What would you do after all of the low-hanging fruit in procurement has disappeared?
Here’s a quick quiz:
What would you do if you became the CPO of a procurement function that is a top-quartile performer and already highly mature?
Keep things as they are – if it ain’t broke, don’t fix it.
Make small, incremental improvements, being careful not to change anything significantly.
Roll your sleeves up and transform the function from top-quartile performer to a world-class organisation.
Bob Murphy was faced with this choice back in 2014 when he first took on the role of IBM CPO. In many ways, inheriting a highly-mature procurement function is more of a challenge than stepping into a low-maturity team. For Bob, the low-hanging fruit had all been picked: the team had already undergone a significant transformation, it was recognised internally and externally for its high level of excellence, cost savings were at record levels, and supplier relationships and sourcing strategies were delivering results. Client engagement and interlock with business unit stakeholders was also maturing, while procurement was viewed as a key function enabling business unit objectives.
So, what was there left to do? Bob’s challenge – as well as his opportunity – was to take a high-functioning team that was delivering best-in-class outcomes and make them evenbetter. He did this through unleashing his passion for the profession, leveraging 30+ years of procurement and supply chain experience to mobilise a global team of 3000 procurement professionals around a shared vision.
He developed a set of global, transformative initiatives and domain priorities that moved IBM from the front of the pack to a truly world-class outlier position. Today, IBM Procurement services have arrived at a status dreamt of by many CPOs – that of an essential trusted advisor to the business.
IBM’s secret recipe for success isn’t actually a secret – the roadmap established by Bob early in his tenure as CPO covers six key areas:
Investment in talent and skills development
Digital transformation through AI (Watson cognitive procurement), robotic process automation and Source-to-Pay transformation.
Unlocking big data to drive informed, outcome-based decision making for IBM and its clients.
Supercharged engagement through end-to-end ownership for deliverables and client-aligned squads, while satisfaction is captured using the Net Promoter Score.
Deployment of Agile principles and self-empowerment across the entire team.
Growth of supplier innovation as complex enterprise relationships mature.
It’s interesting to note that people and talent are at the very top of Bob’s list. To quote an article he wrote for Procurious, “I learned a long time ago that the key to success is having a great team. And there is a very human element to procurement. There will always be a need for people to handle the relationship management side of the function, with both suppliers and stakeholders and make the strategic decisions.”
Although he operates in a highly technical sphere, Bob stresses the importance of soft skills:
“When we think of the soft skills necessary for future success in the procurement industry, we focus on building closer stakeholder and supplier relationships. Broadening our communications skills, including active listening is a key enabler to both visibility to value proposition, but also in understanding our stakeholder requirements from their point of view. Another critical element is having better agility skills; think flexibility, adaptability and speed.”
Bob Murphy’s achievements in leadership were celebrated at the Procurement Leaders awards in May, where he picked up the prestigious 2018 Procurement Leader Award.
But what are the trade-offs in terms of privacy and civil liberties? Highlights from General Keith Alexander and John Brennan keynote at #ISM2018.
During the American Revolutionary war, military commanders of the 13 Colonies realised that the conflict could not be won with soldiers alone. Civilians left their towns and farms to swell the ranks to a level where the British could be pushed back and eventually overcome.
Retired four-star general Keith Alexander (former Director of the National Security Agency) tells delegates at #ISM2018 that just as civilians fought alongside soldiers 240 years ago, there’s currently an urgent need for a public and private partnership to defend against cybersecurity breaches. In other words, business and government need to cooperate if the US is to have any chance of defending against offshore cyberattacks and resultant IP theft.
Calling for a partnership
“I think our approach to cybersecurity has to be changed,” says Alexander. “We need a new strategy.” Companies that suffer data breaches tend to fall into two camps – those that have been attacked and know it, and companies that have been attacked and don’t know it. Alexander says that in an environment where “everybody’s getting hacked,” industry has a responsibility up to a certain level.
The issue is that intelligence agencies (such as the NSA) can’t see what’s in the packets of information that pass through cyberspace at light-speed until after the fact, which means they are relegated to reactive incident response. The solution is for companies to help build a common picture by sharing information so the government can then defend effectively. Alexander gives the example of the energy sector, where 18 companies are working together to share information at network speed.
Alexander also raises the issue of companies that have been attacked being treated as a guilty party, with some organisations getting sued after a cyberattack. “If you want industry to work with government and share what’s hitting them, you’ll have to give them liability protection. We also need to incentivise it so it’s cost-neutral to build up your cyber defence.”
Former Director of the CIA, John Brennan, comments that as difficult as counter-terrorism was, dealing with cybersecurity was even more challenging. “The digital domain is 85% operated by the private sector, and there’s currently no consensus on the government’s role in that environment,” he says. The nature of globalisation means it’s not always easy for a security agency to figure out what’s an American company. “The ecosystem is so interconnected,” says Brennan. “You’re not going to stop globalisation, but you need to [respond to it] in a way that protects government and business interests.”
Panel facilitator and ISM CEO Tom Derry raised the question of how you can protect privacy and civil liberties while acting to defend against cyberattacks. According to Alexander, you can do both. “If we’re completely transparent in what we share and ensure everybody agrees to it, we can build a picture that defends our nation.” The consolidation that is taking place as businesses increasingly move into the cloud (usually via a managed service) will help in a cybersecurity sense. “It’s going to come down to consolidation,” says Alexander. “The cloud is going to be the future, collective security in the cloud will be so much better, and you’ll be assured that both your data and your privacy are protected.”
Brennan was less reassuring when it comes to privacy trade-offs. “Lots of privacy and civil liberties have been given up already. People would be shocked about how much of their information is being shared online. We need greater transparency and obligations, and need to be aware of the risks and opportunities. You can’t secure your data the same way you can secure a building.”
What can be done?
Most companies, says Alexander, have a firewall and other measures in place to defend against cyberattacks, but he gives the example of a company with 2,500 people and 5,000 systems that was discovered to have 400,000 unpatched vulnerabilities. “Most companies only try to patch the critical ones.”
Alexander and Brennan list the following solutions:
An unprecedented level of partnership and information-sharing between government and business.
Behavioural analytics, where a system-user’s behaviour raises red flags if it changes dramatically.
Freezing or isolating systems when malware signatures are detected.
Better hiring practices, training, procedure and policies to protect against the human element (e.g. Edward Snowden’s data theft).
Machine learning and AI systems to cope with the sheer size of the challenge.
Be clear on policy: what constitutes an act of war in cyberspace?
In other news from #ISM2018:
ISM Appoints First Chief Product Officer
Susan Marty to Lead Member Engagement, Market Development and Growth Initiatives for ISM.
In its mission to reflect the voices of everyone in the supply management community, ISM has appointed Susan Marty as it first Chief Product Officer. Ms. Marty will focus on member engagement, market development and growth for ISM, the leading not-for-profit, independent, unbiased resource for everyone in supply management.
“As Chief Product Officer, I am strongly committed to meeting the current and future needs of all ISM members and constituents in a timely and meaningful way. We will continue ensuring that all our offerings–from education and events, to discussions and publications–enable members to advance professionally while making their organizations stronger and better,” said Ms. Marty.
“Susan Marty is an exceptional leader with a talent for building strong customer, partner and industry relationships, and innovating in response to market shifts. At a time of rapid transformation for supply management, she will help ISM remain vital to our entire industry,” said Tom Derry, CEO of ISM.
In addition to her focus on ISM’s educational offerings, Ms. Marty will concentrate on making ISM a source for compelling, customer-driven content, including research, thought-provoking conversations with subject-matter experts, and issue-oriented articles.
She will also lead efforts to bring supply management leaders and practitioners together with technology providers, analysts, and other members of the broader professional community. Whether online or via social media, she will focus on maximizing opportunities for the profession to access all ISM has to offer.
“We are thrilled to have Susan Marty join the ISM team. She is a high-caliber talent with a wealth of experience to help us deliver superior products that are valued by our customers,” said Debbie Fogel-Monnissen, Chief Financial Officer, ISM.
“Susan Marty is exactly the kind of product leader that ISM needs to fulfill the strategy of increasing engagement with the supply management professional. Her background in creating value offerings and communicating them clearly and through multiple channels will help today’s supply management professional leverage ISM’s vast resources,” said Jim Barnes, Managing Director for ISM.
Ms. Marty comes to ISM after serving as Vice President Marketing, Product Management and Sales at WorldatWork. She previously held senior roles at Inter-Tel (now Mitel), Voice Access Technologies, OmniSky and AT&T Wireless (now AT&T Mobility).
Hot off the press: the Asia-Pacific region’s 2018 CPO of the Year and Future Leader in Procurement (FLiP) of the Year have been announced at The Faculty’s Gala Dinner.
Dramatically shifting the impact of procurement in a truly international role, MMG General Manager of Supply Chain Ron Brown has been recognised for delivering major procurement and supply chain transformation, driving value creation across the organisation and consistently delivering tens of millions in savings per annum over the past four years.
Brown’s achievements were celebrated at last night’s CPO Forum Gala awards, hosted by leading procurement advisors The Faculty.
Global resources company MMG Limited operates and develops copper, zinc and other base metals projects across Australia, the Democratic Republic of Congo, Laos and Peru. As such, Brown and his centre-led procurement team have become adept at not only working across time-zones but also in negotiating the significant language and cultural differences in the four regions. Brown himself has a full travel schedule, as he regularly visits sites across four continents in person.
Shifting the focus
Brown’s commercial leadership has led the organisation to recognise that simply focusing on cost-down does not work. Instead, Brown has shifted the focus to:
Improving the skill-sets on contract management, creating commercial value over the life of the contracts and putting in place systems to ensure opportunities are not left on the table.
A greater emphasis on supplier relationships, including better engagement, more regular communication around performance to enable greater value creation.
Greg Travers, Executive General Manager Business Support, comments that Business Unit stakeholders within MMG have recognised the value that Brown and his team are delivering. “They have worked hard on improving relationships and have turned the perception of procurement around favourably. Ron and his team are getting out of the office to see the business, and spending more time on site.”
Influence beyond procurement
Travers also comments that Brown is a well-rounded, commercially focussed executive who contributes more broadly across the organisation, and has presence at all levels including the executive team and the Board. “Ron is one of the General Managers the Executive Group regularly nominates to attend group meetings and get involved in projects from the very start. He is energetic and is ideal for contributing to broader organisational projects and for change and efficiency reviews.”
Key achievements that contributed to Brown’s nomination for the CPO of the Year award include the delivery of a major procurement project to support the construction of the recently completed Dugald River Mine site in Queensland (Australia). Brown and his team embedded the contract management approach to build savings, sourced long-lead items and engaged local suppliers in a logistically challenging, complex industrial environment. Brown and his team contributed to the delivery of the project significantly under budget and ahead of schedule. They also achieved multi-million-dollar savings through an electricity contract revision for Las Bambas (Peru), and enhanced global sourcing primarily through China, resulting in significant savings across a wide range of supplier inputs.
Brown and his team have also re-engineered and simplified procurement policy, process and reporting frameworks at MMG, creating a high-level dashboard to drive visibility. Site inventory has been improved through more efficient contract management, buying at better prices and strengthening supplier relationships.
“Ron has significantly lifted capability across his team, hired and developed the right people in procurement and supply,” says Travers. “He mobilises his team and creates career pathways for them.” Brown has also actively promoted gender diversity across his team.
But the CPO of the Year wasn’t the only award presented at the #CPOForum18 Gala Dinner. One of procurement’s rising stars, Maryam Rahimi of Sydney Trains, was also celebrated with the presentation of the Future Leader of the Year (FLiP) Award.
Keith Bird, Managing Director of The Faculty, says “The CPO of the Year and Future Leader of the Year Awards not only recognise the significant achievements of these talented professionals, but they serve as an important source of inspiration for other aspiring leaders in the profession. Both Ron Brown and Maryam Rahimi are known both for delivering excellent value to their organisations, but also for their dedication to mentoring, coaching and inspiring others.”
Public Sector Procurement Star Wins Future Leadership Award
It’s a big week for Sydney Trains’ Maryam Rahimi. Not only is the Australian public sector procurement professional stepping up to a new role where she’ll be leading a team of 27 people, Rahimi was also awarded the prestigious Future Leader in Procurement (FLiP) of the Year Award for 2018 at last night’s gala event in Melbourne.
Originally from Iran with an engineering and manufacturing background, Rahimi immigrated to Australia in 2010 where she entered the rail sector, first with Downer Rail and then with Sydney Trains. This week, Rahimi is moving from her role as Acting Senior Business Category Manager to Manager, Plant Hire. This leadership position with responsibilities and a team across both Sydney Trains and NSW TrainLink has greatly expanded responsibilities from her previous role – and she’s 100% up for the challenge.
Len Blackmore, Deputy Executive Director of Procurement for Sydney Trains and NSW TrainLink, says that Rahimi’s personal story is as impressive as her professional achievements. “Maryam is balancing the demands of a busy career whilst raising her young family, and was the sole income earner upon her arrival in Australia. She is a highly capable professional with enormous resilience.”
“Resilience” is a term that comes up frequently when discussing Rahimi with Blackmore, who says one of the key markers of resilience is that fact that she proactively champions change in the organisation. “Maryam has been enthusiastically involved in the complete revamp of our Source to Contract process”, he says. “This has been on top of her day-to-day role, where she’s also embraced the procurement improvement program we’re currently running.”
But it’s in stakeholder engagement where Rahimi has her most impressive wins. Upon settling in at Sydney Trains, she quickly identified an issue where stakeholders were not highly engaged with procurement. Through outstanding business partnering with a focus on the customer, Rahimi lifted stakeholder engagement and improved the perception of procurement through the establishment of trust, credibility, early engagement and taking the time to understand customers’ needs.
Rahimi’s commercial leadership was another key factor in her being nominated for the Award. Along with strong negotiating skills, she has a strategic focus, thinks holistically over the total life of the contract, and involves the end user in designing solutions to get results. Rahimi reportedly has a great touch in leading people and is known for her focus on working collaboratively and fostering a positive culture. She has lifted the capability of her direct reports through mentoring, coaching and inspiring others.
“I’m absolutely delighted about her winning the award because Maryam has worked extremely hard to get where she is”, says Blackmore. “It gives someone who is a high performer with high potential the due recognition that will benefit her career.”
About The CPO of the Year Award
The CPO of the Year Award is a flagship initiative of The Faculty, created in 2012 to recognise and celebrate the achievements of procurement professionals across Asia Pacific.
For the past 6 years the Award has celebrated someone who has been assessed as an outstanding leader, a prominent contributor to their business and the broader profession, leading delivery of high ROI, and exceeding performance expectations. The Award is a measure of executive presence, commercial insight, people leadership abilities, innovation, professional advocacy, technical ability and integrity.
About The Future Leader in Procurement (FLiP) Award
The Future Leader in Procurement (FLiP) Award recognises an outstanding commercially focused member of the next generation of procurement professionals who is making a demonstrable difference to business results, across different industry sectors, budgets, team size and experience. The FLiP Award will be presented to a multi-talented professional who has demonstrated leadership capabilities and is an influencer and trailblazer in their organisation. The Award is a measure of leadership potential and presence, commercial insight, stakeholder engagement, innovation, professional advocacy, technical ability and integrity.
The 2018 Judging Panel was comprised of Michael Andrew, Chair of the Board of Taxation and former Global CEO of KPMG, Helen Sawczak, National CEO of the Australia China Business Council, and Andrew Porter, CFO of Australian Foundation Investment Company and President of the Group of 100. The meeting was chaired by Tony Megally, General Manager, The Source.
The CPO of the Year and Future Leader of the Year awards were sponsored by Coupa Software.
About The Faculty
The Faculty is recognised as one of Asia-Pacific’s leading procurement advisors. The team works with organisations to transform and elevate the role of procurement, build high performance commercial teams and facilitate professional knowledge networks.
In short, climate change could destroy the chocolate industry within 30- 50 years.
What can procurement professionals do?
All is not lost! Procurement teams around the world are already investing in alternative, and more sustainable options, for their cocoa sourcing.
Developing a sturdier cacao plant
Last year, Mars unveiled their Sustainable in Generation Plan stating:
“We’ll invest $1 billion over the next few years to tackle urgent threats facing our business and the society we operate in – threats like climate change, poverty in our value chain and a scarcity of resources.”
The majority of farms in Côte d’Ivoire and Ghana are run by poorer families who cannot afford fertilisers and pesticides. If modern farming techniques were made available to the farmers in Western Africa; cocoa production might be easier.
The Rainforest Alliance is working with smallholder cocoa farmers to manage climate change and protect their livelihoods and way of life.
Organisations could look to source their cocoa beans from a different region entirely.
Dr Barry Kitchen, executive chairman of Daintree Estates, told the New Daily that “Cairns generally had ‘ideal’ conditions for cocoa trees, which need consistent rain, warm temperatures, and shade with dappled light.”
“You’ve got to be continually innovative and continually looking at ways that you’re preparing yourself for the future.” he said.
But, given the much higher labour costs in Australia, it’s unlikely that the industry could ever migrate to Australia.
Changing the nature of chocolate
Research by The Conversation suggests wild mango butter, made from the fruit’s stone, has a very similar chemical, physical and thermal profile to cocoa butter.
If procurement teams decide to invest in the science behind it, it mightn’t be too long before we’re eating mango butter Easter eggs.
Personally, Procurious thinks it’s an egg-cellent idea!
In other procurement news this week…
Starbucks Testing Blockchain
Starbucks is piloting the use of data technology, including blockchain, to make its coffee supply chains more transparent
The firm hopes the technology will provide real time information about the beans within the supply chain and help financially empower rural farmers
Kevin Johnson, chief executive officer at Starbucks, said: “Over the next two years, we will look to demonstrate how technology and innovative data platforms can give coffee farmers even more financial empowerment
Hand-on-heart: Can you swear that you’ve properly briefed consultants and paid only for what you’ve received?
Buying professional services is often accompanied by a host of reputational risk and budgetary pressures. However, for the public sector, a new approach to professional services procurement is proving that it doesn’t have to be that way.
Public sector procurement continues to be a highly debated topic in the UK, against a backdrop of reduced budgets and high-profile failures, it seems clear there’s still a need for new and innovative approaches.
What needs to change? Well, traditional purchasing frameworks have long been pegged as a solution to the sector’s buying challenges. They promise fully compliant access to a range of suppliers with all the hard work that comes with the tender process done for you. However, as they often offer a limited pool of suppliers and a notable cooling-off period which can delay a project’s start date, frameworks can be a frustrating route to market for some.
It’s in the procurement of professional services where the frustrations of traditional routes to market are often most keenly felt. There’s often a lot at stake. As budgets shrink and requirements evolve, the need to access expert external advice, often at short notice, is crucial to the success of some projects.
Consultants are often appointed as trouble shooters; to advise and lead on new projects or even spearhead big organisational changes. Using such services can represent a significant investment for public bodies and the failure of high profile projects such as IT infrastructure demonstrates the reputational and budgetary risk that can occur if you don’t get it right. Control is a key success factor.
There’s a need for change and some public sector bodies have already embraced a different approach. It’s an innovation that, unusually, could see the public sector leading the private sector.
The NEPRO neutral vendor solution recognises and responds to these and other short falls of traditional frameworks. It helps procurement professionals gain that control, mitigate reputational risk, deliver on budgets and manage demand. It’s a fast solution for the procurement of professional services that offers a welcome alternative to traditional purchasing routes.
The NEPRO solution is based on outcomes – buyers pay only for results delivered, measured by pre-agreed project milestones. We’ve all heard stories of consultants hired by public sector organisations to work on a specific project for a significant fee, only for the provider to still be there long after the project has finished having been hijacked by another department. This approach puts an end to that, with both the buyer and supplier clear on what is needed, by when and at an agreed fee.
If there’s no robust focus outcomes or deliverables it’s easy to see how contractors can end up staying in departments long after project completion and be paid significantly beyond the original value of the project they were hired to support.
When speed is important, procurement professionals have the opportunity to cut red tape and realise the benefits of consultant-based projects in a third of the time it traditionally takes to procure professional services. While traditional procurement routes can take 100 days from initial request for information through to a consultant starting work on a new project, this approach can see consultants start work in an average of 30 days through direct contract awards and fully compliant mini competitions.
The starting point for any new project is to fully understand what the buyer needs and find the right supplier to fulfil the brief. All the complexities of supplier management are taken care of on behalf of the buyer, providing compliance, control and transparency of expenditure. NEPRO delivery partner Bloom then manages the project and assures delivery.
We’re proud to now be transforming the procurement of professional services across the UK, giving buyers more choice and more business opportunities to suppliers of all sizes. To put that in context, last year, the number of contracting authorities wanting to procure through Bloom almost doubled to 170, suggesting that the public sector is waking up to this faster and more effective way to procure the services of consultants.
By Rob Levene, executive director and co-founder, Bloom.
With its unique neutral vendor solution, Bloom offers buyers access to a vast community of over 4,000 suppliers across 19 categories and 240 sub-categories. This dynamic supplier marketplace drives choice and competition and with over 70% of projects delivered by SMEs, helps drive growth back in the local economy and supports social value agendas.
Get to grips with the jaw-dropping scale of China’s investment in ultra-modern supply chains stretching from South-East Asia to Scandinavia.
China’s Belt and Road initiative is big. VERY big. We’ll get to some of the awe-inspiring numbers in a minute, but first let’s look at why this project is particularly relevant to supply management professionals around the globe.
Helen Sawczak, National CEO of the Australia China Business Council thinks that there’s a common perception that the Belt and Road will be a way for other countries to see to China.
“It certainly will enable smoother movement of goods into China, but what people need to understand is that the strategic focus is on the movement of goods out of China.”
That’s why the Belt and Road needs to be firmly on the radar of every procurement professional who sources goods from China – and let’s face it, that’s just about all of us.
In this interview with Sawczak, who is a guest speaker at The Faculty’s upcoming CPO Forum in May, we explore the sheer scale of the project, the timelines involved, its embedded supply chain technology, and what it means for standardisation of trade practices.
1: What is the Belt and Road, and how big is it?
The Belt and Road is a $900 billion-dollar signature initiative announced by China’s President Xi Jinping in 2013 and hailed by China as “the project of the century”. The name refers to the land and sea trade routes.
The “Belt” is centred around the re-establishment of the ancient Silk Road, which stretched from Japan to Europe in the time of the Roman Empire.
The modern-day Belt is actually divided into six routes where China is building roads, high-speed railways, gas pipelines and more to bridge an infrastructure gap that exists throughout Asia and Central Asia, before joining with existing transport infrastructure in Europe:
The New Eurasian Land Bridge, running from Western China to Western Russia through Kazakhstan.
China–Mongolia–Russia Corridor, running from Northern China to Eastern Russia
China–Central Asia–West Asia Corridor, running from Western China to Turkey
China–Indochina Peninsula Corridor, running from Southern China to Singapore
China–Myanmar–Bangladesh–India Corridor, running from Southern China to Myanmar
China–Pakistan Corridor, running from South-Western China to Pakistan
The “Road” (confusingly) refers to a maritime route beginning in South-East Asia, moving through the Suez Canal and ending in the Mediterranean. Similarly, China is investing heavily in ports along the route.
“Together, the Belt and Road encompass three continents, 68 countries and more than 60% of the world’s population”, says Sawczak. “An estimated 25% of all the goods that are shifted around the world will go via the new Silk Road route.”
Beijing says it will ultimately lend as much as $8 trillion for infrastructure in 68 countries.
2: Long-term vision
During his historic visit to China in 1972, Richard Nixon reportedly asked Zhou EnLai what he thought had been the impact of the French Revolution on western civilisation. The Chinese Prime Minister considered the question for a few moments before replying, “It’s too early to tell”.
China has always taken the long-term view.
Without being locked into the short-term political cycles faced by many Western governments, China is in the rare position of being able to launch far-sighted projects to improve critical infrastructure.
As such, the length of the Belt and Road Initiative will be measured in decades, rather than years. Today, says Sawczak, “every company in China is trying to get a Belt and Road label in order to secure funding.”
“Belt and Road isn’t just about infrastructure and the supply of goods. To build this stuff they’ll need people, food, education and more. There are going to be enormous opportunities for business and suppliers to support this initiative – it’s going to have a huge impact.”
3: It’s buzzing with 21st century technology
One of the benefits of building new road, rail and port infrastructure from scratch is that China is taking the opportunity to build a truly 21st-century supply chain.
Infrastructure along the land and sea routes will feature digital technology including inventory sensors (IoT) that will enable a level of data analytics that leapfrogs past current supply chain practices.
Trading will involve blockchain verification and e-commerce settlement transactions that will vastly improve the cost and speed of trade.
To learn more about what IOT is and basics of Blockchain, check out here and here.
4: The Belt and Road will drive standardisation
“Because there are 68 countries involved, there’ll be a push for the standardisation of trade processes all along the Belt and Road”, says Sawczak. “One would hope the highest standards will be used – such as blockchain verification. Overall, standardisation is a good thing that eases free trade and boosts globalisation.”
Sawczak warns that with so many parties involved, it will be imperative for other countries to integrate their e-commerce with Chinese systems and to consider availing themselves of the new flexibility of the Renminbi as an international currency.
“Communication is another area where you’ll need to align. For example, WhatsApp has been blocked in the past in China, so cybercommunities need to be prepared to adapt to Chinese platforms to communicate during multilateral deals.”
Helen Sawczak is the National CEO of the Australia China Business Council, a membership based organisation dedicated to promoting trade and investment between Australia and China. ACBC has a Branch in every Australian State and Territory, holding hundreds of information and networking events each year to assist Australian and Chinese companies to connect.
Now in its 11th consecutive year, The Asia-Pacific CPO Forum is the region’s premier procurement event dedicated to accelerating commercial leadership at the highest level. Held at Melbourne’s Crown Conference Centre over two days, it is a once-a-year opportunity for leading Chief Procurement Officers to engage with peers and like-minded business leaders in an intimate and interactive setting. Click here to learn more.
“Molly, the reason you got less than Thomas, is because you are a girl.” We take a look at some of the highlights of this year’s International Women’s Day…
The #MeToo and Time’s Up movements have triggered an intensely powerful outpouring of testimony and solidarity among people around the world.
But this is only the beginning of the story.
The broader issues of systemic workplace sexism and the fight for meaningful inclusion undeniably stretch far beyond the entertainment world.
We need look no further than our own procurement backyard where women account for just 20-35 per cent of procurement association memberships, represent just 30 per cent of attendees and 20 per cent of speakers, and earn up to 31 per cent less than their male counterparts.
Time is most definitely up for our own profession to tackle this issue and celebrate more fully the dynamite contributions made by talented women to their businesses and to the profession.
In Pakistan’s capital Islamabad, its largest city Karachi, and the cultural capital of Lahore, campaigners denounced violence against women in Pakistan, where nearly 1,000 women are killed by close relatives each year in so-called honour killings
People tweeted about the global #WikiGap event, organised in partnership with the Swedish foreign ministry, which aimed to get more women contributing to the Wikipedia website to address the gender imbalance on the world’s largest online and user-generated encyclopaedia
“Molly, the reason you got less than Thomas, is because you are a girl.”
Stark pay gaps between men and women prevail across the world, which is why one Norwegian financial trade union, Finansforbundet, launched one of our favourite campaigns for this year’s International Women’s Day.
In the video, a group of children are asked to fill two vases with blue and pink balls.
Once they’ve completed the task they are rewarded with jars of sweets.
But the boys get more.
As you might predict, the confused children are quick to condemn the explanation they are given that boys get more simply because they are boys.
Unequal pay is unacceptable in the eyes of children.
We promise to donate £1 to Action Aid – a charity committed to ending the inequality that keeps women and girls locked in poverty – for every person that joins Bravo before 12th March 2018 – that’s the end of the day today!
In other procurement news this week…
KFC: Back to Bidvest
It hasn’t been a (finger-licking) good month for KFC WHO experienced widespread distribution problems after it decided to switch its logistics contract from Bidvest to DHL, resulting in the closure hundreds of outlets and disappointment of thousands of fried-chicken fans
Last week, it was reported that KFC would be returning, in part, to its ex-distributor Bidvest, who will supply up to 350 of its 900 restaurants
Bidvest has pledged “a seamless return” and a KFC spokesperson said “our focus remains on ensuring our customers can enjoy our chicken without further disruption.” Let’s hope they don’t cluck it up this time!
Lego has started using polymer from plants in some of its toys as part of a move away from oil-based plastics.
The Danish firm’s first bioplastic offering is made from sugarcane and will be used in “botanical” elements including leaves, bushes and trees
The bioplastics are set to appear in stores later this year as Lego moves towards sustainable raw materials in all its products by 2030
Tim Brooks, vice president of environmental responsibility at Lego said: “We are proud that the first Lego elements made from sustainably sourced plastic are in production and will be in Lego boxes later this year. This is a great first step in our ambitious commitment of making all Lego bricks using sustainable materials.”
Maersk, TNT and other global companies that suffered nearly a billion dollars in collective damages were not the intended targets of a Russia-launched cyberattack. How, then, were they infected?
“The UK government judges that the Russian government, specifically the Russian military, was responsible for the destructive NotPetya cyberattack. Its reckless release disrupted organisations across Europe costing hundreds of millions of pounds. “We call upon Russia to be the responsible member of the international community it claims to be, rather then secretly trying to undermine it.”
This statement was part of the UK Government’s unusual step last week of publicly accusing the Russian military of being behind a cyberattack. The White House also called out Russia, issuing the following statement: “In June 2017, the Russian military launched the most destructive and costly cyberattack in history. This was also a reckless and indiscriminate cyberattack that will be met with international consequences.”
Experts believe that Russian hackers launched 2,000 “NotPetya” attacks in the early hours of June 27 last year. NotPetya was designed to masquerade as ransomware, but was soon revealed to be wiper malware with the purpose of destroying computer systems, erasing data and disrupting business operations.
Global firms were collateral damage
One of the consequences of living in a connected world is increased vulnerability to indiscriminate cyberattacks, even for organisations that are not the hackers’ intended victims.
NotPetya’s primary target was a shipping company in Ukraine, which has been locked in conflict with Russian-backed separatists since 2014. However, the virus-like nature of the cyberattack meant that businesses with strong trade links with Ukraine, including parts of FedEx, Danish shipping giant Maersk, UK manufacturer Reckit Benckister, and Dutch delivery firm TNT were also affected. Pharmaceutical firm Merck & Co and FedEx reported permanent damage to the systems, while a West Virginia health system had to replace its entire network after being attacked.
Russian officials have responded that the claims are “groundless” and that Russian businesses were among those whose systems were affected.
The US Navy’s recent purchase of two drone-incinerating laser cannons signals a turning-point in the ever-rising costs of sourcing – and firing – high-tech weaponry.
Remember the USS Zumwalt? Launched with much fanfare in 2013, the guided missile destroyer was equipped with 155-millimeter advanced gun systems, designed to fire the Long Range Land Attack Projective, a GPS-guided shell with a range of 60 miles. At an eye-watering $800,000 a round, however, the guns were simply too expensive to fire, and were soon replaced with a more affordable system.
Zumwalt provides an extreme example of the prohibitive cost of firing a weapon at sea. At its cheapest, a typical shipboard gun and missile arsenal costs $5,000 per shot.
That’s why the US Navy’s procurement of two high-powered lasers – developed by Lockheed Martin at $75 million each – will change the game for the expense of firing weaponry. One of the lasers is designed for testing on land, while the second will be installed aboard an Arleigh Burke-class destroyer by 2020.
The lasers are so cheap to run because firstly, solid state lasers run on electricity rather than chemicals, and secondly, they do not fire a projectile at all. A pulse of directed energy costs under one US dollar each – that’s $799,999 cheaper than the Zumwalt rounds. At present, the lasers are primarily defensive, with the magazine limited only by the amount of energy pumped into it. Using 150 kw of power per shot, they are able to destroy small boats and shoot down unmanned aerial vehicles (drones). Upgrading their power to 300 kw could allow them to destroy fast-moving anti-ship missiles, while 1000 kw (one megawatt) worth of power could burn through 20 feet of steel in one second, easily enough to neutralise a fighter jet.
The Navy is clearly anticipating ordering more lasers. The contract with Lockheed Martin includes options worth an additional $800 million (nearly $950 million in total) to buy another 10 weapons and equip over 10% of the fleet’s destroyers with high powered lasers.
The lasers were purchased against the background of China’s reported testing of a ship-mounted rail gun, a weapon that uses powerful electromagnets to accelerate projectiles to over 3km/s. Again, these weapons are expected to be cheaper to fire than conventional guns as they will not require explosives or propellant to launch ammunition.
Several US contractors have attempted to build a rail gun including BAW Systems, which created a prototype, but the project was scrapped due to budget issues.
Chinese rail guns aside, observers have speculated that the 300 kw laser’s ability to destroy small boats is a direct response to Iran’s use of “swarm boat tactics” in the Strait of Hormuz. Iranian fast boats, typically armed with anti-ship cruise missiles and torpedoes, set off in an asymmetrical, dispersed fashion from hidden harbours in the Persian Gulf and then converge to surprise-attack an enemy ship. Laser weaponry has been mooted as the most promising solution to ward off this form of attack.
Meanwhile, Lockheed Martin has developed a ground vehicle-mounted laser system that can burn through tanks, and is working on an anti-missile laser that can be mounted on fighter jets. Defence contractor Raytheon built a laser that could be fired from a moving helicopter, along with a drone-destroying, laser-mounted dune buggy. Similarly, Boeing has developed an anti-drone laser cannon.
In other news this week:
Japan launches its own Belt and Road Initiative
Tokyo is deepening economic ties and security cooperation with multiple countries in an apparent bid to counter China’s Belt and Road Initiative.
Japan’s Foreign Minister Taro Kono has recently completed a tour where Japan made investment announcements in areas including Southeast Asia, Sri Lanka, Pakistan and the Baltics.
Tokyo has launched a US$200 billion infrastructure plan as they actively propose an alternative to the Chinese Belt and Road. Previously, the single biggest competitor to the Belt and Road Initiative was the Trans-Pacific Partnership trade pact, which collapsed after Washington withdrew.
According to a report from Gozmodo, the US Federal Aviation Administration has only acted once to enforce its licensing requirements for the operation of commercial drones.
The FAA began requiring licenses in 2016 for people operation drones for commercial use, including photographers, crop-sprayers, and pilots delivering goods via drones. Hobbyists are exempt from the license requirement, although all drones need to be registered. The licensing system is unpopular, with drone pilots having to pay $150 and pass a 60-question test with a 70%+ score.
Goods delivery via drones is an area of key interest for supply managers worldwide, along with associated regulatory and cost burdens.
Disney, Walmart and other big players have partnered with Humanity United to launch Working Capital, a $23 million early-stage venture fund aimed at creating scalable, ethical supply chain innovations.
Image: Royal Navy Brig “Acorn” chasing a slaver vessel in 1841, by Montague Dawson.
In 1808, the Royal Navy established the Preventative Squadron, tasked with suppressing the Atlantic slave trade by patrolling the coast of West Africa. By 1860 the Squadron had captured 1,600 slave ships and freed 150,000 Africans. In the meantime, America fought a long and bloody civil war before the Emancipation Proclamation could finally be enforced through all regions.
Abolition in the 19th century – in the very simplest terms – was driven firstly by a change in the law, then enforced with the barrel of a British frigate’s cannon or a Union Army soldier’s rifled musket.
In today’s fight against modern slavery, we’re seeing a new wave of legislation, including the UN Global Compact, the UK’s Modern Slavery Act, France’s Duty of Vigilance law, Holland’s Child Labour Due Diligence law, and similar legislation being considered in Switzerland and Australia. Yet, as we know, the insidious nature of modern slavery means the perpetrators are considerably more difficult to identify than they were 200 years ago. That’s why modern slavers must be fought not with guns, but with tech solutions that remove their sources of income.
Big names behind venture launch
Working Capital was launched by Humanity United last week with the goal of “accelerating supply chain innovations to enable corporations to operate more transparently and ethically around the world”. The launch made headlines due to the leading brands that are on-board with Working Capital, including: Walmart Foundation, C&A Foundation, Stardust Equity, Open Society Foundations (Soros Economic Development Fund), The Ray and Dagmar Dolby Family Fund, and The Walt Disney Company. The fund also received £2.5 million in sidecar grant funding from the UK’s Department for International Development.
Ed Marcum, Managing Director at Working Capital, said in a statement that “There is a growing market demand for more transparent and responsible corporate supply chains. We see an opportunity to invest in emerging solutions that will meet the demands of large multinational corporations while also benefiting millions of vulnerable workers.”
A press release from Humanity United says the fund focuses on product traceability, worker engagement, sourcing platforms, risk assessment, and ethical recruiting tools by investing in emerging technologies such as blockchain, machine learning, artificial intelligence, digital identity and Internet of Things (IoT) solutions.
Two tech platforms that are about to be scaled up
At present, Working Capital’s portfolio of slavery-fighting tech solutions lists two organisations:
Provenance: Described as “Fairtrade on the Blockchain”, Provenance is a technology platform that uses blockchain to enable brands, suppliers, and stakeholders to trace products along their journey from producer to consumer.
Ulula: A software and data analytics platform that allows organizations to engage with workers in real time to measure and monitor labour-related risks, creating more responsible global supply chains.
Watch this space
As companies such as Provenance and Ulula use this cash injection to maximise their impact, be prepared for the appearance of anti-slavery plug-ins to existing systems or even mobile Apps that rate and lock-out the use of risky suppliers.
While 19th century slavery was fought on the battlefields and on the high seas, the 21st-century frontline exists on the smartphones of procurement professionals around the globe.
In other Procurement news this week:
Germany’s biggest trade union strikes
About 260 companies were affected by thousands of striking metal and engineering workers in Germany last week.
The IG Metall union wants an 8% pay rise and reduced hours on full-time pay to enable workers to care for children or elderly or sick relatives. The IG Metall union has 3.9 million members.
The companies involved are currently willing to negotiate on pay not on reduced hours.
Facebook reports more active users, less time spent on site
Users spent approximately 5% less time on Facebook, which translates to around 50 million hours a day, from October to December 2017.
Facebook’s Mark Zuckerberg commented that the priority was encouraging more personal interaction among users. Active users rose 14% to 2.13 billion people in the same three months.
Facebook’s annual advertising revenues jumped 47% to over $40 billion, while profits jumped 56% to $16 billion. Despite these figures, the company is adjusting its News Feed to prioritise posts from friends and family and make sponsored content less prominent.