Category Archives: In The Press

Rio Olympics Focus on Global Supply Chain Sustainability

A focus on supply chain sustainability gives the Rio Olympics the opportunity to revolutionise global sustainability, and create a lasting legacy in Brazil.

Rio Olympics Supply Chain Sustainability

The Rio Olympics’ commitment to supply chain sustainability (with 100 per cent recovery, disposal and use of goods and waste) has the capacity to revolutionise supply chain sustainability worldwide as well as creating a legacy for positive change in the region, says supply chain consultancy Crimson & Co.

Despite a backdrop of political and economical uncertainty, Brazil has promised that the first South American-hosted Olympic and Paralympic Games, taking place in less than 100 days, will bring permanent changes to the city of Rio de Janeiro, with benefits spread throughout the country. Central to this has been the drive to ensure all suppliers are adopting sustainability practices.

“Most Sustainable” Olympics Ever

The London 2012 Olympics was billed as ‘the most sustainable ever’ but associations with key sponsors including BP, Rio Tinto, Dow Chemical and McDonalds, provoked a backlash from a coalition of campaign groups, keen to highlight the negative social or environmental impact of these firms.

In the run up to the Games in Rio, event organisers have been keen to ensure that all suppliers adopt sustainable practices, including managing waste, minimising the use of harmful substances, making conscious use of energy and water and maintaining ethical labour practices. Additionally, businesses are invited to participate in training sessions on sustainability as part of the bidding process.

For Richard Gurney, General Manager of Latin America for Crimson & Co, this commitment to sustainability represents the positive impact the Games can have on Rio and further afield:

“Sustainability throughout the Games’ management cycle – from initial planning to after the event – has been in the DNA of the Rio proposal since it first announced its interest in hosting the greatest sporting event on the planet.

Learning from Past Mistakes

“Brazil’s hosting of the FIFA World Cup in 2014 was not without controversy. More than $3 billion was spent on building five new stadiums and renovating seven existing ones, but many of these so-called white elephants are as likely now to collect dust as they are to generate ticket receipts. Brazil does not want to see a repeat of this and that is why there is such a huge emphasis on sustainability.

“When the Games finish, and until 2017, the Olympic Operations Committee will manage the dissolution process. This includes closing contracts, selling property assets and managing donations and returns. This planning, i.e. what will be done with each item after the Games, was part of the purchasing process and is considered part of the total cost of acquisition in purchasing decisions. The goal is 100 per cent recovery, disposal and use of goods and waste.”

Gurney continued: “In addition to reducing the environmental impact and the volume of waste after the Games, the initiative informed producers about how to get more sustainable alternatives to their products.

“Companies were invited to participate in training sessions as part of the bidding process to win contracts. Many companies still have the perception that sustainable products are more expensive. In fact, more often than not, the price of a product or service can be greater, but the cost reductions and elimination of waste in the value chain through sustainable practices lead to a lower total purchase cost.

“Time will tell on the impact of these decisions for Rio but, if carried out effectively, it has the capacity to revolutionise supply chain sustainability as well as creating a legacy for positive change. If that is the case, it will certainly have cause to rival London 2012 for the most sustainable Olympics ever.”

Good News-Bad News Week for Global Tech Giants

The good news is that one of your favourite social networks is booming, the bad news is that one of your favourite tech companies is not.

Good News Bad News

It’s been something of a good news, bad news kind of week for a number of major global organisations this week. On one hand, alongside the success of the Big Ideas Summit 2016 (we couldn’t resist one last mention…), Facebook is bucking the trend for growth in 2016.

On the other hand, continuing (and very public) supply chain issues, as well as declining sales, put Apple firmly in the bad news column. And outside of the tech industry there was bad news in global manufacturing, as it became clear that lessons don’t appear to have been learned in Toyota’s supply chain following recent earthquakes in Japan.

Golden Quarter

At a time when other technology companies are beginning to feel the pinch, and slow growth is causing some real concerns, Facebook appears to be bucking the trend with its good news announcement on its first quarter growth.

Q1 of 2016 was the company’s strongest single quarter growth since 2014, with an overall revenue increase of 51.9 per cent. Combined with an increase in user activity (it’s estimated that two-thirds of Facebook users are on the site or app every day), it served to place Facebook far out in front of its competitors in both the social media, and tech, fields.

The revenue growth has been put down to a marked increase in the sales of mobile advertising on both its original platform, and on Instagram, which it purchased for over $1 billion in 2012.

What’s more, there is plenty potential for more good news, as Facebook is yet to release advertising for it’s other 2 major platforms – its Messenger service, and Whatsapp. There is also the release of Oculus Rift, the company’s virtual reality headset, to be taken into account, although this is unlikely to happen until next year.

‘The Fruit’ in Decline?

Facebook’s good news came as welcome relief for investors and markets, particularly in light of other first quarter announcements from the large technology companies came in under expectations.

Twitter’s earnings fell short of Wall Street predictions, with $595 million, compared to an expectation of over $607 million. Bigger problems for Twitter were a less than expected growth in user numbers, hindering the platform’s ability to drive advertising revenues.

However, the biggest news (though some might say not as surprising) came with the quarterly announcements from Apple. For the first time in 13 years, Apple reported a fall in quarterly sales, at nearly 13 per cent, to $50.6 billion. The tech giant expects this trend to continue in Q2, with estimated sales falling to around $41 billion.

Apple were not alone in feeling the effects of the slowing Chinese economy, where its sales dropped by more than a quarter. However, there was some good news for Apple fans. CEO Tim Cook told analysts that, “The future of Apple is very bright”, with a 20 per cent growth in revenue from Apple Music and App Store areas of the business.

However, many analysts are concerned that, in a market saturated with smartphones, unless the iPhone 7 is a game changer, then this decline could continue. With an announcement, and launch, expected later this year, it seems we will just have to wait and see.

Vulnerable Supply Chains

Technology wasn’t the only bad news area this week either. Toyota have come under fire for not learning the lessons of Japanese earthquakes in 2011, with their supply chain again showing severe vulnerability following earthquakes in the country in recent weeks.

Following the events of 2011, Toyota set out to create an “earthquake-proof” supply chain, working with suppliers to create the RESCUE (REinforce Supply Chain Under Emergency) system, aimed at spreading the risk in the event of future natural disasters.

The new supply chain was put to the test in April, and despite early promise, it seems that the same vulnerabilities in the supply chain still exist. The manufacturer shut 26 of its 30 Japanese production facilities in the middle of April, only reopening 5 at the tail end of the month.

With both Honda and Nissan now operating at full capacity, with minimal shutdowns, it seems that Toyota has yet to learn its lesson.

Do you work in the technology industry? What do you make of the latest announcements from Facebook and Apple? We’d love to hear from you – you can get started in the comments section below.

As ever, we’ve been keeping an eye on all the major headlines just for you…

Congress Votes Yes on Russian Rocket Purchase

  • US Congress have voted to purchase $540 million worth of Russian rocket engines, despite a ban on trading
  • The intention of the 2014 procurement ban was to end US reliance on Russian-made RD-180 rocket engines
  • The US relies on these engines to launch national security satellites into orbit, as the US-built engines are still under development
  • Critics say the $540 million will be spent by Russian on modernising its military

Read more at Space Daily

Japan Fury at Australia-France Deal

  • Australia has awarded France the submarine ‘deal of the century’
  • The $AUS50bn submarine contract is the largest defence deal in Australian history, but the move has infuriated Japan.
  • Japan’s Mitsubishi Heavy Industries and Kawasaki Heavy Industries submarine had been seen as early favourites for the contract.
  • In an unusually blunt criticism, Japan’s defence minister Gen Nakatani described Australia’s decision as “deeply regrettable”.

Read more at The Telegraph

Slow Progress on US-EU TTIP

  • Progress is slow on negotiations for a comprehensive Trans-Atlantic Trade and Investment Partnership, or TTIP, between the EU and the USA
  • Negotiators said they would push for a comprehensive TTIP before US President Barack Obama leaves office in January.
  • Among the deepest divides concern Europe’s food safety rules that exclude American beef raised with hormones, genetically modified foods and Europe’s many local food naming rules.
  • The deal exclude European demands for greater access to US federal, state and local government procurement, which often carries “buy American” or local content standards.

Read more at Euractive

Gorman Failing Overseas Workers

  • Australian fashion brand Gorman has come under fire for not doing enough to protect overseas workers in its supply chain
  • The 2016 fashion report by Baptist World Aid Australia graded Gorman as an ‘F’ for policies on preventing exploitation of workers in overseas factories
  • Although the organisation has an ethical compliance statement on its website, fans and wearers of the brand have reacted angrily to the company’s alleged lack of action
  • The company’s founder, Lisa Gorman, has now stated that they will be publishing supply chain audit reports on its website in the coming months to help prove transparency

Read more at The Guardian

Procurement Sets Courageous Agenda – Big Ideas Summit 2016

The Big Ideas Summit 2016 global brainstorm lit up social media, bringing together a global community to advance discussions on ‘uber-ization’, cognitive procurement and more, as well as setting a courageous agenda for the future.

Big Ideas 2016 - Courageous Agenda

Expected to handle cataclysmic events and act with extreme agility, today’s procurement executives must be brave and bold. Indeed, Being courageous is now the defining characteristic of successful procurement leaders, according to the influencers who spoke during Procurious’ second annual Big Ideas Summit on April 21, 2016.

The unprecedented digital think-tank event connected these presenters with Procurious’ 14,000+ members, crowdsourcing everyone’s big ideas for the future of the profession.

Sponsored by Coupa, The Hackett Group, IBM, and the Institute for Supply Management® (ISM®), the event sparked vigorous discussion on Procurious.com, the leading online community for procurement/supply management professionals.

Delegates watched live footage, and posted and tweeted under the #Bigideas2016 hashtag, reaching a potential audience of over one million individuals. Among the big ideas that influencers shared:

Preparing for “Black Swans”

In a year racked by political and economic volatility, Former BBC anchor Nik Gowing challenged delegates to prepare for the next “black swans” (unknown cataclysmic events) that threaten their supply chains.

Barry Ward, Senior Brand Manager, IBM, urged them to use Cognitive Procurement technologies to predict these crises, which could throw their market caps into a downward spiral.

Uber-ization Sparks Innovation

Gabe Perez, Vice President of Strategy and Development, Coupa Software, encouraged procurement leaders to drive more innovation and value by replacing RFP processes with an Uber-like open network model.

How else can procurement leaders accelerate innovation? Christopher Sawchuk, Principal and Global Advisory Practice Leader, The Hackett Group, laid out an agility model enabled by the right culture, talent and leadership, risk forecasting and planning, automation, outsourcing, and more.

Driving Social Outcomes

Procurement leaders’ opportunity to do social good was another hot topic. Journalist Lucy Siegle, co-founder of The Green Carpet Challenge, called attention to abuses in the fashion industry supply chain, and the iconic brands who are tackling it.

Peter Holbrook, CEO of Social Enterprise UK, discussed the transformational ‘Buy Social Corporate Challenge‘, through which ten major global organisations will spend £1 billion with social enterprises by 2020.

Open and Connected

With the pervasive use of the Internet and social media, especially among the Millennial generation, leaders such as Tom Derry, CEO of ISM®, advocated a more open communications approach. Walking the talk, his organisation recently made its comprehensive Mastery Model – a blueprint for lifetime success in supply management – freely accessible over the Internet.

“The procurement profession must share, share, and share online to build our collective muscle, amplify attention to our impact, and tackle our thorniest issues together,” said Tania Seary, founder of Procurious.

Everyone’s Turn

The global brainstorm continues on Procurious, where members can view more Big Ideas Videos and articles from the speakers, submit their own videos, tweet using #BigIdeas2016 @procurious_, ask follow-up questions on the Procurious Discussions Board, claim their Digital Goodie Bags, and invite friends to participate.

Be courageous and make your voice heard today by visiting the Big Ideas Summit website.

We’ve been keeping an eye on the top headlines in procurement and supply chain this week…

More supply chain leaders are making the move to CEO

  • Supply chain leaders who have stepped up to CEO include Tim Cook of Apple, Mary Barra of General Motors and Brian Krzanich of Intel.
  • Kevin O’Marah comments that supply chain leaders have CEO-level skills including balancing risk and opportunity, fighting the near-term battle with an eye on long term strategy, and focusing on profitable growth.
  • CPOs think like engineers, but also like salespeople. Like CEOs, they’re able to communicate and influence to get the job done.

Read more at Forbes

CIPS UK: Procurement salaries are on the rise

  • Demand for procurement professionals has risen over the past 12 months driving salaries up 5 per cent, compared to the UK national average rise of 2.9 per cent.
  • 68 per cent of those surveyed had received a pay increase in the past year, compared to 61 per cent in 2015,
  • This has driven the average salary for procurement professionals up from £41,661 last year, to £44,226 in the past 12 months.

Read more at CIPS

India: Punjabi procurement agencies in wheat corruption scandal

  • Punjab’s foodgrain procurement agency officials accused of siphoning off over Rs 12,000 crore and diverting procured wheat to the black market.
  • Officials accused of covering up theft by adding water to stored wheat to increase its weight.
  • Farmers caught in the cross-fire as banks freeze payments.
  • Over 500 mandis (procurement centres) to be monitored by committee.

Read more at Indian Express

US Defence: Proposal to cut war budget to fund procurement

  • Chairman of the House Armed Services Committee, Rep. Mac Thornberry, wants to allocate an additional $18 billion to buy newequipment and maintain aging gear and facilities.
  • The draft bill would preserve the overall budget top-line of $610 billion, but bulk up base budget spending to $574 billion.
  • $18 billion would be pulled from overseas contingency operations funds.
  • Thornberry said he believed “procurement was the real way out of the readiness pit”.

Read more at Military.com

Don’t Get Left Out of the Global Digital Brainstorm

It’s just days away now! Join the global digital brainstorm at the Procurious Big Ideas Summit on April 21, and make your ideas heard.

Global Digital Brainstorm

Attention, procurement and supply management innovators – stake your claim in the future of your profession!

Time is running out to add your voice to the Procurious Big Ideas Summit, an unprecedented global digital brainstorm and think tank event scheduled for April 21. Make sure your ideas are heard as Procurious connects 50 top executives, with its 13,000 worldwide members to solve thorny issues and harness new opportunities – together.

“Procurement professionals are at the centre of the Big Ideas Summit, driving and shaping this global digital brainstorm,” said Tania Seary, Founding Chairman of Procurious, the leading free online business community for the procurement and supply management profession. “We are forging a new kind of innovation movement, where everyone has equal power to ignite significant change.”

Sponsored by IBM, the Institute for SupplyManagement (ISM), The Hackett Group, and Coupa, the free Summit will feature several provocative sessions. Leaders from these organisations as well as AstraZeneca, The World Bank, and more will address the mega-trends, disruptions, blind spots, risks, and technologies that are already leading to a “procurement revolution”.

Getting Involved

With so much at stake, the conversation is already beginning, as delegates submit advance questions for the speakers, discuss everything from supplier management to sustainability, and share videos with their own big ideas.

On April 21, the dialogue will be amplified as delegates log onto Procurious for digital and video updates, and engage on other social media channels to become even more involved. They will be checking out the action on Twitter, staying up-to-date with live tweets from the event, and tweeting back @procurious_ using the hashtag #BigIdeas2016. LinkedIn and Facebook will also be rich sources of event news and discussions.

From April 22 onward, the dialogue will continue as Procurious shares speakers’ and influencers’ Big Ideas videos, footage, blog posts, and more.

Last year’s event generated close to one million impressions, as the worldwide procurement community woke up to the power of collective innovation.

To join this year’s event now, go to www.BigIdeasSummit.com, where you will be able to register for free membership on Procurious, join the Big Ideas Summit group and shape the future of procurement by getting involved in what promises to be a fantastic global digital brainstorm.

Tweet this: Help innovate procurement at #BigIdeas2016Summit, April 21 www.bigideassummit.com

We’ve also been keeping an eye on all the procurement and supply chain headlines this week…

Japanese Earthquake Supply Chain Disruption

  • Two earthquakes in Japan at the end of last week, tragically killing 41 people, are set to cause major disruptions to Japanese and global supply chains.
  • Toyota are one of a number of manufacturers who will be suspending production at facilities in southern Japan due to a shortage of parts or factory damage
  • Organisations in Japan have been making changes to their supply chains to mitigate risks from natural disasters following the earthquake and tsunami in 2011.
  • It is thought that the current disruptions will test these changes, and new measures put in place to help mitigate these risks.

Read more at Reuters

Cybersecurity Worker Shortage

  • According to a recent survey, nearly two-thirds of Millennials were unaware they could pursue a career in cybersecurity.
  • This has raised concerns that there could be a shortage of cybersecurity workers in the coming years.
  • The survey, commissioned by Raytheon and the National Cyber Security Alliance, also showed that 58 per cent of the Millennials surveyed were not taught about ways to stay safe online.
  • Universities and colleges are now working to introduce programmes which integrate cybersecurity into existing computing and computer science courses.

Read more at Government Technology

SMART by GEP Contracted

  • SMART by GEP®, has been selected by a leading provider of building maintenance and facility services across North America.
  • Enterprise sourcing and procurement teams at the company will use SMART by GEP to streamline and automate their entire source-to-pay (S2P) workflow.
  • SMART by GEP provides complete source-to-pay functionality in one unified cloud-native platform.
  • SMART by GEP hosts $50 billion spend per year across 140 countries, for organisations such as AstraZeneca, DuPont and Maersk

Read more at SMART by GEP

H&M Releases 2015 Sustainability Report

  • H&M published its Conscious Actions Sustainability Report 2015 late last week, highlighting the actions the retailer has taken during the 12 month period on supply chain sustainability
  • The report shows a steady increase of sustainably sourced materials, and progress when it comes to the use of renewable electricity.
  • H&M now sources 20 per cent of its materials sustainably, as well as using 78 per cent renewable energy sources for its global electricity usage (up from 27 per cent in 2014).
  • The report also highlighted the signing of the Global Framework Agreement with IndustriALL Global Union and IF Metall, aimed at working towards payment of fair living wages

Read more at Business Wire

How The ‘Brexit’ Could Change Public Procurement

Although the UK referendum isn’t until June, an increasing number of reports are now discussing the potential impact of the ‘Brexit’ on public procurement.

Brexit

On June the 23rd, UK voters will go to the polls in order to decide on the UK’s future as part of the EU. The referendum promises to polarise opinion, much like the Scottish Independence Referendum in 2014, but there is an increasing focus on what it will mean for public procurement in the UK, as well as supply chains crossing UK/European borders.

EU Procurement Directives, required to be taken into account for all public procurement activity within the community, are widely recognised, and even more widely discussed. While there are critics of the Directives, many believe that they are key to maintaining a fair and equitable process in sourcing activities.

Brexit Impact

Although the EU procurement directives receive a lot of bad press, they were set up with a specific purpose in mind – elimination of trade barriers resulting from discriminatory and preferential procurement practices. It was hoped that this would assist countries across the EU realise savings in public procurement, and create a level of transparency in activities.

Further changes have been made to the procurement directives in the past 12 months, aimed at simplifying and modernising the public procurement process. The directives also have their supporters, who argue that they help to maximise competition, achieve value for money, and enable social benefit and innovation in purchases.

There are also arguments made that, had the UK not joined the EU Common Market, now the European Union, it would have still ended up with public procurement regulations that would not have been vastly different to what exists now.

The impact of a UK exit, or ‘Brexit’, is still largely unknown, and can only be estimated in terms of costs to both the UK economy and UK businesses. However, from the point of view of procurement regulations, some parties are stating that it wouldn’t have an immediate impact on current UK procurement rules.

In fact, any changes to procurement law in the UK public sector would be low on the Government’s priority list. And if there were changes, the rules would end up being very similar (where they have been successful), or some industries, like agriculture, would have to maintain EU standards in order to continue doing business on the Continent.

Supply Chain and Procurement Costs

But what about costs to import goods and the wider supply chain impact in the event of the ‘Brexit’? Well, there still isn’t a consensus when it comes to this either. Some reports show a potential drop of 8 per cent in import costs, but that this could potentially be offset by rising labour costs, partly due to a loss of access to low cost, or cheaper, labour.

Open Europe, a think tank, predicted a worst case scenario of a 2.2 per cent fall in UK GDP, but a potential 1.6 per cent growth in GDP, by 2030. There are also concerns that any possible saving the UK might see in tariffs and not paying money into the EU, would be swallowed up by having to cover subsidies paid to certain industries by the EU.

For both UK and European businesses with supply chains operating across borders, there would be a loss in freedom of movement, both goods and services, and labour. Some goods could be subject to as much as 35 per cent export tariffs, while pan-European partnerships could be lost or cancelled.

While a ‘Brexit’ is by no means a certainty, both British and European companies should start preparing for it happening. Actions like monitoring alternatives suppliers, assessing logistics decisions, and work with existing suppliers to put deals in place, all help to reduce the risks that businesses are exposed to.

What are your (non-political!) thoughts on the ‘Brexit’? Is your business likely to be exposed to the impacts? Let us know in the comments below.

As ever, we’ve been scouring the ‘net this week for top headlines to enjoy with your morning tea or coffee…

Using Waste to Plug Power Gap

  • Using the energy from processing waste at anaerobic digestion plants in the UK could help to solve the country’s energy issues
  • However, there are warning that if the AD technologies aren’t promoted better, they could be lost before they even manage to prove benefits
  • Despite favourable tax breaks, environmental benefits and cost savings, the UK lags a long way behind European countries such as Germany in the number of AD plants it has
  • There are currently 434 plants in the UK, some of which support large retailers (Sainsbury) and manufacturers (Diageo) in their operations

Read more at Supply Management

Brazilian Retailer to Clean Up Supply Chain

  • Brazil’s largest grocery chain has pledged to stop selling beef reared on deforested land in the Amazon rainforest
  • Retailer, Pão de Açúcar, also promised to stop buying beef produced by workers living in slave-like conditions, or cattle produced on land grabbed from local communities
  • The new purchasing plan is set to be in place by the 30th of June, at which point the business will stop dealing with suppliers linked to deforestation and modern slavery
  • The firm operates 832 stores across Brazil and has pledged to help its suppliers improve their practices ahead of the June deadline.

Read more at Thomson Reuters

Love Your Waste to Save Money

  • New reports have shown that Scottish households waste the equivalent of 26 million beef burgers (2,900 tonnes of beef) each year in food wastage
  • Zero Waste Scotland has launched a campaign aimed at reducing this waste by using leftovers as part of other dishes, something that could save each household up to £460 per year
  • Confusion over dates on labels, caution about meat safety and worries over freezing and reheating can lead to good meat being thrown away even thought it is still fine to eat
  • In February, Scottish environment secretary Richard Lochhead pledged to cut food waste in Scotland by a third by 2025, to save businesses and households at least £500m

Read more at Supply Management

2016 Enviro Challenge Launched

  • Enviro Challenge’s challenge day for 2016 is set to take place next week in the Waikato, Auckland, Bay of Plenty, and Central Plateau regions of New Zealand
  • The day is aimed at inspiring schools to develop sustainability and leadership skills in high school students
  • Students are also asked to develop, or continue developing, a project for their school with measurable outcomes, and encouraged to think long term
  • Students will be working on initiatives that will have ongoing positive impacts on their schools and their communities, which this year include renewable energy and biodiversity

Read more at Sun Live

Procurement Faces Balancing Act as Business Uncertainty Rises

According to new research from the Hackett Group, procurement faces a balancing act in 2016 thanks to rising business uncertainty.

Business Uncertainty

  • Key issues research shows budgets and staff expected to rise slightly in 2016
  • The Hackett Group recommends that to improve agility and reduce cost, procurement must harness the value of Big Data and control tail spend

According to new Procurement Key Issues research from The Hackett Group, Procurement leaders expect operating budgets and staffing to increase slightly in 2016. This comes at a time as they attempt to balance the need to reduce costs, with the desire to become a better strategic business partners and other priorities. 

Increased business uncertainty and risk are driving a resurgence in traditional cost reduction strategies, according to research. At the same time, the research identified critical development gaps in four key procurement strategy areas:

  • Becoming a better strategic partner to the business.
  • Increasing spend influence.
  • Improving agility.
  • Tapping supplier innovation.

These are seen as important targets for capability development.

Harnessing Big Data

To improve agility, The Hackett Group’s research recommended that procurement organisations become more information-driven and harness the value of ‘Big Data’. Unfortunately, the research found that over half of the study respondents currently lacked a formal market intelligence program, or were only in the earliest stages of adoption.

Study respondents also identified predictive analytics and forecasting as the trend with the greatest transformational impact for procurement over the next decade.

Finally, The Hackett Group’s research recommended that, to unearth new sources of savings, procurement examine tail spend. This is­ the 20 per cent of spend that is spread thinly across up to 80 per cent of suppliers.

This is an area where most procurement organisations have not focused heavily.  But with effort, The Hackett Group estimates that savings of 3-5 per cent for less mature sourcing organisations is possible, in part by identification of high-dollar maverick spending that should have been strategically sourced.

A complimentary version of the research is available for download, following registration, here.

Cost Reduction Pressures

According to The Hackett Group Global Procurement Advisory Practice Leader, Chris Sawchuk, “For 2016, companies are expecting to see business uncertainty and risk increase, along with greater struggles to grow revenue. So the pressure to reduce costs is increasing. At the same time, procurement leaders need to balance this with other more strategic priorities, like becoming a better strategic business partner.

“This is challenging, because for 2016, procurement operating budgets are expected to increase by just 1.1 per cent, and staffing will only grow by 2.2 per cent. So procurement can only afford to fund its highest-priority initiatives. One clear differentiator we saw in the research this year was the recognition of the value of improved market intelligence.

“Procurement leaders are realising that higher-quality information can help them drive greater business value. Big data has been a game changer when it comes to customer analytics, offering an unprecedented ability to quickly model massive volumes of structured and unstructured data from multiple sources. But procurement’s lack of maturity in market intelligence is a significant obstacle that must be overcome,” said Mr. Sawchuk.

The Hackett Group’s 2016 Procurement Key Issues research  is based on results gathered from executives from nearly 180 large companies in the US and abroad, most with annual revenue of $1 billion or greater.

Chris Sawchuk is a keynote speaker at the Big Ideas Summit on April 21st. Chris will be talking about how procurement is applying key agile capabilities in the areas of leadership, talent, service placement and information-driven performance.

If you’re interested in finding out more, visit www.bigideassummit.com, join our Procurious group, and Tweet your thoughts and Big Ideas to us using #BigIdeas2016.

Don’t miss out on this truly excellent event and the chance to participate in discussions that will shape the future of the procurement profession. Get Involved, register today.

Modern Slavery Act Will Force SMEs to Step Up to the Plate

With new changes to the Modern Slavery Act coming into effect as of April 1st, we ask how much progress has been made since 2015?

Modern Slavery

At Procurious, we know it’s crucial to continue focusing on the issue of modern-day slavery, both with regard to tackling existing cases, and to encourage and applaud organisations who are making real efforts to end the practice world-wide.

Last week, it was reported that the majority of small firms are ignorant of the Modern Slavery Act and the impact that the law changes will have on them.

On the flip side, it was announced that the Building Research Establishment (BRE) are launching a standard to help businesses tackle risks around modern slavery.

As the Telegraph reports, with the modern slavery laws set to change again as of this April, ignorance is no longer an excuse.

Modern Slavery Act 2016

New UK legislation, effective from 1st April 2016, requires all businesses with a turnover of over £36 million to prove they have taken steps to remove slave and child labour from their supply chains.

It is currently estimated that between 21 and 39 million people worldwide are victims of modern slavery. The changes to the Modern Slavery Act 2015 will force big organisations to fully audit their supply chains.  

It is expected that, as larger companies begin to investigate suppliers throughout their supply chain, there will be a trickle down effect to smaller businesses, who will be expected to prove they are slavery-free.

Chris Ross, founder of J&K Ross, spoke with The Telegraph stating, “ultimately, big companies will not deal with firms of any size that they don’t feel safe with.” With this in mind, he has begun voluntarily auditing the supply chain of his safety equipment business, to ensure it is fully compliant.

CIPS have released guidelines to help companies below the £36 million threshold voluntarily comply with the act.

SMEs Unprepared

According to research released by The Chartered Institute of Procurement & Supply (CIPS), almost two thirds of SMEs are unaware of the Modern Slavery Act and the impact it has on them. The CIPS polled 263 SMEs.

Despite the changes only directly targeting larger businesses, it is expected that there will be a knock-on effect on SMEs. It is these smaller businesses that are particularly ignorant of how the amendments to the law this April will affect them.

Whilst acknowledging that smaller companies may not have access to the same resources as large organisations to tackle slavery, the report asserts that a number of simple measures can be put in place. These include the formation of partnerships between larger corporations and smaller SMEs.

David Noble, Group CEO of CIPS, asserted that, “Ultimately, modern slavery is not an issue confined to the supply chains of large multinational corporations. On the contrary, SMEs can often have long and complicated supply chains themselves.”

Despite many SMEs claiming to not have found any evidence of slavery or forced labour within their supply chains, it seems this is largely due to ignorance and lack of action. Of the SMEs surveyed, 67 per cent admitted to having never taken any steps to tackle the issue of forced labour, and 75 per cent said they would not know what to do if modern slavery was found in their supply chains.

New Standard to Assist Business

Nigel McKay, former procurement head at HS2, is launching a standard with the Building Research Establishment (BRE), which will assist businesses in tackling risks around modern slavery and other ethical labour issues within their supply chains.

The standard will cater to companies of all sizes, and be applicable across varying industry sectors for three tiers of companies – those with a turnover under £36 million, between £36 and £500 million, and those with turnovers of more than £500 million.

Shamir Ghumra, Associate Director, Head of Responsible Sourcing in the Centre for Sustainable Products at BRE, said that the organisation, “recognised that there is a need to strengthen some of [the work BRE has previously done in this area], and since then Modern Slavery Act has come out. It’s not just about how to comply with the Act, but looking at ethical labour issues as a whole.”

McKay believes that nowadays within procurement, people are more socially and ethically aware – “a lot of conversations are now around the social and ethical issues of procurement and how much good your pound does, not just how cheap something is.”

McKay is realistic about the scale of what they are trying to achieve, acknowledging that changing a company’s approach to its supply chain can can several years. He claimed that “Not every company will be able to do everything in the first year. It takes three, four or five years, to re-engineer a supply chain.”

With the law change effective as of last Friday, it won’t be long until SMEs feel the pressure to take action and start voluntarily assessing their supply chains.

We’ve been keeping up with other procurement news around the world, and have picked out the top headlines for you this week…

Ghana Approves Procurement Bill

  • The Public Procurement Amendment Bill 2015 has been passed by the Ghana’s parliament.
  • The bill will introduce a sustainable public procurement framework for contracting and electronic procurement, and will also bring about a more transparent and accountable procurement system.
  • The 2003 Public Procurement Act has been amended to improve public financial management, and now needs to be signed by Ghana President, John Dramani Mahama, to bring it into force.
  • 2003’s Public Procurement Act “exposed some administrative bottlenecks, delays and imbalances in the procurement structure,” the government statement added.

Read more at Supply Management

Brambles’ Sustainability Goals

  • Brambles, a global supply chain logistics company operating primarily through the CHEP and IFCO brands, has announced its Sustainability Goals for 2020.
  • The company’s goals focus on the most material aspects of the Group’s operations and are closely aligned with the United Nations’ Sustainable Development Goals (SDGs).
  • Tom Gorman, Brambles’ CEO said “Brambles has made significant progress in delivering continual improvement through our sustainability objectives over the past five years.”
  • You can view the full details of the company’s 2020 goals here.

Read more at Supply Chain 24/7

Manufacturers Trying to Forge Disruptive Supply Relationships

  • Manufacturers operating in high-value sectors, such as the aerospace and automotive industries, are going all out to forge relationships with businesses in other sectors in order to secure a clear, competitive advantage.
  • These businesses are demonstrating how a bit of lateral thinking and a clear sense of what end users want can create some unlikely and yet productive partnerships.
  • It is now business critical to establish supply partnerships that will enable them to work together to innovate new products and services and bring them to market more quickly.
  • Of course, there are significant risks attached to such supplier collaboration relationships, which some businesses may be reluctant to establish.

Read more at Supply Chain Digital

World Bank Report on East Asian Cites

  • East Asian cities could create more than 7m new jobs each year if they boosted infrastructure and improved skills and the regulatory environment, claims a new World Bank report.
  • The report looks at how the world’s successful cities have achieved their growth. It found cities did best by perfecting existing skills rather than completely overhauling themselves.
  • East Asian cities have grown faster than anywhere else in the world in recent years and are likely to keep expanding.
  • The report said linking infrastructure investments with private sector needs, zeroing in on the skills gaps, and making sure private and public sector industries supported each other were all factors which led to cities becoming more competitive.

Read more at Supply Management

BBC micro:bit Launches to Generation of UK Students

In a landmark moment, the BBC are delivering up to one million micro:bit devices free to UK students to encourage more young people get creative with technology.

BBC Micro:bit

Every Year 7 student in England and Wales, Year 8 student in Northern Ireland, and S1 student in Scotland will receive a micro:bit. The device, launched as part of the BBC Make it Digital initiative, is a pocket-sized, codeable computer that allows young people to get creative with technology, whatever their level of experience, and aims to help develop a new generation of digital pioneers.

Students can program their BBC micro:bit to become anything they want – from simple games to smart watches and even fitness trackers. This is done by using one of the code editors at www.microbit.co.uk, or the mobile app, and by connecting it to other devices and sensors. The website also features a range of resources and tutorials to help teachers, parents and students take advantage of the BBC micro:bit’s vast potential.

It’s the BBC’s most ambitious education project in 30 years and builds on the pioneering role of the BBC Micro, which helped introduce the nation to computing in the 1980s. It has been made possible only through a ground-breaking partnership between the BBC and 31 organisations, including ARM, Barclays, element14, Lancaster University, and Microsoft.

Open-Source Technology

BBC micro:bits will be delivered nationwide through schools and made available to home-schooled students over the next few weeks, but they will be the students’ devices to own. This allows students to keep their device as they move up through the school, and to continue bringing their ideas to life outside of school and term time.

Some additional BBC micro:bits have been included in the rollout to enable teachers to extend their BBC micro:bit lessons to students in other year groups, giving the BBC micro:bit partnership an even better chance of inspiring an entire generation.

Following the nationwide rollout, the BBC micro:bit hardware and much of the software will be open-sourced, and BBC micro:bits will be available to buy from a range of retailers. Money generated from these commercial sales will be used to further encourage as many people as possible to join the coding revolution. Further details will be announced soon.

British Innovation

Tony Hall, BBC Director-General, said: “This is a very special moment for us, our partners and most importantly for young people across the country. The BBC micro:bit has the potential to be a seminal piece of British innovation, helping this generation to be the coders, programmers and digital pioneers of the future.

“Only the BBC could attempt a project this ambitious, on such a large scale, and I’m thrilled we’ve persuaded so many people to get behind this and make it happen.” 

Sinead Rocks, Head of BBC Learning, said: “The BBC micro:bit has seemingly limitless potential, especially when paired with other hardware, and we can’t wait to see what students will do with it. They’ve already come up with all kinds of ideas during testing and at events around the country – some ideas help solve some of life’s daily challenges, some could have business potential, and others are just great fun. Teachers have been quick to embrace it too, which is so important to the success of the project, and they have already made valuable additions to our online resources.”

Jessica Cecil, Controller, Make It Digital said: “BBC micro:bit represents a major milestone in our bid to inspire a new generation of digital innovators. As part of our Make it Digital initiative we want everyone to discover more about the digital world. We’re offering easy-to-use devices like the BBC micro:bit, up to 5000 Make it Digital traineeships across the UK, and shows on the BBC such as Girls Can Code and Calculating Ada, to achieve just that.

“Working with our many partners to create opportunities for children to code, make and to discover, together we aim to build the chances of the next generation.”

The BBC micro:bit is the result of a ground-breaking partnership on an unprecedented scale. The BBC micro:bit’s product partners have led on the software, hardware, design, manufacture and distribution of the device. This includes:

  • ARM: The BBC micro:bit was created using the ARM® mbed™ hardware and software development kits and compiler services. The project builds on the organisations’ collaboration on the original 1981 BBC Micro computer.
  • Barclays: Supporting the distribution and manufacture of the BBC micro:bit by incorporating it into their digital education programmes
  • BBC: The BBC micro:bit project has been conceived and convened by the BBC, bringing together partners to deliver a digital literacy project on an unprecedented scale.
  • element14: element14 manufacturers the BBC micro:bit and has worked closely with all partners in areas such as component selection, cost optimisation and design for manufacture. In addition, element14 has leveraged its manufacturing, logistics and packaging capabilities to safely deliver the first 1 million units into the UK.
  • Lancaster University: Designed and developed the BBC micro:bit runtime; the essential core code that makes the BBC micro:bit do all the amazing things it does. The University will continue to support the micro:bit community as it grows.
  • Microsoft: Developed the BBC micro:bit website (www.microbit.co.uk) to host code editors for all one million micro:bits and has also supplied two coding languages.
  • Nordic Semiconductor: Supplied the ultra low power Bluetooth® chip that integrates the micro:bit’s computer brain, and allows the micro:bit to both wirelessly communicate with other micro:bits, and sync to or be updated from smartphones, tablets, and computers via Bluetooth.
  • NXP Semiconductor: Provided the micro-controller that manages the BBC micro:bit’s USB connection, the accelerometer and magnetometer that enable the micro:bit to react to motion and the direction it’s facing.
  • Samsung: Developed the Android app for the BBC micro:bit.
  • Technology Will Save Us: A London-based start-up that designs ‘Do It Yourself’ tech kits that spark the creative imagination of young people. Tech Will Save Us led the BBC micro:bit design, producing the distinctive look & feel that encourages kids to get hands-on with technology.
  • Wellcome Trust: Through direct initiatives to schools, Wellcome Trust will provide exciting real life contexts for teachers and learners around the UK to use the micro:bit.

For more on the BBC micro:bit, the project partners and product champions, visit the ‘Make it Digital’ website.

Easter Supply Chain Set for Record Year

You may not realise the complicated Easter supply chain that exists in order to cope with increasing consumer demand.

Easter Supply Chain

Whether your Easter delicacy of choice is the humble egg, sweets like jelly beans and marshmallows, or something more like a Spanish torrija, you are contributing to the enormous spend on confectionary and other Easter-related items.

In the UK, Easter sales of chocolate make up 10 per cent of the figures for the entire year. According to the National Confectioners’ Association in the USA, around 70 per cent of the Easter sweets purchased are chocolate, which works out to a whopping $2.2 billion spend.

All of this puts pressure on the Easter supply chain plans that businesses have in place. And 2016 is expected to be a bumper year for consumer spend.

Highest for 13 Years

According to the National Retail Federation (NRF) in the USA, total spending on Easter this year is expected to hit $17.3 billion, the highest level for 13 years. To put it into perspective, that’s a spend of $146 for each person in the USA.

According to some statistics, this will put spending, particularly on sweets and chocolates, at a higher level for Easter than it is for Halloween. The NRF have estimated confectionary sales will total $2.4 million, surpassing the average of $2.1 million for Halloween sweets.

Possibly not good news for the 81 per cent of adults who admitted to stealing chocolate from their children’s stashes over the holiday period…

Retail Sales

And it’s not just the confectionary market that sees a huge spend at this time of year. With adults planning on spending on average 50 per cent for Easter than they did on Halloween, the money is being spread around.

According to the NRF survey, spending will see high figures in the following areas:

  • $5.5 billion on food
  • $3 billion on clothing
  • $2.7 billion on gifts
  • $2.4 billion on confectionary
  • $1.2 billion on flowers

And with over 40 per cent of shoppers visiting department stores to carry out their shopping, and 21 per cent shopping online, organisational supply chains will be working flat out to cope with demand.

Easter Supply Chain Optimisation

Delivering all this chocolate, sweets and other items to stores requires a mammoth effort from logistics organisations around the world. Shipping efficiency, customer location, order quantities and supply chain management all have to be reviewed in order to keep up with the demand.

In the USA, Hersheys opted to optimise their supply chain around the elements of customer geographical location and grouping stock-keeping units with product groups. It is estimated that by doing this, and using off-the-shelf software, the organisation has saved itself in excess of $15 million per year.

Just Born, a confectionary manufacturer who are responsible for America’s favourite non-chocolate treat, the Peep, changed their Easter supply chain strategy in order to cope with the huge demand for their products over the holidays.

The organisation now uses distribution centres and 3PL to break bulk orders for more efficient delivery to retailers. Just Born also shares these centres with other organisations, with this collaboration further reducing the costs associated with deliveries.

An increasing use of technology for inventory management and planning is making life easier for organisations too. Barcodes can be used to manage inventories more efficiently, while also allowing for real-time tracking of stock at both distribution centres and retail outlets.

Further advancements in technologies such as ERP and MRP systems will allow organisations to further increase efficiencies, while increased collaboration will benefit not only the whole industry, but also the consumer.

So just remember, the next time you crack open that chocolate egg, there’s more than a simple process required to get it from manufacturer to shelf (and that’s before the Easter Bunny gets involved!).

What Can National Apprenticeship Week Do for the UK Economy?

Last week was National Apprenticeship Week in the UK. The National Apprenticeship Service uses the week to raise awareness of the fantastic benefits apprenticeships can offer to business, employees and the wider economy.

UK Apprentices with Sajid Javid, Secretary of State for Business, Innovation and Skills
UK Apprentices with Sajid Javid, Secretary of State for Business, Innovation and Skills

It’s great to see UK businesses embracing National Apprenticeship week. Despite the popularity of apprenticeships waning in recent years, the National Apprenticeship Service (NAS) are committed to providing opportunities and relevant training for businesses and employees. The most obvious positive is that more jobs are created for those who wish to have training and gain skills and experience within different industries.

The UK isn’t the only place to be positively addressing employment issues this week as New Zealand celebrated an end to zero-hour contracts.

On the flip side, it was revealed that Nigeria have the onerous task of needing to find 40-50 million new jobs to cater to their growing economy.

National Apprenticeship Week

Apprenticeships can provide so many opportunities to different stakeholders including work opportunities and training to employees and employers. National Apprenticeship Week seeks to change the common misconceptions about apprenticeships consisting of low-skilled and badly paid roles and being non-advantageous to employers. The reality is quite the opposite with 1,500  different jobs available across 170 industries.

Unfortunately, many companies don’t realise all of the advantages they can reap from implementing an apprenticeship scheme. For example, as of April 2016, businesses will not have to pay National Insurance for apprentices under 25 years of age.

Whilst many businesses, including CIPS, already have schemes in place, National Apprenticeship Week raises awareness to those that don’t and organisations like the NAS can help to put these in place and expand existing schemes.

The UK Government have committed to improving the apprenticeship system by creating three million new apprenticeships by 2020. The UK, and other nations, should be taking a leaf out of Germany’s book, where apprenticeships are integral to the education system.

Germany has implemented a dual system whereby apprenticeships combine theoretical training with hand-on practical experience in the workplace funded by employers. They also have a highly effective assessment process for candidate selection.

It would be fantastic to see the UK succeed in emulating Germany’s apprenticeship system. National Apprenticeship Week seems like a good place to start.

Zero Hour Contracts in New Zealand

Zero-hour contracts have sparked controversy in recent years and many have campaigned to put an end to them. Those against the contracts claim that they are unfair, exploitative, and only benefit an employer, who can avoid paying for things like annual leave and leave and sick days.

Some, however, would attest to the benefits of the zero-hour contract, arguing that it allows flexibility and minimum commitment. They can certainly come in use to those solely seeking part time work, such as students who might benefit from having weeks at a time with no work hours.

New Zealand has clamped down on the contracts this week as their parliament unanimously voted to abolish them. Having initially sought to only moderate the contracts, the country have now officially banned them altogether.

The Unite trade union, which has named and shamed fast food employers as users of zero-hour contracts, has strongly welcomed the move having campaigned for this result since 2003.

It will now be obligatory for all employers in New Zealand to contract employees with at least some guaranteed hours.

Nigerian Job Shortage

This week, the World Bank released a report which states Nigeria needs to create between 40 and 50 million jobs to sustain their rapidly growing population.

The report, which explains how only a tiny proportion of the country’s population is currently benefiting from high growth emphasised the importance of implementing more relevant technical and vocational education and training.  As ever, it is the women who are most affected by job shortages as there few job options for them.  

It will also be crucial to raise the productivity of agriculture by increasing access to markets, inputs, credit, and technology.

At the moment, a North-South divide is emerging because the northern regions have more difficulty accessing education and employment.

Kathleen Beegle, world bank lead economist said “Nigeria is facing a real challenge when it comes to creating enough good jobs for the many new entrants to the job market.”

We’ve been keeping up to date with all of the procurement news this week. Here’s what has been going on…

Supply Chain Salaries in UAE

  • According to a report by recruiter Morgan McKinley, supply chain professionals are likely to see salaries rise by 4 to 6 per cent in 2016.
  • This is due to increased investment in manufacturing capability in the Gulf region and, with it, the rising prominence of the region’s supply chain professionals.
  • In the UAE and Saudi Arabia, for example, warehouse and distribution managers are in particularly high demand, as there has been strong growth in manufacturing and distribution.
  • According to the report, the outlook for salaries beyond mid-2016 is heavily dependent on oil prices.

Read More at Supply Management

Wildlife Trading

  • Some 40 companies across shipping, airline and transport industries – members of the United for Wildlife Transport Taskforce – signed an agreement at Buckingham Palace on Tuesday which aims to block transportation routes for the illegal wildlife trade.
  • The move could mark a significant milestone in preventing the illegal wildlife trading industry, which according to United For Wildlife is valued at up to $20 billion per year.
  • The initiative also has the backing of key global lobbies such as the WWF.
  • Prince William, who is backing the initiative, said “We have faced up to the fact that if current trends continue the last wild African elephants and rhinos will be killed before my daughter Charlotte’s 25th birthday.”

Read More at Supply Management

UPS Alternative Fuel Investment

  • UPS has announced plans to build an additional 12 compressed natural gas (CNG) fueling stations and add 380 new CNG tractors to its growing alternative fuel and advanced technology fleet.
  • The company is working to meet its goal of logging one billion miles with its alternative fuel and advanced technology fleet by the end of 2017.
  • They plan to use a Rolling Laboratory approach to determine the right alternative fuel solutions to meet the unique needs of route-specific driving environments.
  • UPS was one of the initial 13 leading companies to take the Obama Administration’s American Business Act on Climate Pledge, committing to reduce greenhouse gas emission intensity 20 percent by 2020.

Read more at Supply Chain 247

Why Food Procurement Can Help Climate Change

  • Estimates suggest that food and drink production and distribution contributes 20 per cent of UK carbon emissions every year and is the leading cause of deforestation, land use change and biodiversity loss.
  • It also accounts for 70 per cent of all human water use and is a major source of water pollution
  • The UK Government recognises that procurement can have a considerable impact on the environment. As a result it has introduced the Government Buying Standards.
  • The standards include a set of minimum mandatory standards for inclusion in tenders and contract performance conditions, and apply to all aspects of Government procurement, which of course includes food and catering services.

Read more at Public Health Matters