Category Archives: Procurement News

Is The Economy Heating Up, Or Cooling Off?

What do the stats from ISM’s Report On Business reveal about the economy and how can they help you on the job?

The October Purchasing Managers’ Index (PMI®)  registered 58.7 per cent in the U.S. It showed a decrease of 2.1 percentage points from the September ISM® Manufacturing ROB reading, yet the report stated that the economy has been growing for the past 14 consecutive months.

What do all these numbers mean and how can they help you in your job?

These reports have been correctly forecasting major turns in the business cycle for more than 70 years. Savvy purchasing executives have been using the keen insights provided to help with their strategic and tactical plans for just as long.

First things first, any PMI® above 50 indicates expansion in the ISM® report. So even if ‘the rate of up is down’, as our former chair used to joke, if the index is above 50 it signals a growing economy. If you are new to reading this report, start with the ‘Table At A Glance’ so you can familiarise yourself with the comparison of this month to last month for all 11 indicators.

Next, start listening in to the radio broadcasts each month following the report, on Manufacturing Talk Radio – not only will you get analysis of the latest numbers, there is also an archive of shows from which to put everything in context, and help you make the most of these reports.

ISM Report On Business

The foundation of the ISM® ROB and the primary reason for its credibility as an accurate indicator of the U.S. economy is the Business Survey Committee. The committee is composed of supply management professionals who are responsible for the purchases at their company.

Membership of the committee is based on the Census Bureaus’ North American Industry Classification System (NAICS) and diversified on each industry’s contribution to Gross Domestic Product (GDP).

Data is collected through a monthly survey, which asks how certain economic events have changed, if at all, in the current reporting month compared to the previous month. Committee members are only required to indicate for each of the activities has moved in one of three ways: has there been no change (same), or has there been a positive change in the economic directions (better, higher, and for Supplier Deliveries, slower) or a negative change in the economic direction (worse, lower, and for Supplier Deliveries, faster).

Members are encouraged to make additional comments about any of the activities that are affecting their purchasing operation or the outlook of their company. These comments provide valuable insight and depth to the reasons for the changes which might not otherwise be apparent form the statistics alone.

Are you interested in joining the panel of supply management professionals whose input informs the ISM® Manufacturing Report On Business®? It’s also a great way to learn what each index means!

To find out if you qualify and fill out an interest form, please click here. 

The Jaggaer Juggernaught Rolls On

With the recent acquisition of BravoSolution, Jaggaer continues its trajectory of rapid, aggressive growth to contend for the title of the world’s largest spend management solutions company. 

The Jaggaer growth story has been interesting to watch. Formerly known as SciQuest, the company’s announcement about BravoSolution needs to be understood in a long line of acquisitions beginning in 2011:

  • January 2011: AECsoft (supplier management and sourcing technology)
  • August 2012: Upside Software (contract lifecycle management (CLM) solutions
  • October 2012: Spend Radar (spend analysis software)
  • September 2013: CombineNet (advanced sourcing software)
  • June 2017: POOL4TOOL (to add direct material capability and introduce Jaggaer Direct)
  • December 2017: Italmobiliare’s BravoSolution.

The company’s press release says the acquisition will effectively render Jaggaer the “largest independent, vertically focused spend management solutions company in the world”. The solution includes advanced spend analytics, complex sourcing, supplier management, contract lifecycle management, savings tracking, and intelligent workflow capabilities.

As a result, Jaggaer will have over 1,850 customers connected to a network of 3.7 million suppliers in 70 countries, served by offices located in North America, Latin America, throughout Europe, the United Kingdom, Australia, Asia, and the Middle East.

Spend Matters reports that this latest move will make Jaggaer “the No. 2 player to SAPAriba in the procurement technology market by revenue”.

A Spend Management “Super Suite”

Robert Bonavito, CEO of Jaggaer, says that the move “creates a powerhouse in the global spend management space and represents the execution of our strategy to build a Super Suite of fully integrated spend management solutions. This acquisition enables the largest companies in the world to do business with a single partner and cover all of their spend management needs. We have best of breed, fully developed solutions for multiple vertical industries delivering value across the full spectrum of spend types. With our size, financial stability, and expanded infrastructure we can further accelerate product innovation and bring customer value across a vast swath of geographies and industries.”

The CEO of BravoSolution, Jim Wetekamp, commented that Jaggaer is “a bold company on an aggressive growth path. The combined entity will deliver greater opportunities for both customers and employees. The combination will allow increased innovation and provide a foundation for procurement digitalisation that will set the trends and benchmarks for the entire industry”.

What’s next? 

The language used in the press announcement (“covering all spend management needs” and “full spectrum of spend types”) appears to suggest that with the acquisition of Bravo, Jaggaer’s offering is now complete. But is this the peak of Jaggaer’s rapid growth story? As the dust settles and any remaining gaps begin to emerge, users may get a glimpse of the type of solution Jaggaer intends to acquire next.

Introducing the Lavergne Procurement Matrix

Are you a #procurement value-creator, or a cost-reducer? Perhaps you’re neither of these – or both? Procurious member Remy de Lavergne has created a new matrix that shows, among other things, just how far the profession has come. 

“Procurement is the process of finding, agreeing terms and acquiring goods, services or works from an external source, often via a tendering or competitive bidding process. The process is used to ensure the buyer receives goods, services or works at the best possible price, when aspects such as quality, quantity, time, and location are compared.” (Wikipedia)

This definition is clear, but it is not enough for me – and probably not enough for you, either.

I have been purchasing for 20 years now in different countries and industries and I often read and hear very interesting things about procurement issues, but not enough to give me a global picture about the profession’s objectives and  best practices.

So, using PowerPoint, I’ve spent some time brainstorming and have created a one-page puzzle about procurement, keeping two strong ideas in mind:

  • What does buying mean ?
  • How can you be a good buyer ?

After selecting and analysing more than 35 key words (SRB, Networker, Communicator, Excel, …) I settled on  a clear and simple definition :

A buyer is both a value creator and a cost reducer for clients.

It is possible to classify buyers into four separate categories according to their contribution to client value creation and cost reduction.

And with the keywords added:

1. The Bureaucrat:  does not effectively reduce costs or generate value for customers.

Profile: The Bureaucrat prefers to work alone rather than cooperating with internal or external contacts, and often waits to be asked to act rather than taking proactive steps on their own. This professional has no insight into the company, customers, trends, or innovations and prefers to preserve the status quo rather than embracing change.

The Bureaucrat Buyer is likely to be an endangered species, since this person is less and less sought after by organisations. Four solutions are available to address this population of buyers:

  • upskill to one of our other types of buyers,
  • change jobs,
  • retire,
  • remain in place without changing until a planned or negotiated departure.

2. The Cost Killer achieves significant cost reductions but does not generate value for customers.

Profile: The Cost Killer knows supplier markets, has mastered Excel and relevant software, and can create effective supplier cost models. This buyer is proactive, but can be sometimes brutal and act without enough team consultation. Additional skills include intense benchmarking and efficient negotiation.

There are many Cost Killers, largely corresponding to certain types of enterprises. This kind of buyers is unlikely to disappear, even if they become a shrinking percentage of all buyers in the organization. If you are a Cost Killer, consider acquiring new skills to broaden your value to the organization, especially if you want to evolve professionally. Study the skills associated with Innovative Buyers and Business Developers.

3. The Innovative Buyer generates considerable value for clients and sometimes reduces costs, but cost is not their top priority.

Profile: The Innovative Buyer is a natural networker (external and internal) and is always looking for new ideas and information. This professional has both ‘sales’ and leadership skills, which they use to bring together colleagues with very different profiles to build, validate, and implement projects. Innovative buyers adapt well to a number of situations, and are diplomatic in their efforts to maintain good relationships with all stakeholders. Additional skills include an ability to deal with crisis situations, interest in identifying and testing futuristic concepts, and an open mind to the ideas and approaches of others.

The population of Innovative Buyers is still relatively small. These purchasers are particularly useful and adapted to the needs of companies where purchases account for a small part of the total turnover of the company (- 50%) and/or in which rapid innovation is a vital necessity. Given that the pressure to innovate is greater in some industries than others, even for global leaders (such as Nokia), the Innovative Buyer is in high demand.

4. The Business Developer simultaneously creates customer value and cost reduction.

Profile: In addition to having all the qualities of an Innovative Buyer or Cost Killer, this professional also has skills that are not always found in either other desirable type of buyer. They are determined to create value for customers and wealth for the business. The Business Developer is ‘hands on’ and regularly meets with the people who produce, sell, use or benefit from the services, materials, products or services purchased on behalf of the company. This professional likes to communicate in order to establish relationships with people from multiple levels in the company (CEOs, Managers, or Individual contributors) and functions (engineering, sales, finance, legal).

To succeed in their mission, the Business Developer must be emotionally intelligent (i.e. have the ability to adapt to their context). As often as possible, this person works in close collaboration with business colleagues and employees. The Business Developer knows how to define a strategy, how to share it effectively inside and outside of the company. This professional knows how to drive complex projects (in rapidly changing environments with precision and agility, even under pressure. Additional useful human qualities include listening, empathy, humility, availability, humour, persistence, persuasion, intuition, rigour, agility, creativity, resistance to stress, and sociability.

If you’d like to know more about the Lavergne Procurement Matrix and/or use it in your school or company, do no hesitate to contact me via [email protected]

The Lavergne Procurement Matrix is protected by copyright.

Would You Order A Tesla Electric Semi?

Elon Musk promised that the Tesla Semi reveal would “blow your mind clear out of your skull and into an alternate dimension”. The truck is certainly a game-changer for the logistics industry, but Tesla faces some steep challenges if it plans to win over the commercial market.

We can’t wait to see these trucks on the road. The sleek, bullet-train shaped cab of the Tesla Semis will be instantly recognisable once they hit the freeways in 2020 – if Tesla can overcome the production delays which are increasingly plaguing the organisation.

What can the Tesla Semi actually do?

Equipped with a battery instead of a diesel tank, the Tesla Semi is capable of travelling 804km (500 miles) on a single electric charge – even with a full 36,000kg load. Its autopilot system will go a long way towards eliminating human error in truck accidents, with the ability to automatically:

  • detect instability and adjust each wheel individually to make jack-knifing “impossible”
  • maintain a set speed and slow down in traffic
  • keep the vehicle in its lane with lane detection and lane departure warnings, and
  • lock onto other Tesla Semis to travel in a convoy.

Charging will take place via a planned, worldwide network of solar-powered “Megachargers”, which will be added to Tesla’s existing network of 2000 Supercharger stations which are in place to power Model S sedans. For drivers in a hurry, a 30-minute charge will enable 640km (nearly 400 miles).

Inside the cab, the driver’s seat is positioned in the centre of the space (which has full standing room), allowing better visibility. The seat is flanked on both sides by touch screens that provide blind spot monitoring and navigation. The truck also comes with tracking features to be used by a fleet manager for routing, monitoring and scheduling.

What’s the cost?

Unknown – Musk didn’t reveal the unit price on stage, but claimed the Tesla Semi would cost 20% less per mile than a diesel-powered truck. Whatever the price is, it’s only likely to fall in the future as regulations on diesel continue to tighten, charging infrastructure improves and the costs of batteries fall.

Despite the unknown price, pre-orders have started flowing in from companies including Wal-Mart (15 trucks), Meijer (4 trucks), and J.B. Hunt (“multiple trucks”).

Will we see these trucks on the road in 2020?

“If you order now, you get your truck in two years”, Musk said at the reveal. The company, however, has been known to over-promise and under-deliver when it comes to production deadlines. The Model 3 sedan, for example, has been beset by 18-month delays. While the company’s consumer fans are apparently willing to tolerate delays, commercial trucking companies are likely to be less patient. The Tesla Semi notably represents the company’s first foray into the commercial vehicle market.


In other news this week:

NAFTA Negotiations Struggle Onward

  • Reports from the NAFTA negotiations reveal that little progress has been made on U.S. demands that could potentially sink the 1994 trade pact between the U.S., Mexico and Canada.
  • Officials are currently meeting in Mexico City for the fifth of seven planned rounds of talks. Upcoming presidential elections in Mexico mean that a deal needs to be reached by late March 2018.
  • New U.S. demands include a five-year sunset clause, and tightening of rules of origin to boost the North American content of autos. Other issues discussed include labour, gender, intellectual property, energy, and telecommunications.
  • While Mexican officials have said “the work is moving forward”, Canadian negotiators complained on Friday about inflexibility by the United States.

Read more: CBC News   

Calvin Klein Bypasses Retailers For Holiday Shopping

  • Calvin Klein is offering an exclusive line on Amazon only for Black Friday sales, in a move that reflects the increasing shift away from traditional stores.
  • The company has announced a holiday retail experience called “Calvin Klein X Amazon Fashion”, with underwear and denim available exclusively in an online Amazon brand store and in Amazon pop-up shops in New York and Los Angeles through to December 31st.
  • Amazon’s pop-up stores pose another threat to brick-and-mortar retailers, in additional to the sales shift to online retail.

Read more: Wall Street Journal

New Procurement Benchmarking Report Released

  • APEX Analytix has released its “Procurement Leaders’ Benchmarking Report”, with best-in-class performance data from global organisations with a combined revenue of $2.3 trillion. The report reveals:
  • Only 10% of organisations have a combined P2P organization under common leadership
  • 65% of businesses don’t authenticate vendors against public domain data sources prior to payment
  • Only 14% capture verifiable details of a vendor’s CEO, CFO or principals.

Get the report here.

IT Procurement Without a Tech Strategy Is A Recipe For Disaster

If you’re struggling to effectively run your IT procurement processes, it might be time to evaluate your strategy!
This article was written by Harry Wilson, an IT Consultant. Read more via Leap Consulting.

If procurement is the series of activities and processes required during the acquisition of any IT infrastructure, software and systems, IT procurement and the purchasing of updated systems are essential to any business which uses information systems and digital technology equipment to drive projects, management and processes.

The running of the IT procurement process should be carefully managed and examined to ensure that  purchases provide both a good foundation and high-quality equipment for the future process, in line with the businesses goals.

This requires a dedicated employee in charge (usually the CIO) and an IT strategy to allow a business organisation to reach best practices of IT procurement.

Digital transformation and disruption

Digital transformation and disruption have changed the IT buying process. Traditionally, the CIO had the final say in IT purchasing decisions following consideration of the IT strategy and alignment with business goals.

However, recently it has been found that nearly a third of purchasing power has moved outside of the executive suite into the hands of departmental managers.

Business departments making technology decisions without the CIO can lead to CIOs losing control of the IT then having to deal with issues such as;

  • Lots of different systems running in silos
  • Information sprawl
  • Incompatible systems
  • Gaps in internal information technologies
  • Hindered business growth
  • Loss of competitive advantage

This emphasises the need for an IT strategy as one of the biggest mistakes a business can make is committing to a system or contract without due diligence or consulting the overarching IT strategy to understand how the implementation of the considered technology will impact the operations and systems within the business.

What should an IT strategy include?

An IT strategy can benefit both CIOs and department managers as it encourages collaboration that results in alignment with existing and new investments. A strategy should include up-to-date versions of:

  • A systems architecture rundown of the whole business
  • An inventory containing end-of-life dates, and usage
  • A list of emerging problems recorded by staff and IT team

The rapid speed that these technologies are being innovated is phenomenal, and businesses are being exposed to more technologically advanced IT systems which creates the need to update and adapt to these IT systems regularly.

The benefits of an IT strategy

Despite significant investments in new technologies over the past decade, many organisations are actually watching their operations slow down due to underutilisation of technology and poor user engagement related to technology usage is part of the problem.

Poorly designed applications and a general lack of training causes many employees not to leverage the innovation and drive productivity.

Encouraging effective adoption of new technology requires an IT strategy for organisational change management.

There’s no easier way to manage IT than to work with an IT specialist who can help you manage these IT services and create a more efficiently run business. Many companies are seeking It managed services for a source of competitive advantage, so there isn’t a lack of responsibility or confusion within the company.

By following an IT strategy and understanding the reasons behind process bottlenecks and other errors, enterprises can more efficiently allocate IT and human resources. By partnering with a managed services provider who can create and implement an IT strategy, businesses can focus on their core competencies to cut costs and increase productivity.

This article was written by Harry Wilson, an IT Consultant. Read more via Leap Consulting.

Check Out The Keynotes for ISM2018 Nashville

ISM has done it again, with three globally-recognised keynotes announced ahead of its highly anticipated annual conference in Nashville, Tennessee.

About this time every year, the Institute for Supply Management announces its keynotes for its upcoming annual conference. As usual, the lineup for ISM2018 is impressive, with Mitt Romney, Arianna Huffington, and John Rossman set to wow the crowd.

Mitt Romney was the 70th Governor of Massachusetts from 2003 and 2007 and the Republican Party’s nominee for President of the United states in the 2012 election, where he ran against the formidable incumbent, Barack Obama. Romney is also the founder and CEO of Bain Capital.

Arianna Huffington is the co-founder and former editor-in-chief of the Huffington Post, and appears regularly in Forbes’s most influential people lists. Huffington has recently launched a new startup, Thrive Global, focused on health and wellness information.

John Rossman is a former Amazon executive and author of “The Amazon Way: 14 Leadership Principles Behind the World’s Most Disruptive Company.”

Top-tier keynotes at ISM’s annual conference have become something of a tradition. Romney, Huffington and Rossman will join an alumni of household names who have spoken in the past, including:

Focused on “Global Insights, Peak Performance”, ISM2018 expects to draw over 2,500 supply management executives and professionals from around the world. More than 100 interactive sessions are a part of six practitioner-led learning tracks, and will feature executives from firms such as Google, Pfizer, and P.F. Chang’s China Bistro.

ISM2018 will be held from May 6th – 9th 2018 at the Gaylord Opryland Resort & Convention Center in Nashville, Tennessee.


In other news this week:

 Economists warn against NAFTA withdrawal

  • A report in the Wall Street Journal has given the probability of a U.S. withdrawal from the North American Free Trade Agreement is roughly 1 in 4.
  • Private-sector forecasters have said that such a move would likely weigh on economic growth.
  • S. President Donald Trump has threatened to pull the U.S. out of NAFTA if efforts to renegotiate it fail. Talks are set to resume on November 17th in Mexico City.

Read more: Wall Street Journal

 

Driverless shuttle hit by delivery truck

  • Only hours after its debut, a driverless shuttle in Las Vegas was hit by a semi-truck, demonstrating that robotic vehicles are still vulnerable to human error.
  • According to reports, the fault lies squarely with the driver of the semi, whose vehicle grazed the front fender of the shuttle. The robot shuttle’s sensors registered the truck and stopped the vehicle in an effort to avoid the accident.
  • None of the shuttle’s eight passengers were injured in the incident, but proponents of the self-driving vehicle revolution are concerned that incidents like this will delay the uptake of robotic vehicles.

Read more: MarketWatch

A New Role Emerges: Supply Chain Scrutinisers

Any increase in transparency is good news for the supply management profession. That’s why the rise of the 3rd-party Supply Chain Analyst is a development that the profession should welcome, rather than fear.How many articles have you read about Apple’s supply chain? Dozens, no doubt. Tesla’s is similarly scrutinised, along with McDonald’s, Walmart’s and a handful of other household names.

The reason for the growing popularity of this news is twofold.

Firstly, increased transparency in reporting means that researchers have a lot more to work with. For example, a recent Forbes article from Jonathan Webb reports that recent legal changes in Taiwanese corporate law means analysts can now take advantage of mandated monthly earning reports.

Secondly, corporate supply chains are finally being recognised as a key factor that contribute to commercial advantage – such as risk levels and speed-to-market – or commercial disadvantage. As such, top analyst firms such as Bloomberg now employ supply chain research experts whose insights can affect a companies’ share price just as dramatically as a surprising result in a quarterly earnings report.

What does the role look like?

Here’s an example of a supply chain analyst role currently being advertised with Bloomberg:

https://careers.bloomberg.com/job/detail/62154 

The role calls for someone who is capable of “researching and analysing business relationships on over 23,000 companies globally, “providing a roadmap for clients to view supplier and customer relationship networks, helping them identify and manage supply chain risk and generate investment ideas”.

The researcher is expected to interact with analysts, fundamental and quantitative portfolio managers and news agencies. In other words, the data uncovered by a supply chain analyst is much-anticipated and eagerly consumed. Gartner’s annual Supply Chain Top 25 Rankings, for example, make a splash not just within the supply management profession but within investment circles too:

Cleaning up the supply chain

Valuation and investment insights aside, another major role of supply chain analysts is to uncover malpractice such as human rights abuses, corruption, and environmental breaches. The biography of the aforementioned Forbes contributor, Jonathan Webb, says it all:

“I’m focused here on the murky world of supply chain corruption, looking at commercial bribery, supplier compliance and other nefarious goings on in the supply chain.”

And this is where the really interesting part of the supply chain analyst’s role begins. Once the domain of investigative journalists, supply chain malpractice is now being uncovered by experts who travel to hotspots to reveal and report on issues ranging from conflict minerals in the Congo, sweatshops in Bangladesh, and toxic waste in China.

Again, the big-brand household names are those that come under the most scrutiny for supply chain sustainability and human rights abuses, with subsectors such as clothing manufacturers and chocolate makers receiving the highest level of focus. Reporters and political enemies of Ivanka Trump, for example, continue to probe her clothing brand’s supply chain as a likely area of weakness. In response, the company has apparently made public information harder to find than ever.

What does this mean for the next generation of procurement pros?

The emergence of the supply chain research analyst opens up a new career path for procurement and supply management professionals. If you’re currently working as a data analyst for a single organisation’s supply chain, in the future you may consider scaling up your role to pull trends and insights from the supply chains of tens of thousands of organisations.

In other procurement news this week…

Procurement Fraud Is Costing NHS

  • The NHS Counter Fraud Agency (NHSCFA), launched 1st November, has estimated all types of fraud cost the health service a total of £1.25bn, with procurement fraud the second largest contributor after patient fraud
  • One of its aims is to identify problem areas in preventing – and increasing reporting of – invoicing and procurement fraud
  • This is the first time the health service has released an official estimate of the cost of fraud to the NHS. The total figure is roughly 1 per cent of the NHS budget

Read more at Supply Management

Stephen Hawking’s warning on AI

  • Stephen Hawking is concerned that artificial intelligence could replace humans. The world-renowned physicist fears that somebody will create AI that will keep improving itself until it’s eventually superior to people
  • “If people design computer viruses, someone will design AI that improves and replicates itself. This will be a new form of life that outperforms humans”

Read more on The Independent 

Weetabix sets out new supply chain vision

  • Milan Pankhania, who was appointed head of supply chain for operations at Weetabix, has just completed three months in the role and he has been identifying areas where the company could make efficiencies or cut waste
  • “My role is to help drive efficiencies across the supply chain process, while striving for excellent customer service,” he said.
  • “The focus for my strategy will absolutely include cost control and proactive risk management. It isn’t about cutting costs though, it’s about doing the right things to manage risk”

Read more at Supply Management

You will be Assimilated: The Collective Intelligence of Procurement

For those who remember “The Borg” from Star Trek, you’ll remember the notion of a dispassionate alien mind-being that would suck up your individual mind to subsume into the collective intelligence.  Resistance is futile. 

Crazy stuff, right?  Or maybe not.

Flash forward to today.  For most people, your every move is being tracked by your smartphone, social media apps, web browsing, and credit card transactions.  Ever wonder why Google and Amazon are basically giving away their helpful devices and AI assistants?  You are being watched.  You are the product (not the customer).  You are the raw materials of a collective intelligence being built upon your individual experiences and desires.  In other words, the proverbial machine is watching and learning from you (in order to sell to you, er, rather, to “better meet your needs”).

But, this is all consumer stuff, right?  B2B is different, right?

Sort of – but it’s not THAT different.  And with all the regulatory pressures coming on consumer data privacy, as compared to much of the privacy that you sign away your rights to when you enter an employment contract, the tables may actually turn here. If you’re using a popular cloud-based Procurement system, you are also being watched (many providers analyse your system behaviour to figure out how you navigate the system and how to help you… yes, the chatbots are coming). If you use a procurement “business network” or eMarketplace (e.g., Amazon Business), your suppliers are signing away some of their intellectual property – whether they know it or not.  And smart companies are trying to gain a market intelligence advantage through digital business strategies in the supply chain. There’s a reason why GE created Predix; why Flex funded Elementum; why DHL sells supply chain risk technology; and so on.  Adoption creates insight and intelligence… and advantage.

All this isn’t necessarily bad for you though.  It serves up price benchmarking, risk intelligence and improved system usability.  It also signals how the world is moving away from “empty apps” that push documents around in workflows and move towards systems that are building intelligence to make your apps “smarter”.  This intelligence is typically built using machine learning fed by large data sets that help improve repetitive tasks like spend classification. Of course, AI is a bigger topic, and there are 23 distinct areas in AI for procurement and supply chain that we’re following that I can’t cover in a single blog post!  For example, contract management is a great example where AI is already having an impact and this will be very disruptive in the Legal services (e.g., Legal BPO) area.

Still, building your collective intelligence for your firm doesn’t necessarily require AI.  You can avail yourself to some good old-fashioned knowledge management built up from the various collectives that are all around you:

  • The internal corporate collective. Learn from consulting companies and build presentation storyboards of your procurement projects that created change and value – and use them to win over skeptical stakeholders.
  • Your supplier collective. Your current supply suppliers, previous suppliers, “almost suppliers” (who bid on your business), and potential suppliers via crowdsourcing are a wealth of knowledge – if you know how to tap them through supplier innovation programs and proper supplier management processes.
  • Your customer collective. This includes not just internal stakeholders, but external customers as well.  For example, Lenovo uses its social customer mining tools to identify key customer/demand information that can be passed upstream to suppliers.  On the flip side, many similar intelligence tools are being deployed on the supply side with varying results (that’s a whole topic for another day).
  • The installed base collective. Your procurement app providers, consulting providers, and managed service providers are likely working hard to extract and productize your individual intelligence into a re-saleable collective intelligence. Choose a provider that is working on building collective intelligence into its overall platform strategy.
  • Your peer/community collective. There are lots of communities out there right now where you can learn from your peers – and many of them are free. You’re learning right now by reading this on Procurious, so you’re already well on your way!

We even practice what we preach at Spend Matters when we tap into this collective intelligence of procurement technology users by capturing end user satisfaction (think Net Promoter Score on steroids) and using it as an entire axis of our “SolutionMap” vendor scoring model/methodology.  And, yes, there’s a freemium version (it has eight procurement technology areas mapped out based on five different buyer personas from which you can select)!

The bottom line is that although we all start with a certain amount of individual intelligence, it’s the collective supply market of intelligence that is all around us if we can learn how to tap it, build it, and wisely bring the right intelligence back to our individual selves (and we’ll even be able to augment that individual intelligence into our own personal bots and ‘digital twins’).  And since procurement should be enabling stakeholders to also tap that collective intelligence of supply, it couldn’t be a more important competency to build right now.

So, go bravely into that supply market and assimilate yourself into the collective intelligence of procurement and be smarter and better from that experience.  It’s really what life is all about, isn’t it?

This article was contributed by guest author Pierre Mitchell, Chief Research Officer and Managing Director at Azul Partners.

Boeing Acquires Robotic Aircraft Maker

Imagine an aircraft that can take off and land vertically, but isn’t a helicopter. It has an intelligent pilot, but there’s no human being sitting at the controls. Boeing has propelled itself into the world of futuristic aircraft with its acquisition of Aurora Flight Sciences.  

Boeing announced on Friday that it will acquire Aurora Flight Sciences Corporation, a company that specialises in advanced robotic aircraft. Aurora already has an impressive portfolio of autonomous aircraft, including vehicles it has been working on with Uber for its flying taxi project.

Much of Aurora’s business in the past has been with the U.S. Military, namely DARPA (The Defense Advanced Research Projects Agency) and NASA. Its aircraft have attracted interest (and funding) mainly due to its advanced Vertical Takeoff and Landing (VTOL) technology, with the small company beating out Boeing and Lockheed Martin last year to build the VTOL X-Plane for DARPA.

What does Boeing plan to do with this technology? The organisation’s press release doesn’t reveal much, but there’s speculation that the acquisition will help bolster Boeing’s own expertise in autonomous aircraft and VTOL tech, with most of that knowledge being funnelled into military aircraft. On the civilian side, the combination of autonomous piloting and VTOL technology are ideal for finally developing the drone taxis we’ve been hoping for. It is unclear whether Aurora will continue to work with Uber on this project.

A report in the Wall Street Journal notes that the acquisition is likely to have an impact on the jet maker’s supply chain long before it produces self-flying planes: “The technology includes … machine learning capability, which could be used to make industrial operations more efficient. Aurora produces composite parts for aircraft and other vehicles, potentially a big attraction to Boeing as it looks to take greater command of its supply chain.”


In other news this week:

Air France Testing Blockchain Technology

  • Air France KLM’s engineering and maintenance division is evaluating the potential for Blockchain to become its new digital ledger for managing replacement parts on in-service aircraft.
  • A spokesperson noted that Blockchain’s resilience, traceability, integrity and disintermediation are well suited to the aviation supply chain.

Elon Musk On Track To Win Solar Battery Bet

  • Elon Musk has announced that Tesla has reached the halfway point of construction on the “world’s biggest battery” in South Australia.
  • The company has a 100-day deadline to complete the construction of a 100-megawatt battery array, or it will build it for free.
  • The batteries, expected to power 30,000 homes, were commissioned as an innovative solution to an ongoing energy crisis in South Australia.

 Image credit: Aurora Flight Sciences

Take the Positive Procurement Pledge

Eight months after its launch, the International Standard for Sustainable Procurement (ISO 20400) has the potential to help procurement professionals stamp out the worst aspects of supply chains worldwide. But what can be done to create a groundswell of support for this voluntary Standard?   

ISO 20400 creates a standard that will enable every organisation in the world, regardless of size, industry, and location, to have a flexible guidance framework on sustainable procurement. The Standard includes seven core subjects, including the environment, fair operating practices, labour issues and human rights, with a range of subtopics under those such as discrimination and gender inequality.

While some businesses have jumped at the opportunity since its launch in April, the voluntary nature of the Standard has meant that many organisations are yet to do so.

Take the Pledge

Kim Andrews, Sustainability Advisor at Good Environmental Choice Australia (GECA), says that the earliest movers regarding ISO 20400 are the ones that will get ahead.

“The conversation has moved well beyond sustainability simply being the right thing to do”, Andrews says. “Business leaders now understand that there’s a whole spectrum of concrete benefits, ranging from building resilience, future-proofing your organisation, managing sustainability risks and getting ahead of future regulatory requirements.”

GECA has recognised the need to jump-start the conversation and education around ISO 20400. To do so, the organisation has launched a challenge for businesses, government agencies, industry groups and non-governmental organisations around the world to take the Positive Procurement Pledge. By taking the pledge, organisations agree to develop, document and implement a sustainable procurement policy to govern all purchasing decisions by 31 December 2020.

“This is a chance to differentiate yourself from the competition and demonstrate leadership and innovation within your sector”, says Andrews. “It makes a lot of sense from a risk-management perspective. Here in Australia, we’re dealing with gas supply problems, water shortages, rising temperatures in summer, and climate change directly affecting resources. Companies need to start looking at these factors, identifying their own risks and planning to build capacity against that, and the ISO 20400 provides the framework to do so.”

GECA provides certifications and ecolabels across a range of standards by working with organisations to ensure they comply across multiple criteria including environmental and social aspects.

“The ecolabels do the hard work for procurement”, says Andrews. “When you see our logo, it means that yes, you can trust that all of the compliance with legal aspects and international trade laws has been addressed. The global nature of supply chains means that having an internationally recognised label is crucial, which is why we’re part of the Global Ecolabelling Network (GEN) that includes 27 members spread across 57 countries and territories.”

With so many certified products available, there has never been a better time for organisations to start their positive procurement journey.

A sustainability roadmap

Complying with ISO 20400 will take time and commitment, which is why Andrews recommends that companies follow a three-year plan to do so:

Year one: Understanding ISO 20400 and how it currently aligns with your own policies. Identifying the risks in the Standard that apply most to your organisation, and how ISO 20400 can be integrated into your ways of working.

Year two: Using the tools and resources available for companies to help build new policies aligning with ISO 20400, and strengthening policies already in existence. Identifying roadblocks such as contracts, trade agreements or a lack of understanding among suppliers.

Year three: Refinement of your organisations’ policies and seeing how far you’ve come in increasing resilience and purchasing certified products.

“Sustainable products are now a $3 trillion business”, Andrews says. “Taking the Pledge gives organisations the opportunity not only to do the right thing but to get ahead of the competition as the sustainability mandate grows.”

Interested in taking the Pledge? Learn more here. Kim Andrews will introduce the Positive Procurement Pledge to attendees at GovProcure2017 in Sydney on 6 December. Click here to learn more and download an event brochure.