Category Archives: In The Press

Corruption & Slavery Threaten to Overshadow Olympics

As the 2016 Olympics kick off in Rio, ongoing corruption and slavery scandals threaten to overshadow the event.

Brazil Corruption Slavery

The 2016 Rio Olympics opened on Friday evening with a lavish opening ceremony, watched by a global audience of billions. Over the next two and a half weeks, 10,500 athletes from 207 countries will compete for medals in 28 sports.

However, the Olympics could be overshadowed by corruption and slavery scandals currently engulfing Brazil.

Corruption Scandal Widens

There has been widespread criticism of the money being spent to hold the Olympics in Rio. Much has focused on where money could have been spent to tackle poverty and social issues present in the city.

However, one scandal that has rolled on for over a year relates to massive corruption in the awarding of contracts. Petrobras, Brazil’s national oil company, and it’s ruling Workers’ Party (PT), are at the centre of allegations of one of the largest corporate frauds in history.

Petrobras was nationalised between 2002 and 2010, with the PT appointing its own candidates to high-level executive positions. These executives secretly diverted funds, valued at up to 3 per cent of all new oil contracts, to the PT and its coalition partners.

Senior Politicians Implicated

The corruption probe, nicknamed “Operation Carwash“, continues to widen. Plea deals have now implicated more than 480 politicians and executives.

It is alleged that these individuals received over $6 billion in bribes from a cartel of Brazil’s biggest builders. The money was traded in exchange for at least $50 billion in Petrobras contracts.

Suspended President Dilma Rousseff has been found guilty of budget fraud by a senate committee. Her predecessor, former President Lula da Silva, has been ordered to stand trial by a federal judge for money laundering and hiding assets.

Rousseff’s campaign strategist, Joao Santana, was also arrested for allegedly receiving $7.5 million in bribes from Petrobras. However, due to delays in Brazil’s legislature system, it could be a while before these cases are heard.

Slavery Rife in Brazilian Cities

Alongside the corruption and fraud in Brazil, new figures released this week suggests that slavery is still a major issue in the country.

The Walk Free Foundation has reported that there are an estimated 161,000 people working in slavery conditions in Brazil. This figure is up nearly 4 per cent from 2014.

Brazil has seen an influx of immigrants over the past decade from other Latin American, and African, countries. The issue is most prevalent in rural areas, but instances are occurring in major cities too. There have been more slavery cases reported in urban areas than countryside since 2014.

Official statistics show the mining sector accounts for 31 per cent of slavery cases discovered in Brazil, followed by construction (18 per cent) and agriculture (15 per cent).

“Blackballing” Companies

However, the Brazilian Government has earned some positive press in the way it is tackling slavery. They have created a “dirty list” of 300 companies who could lose access to public contracts as forced labour has been found in their supply chains.

The list was briefly suspended in March this year, although it was reinstated in May. The dirty list, and strategies that go along with it, have helped to free over 50,000 people from slavery conditions between 1996 and 2013.

At a time when the eyes of the world are on Brazil, and Rio, the ongoing work to free workers caught in forced labour conditions represents a glimmer of hope in an otherwise bleak political climate.

Are you in Rio for the Olympics? Or have you been involved in procurement or supply chain for the Games? We’d love to hear your experiences and showcase them on the Blog.

We’ve been collating all the major headlines from the past week to keep you up to date…

UK Interest Rate Cut Bad For Savers & Pensions

  • The Bank of England announced a decrease in UK interest rates to 0.25 per cent, the lowest rate ever.
  • It comes at a time of lower than expected growth in the UK economy.
  • The cut heaps further pressure on pension schemes already facing huge deficits from the shrinking economy.
  • It also means that a greater number of accounts, including business accounts, are expected to not see any form of interest on savings.

Read more on The BBC

Mercedes-Benz Vans to Open New South Carolina Plant

  • Construction on a new plant began last week in North Charleston, South Carolina, to produce Mercedes-Benz’s iconic Sprinter Vans locally.
  • The move will significantly cut lead-times for the German automotive giant. Previously US-based plants only assembled vehicles from ‘kits’ sent over from Germany.
  • Parts suppliers including the Auto Truck Group and the Knapheide Manufacturing Company, are expected to establish production sites in the region.
  • Mercedes-Benz reported delivery of approximately 28,600 vans to US customers last year.

Read more at Automotive Logistics

Brexit Leads UK Retailers to Source More Home-Grown Products

  • Fashion industry publication Just-Style reported that one-third of British retailers predict they will source more from domestic suppliers following the Brexit vote.
  • Research published by Barclays has found that 52 per cent of retailers also expect to increase supply chain activity in India.
  • 43 per cent of British retailers have indicated they anticipate a reduction in goods sourced from the EU.  
  • Despite the Brexit vote, European manufacturing actually improved over July. According to data firm IHS Markit’s Purchasing Managers Index, figures rose to 53.2 in July from 53.1 in June.

Read more at Just Style

Phone Battery Life Could Be Used to Track Users

  • The battery status API, introduced in August 2015, has been found to be capable of tracking individual users online.
  • API allows site owners to see the percentage of battery life left in a device, as well as the time it will take to discharge or recharge.
  • Although currently being used to enable low-power versions of websites, researchers have proved that it could be used to spy on users.
  • Privacy campaigners have argued that companies could use this data to also monetise battery levels, with users making different decisions when faced with a low battery.

Read more at The Guardian

Investor Confidence & Debt – A Study in Trans-Atlantic Contrasts

It’s a time of contrasting fortunes for trans-Atlantic businesses, as high investor confidence is matched by high debt.

Investor Confidence

Trans-atlantic businesses are always going to see some contrasting fortunes, given the diverse nature of the market environments. However, two new reports published this week suggest that these contrasting fortunes may have more impact than usual.

Despite a period of ongoing uncertainty in the UK, a new study has shown that investor confidence in UK SMEs remains high. Over 50 per cent of UK investors have stated they will support SMEs through private investment, even as confidence drops in shares, bonds and property.

However, in the US, another report suggests that companies are failing to maximise favourable conditions to lower their debt levels. A lack of improvement in supplier payments, and inventory management, has left overall working capital performance at its lowest level since 2008.

UK SME Investor Confidence

Despite the uncertainty surrounding financial markets and a variety of investment products, the majority of British investors are resoundingly confident in the country’s SMEs as an investment vehicle.

The research was commissioned by private equity house, IW Capital, and crowdfunding specialist Crowdfinders, and surveyed 1,000 UK investors. The survey revealed that over half (52 per cent) of investors said they would support the UK’s small and medium-sized enterprises through private investment channels in the wake of the referendum vote.

This equates to over 12.9 million potential investors for UK SMEs, and comes at a time where investor confidence in traditional assets, such as shares, Government bonds, and property, has dropped significantly.

The Lloyds Bank Investor Sentiment Index has helped to demonstrate the impact of the post-Brexit economic climate on investor confidence levels across the UK.

In mid-July 2016, the Index fell to its lowest level since it was launched in March 2013. Property (down by 35.3 per cent), government bonds (down 15.5 per cent) and UK shares (down 21.7 per cent) all experienced notable declines in investor sentiment.

Young Investors on the Rise

Encouragingly, 70 per cent of the younger age bracket of investors – 18-34 year olds – said they will consider investing in SMEs post Brexit.

Furthermore, the highest proportion of investors in a regional comparison who would back SMEs post Brexit was based in London. A significant 68 per cent of investors in the capital said they would support small businesses through private investment.

Luke Davis, CEO of IW Capital and Co-founder of Crowdfinders, commented on the report’s findings. “Following Brexit, Britain has been in a state of limbo, with consumers and investors unsure how the economic landscape will change over the coming months and years.

“What we can take from this research is that there is a silver lining from a business perspective as our nation’s investors are willing to support SMEs in the wake of Brexit, something that cannot be said for other investment classes.

“In times of economic uncertainty, ensuring support for the nation’s private sector – particularly the SMEs who make up 99.9% of all private businesses – is of paramount importance.”

US Companies Taking on Debt

Across the Atlantic, the situation was less positive. According to a survey from REL, a division of The Hackett Group, large US companies have increased debt levels, rather than improve working capital performance.

The survey looks at the performance of 1,000 of the largest public companies in the U.S. during 2015. It saw corporate debt rising significantly for the seventh consecutive year, as a result of low interest rates. Debt was up 9.3 per cent in 2015, the equivalent of $413 billion.

Since 2009, the total debt position of the companies in the survey has increased by over 58 per cent.

Working capital performance worsened, with a deterioration of 2.4 days or 7 percent in Cash Conversion Cycle (CCC). It is now at 35.6 days, the worst since before the 2008 financial crisis. These figures suggest major inefficiencies in managing their collections, payables, and inventory processes.

The working capital improvement opportunity of companies in the survey now stands at over $1 trillion, or 6 percent of the U.S. GDP. However, this can only be achieved by the companies equalling the performance of industry leaders.

Oil and Gas Performance 

A significant factor in this year’s overall results were the continuing low oil prices. This caused oil and gas companies to increase reserves, dramatically worsening both inventory and overall working capital performance, and dragging down the performance of the entire survey group.

Commenting on the results, Hackett Group Senior Director Craig Bailey stated, “Once again, low interest rates gave companies a perfect excuse to ignore the hard work of optimising receivables, payables, and inventory. This leaves over a trillion dollars unnecessarily tied up in operations. Instead of doing the hard work of transformation, most simply leveraged their future with more loans.”

Hackett Group Director, Ben Michael, added, “Eventually, interest rates will rise again, and there are signs this may happen soon. Then many companies may find themselves in dire straits, after seven years of growing debt and worsening working capital performance. Smart companies are getting out ahead of the curve now, and starting making the changes they need to squeeze unnecessary cash out of these key areas.”

You can access the full report, and results analysis, plus findings for European companies, on The Hackett Group website.

Want to have your say on these reports? Let us know your thoughts on these two surveys by commenting below. 

Away from the world of investor confidence and company debt, we’ve tracked down the key headlines in the procurement world.

NATO IT Division to “Splurge” on Defence Procurement
  • NATO’s Communication and Information Agency (NCI) has announced it will award €3 billion (US$3.3 billion) worth of cyber, air and missile defence contracts.
  • This is the first time since 2009 that NATO has increased expenditure. 
  • Proposals include a €2.5 billion satellite communications contract, advanced software procurement, and further strengthening of NATO’s air defences.
  • The spending increase comes at a time of scrutiny into NATO finances.

Read more at The Register

Nuclear Supply Chain Collaboration
  • Nuclear supply chain organisations from the US and Canada have signed a memorandum of understanding on cooperation this week.
  • The MoU will help to facilitate collaboration and innovation among nuclear suppliers and research organisations in both countries.
  • Focus areas include the development and deployment of advanced reactors and small modular reactors, job-creation and combating climate change.
  • The agreement comes ahead  of the major annual summit for utilities procurement professionals, who are due to gather in September for ISM’s UPMG2016 conference.

Read more at World Nuclear News

Aerospace Supply Chains Under Pressure
  • Boeing and Airbus supply chains were in the spotlight at the Farnborough air show, as pressure grows on both companies to deliver record numbers of aircraft.
  • This is putting increased pressure on already stretched suppliers, and is leading to concerns about supplier treatment.
  • Suppliers are expected to sign long-term supply agreements, promising both regular price reductions, and accepting unlimited liability should something go wrong, or face losing business.
  • It also comes at a time when Boeing have started delaying payments to some suppliers by up to a month.

Read more at the Financial Times

New UK Nuclear Power Plant in Doubt
  • A project to build a new nuclear reactor at Hinkley Point has been put on hold by the UK Government.
  • Despite EDF directors voting to proceed, the Government has delayed a decision until a further review in the Autumn.
  • The project cost is estimated at £18 billion, but could rise to £30 billion when further subsidies are paid.
  • Much of the debate centres on the guaranteed price for electricity produced by the plant being over double of current electricity prices.

Read more at The Guardian

Celebrating Supply Chain – The Organisation’s Unsung Hero

It exists in the background. When it works seamlessly, you wouldn’t know it was there at all. But the supply chain really is the unsung hero of the organisation.

Unsung Hero

Alice Catherine Evans. Dr. Megan Coffee. Gunner the Dog. Rick Rescorla. Heard of any of these individuals? They are just some of the unsung heroes from the past 150 years. They have all made a huge difference to the world, and arguably deserve much more recognition.

While maybe not at the same level, the same could be said for the organisational supply chain. It exists in the background. If it works seamlessly, then people don’t really take any notice of it. But, without it, organisations would grind to a halt. It really is the unsung hero of an organisation (as are all the people working in it!).

This week, supply chains have been in the news for the right reasons. The US Aerospace and Defence Industry and Domino’s Pizza were just a couple of organisations to highlight the good work their supply chains were doing.

However, it wasn’t all good news, as supply chains came under fire again for not doing enough to combat modern slavery.

SMEs the Unsung Hero for A&D

The Farnborough International Airshow, held in the past week, presents a fantastic opportunity of organisations further down the supply chain to present their new technologies and ideas. This year it also allowed the US A&D Industry the chance to celebrate its SMEs.

According to data from the Aerospace Industries Association (AIA), the US A&D Industry has exports totalling $142 billion last year. Of that, the supply chain generated 58 per cent of the exports, a whopping $78 billion.

The numbers go to show the strength of the supply chain companies, as well as the global partnerships they have built across the world. The importance of the supply chain SMEs is clear to the US A&D industry too. They have led the way in building a solid reputation of US technology and innovation across tens of thousands of projects worldwide.

AIA CEO David Melcher also sees a bright future of the SMEs. With trade agreements in place, Melcher argued that “small- and medium-sized companies can generate exports for decades more to keep this equipment operating effectively and efficiently.”

Supply Chain Success

Another unsung hero, at least until this week, was the supply chain for Domino’s pizza. The fast-food giant announced a 12 per cent increase in sales in the second quarter of 2016, beating profit and revenue forecasts.

The company attributed increased supply chain sales, including increased volumes and store growth, as a key reason for this. The supply chain sales themselves also saw a 12 per cent increase in the quarter.

Heroes Required

However, the week wouldn’t be complete without stories of what organisations need to do to combat slavery in their supply chains. A report released this week showed that the ICT industry has plenty to do in this area.

KnowTheChain compared 20 ICT companies, including Apple, HP and Samsung, on their supply chain practices. The results were not pretty, with the majority of the organisations scoring under 50 (out of 100) for efforts to eradicate forced labour, and how transparent their efforts were in doing this.

However, according to a business leader in the cosmetics industry, eradicating forced labour and slavery completely is an on-going battle. Simon Constantine, of British retailer Lush, stated that even though Lush is willing to pay more for ethically sourced goods, the company has still struggled to keep up.

Constantine said, “With the amount of work you need to do to stay on top of things, and everything changing so rapidly…I would never be comfortable saying our supply chain is 100 per cent clean.”

But with new regulations increasingly putting the onus on companies to ensure their supply chains are clean, it’s a battle that is set to be fought just as hard as ever.

Is your supply chain an unsung hero? Why not let us know and we can help you tell your story?

We’ve been pouring over the news and digital media to make sure you don’t miss the key headlines this week…

Brexit Causes “Dramatic Deterioration” in UK Economy
  • The decision by UK voters to leave the EU has led to a “dramatic deterioration” in economic activity in Britain.
  • Markit’s Purchasing Managers Index shows a fall in economic output to 47.7 in July, the lowest since the end of the Global Financial Crisis.
  • Both manufacturing and service sectors saw a decline, though exports were up due to the weakening pound.
  • Chris Williamson, Chief Economist at IHS Markit, said the downturn has been “most commonly attributed in one way or another to ‘Brexit’.”

Read more at The BBC

Turkish Procurement Programme Delays
  • The failed coup attempt to overthrow the national Government in Turkey will delay multi-billion dollar procurement programmes.
  • Members of the coup took senior army officials hostage last weekend, with their actions leading to over 200 deaths.
  • Although incomparable to loss of life, senior officials have admitted that procurement is “nowhere in the military command’s priority list.”
  • It has raised concerns that this will leave the army short of operational resources in the fight against ISIS.

Read more at Defense News

Rio Olympics Highlights Cross-Border Procurement Risks
  • The Rio Olympics, due to start in a few weeks, represents a massive opportunity for cross-border commerce.
  • The organising committee has already procured more than 30 million goods, including sports equipment and accommodation items.
  • However, organisations still need to be aware of the potential risks, such as logistical issues, and currency exchange rate fluctuation.
  • Reggie Peterson, Director of Indirect Supply Programmes at AmeriQuest, highlighted the importance of carrying out due diligence for organisations before getting involved.

Read more at PYMNTS.com

Facebook Drones Close to Taking Flight
  • Drones, built with the purpose of bringing connectivity to remote regions of the world, are closer to taking flight.
  • Facebook-owned British company, Ascenta, has run a successful test of its drones in the skies above Arizona.
  • The the solar-powered drones will be airborne for months at a time, beaming signals down to users on the ground.
  • The project is in competition with Google’s ‘Project Loon’, which aims to use high altitude balloons for the same purpose.

Read more on The BBC

Gotta Catch Them All! But Is Pokémon Go a Cyber Crime Target?

Pokémon Go is the new craze sweeping the world. It’s just a game, but how does it relate to real-life laws? And could it really be a target for cyber criminals?

Pokémon Go

Last week, Nintendo launched its new ‘augmented reality’ game, Pokémon Go, across the world. Nintendo spread the launch dates out, with the USA, Australia and New Zealand first, and Europe and other parts of Asia launches in the following days.

For the uninitiated (and you’ll be hard pushed to be one of those with the blanket media coverage), the game blends digital characters from the successful Pokémon franchise, with GPS and location based technologies on smart phones.

Global Craze…and Growing

Within 24 hours of its US release last Tuesday, Pokémon Go had already overtaken its competition to be the biggest game of 2016. It moved to number 1 on App Store, and after 3 days had become the biggest mobile game in US history.

The game surpassed Twitter in terms of daily active users, and Facebook in terms of user engagement on its app. It’s also estimated that it may overtake Google Maps as the largest user of Alphabet’s mapping data.

The incredible growth has also helped Nintendo’s market value jump. It marks the end of a difficult period for Nintendo, who’s market value has been in decline since October 2015.

Nintendo’s market value increase by 10 per cent when the game went viral in the first week of July, with a further 25 per cent added by last Tuesday. This equates to nearly $9 billion added to the market value in less than a week.

Safety First!

The new craze has not been without its hiccups, however. In addition to people walking into walls and falling down holes while glued to their phones, there have also been reports of muggings and armed robbery facilitated by the game’s geolocation software.

Police in Australia have also issued a couple of public announcements in light of these incidents. They have asked the public to be aware of their surroundings while hunting Pokémon, that they shouldn’t use the app while driving, and that “I was collecting Pokémon” is not a defence for trespassing.

The final point brings into focus the issue of how augmented reality games will cope with country laws. As users are collecting characters in the real-world, the potential for trespass grows.

How this will be handled by businesses (some of whom are taking advantage of the craze) and locations (like Arlington National Cemetery) in the future will be interesting to see.

Pokémon Go a Cyber Target?

A number of experts have also argued that Nintendo’s launch could leave some users potentially vulnerable to cyber criminals. With a staggered launch, some users may have been tempted to download a version of the app from unverified third-party app stores. This could subsequently leave them vulnerable to malicious apps and malware.

These apps could then allow criminals to access smartphone data, spy on users, or even control phones remotely. Another report by security software company, Trend Micro, highlighted the risk posed by the game to individuals’ data.

Gamers who downloaded Pokémon Go and registered using a gmail account, could inadvertently give third parties access to private data. However, this issue could be mitigated by ensuring the correct privacy settings in the app.

Connected Devices

While the cyber crime risk for Pokémon Go seems fairly low, it may signify the start of a larger issue. The growth of augmented reality games, smartphone technology, and connected devices via the Internet of Things, does pose a cyber security risk.

But what is certain is that as the technology leaps forward, security provisions and investment needs to move forward too.

Have you jumped on the Pokémon Go bandwagon? Do you think talk about cyber crime for these games is realistic? Let us know. 

We’ve dragged ourselves away from virtual creature capture long enough this week to bring you the weekly headlines…

General Motors Deal with Bankrupt Supplier
  • GM’s contract dispute with Clark-Cutler-McDermott Co. (CCM) has forced the parts supplier into bankruptcy protection, with plans to sell its remaining assets.
  • CCM has argued that unprofitable contracts have led them to lose $12 million since 2013.
  • GM will purchase a quantity of critical factory equipment and parts necessary to continue production across their North American factories.
  • The well-publicised dispute in the bankruptcy court has shed light on the uneven power dynamic between car makers and parts suppliers.

Read more at the Wall Street Journal

Retailers Struggling with Reverse Supply Chain
  • Customer returns and product recalls are becoming increasingly common, with the most notable recent event being IKEA’s massive recall of 36 million dressers worldwide.
  • Returns and recalls pose a significant challenge for the retail sector to build a ‘reverse supply chain’.
  • This term can be misleading, as it is not simply the usual supply chain run backwards, but a complex network of transportation and resellers.
  • Retail Industry Leaders Association VP Adam Siegel warns: “You’re not going to succeed if you’re losing money on your reverse supply chain because, inevitably, the reverse supply chain is going to grow.”

Read more at PYMNTS.com

Palm Oil Industry Rife with Human Rights Abuses
  • The palm oil industry has come under further scrutiny for human rights abuses.
  • The Rainforest Action Network (RAN) has released an animated video that highlights the organisation’s largest criticisms of the palm oil industry.
  • The video focuses on the non-compliance of a PepsiCo joint venture and endemic labour abuses in Indonesia. 
  • RAN claims workers at palm oil plantations have been subjected to excessively long work hours for low wages, dangerous exposure to agricultural chemicals, confiscation of passports, and child labour.

Read more at Triple Pundit

IBM Pushes Blockchain in Supply Chain
  • IBM has launched a platform for companies to test “blockchain” record-keeping technology in their supply chains.
  • The service is an attempt to expand the use of blockchain beyond the financial services industry.
  • IBM’s new service lets supply chain customers build and test blockchains using a version of the company’s LinuxOne system.
  • The service is aimed at companies that need to track high-value items through complex supply chains.

Read more at the Wall Street Journal

Facts not Fear: The Impact of Brexit on US Business

Institute for Supply Management (ISM) CEO Tom Derry tells Procurious that people need facts, not speculation and fear, when it comes to understanding the impact of Brexit on US business.  

Brexit US Business

ISM took the unusual step this month of releasing a supplementary Report on Business, focusing specifically on the impact of the UK’s Referendum on EU membership on US business.

The decision was prompted by a flood of enquires from US business and media representatives about whether the data for this month’s highly anticipated and influential report would reflect the fallout from Brexit.

“We decided to go back to our panel of over 600 procurement professionals with a tailored series of questions about the net financial impact of Brexit on their organisations”, said Derry.

“More importantly, there has been an enormous amount of speculation about the impact of Brexit, fed by a sense of unease and uncertainty. ISM was in a position to gather real data and put the information out there so businesses can make informed decisions based on facts, rather than fear, concern or emotion.”

Negligible Impact

The report will serve to dispel much of the speculation around the impacts of Brexit on US business. The vast majority of those surveyed reporting that Brexit will have a “negligible” impact on their business. Only one in three thought their firm would be negatively, or slightly negatively, impacted.

The main concerns for those who do anticipate an impact include the exchange value of the dollar, changes in demand globally, financial market uncertainty, and currency movements.

“The report demonstrates that despite the speculation, the majority of US businesses feel that Brexit will have a negligible impact”, says Derry. “This is because the US has a comparatively low export economy at only 13 per cent of GDP, so we are relatively insulated from the impacts of currency movements and global demand. We’re not a huge commodity exporter, although the strength of the dollar is of course a concern for those who are in the exporting business.”

Derry says that in the short-term, trade relationships are stable. “For US firms doing business in the UK or EU, very little has changed. For now, we’re good – business is predictable, and we love predictability and certainty.”

Future Investment Shift

In the long-term, however, US businesses may not choose to invest additional dollars in the UK. Historically, a lot of companies (such as car manufacturers) have used the UK as their port of entry into the EU, due to its shared language and talented workforce.

Derry added, “That option may no longer be so attractive, and discretionary investment will probably shift to Eastern Europe – Poland or the Czech Republic – to have a presence within the EU, and take advantage of low-cost labour.”

Derry says that the Brexit referendum is a historical event. However, in 10 years it is likely to be seen as a political decision, rather than an economic one. “The ‘sky is falling’ scenario is certainly overdone”, he says. “I don’t think we’re going to see the fracturing of the EU over Brexit.”

“It’s important to keep our vision focused forward. As supply management professionals, we work in the global economy and a major shift, such as Brexit, forces each of us to recalibrate our global supply strategies and trade relationships. The EU is the largest single market in the world – we can’t ignore it.”

Click here to read the supplemental ISM Report on Business: Brexit Report.

Debate Over Renewed Focus on Career Guidance

Inadequate career guidance and advice from schools is exacerbating the UK’s skills gap, says a report published in the last week.

Good Career Guidance

A new report published at the end of last week by the Education, Skills and the Economy Sub-Committee, has stated that the skills gap in the UK is being worsened by poor career guidance given to pupils by their schools.

It was argued that poor career guidance was stopping young people making informed career decisions, which in turn was harming the country’s economy.

The report, the first published by the Sub-Committee, also argued that there needed to be greater oversight over the wealth of organisations, service providers, and websites set up to offer careers advice.

The report concluded that schools needed to be held to greater account when it came to careers services, and that this should make up part of annual inspections.

“Big Stick” Approach Wrong

However, the report came in for criticism from head teachers’ leaders, who argued the “big stick” approach of downgrading schools for poor performance wouldn’t solve fundamental issues with the careers advice system.

Malcolm Trobe, interim general secretary of the Association of School and College Leaders, said that there were severe problems in the existing system that urgently needed fixed, while school budgets were frozen and under severe pressure.

It was argued by other leaders that the threat of downgrading and inspection was not an effective way of driving improvements in career guidance.

Effective Career Guidance

However, there was agreement that steps needed to be taken in order to better equip students and school leavers with the right advice for their careers.

As the business world continues to change and evolve, students need the best possible advice about experiences, qualifications, and training needed for chosen careers, or how to get involved with new and emerging industries.

And this is not necessarily about just encouraging school leavers to go on to higher education and university, a criticism which has been levelled at many schools, but also making them aware of apprenticeships and other work opportunities.

This could be done through giving pupils better access to employers while still in school, work experience opportunities, and career talks from former pupils and local business leaders.

Seamus Nevin, Head of Employment and Skills at the Institute of Directors, said: “The IoD welcomes the committee’s focus on careers guidance, which by all accounts remains an Achilles heel in the UK education system.

“Alarmingly, just 43 per cent of students currently receive any formal careers guidance before choosing their A-level subjects and yet the subjects they choose can severely restrict their employment options later in life.

“This is partly because only 83 per cent of secondary schools employ a qualified, full-time careers adviser, with many relying instead on other support staff to fill career guidance roles. The only way to solve this problem is to improve guidance, not punish schools for being poorly equipped.” 

Australia Next Victim of Political Uncertainty

The political environment in Australia is tense, even as the Liberal Coalition claims victory by the slimmest of margins. How the corporate landscape will be impacted by the outcome is merely a guessing game.

Political Uncertainty

It’s been something of a topsy-turvy year, and couple of months in particular, for political uncertainty around the world. The on-going US election campaigns ahead of the November election have polarised opinion, while in the UK the Brexit vote has individuals and organisations alike trying to uncover the full extent of the changes.

And while there is likely to be more instability in the coming months, the ongoing uncertainty around the Australian election has the business community and procurement leaders watching with baited breath, given that what elements of business trade could be impacted by this is anyone’s guess.

With 80 per cent of the vote counted, we do know that Malcolm Turnbull will be returned as Prime Minister, after opposition Leader Bill Shorten admitting defeat on Sunday, according to recent media reports.

The Liberal Coalition is expected to win just enough seats (76) to form a majority government. But the rest of the line-up could take weeks to finalise. And Turnbull has an uncertain and challenging year ahead, as he faces difficult negotiations with independent members of parliament, a hostile Senate, and potential mutiny within his own party.

Complicated Situation

The election was held against the backdrop of a particularly complicated political environment. Laura Tingle, the Australian Financial Review political editor, helped to outline why in her keynote address to the Asia-Pacific CPO Forum in Melbourne earlier this year.

Back in 2013, Australian voters wanted to get rid of the Labor government, with many viewing it as a “soap opera“, as Julia Gillard first took over from PM Kevin Rudd in 2010, before being challenged by Rudd twice, resulting in Rudd leading Labor again at the 2013 election.

However, Tingle explained that the ‘coup’ in 2013 from Rudd isn’t the only reason the electoral situation was in flux.

“Voters have been utterly disappointed by the Coalition under Tony Abbott, and confused and angered by what has happened since Malcolm Turnbull took over,” she says.

The highly respected journalist and political commentator told forum attendees that it’s rare for there to be a uniform swing across seats in an election, and that she can’t think of an election where there are so many unknown factors at play that could create wild outcomes.

For example, the Melbourne seat of Batman, once considered technically the safest Labor seat in Australia (with margins of 21 per cent), was only just held by Labor during the election. The significant change is due in part to rapidly changing demographics in the seat.

In addition, there was a lack of clarity in the state of Queensland as to how the votes would be cast, with independents including the hard-right Pauline Hanson picking up support from dissatisfied voters.

Political Instability Ahead

Tingle argued that Australia was heading into a period of instability.

“When I say ‘uncertainty’, I mean it in the sense that we really don’t known what the election outcome will be if we judge it purely by the numbers.”

Prior to the election, the question was really about whether or not the electorate really wanted yet another change in prime minister.

“Ironically, I think it is the Coalition – the current government – which is more of a policy unknown that the Labor Party.

“The Coalition has been thrown off course in the last couple of years. First by its political incompetence and lack of policy savvy. The 2014 budget has become the byword for this, but there was much that proceeded it in terms of policy towards business even before the budget was brought down,” she says.

Complex Issue Resolution

Even if the government is returned to power, and it looks likely that it will happen, Tingle argued that the major issues, such as health funding, schools funding, and universities funding, would have to be sorted out one at a time, due to the complexity of the issues in the political environment.

“None of this, in reality, leads you to think that either side of politics can have a real breakthrough moment. There has already been a lot of commentary to the effect that much will depend on the size of the majority Turnbull is able to command in the House of Representatives.”

The most basic measure Tingle has learned covering politics and policy making for so long is the capability of politicians to react to the issues of the day.

“When I say that, I mean it is assessing what you believe their underlying capability is to deal with the stuff that comes along every day when governing a country, rather than the set piece policy positions you draw up beforehand.”

Government Procurement

However, it’s not all bad news, particularly from the point of view of public sector spending and government procurement. Even in the midst of the political upheaval and turmoil, it appears to be a case of “business as usual” for procurement.

The Federal Bureaucracy, which is unelected, and as such unaffected by the election until a result is declared, has assured people that the chaos is mainly isolated to the parliament itself. 

They have stated that since the election, there have been a large number of state and local government authorities calling for tenders, announcements of grants, and new public works projects. In addition to this, there are tender notices still being issued for on-going projects, suggesting that business will continue however the final few seats fall.

What are your thoughts on the Australian elections? How will your business be impacted by the political uncertainty?

Meanwhile, we’ve been keeping track of the all the major procurement and supply chain news headlines this week…

China Cosco to invest in Port of Piraeus

  • One of the largest seaports in the world, the Port of Piraeus, was sold to China Cosco Shipping Corporation for €368.5 million in April this year,
  • The deal represented a major privatisation and was a central plank of the €86 billion bailout deal agreed with Eurozone partners.
  • This week, China Cosco announced its plans for the site, including an investment of over €500 million in the port over the next five years. The company will focus on developing the cruise and shipbuilding industry.
  • Chinese president Xi Jinping said this week, “We are certain that Piraeus will open new prospects for the broadening of Greece-China cooperation in transport, infrastructure, telecoms and shipping”.

Read more at the Wall Street Journal

Estonian Startup Tests Robot Package Deliveries

  • Robot maker Starship Technologies has launched a test programme for their self-driving robots.
  • The test will involve the robots delivering packages, groceries and goods in the UK, Germany and Switzerland.
  • The robots drive autonomously in a 2-3 mile radius and are monitored by human operators. 
  • Rolling on six wheels, the robots find their destination using GPS, radar and camera, and are able to navigate around obstacles and follow traffic rules. Customers open the secure compartment to access the delivery using their phone.

Read more at Engadget and Watch the Robots here

Hackers Use Social Media for Identity Theft

  • The number of victims of identity theft in the UK rose by 57 per cent in the past year, with more than 148,000 victims in the UK in 2015.
  • According to Cifas, the fraud prevention service, hackers are now using social media sites like LinkedIn and Facebook to harvest information on individuals.
  • Names, addresses, dates of birth, and names of banks are some of the information fraudsters are able to piece together from social media profiles.
  • Cifas has urged individuals to look at what information their profiles have on them, and to ensure that security settings on all networks are correct.

Read more at The Telegraph

Hyperloop “Proves” Cost Effectiveness

  • Hyperloop, the high speed transport solution and brainchild of Elon Musk, has released a feasibility study which makes the case for the affordability of the system.
  • The study examines the cost of connecting Stockholm and Helsinki using Hyperloop, and compares it to California’s high-speed rail project.
  • Hyperloop estimates this project to cost $40 million per km, while the rail project is estimated by The World Bank at $56 million per km.
  • The report is considered a significant step in proving the validity of the Hyperloop concept, with the technology due for its first test before the end of the year.

Read more at Engadget

Anti-censorship Campaigners Launch New Site to Test VPNs in China

A new website, launched by anti-censorship group GreatFire, will help users in China test how well VPNs work in the country.

VPNs Test China

Anti-censorship group GreatFire launched a new service on Tuesday that will help internet users inside China live test how well different virtual private networks (VPNs) are working in the country.

VPNs, which create direct links between computers and offer a way in which to gain unrestricted access to the internet, are vital for business in China as well as for accessing information.

The country actively censors the internet, with users having to use circumvention tools in order to access over 18,000 websites including Google, Facebook, the BBC and the New York Times.

Testing VPNs

“There is a commonly held belief in China that if you have a VPN that works then you should keep quiet about it,” said GreatFire co-founder Charlie Smith. “In terms of freedom of access to information, the problem with this approach is that it keeps useful knowledge secret.

“We hope this project will destroy that model and give people accurate information so they can make informed choices. The public need to be able to get online quickly, reliably and free from state censorship.”

Chinese authorities have stepped up their attacks on circumvention tools over the past 18 months and GreatFire’s new testing site is part of the group’s attempt to fight back. The site – Circumvention Central (CC) – provides real-time information and direct access to both free and paid-for censorship-evasion tools that are working in China.

Constantly updated using information from within China, all VPNs (including GreatFire’s own circumvention tool FreeBrowser) are measured on both speed (how quickly popular websites are loaded) and stability (the extent to which popular websites load successfully).

Reflecting Real User Experience

Speed tests typically measure download and upload speed by sending a few requests to a speed test server. That means reported speeds do not reflect user experience because normal browsing involves frequently sending lots of requests to many different servers.

In contrast, GreatFire’s speed test aims to reflect real user experience by downloading resources from the ten most popular websites in the world, including Google, Facebook, YouTube, Baidu, Amazon and Yahoo. If the contents returned are incorrect, or if the download fails to complete within 40 seconds, the test is marked as failed.

Besides speed, stability is also tracked. Typically not taken into account by other services, the stability test reflects the likelihood of a connection failing. Although any connection, anywhere should deliver 100 per cent stability unless unplugged, VPNs on the ground in China regularly fail.

Testing happens in real-time, which is essential to an environment where VPNs get blocked and unblocked continuously. Visitors to the CC site can purchase any paid-for tool currently tested. GreatFire will act as a reseller of these tools in China and as such be given a portion of each sale by the VPN providers themselves. Users need not be based in China to purchase a circumvention service.

Digital Activism

Any revenue generated through the site will be used to support the ongoing digital activism of GreatFire, which earlier this year won an Index on Censorship Freedom of Expression Award for its work fighting online censorship in China.

“At the moment, GreatFire relies on the kindness of individuals who send us donations and a limited number of grant-making organisations around the world,” said Smith. “We want to reduce our reliance on these organisations and raise enough funds to properly end internet censorship in China as soon as is humanly possible”.

Smith hopes the new site will revolutionise VPN use in China. “Until CC, nobody has provided public information about the effectiveness of circumvention tools in China. Many have provided misinformation,” he said.

“Some VPN providers have also famously encouraged their customers to “keep quiet” about the effectiveness of their solutions. On the contrary, we encourage everyone who hears about this project to share this information with those who they think could benefit.”

Dubai Securing Its Future Through Innovation

Traditionally a prime hub for trade, logistics and communications, Dubai, the UAE, are looking to secure the future as a hub of business innovation.

Innovation - Expo 2020

On the 27th of November 2013, Dubai was voted as the host city for Expo 2020, an event that aims to bring together a global audience to discuss issues pertinent to every person in the world. Based on central theme of “Connecting Minds, Creating the Future”, Expo 2020 will also cover key sub-themes of sustainability, mobility and opportunity.

While the event will place the country at the heart of an event with an estimated 25 million visitors, it also helps to cement Dubai’s place as a centre for technology and business innovation.

Smart Cities

Dubai is already well on its way to becoming a ‘smart city‘, with huge sums of money being invested in making the emirate a hub for IT and technology. In September 2015, Dubai was named as the second-best city in the world for expats wishing to start a business, while the UAE was among the top 10 countries for expats to work in.

These titles run in line with Dubai’s aim to open its doors to the best and brightest technology innovators and entrepreneurs. As part of its investment in infrastructure during its ‘Year of Innovation‘ in 2015, provisions were made to assist small to medium-sized startups with technological assistance, aimed at creating growth in this sector.

And, as part of this drive to encourage more global technology organisations to come to Dubai, Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of UAE and Ruler of Dubai, announced a $544 million fund to finance innovation in the city.

While the fund doesn’t actually go live in terms of investment until later this year, it is anticipated that it will provide funding to companies based in the UAE, as well as those providing “exceptional innovative ideas“, helping to drive growth and economic development across the region.

Innovation…and Procurement

All of this comes as part of the UAE’s ‘Vision 2021‘, which aims to make the country one of the most innovative in the world. And it’s good to know that procurement and supply chain have a key role to play in this process too.

In the coming months, a huge procurement and contracting effort will be undertaken to award build work for the site, infrastructure and transportation to support the hosting of Expo 2020. Dubai is forecast to spend around $8 billion on infrastructure mega projects in the build up to Expo 2020 including hotels, new metro links and malls.

Kicking it off last week, the RTA awarded a $2.88 billion contract for the construction of its Expolink metro. This will be followed by purchase of trains to service both the new, and existing, Dubai metro lines.

It’s estimated that Dubai’s Road and Transport Authority (RTA) will look to 30 per cent of the project cost through private funding, with public-private partnerships mooted for the remainder.

Is it too much to ask for to have a little innovation in the procurement process? While traditional processes might still hold sway, we can only hope that the profession can get in on the act in the next few years.

Need something to chat about in the tea room? Or something to enjoy with your coffee? Here are the week’s big headlines…

States Come Together for Purchasing Agreement

  • TheNational Association of State Procurement Officers (NASPO) has been formulating a collective procurement agreement which is expected to benefit 34 states in America.
  • The Value Point platform will give states purchasing similar items cooperative buying power as one organisation, rather then by state basis. 
  • The Cloud-based platform will enable information storage and allow for different payment structures. 
  • The final agreement is expected to be signed off in August and will the states to move forward with a cohesive, cooperative approach to procurement.

Read more at Government Technology

Rolls-Royce Announce Robot Cargo Ships

  • The Rolls-Royce led Advanced Autonomous Waterborne Applications Initiative (AAWA) presented their vision of autonomous shipping at the Autonomous Ship Technology Symposium 2016 in Amsterdam.
  • The group is working on a series of virtual decks, where land-based crew would control every aspect of the ship
  • There will also be drones and VR cameras to assist with spotting issues that humans cannot control.
  • Rolls-Royce aims to launch first remote-controlled cargo ship by 2020, with the aim for automated fleets to follow soon after.

Read more at Futurism

New World Bank Procurement Framework Live

  • The new procurement framework at the World Bank was officially launched on the 1st of July.
  • The new Procurement Framework will allow the World Bank to better respond to the needs of client countries, while preserving robust procurement standards.
  • The Framework also enables the Bank to work more closely with country partners in improving their own procurement systems.
  • Hart Schafer, World Bank Vice President for Operations Policy and Country Services, said, “The Bank can now offer a more modern and nimble procurement system to help promote sustainable development.”

Read more at The World Bank

US-Japanese Underwater Cable Goes Online

  • A 9,000km, six-fiber cable linking the USA and Japan, and backed by Google, went online at the end of last week.
  • The $300 million ‘FASTER’ cable is a project backed by a consortium of six companies including NEC, China Mobile, China Telecom, Global Transit and KDDI, aimed at better connecting the two countries. 
  • The cable can deliver up to 60 terabits per second (Tbps) of bandwidth, about 10 millions times faster than standard cable modems.
  • The cable will support Google’s Cloud Platform East Asia region, with dedicated bandwidth supporting faster data transfer and reduced latency.

Read more at Tech Crunch

How the Leave Vote Will Impact Procurement and Supply Chain

It was an unlikely event just a week ago, but the Brexit has come to pass. Procurious looks to unpack initial thoughts on how the ‘Leave’ vote will impact both procurement and organisations as a whole.

EU Vote Leave

Last week, Procurious’ weekly news article reported on the potential impact of the UK Referendum on UK and European supply chains.

Now, with a weekend of uncertainty and speculation behind us, Procurious looks at the initial views on what the wider implications are likely to be for procurement now the ‘Leave’ vote is a reality.

Initial Response

Following the ‘Leave’ result announcement on Friday morning, the UK stock market dropped 8 per cent on opening, its worst one-day fall since 2008, although it recovered slightly during the day. The pound, too, fell dramatically in the early morning, with a 10 per cent fall taking it to an over 30 year low.

Across Europe, stock markets reacted in a similar fashion. Markets in France and Germany also fell around 8 per cent, while the Swiss Government were forced to stabilise the Franc as it dramatically appreciated in value.

Due to the unprecedented nature of the vote and the result, experts foresee a period of volatility in UK, European and World markets. The volatility has already had an impact on commodity prices, with oil prices dropping by over 5 per cent, both in Europe and the USA, while gold prices have risen by nearly 7 per cent.

In a bid to calm markets, George Osborne, Chancellor of the Exchequer, broke his silence to reassure markets that  “Britain is open for business” – but warning too “it will not be plain sailing”.

The Long Term

The long-term implications will take a while to become clear. The markets across Europe will stabilise, as will the value of the currencies of the member states. However, as has already been reported, the UK exit may precipitate other in/out referendums in Europe.

Far-right parties in France, Italy and the Netherlands were all quoted on Friday as saying that it was now time for their countries to have their own votes. Although further votes would result in increased volatility, these are unlikely to happen in the short term.

For now, all member states, the UK included, are still part of the EU, and are therefore subject to EU regulations and obligations under the single market.

Britain will most likely wait until at least October, when a new Leader of the Conservative Party is elected, to trigger Article 50 to start the EU divorce process.

Procurement, Trade and Supply Chains

Setting politics aside, and assessing the UK’s decision from a procurement and supply chain point of view, there are a number of factors businesses must consider in the short term, in the run up to the UK formally taking its leave from the EU.

Should the value of the pound remain low, this will bring both positives (think cheaper exports for British companies), and negatives (think more expensive imports of global products, and less bang for your buck in foreign currency exchange transaction), for procurement organisations.

The UK will also have to renegotiate trade deals, not only with European countries, but also with other countries around the world. Both UK imports and exports would be subject to tariffs, increasing supply chain costs of organisations with pan-European supply chains. However, it is worth noting that this will only happen in the event of the UK fully removing itself from the EU common market.

It is also worth remembering that this will not mean the end for procurement activities around Europe. Far from it. New trade deals, negotiations, supplier evaluations and supply chain changes, will all fall under procurement’s remit, making our profession as important for organisational value as it ever has been.

Prepare Now

A two-year waiting period for the UK to formally leave the EU doesn’t mean that nothing can be done in procurement. There are a number of strategies and actions that can be taken in order to prepare, and help to mitigate future risks.

Procurement professionals first need to understand if and how they are impacted within their current contracts and supply agreements. Assessing the current supplier lists to identify European suppliers, or suppliers with European Tier 2 or 3 suppliers, is a good starting point. 

It will be better to know now if critical, or bottleneck, suppliers will be impacted, so mitigations and contingencies can start to be planned. Within existing contracts, procurement must assess the potential impact of tariffs on pricing, and if they, or suppliers, will be in a position to renegotiate these contracts.

Finally, investigating alternative sources of supply for all products is a good step to take. This could be supplier based in the UK, or further afield. Another option in this regard would be assessing the possibility of exploring innovative supply solutions with existing suppliers.

UK and European businesses, including procurement departments, have time to prepare. The biggest mistake would be in leaving it too late to ensure actionable outcomes.

Are your supply chains likely to be impacted by the referendum result? How can procurement act to ensure they still have the best deals with suppliers? Let us know your thoughts.

Had your fill of politics? Need something to take your mind off it? Here are some headlines to peruse from the world of procurement & supply chain…

FAA Relaxes US Drone Regulations

  • The Federal Aviation Authority (FAA) has relaxed its regulations on the piloting of drones in US airspace.
  • Before now, operators needed to obtain a licence, requested on a case-by-case basis, to have permission to pilot a drone legally.
  • Now, the regulations state that commercial drones can be flown by pilots over the age of 16, below 400 feet, and with the drone in line of sight.
  • However, the changes will not affect the commercial drones proposed by Amazon, as the FAA is still carrying out further research on this use.

Read more at The BBC

Instagram Hits 500 Million Users

  • Social media platform Instagram has doubled its user base in the past two years, topping 500 million in the past week.
  • The last 100 million members have been added since September 2015, a considerably faster rate than the previous 100 million.
  • The site boasts 300 million daily active users, has surpassed its rival Twitter in monthly active users, and is now double the size of Snapchat.
  • The platform has further expansion plans, with much of it aimed at Instagram’s role as a platform for businesses.

Read more at Tech Crunch

Boeing Signs Deal with Iran Air

  • US-based Boeing has signed a deal with Iran Air to supply 100 jetliners.
  • It marks the first time that Boeing has done businesses in Iran since the Islamic Revolution in the country in 1979.
  • The value of the deal is unconfirmed due to a lack of information on the jetliners to be supplier, but it is estimated to be in the region of $11 billion.
  • However, any and all contracts that Boeing signs with Iran will be subject to US Governmental approval, something which could change following the November elections.

Read more on Reuters

Amazon Fined for Shipment Mishandling

  • Amazon has been fined $130,000 for two alleged incidents of mishandling of dangerous chemicals in its logistics operations.
  • The fines, one of $78,000 and one of $52,000, related to the shipment of two flammable substances by air, between Illinois and Florida in 2014.
  • This is the third fine in two weeks for Amazon from the FAA, following a $350,000 fine for a similar incident, also occurring in 2014.

Read more at the Wall Street Journal