Category Archives: Procurement News

Reach Your Summit at Big Ideas Zurich

Sign up as a digital delegate to be in with a chance of winning a Parrot Bebop drone worth £449.99!!

Sign up as  a digital delegate for Big Ideas Zurich (it’s free)  

On the 10th December we’ll be donning our hiking boots, picking up our trekking poles and embarking on a new adventure.

Brace yourselves, because Big Ideas is about to get truly digital!

For the first time ever, we’ll be filming and streaming the entire day’s event via the Digital Delegates group on Procurious. If there was ever a time to register for one of our summits, it’s now. Featuring presentations and interviews from some of Europe’s top procurement leaders, we’ll be discussing:

1. Procurement and Supply Management Towards 2030
2. The Talent Equation
3. Automating Procurement out of a Job
4. Time Enough at Last: where would top practitioners focus energy if tactical elements of procurement were automated?

Prizes for procurement pros – WIN Parrot Bebop drone worth £449.99

You probably don’t need any added incentive to sign up, but everyone loves a prize, right? And believe us when we say we’ve got prizes falling from the mountaintops.

We’ll be doing seven prize giveaways throughout the day to digital delegates actively participating in our online discussions. And, by joining the group you’ll be automatically entered into our prize draw to win  a Parrot Bebop drone.

To be in with a chance of winning…

Step 1: Sign up as a digital delegate for Big Ideas Summit Zurich

Step 2: Get automatically entered into our prize draw to win a Parrot Bebop drone worth £449.99

Step 3: We’ll reveal the winner during Big Ideas Summit Zurich on 10th December

6 reasons to become a digital delegate

Registering as a digital delegate for Big Ideas Zurich is totally free and will give you access to the entire day’s event. Here’s what you can expect from the day:

Drive your peak performance 

As we charge towards the new year, this is your final chance in 2018 to fulfill your personal development goals. Learn how YOU can reach the summit of your career in a whole range of critical areas, from business partnering to engaging with the latest game-changing technology.

Watch from anywhere 

We’ve pushing the digitisation of this event to the limits! Big Ideas Zurich will be streamed on Monday 10th December via Procurious. Become a Digital Delegate to watch from wherever you are, whether you’re at the office, on the bus, or at home enjoying a glass of wine.

Win a Parrot Bebop Drone worth £449.99 

All Digital Delegates that engage in the Procurious Big Ideas Zurich Group on Monday 10th December will go in the running to win a drone! Procurious will also be giving away a whole range of prizes on the day – but only to those who get involved! Follow Procurious on social for more details on prizes and giveaways.

Get the latest research

Be one of the first to get hold of Procurious and Michael Page UK’s final installment of the Procurement 2030 report. This much-anticipated research paper will be released on Monday 10th December, with a live discussion of the findings with one of the report authors.

Engage with the hottest topics facing procurement and supply 

What skills do I need to drive peak performance in my procurement career? What’s the latest intel on blockchain? What steps can I take to close the gender pay gap? Digital Delegates tuning into Big Ideas Zurich will hear about the latest, hottest topics that are challenging procurement and supply professionals around the globe.

Hear from procurement’s top thought leaders

Watch presentations and interviews with inspirational speakers including blockchain guru Olinga Ta’eed, gender equality champion John Everett and supplier innovation expert Jeurgen Nelis. But that’s not all! This event will be packed with bite-sized content including research updates, top picks from the Procurious Blog, and CPO interview compilations.

FAQs

When is it?

10th December 2018. But a lively conversation has already begun on Procurious! Expect to see most of the action between 10am-3pm GMT when we’ll be streaming all of the action from Zurich.

Where is it?

Although our top influencers will be meeting in Zurich, due to its digital nature Procurious members across the world can watch the whole event from the comfort of their office, armchair or even from the beach!

How can I join?

Simply sign up to Procurious to become a digital delegate. You’ll instantly gain access the Big Ideas Zurich Group and the live stream on the 10th December

Does it cost to attend as a digital delegate?

It is completely free to join Procurious and to be a Digital Delegate! Simply sign up or enrol here.

Do I have to be a member of Procurious?

Yes. Participation as a digital delegate is free and open to all members of Procurious. You’ll be joining a community of 32,000 like-minded procurement peers and gain access to all Procurious’ free resources.

Help – I can’t make the live-stream on 10th December!

No worries! If you can’t join the action on the 10th December, you’ll be able to catch up when it suits you, on demand, via the digital delegates group.

Sign up as  a digital delegate for Big Ideas Zurich (it’s free) 

How to Reign In Even The Wildest Maverick Spenders

A candy fix. Underwear from Victoria’s Secret. An obsession with purple. Real maverick expenses from the front-line of procurement, and how to reign them in.

Image: Jackson Stock Photography/Shutterstock

Anyone who works in an office environment has experienced a scenario that goes something like this:

There’s something you need to do your job, so you just go out and get it – the quickest and easiest way you know how – and then expense it back to the company. Maybe that means buying a notebook from the store around the corner or ordering computer accessories from Amazon.com. Maybe you’ve booked your own travel for a business trip or called up a good friend to get her events management company to help with a corporate event.

Using these shortcuts may feel like you’re doing yourself and your company a favor, but most employees have no idea just how counterproductive this “maverick” spend behavior can be for the organisation’s ability to accurately analyze spend, supplier management, and procurement’s overall strategy.

When employees go rogue, purchasing goods or services out of contract or from unapproved suppliers, the company will miss out on certain discounts they worked hard to negotiate. Worst case, it can damage relationships and impact future contract terms with preferred vendors and even open the door to unethical business practices that taint the organisation’s reputation.

What’s scary is that these scenarios mentioned are all too common and appear to be relatively innocuous, believe it or not. In my 20 years of experience in procurement leadership roles, I’ve seen it all. Some of the craziest purchases I’ve seen employees make on behalf of their companies have been things like:

  • Buying candy for the “office” candy dish… you know, just in case a guest might want to help themselves to some. In reality, the employee that purchased it, ate it all.
  • Purple pens to match purple highlighters, purple pads of paper, purple post-it notes, you name it… simply because purple was this employee’s favorite color.
  • Items from Victoria’s Secret which were expensed as “marketing apparel.” Enough said.

So what needs to happen to reign in this type of behavior, both the common and unwitting cases, as well as the rare and extreme? Simply put, you need to make it fast and easy to place and receive the orders.

Start by putting a system in place for better control and compliance– one that simplifies and automates the purchasing process, regardless of the product/service, approval process or supplier. This makes the entire process a lot more efficient by governing requisition, approvals, buying, receipt, reconciliation and reporting. It streamlines even the most complicated workflows, making it much easier for employees to comply.

These systems should also have intuitive and easy-to-use interfaces (think of the way consumer e-commerce sites are designed) so that employees actually want to use them to make purchases, and not just because they have to.

Lastly, and most importantly, take maverick spend seriously. Maverick spend can still sometimes happen even with the most sophisticated and intuitive systems. Keep a close eye on spend analytics to track exactly where rogue spend is coming from, so you know when and how to enforce spending policies that prevent future rogue behavior – and those surprise expense requests.


To learn more about maverick spend and how to set your key initiatives in the coming year, join Basware and The Hackett Group on November 7th for Ramp Up: Planning Your Key Improvement Initiatives in the Coming Year with Amy Fong of The Hackett Group and Nancy Jorgensen of Basware.

5 Challenges in Indirect Procurement

Indirect spend is a notoriously difficult area to bring under control, but it also offers enormous saving potential … if you can get it right!

There’s a lot of buzz online at the moment about indirect spend because we’re barrelling towards one of the major events for indirect on the U.S. procurement calendar: ISM INDIRECT2018.  We’ll have a look at the conference line-up in a minute, but first, let’s review some of the enduring challenges for those tackling indirect spend. 

Five enduring challenges in indirect

Real change happens when CPOs get involved and influence buying behaviour across the entire organisation – and in every category. But the hurdles they face include:

  1. Lack of investment: Indirect procurement is typically under-invested, especially given its potential to create significant savings for organisations.
  2. Lack of capacity: The indirect procurement team has to focus on sourcing commonly purchased and high volume goods and services, as well as transaction processing.
  3. Lack of mandate: The primary responsibility for most indirect procurement categories often lies within the business units. For some categories, such as travel, it may not even be clear as to who actually owns the policy.
  4. Lack of awareness and low visibility of indirect procurement: Indirect procurement is often seen as less important than direct procurement in the eyes of senior executives. It is seemingly even less important at the business unit level. Many stakeholders view an indirect procurement professional’s role as the ‘rubber stamper’ at the end of the process.
  5. Organisations lack the skills required for effective stakeholder management:The indirect procurement function has to find ways of working more effectively alongside the various business units and stakeholders within each business unit.

INDIRECT2018

What happens in Vegas … will definitely need to be brought back to your organisation and implemented at the earliest opportunity!

ISM’s INDIRECT2018, running from 7-9 November at the ARIA Resort & Casino in Las Vegas, is being billed as the essential educational event for indirect procurement professionals.

Speakers include:

  • Rahul Vijay, Head of Global Tech Sourcing at Uber – Telecom, Internet of Things and Sourcing: Powering 10 Billion Uber RIdes
  • Karen Fedele, Head of Procurement Centre of Excellence, Shire – Stakeholder Engagement: Unlocking Procurement’s Value
  • Jessica Rosman, VP Procurement at Caesars Entertainment – Sourcing in a unique and challenging environment – while sustaining the environment

Also on the program:

  • The future of indirect technology
  • Transportation costs in a challenging economy
  • Balancing successful travel relationships
  • Techniques for complex supplier negotiations
  • Reducing risk exposure
  • Roundtable discussions
  • Supplier showcase

INDIRECT2018 also includes a strong focus on nurturing the up-and-coming generation of indirect procurement gurus, with five student presentations and thee announcement of 2018 scholarship winners.

Register now for ISM INDIRECT2018

Food Allergy Deaths Avoidable With Blockchain

The recent cases of tragic deaths caused by food allergies has opened afresh the debate on fully transparent supply chains.

Many of you will have seen or read news reports in the past couple of weeks regarding the tragic deaths of two women due to severe allergic reactions to eating pre-prepared food. In both cases, the food in question was purchased from the same retailer, though the resulting actions from the cases have been markedly different.

The cases have highlighted industry-wide issues regarding food packaging and labelling relating to allergens, as well as reigniting the debate on where the responsibility lies for food content and allergen checks within the supply chain.

Inadequate Labelling and Mis-sold Products

The first incident occurred after a woman ate a pre-prepared baguette that had sesame baked into the product, but had not been listed on the product’s ingredient list on its packaging.

A recent inquest found that the retailer had “inadequately labelled” its products, failing to highlight the presence of sesame in the food. While the organisation agreed with the coroner’s verdict, it has thrown a spotlight on industry packaging requirements, particularly when it comes to listing potential allergens.

The second death was as a result of a severe allergic reaction to the presence of dairy protein in a pre-packaged sandwich. However, unlike in the first case, the retailer has pointed the finger of blame squarely at one of its second-tier suppliers, claiming it was mis-sold a guaranteed dairy-free yoghurt.

The supplier in question, with whom the retailer has since ended its relationship, has rejected the claim that its product was to blame. They had their own supply chain issue in February 2018 when they were forced to recall some of its products due to undeclared milk, resulting in it ending a relationship with a third-party supplier. The supplier has denied that the recalled product is the same product as caused the allergic reaction, though the retailer and two independent authorities have conducted tests showing that the yoghurt in question had levels of contamination.

Where the fault lies for the contamination will be established in due course. And though this ultimately pales in comparison to the tragic loss of life, it does raise a couple of serious questions: Where does responsibility lie for ensuring product quality in the supply chain? And what can organisations AND suppliers do to ensure full supply chain transparency?

Introducing Blockchain to the Food Industry

The debate on the first question will continue to rumble on. In reality, the responsibility lies with every party, irrespective of which tier they are in the supply chain. That said, the buck ultimately stops with the end user, retailer or seller to ensure products are fully labelled and they are satisfied they are selling a quality (and safe) product.

The answer to the second question may be closer than you think, however. Blockchain has been discussed at length on Procurious and its applications in the supply chain are well documented.

Plus it helps that the world’s largest retailer, Walmart, has just unveiled its new food industry blockchain ambitions in China. The retailer plans to use the existing, proven, technology to ‘overlay’ the supply chains in the notoriously complex industry.

And with major producers such as Dole, Nestle and Unilever on board, as well as IBM as a technology development partner, this does have the signs of being the first step on a (long) road to success.

Success that could usher in new processes for how food information is obtained, stored and shared, allowing all parties to track the provenance of food from farm to table. This will give all levels of the supply chain the transparency required to know products are both safe and of the highest quality.

With what has been in the new recently, with impacts that none of us can predict and that potentially extend further than any of us know, this may also represent the first step to ensuring the similar tragedies don’t happen again.

Read more on Walmart’s food industry blockchain ambitions here.

Why Out Of Date Procurement Models Are Worse Than Useless

Manufacturing and procurement technology has moved so fast in recent years that it’s entirely possible the trusty maturity assessment you’ve always used is now hopelessly out of date.

Image by Stokkete /Shutterstock

The other day, someone showed me a quiz from a 1960s Cosmopolitan with a title along the lines of How Good a Housewife Are You? The subject-matter, of course, had not aged well. The reader had to answer questions about what they did when their husband comes home from work – do they put dinner on the table straight away, or fetch his pipe and slippers first? For the 21-century reader, every question in the quiz came across as outdated, and you’d never dream of using it for its intended purpose (unless it was for a laugh).

Things change – whether it’s women’s equality, social mores, or technology. The point of the story above is that the way we measure performance must keep pace.

In the procurement world, maturity models are one such tool that can become obsolete.

Conventional maturity models for direct materials sourcing usually evaluate procurement in terms of outdated capabilities and enabling systems. You know the ones – they focus on concepts such as “upstream versus downstream” and rely on traditional metrics like spend under management. What they don’t do, however, is address the tremendous advances in technology that have transformed the manufacturing world in the last ten years. Nor do they address impaired agility and opportunity risks hidden by siloed data, fragmented ERP systems, and different product management systems. 

A contemporary maturity assessment

Cognitive sourcing advisor, LevaData, were motivated to build a Cognitive Sourcing Maturity Assessment after their 2017 cognitive sourcing study revealed the following trends:

  • Only 13 percent of companies continuously engage their suppliers; the average organization engages with only 52 percent of their suppliers once a year.
  • Outmoded enterprise analytics and sourcing tools lead to reactive, inward-looking decisions, rather than proactive insights that identify market risks and opportunities before they become a problem.
  • Compared to an average organisation, the most advanced procurement teams use technology to speed up their prep and negotiation time by a factor of ten.
  • Only 5 percent of organizations utilize a purpose-built platform for direct materials sourcing operations.

Proof of LevaData’s Maturity Model’s currency is the fact that it takes into account so many of the aspects of Industry 4.0. Founder and CEO Rajesh Kalidindi said the Model is “unique because it captures the impact of contextual market intelligence on sourcing professionals’ decision-making and their ability to leverage open-source analytics, machine learning, and AI-enabled insights with cross-functional teams”.

The survey takes about 10 minutes to complete, and will provide you with a summary report with recommendations for near-term improvements. Kalidindi explains: “This maturity assessment enables companies to quickly and easily close the performance gap. It offers an objective, third-party perspective of an enterprise’s strategic readiness and visibility into actionable business intelligence. C-level executives and board members who may not be familiar with these issues gain a clear picture of resources and processes needed to improve outcomes in increasingly volatile global markets.”

Click here to take LevaData’s Cognitive Sourcing Maturity Assessment.

Don’t miss out on the 2018 Cognitive Sourcing Summit

LevaData will host the 2018 Cognitive Sourcing Summit in Santa Clara, CA, on September 13, 2018.

The event is expected to attract 150 attendees, with speakers and panels exploring how to accelerate the journey towards cognitive sourcing, with a focus on the latest trends in digital transformation and the adoption of AI among procurement teams.

Attendees can expect to hear insights from executive leaders from the high tech, industrial equipment, medical device, telecommunications, and consumer products industries, along with industry analysts and thought leaders from IDC, Supply Chain Insights, Gartner, Chainlink Research, and Spend Matters. Presentations and workshops will include:

  • Cognitive Sourcing: Maturity Model, Innovation and Competitive Advantage
  • Digital Procurement: Building a Successful Roadmap
  • Driving the Transformation: Making the Case and Enabling Change

Participants will also hear from Fitbit’s Kevin Purser and others regarding their successful digital procurement journeys and recommended best practices.

Here’s the really exciting part – the closing keynote presentation will be delivered by Procurious’ very own founder Tania Seary, who will discuss:

  • How to formulate an action plan for when delegates return to the office.
  • The attributes needed to successfully orchestrate, collaborate and negotiate within a complex, technology-enabled global supply network.
  • The uniquely human skills we’ll need to untangle the gridlock of competing interest and find a resolution to the supply challenge in an AI-boosted environment.

Interested in learning more? Visit www.levadata.com.

Register now for the 2018 Cognitive Sourcing Summit.

Procurement 101: Why We Need Data Analytics

Do you want to leverage big data in procurement but are unsure how to article the benefits? Here are four ways data analytics is changing the procurement profession.
 

1. Supply Chains Will Be More Transparent

Data analytics will make it possible to have visibility of more factors than humans could ever analyse on their own. With customers demanding the country of origin and the practices surrounding the acquisition of everything in the products they buy, data can help track products through the supply chain. Additionally, procurement professionals can find ideal suppliers with predictive data. Doing so will make it easier for products to adhere to a specific code of ethics throughout the supply chain.

2. Risk Focus Will Shift

As more information trickles through the supply chain, the timeline of risk will shrink. With more visibility, you’ll be able to concentrate on immediate disruptions in the supply chain and respond to those.

Tracking weather, traffic conditions and other disruptions that could affect your supply chain will allows for more rapid adjustments, which will in turn lead to fewer disruptions in the supply chain and of the business. Planning for these factors becomes easier with data analytics that can juggle far more pieces of information than humans can.

3. Procurement Professionals Will Become Knowledge Leaders

The information procurement professionals will use will make them knowledge leaders for the entire company. For cost savings, the data used in procurement will be invaluable. To take one example, a commercially sold multivariable freight optimisation program saved one industrial company 25 per cent on its air freight costs. The marketing department may consult with the information procurement professionals gather from social media to determine demand.

4. Automation in the Supply Chain Will Gather Pace

The Internet of Things (IoT), which combines sensors and data analytics, will ramp up automation in the supply chain. Automation will ease the supply management professional’s job, as much of the ordering becomes part of the system. Sensors on store shelves can measure how fast a product is selling, then alert the manufacturer to adjust the amount to deliver to individual stores — or even the total number of products to produce. The head of JDA Labs, an operations planning software company, describes big data and sensors as answering manufacturers’ demands for product placement information. The sensors show where stores place products on their shelves, and informing manufacturers of their product placement is the first step toward automation of meeting consumer demands.

Implementing Data Analytics for Procurement

Walter Charles, CPO of Biogen, advises companies to include data analytics in their processes and claims businesses do not need a large team of scientists. All they need are a category manager and a group of six to 10 people who know how to use the software to examine bids.

Charles used such a team to work with $12 billion when he was at Kraft Foods and had a similar group for $10 billion in work at Kellogg’s. Ernst & Young, EY, suggests the team members know how to work with quantitative data since quantitative risk management will become a critical part of procurement. With the right people and software, you can make data analytics a reality for your business.

Analytics will make use of unexpected data. Ernst & Young predicts that by 2025 social media, mobile technology, big data and the cloud will be the primary sources for data analytics in procurement. Analysing this information will be necessary with the right software and people to unpack it.

Security and Big Data

Part of using shared information in the cloud and big data will be keeping the information and your company secure. You cannot ignore the problem, so make sure you always have updated virus screening software. Additionally, keep a firewall for your business. When in doubt, hire a trusted IT security professional to keep your information secure.

Is Data Analytics the Future of Procurement?

Data analytics will become an integral part of the future of procurement and the supply chain. If you don’t start the process of implementing it in your operations today, you could be behind tomorrow. The information from this process will save you money and make your business more efficient. Data analytics is one investment where the ROI will continue to benefit your business for years.

Supply Chain Cyber Attacks On The Up

Software supply chain cyber attacks look set to be one of the biggest cyber threats facing organisations in the coming years. This week, the US intelligence community issued a new warning regarding future attacks…

Varlamova Lydmila / Shutterstock

The US intelligence community has issued a new warning on cyber attack risks.

The Foreign Economic Espionage Report, which was published by the US’s National Counterintelligence and Security Center (NCSC), warns that China, Russia and Iran are most likely to be behind future attacks.

“Software supply chain infiltration is one of the key threats that corporations need to pay attention to, particularly how software vulnerabilities are exploited,” William Evanina, the NCSC’s director and the US’s top counter-intelligence official, told the BBC.

“To get around increasingly hardened corporate perimeters, cyber-actors are targeting supply chains.

“The impacts to proprietary data, trade secrets, and national security are profound.”

The report details that despite the opportunities that technologies including AI and the IoT offer, they will also introduce vulnerabilities to U.S. networks – for which the cybersecurity community is not prepared.

The severe impact of cyber attacks was in evidence in June last year following the NotPetya attacks, ,  which cost nearly a billion dollars in collective damages. The White House called out Russia following these attacks 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 believed that Russian hackers launched 2,000 “NotPetya” attacks in the early hours of June 27.  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.

Cyber attacks on the rise

One of the consequences and subsequent risks of living in a hyper-connected world is an increased vulnerability to indiscriminate cyberattacks.

According to Chain Store Age, “nearly 80 per cent of IT security professionals across the United States, Canada, UK, Mexico, Australia, Germany, Japan, and Singapore believe software supply chain attacks have the potential to become one of the biggest cyber threats over the next three years. Yet, few organisations are prepared to mitigate the risks.”

Whilst many organisations have response strategies in place to deal with cyber attacks, they are not necessarly holding external suppliers to the same security standards.

Tesla Asks Suppliers for Cash Back

  • Tesla sent a memo to some of its suppliers, asking to return cash to the automaker, The Wall Street Journal reported. Tesla did not respond to Supply Chain Dive’s request to confirm the memo
  • The automaker told the Journal it is looking for price reductions from some of its suppliers to improve competitive advantage.
  • Since the beginning of the year, “we’ve seen a huge run up” in the amount of money due to suppliers, Bill Danner, president of CreditRiskMonitor, a financial risk analysis and news service, told Supply Chain Dive. The figure, however, isn’t unexpected as Tesla ramps up production of the Model 3
  • At the end of the first quarter of 2018, Elon Musk assured Tesla shareholders he’s feeling “quite confident” the auto company will have positive cash flow in the third and fourth quarters of the year

Read more on Supply Chain Dive

‘Change public procurement rules in response to heatwaves’

  • In a report on heatwaves, the Environmental Audit Committee (EAC) said “extreme temperature events” in Europe were now 10 times more likely than in the early 2000s
  • “The government should make businesses aware of the developing threat of heatwaves and the economic consequences,” said the report
  • “Procurement rules should be updated so that schools and the NHS do not spend public money on infrastructure which is not resilient to heatwaves
  • “Research on the economic consequences of heatwaves concluded that there was a more significant cost to the economy than benefit,” said the report

Read more on Supply Management 

Record-breaking Prime Day’s aftermath

  • Now in its fourth year, Amazon Prime Day has grown into a major shopping event that not only drives online sales but creates ripple effects throughout the entire retail industry
  • But suppliers and retailers must prepare for a surge in consumers returning goods — or risk products turning in to “dead money”
  • Amazon recently announced it had sold more than 100 million products on Prime Day 2018, making it the biggest on record since it started the event in 2015
  • But now in the middle of its 30-day return period from Prime Day, Amazon and several retailers are likely fielding the return of hundreds of thousands or even millions of products

Read more on Supply Chain Dive

Burberry Under Fire Following Reveal of Mass Product Burn

In the past five years luxury retail brand Burberry has burned more than £90m worth of stock. What’s the justification?

Sorbis / Shutterstock.com

British fashion giant Burberry hit the headlines this week as it was revealed, in its 2017/2018 annual report, that it has set fire to over £28 million worth of products.

According to the BBC, this takes the total value of goods Burberry has destroyed over the past five years to more than £90m.

Several commentators have explained this procedure as common practice in the fashion industry; used as a measure to protect  intellectual property and to prevent products being stolen, replicated and sold on for a fraction of the market price. Destroying stock also ensures it will not worn by what the brand believes to be the “wrong” sort of people.

Indeed, Burberry is far from being a singular culprit in the fashion industry when it comes to destroying excess stock. In 2017, The New York Times carried out an exposé on Nike, which revealed it was deliberately destroying stock by slashing large rips through its shoes.

According to the New Statesman, luxury brands are all at it – “the owners of Cartier and Montblanc destroyed more than £400m worth of watches in two years after buying back unwanted stock from jewellers.”

Burberry’s spokesperson said “Burberry has careful processes in place to minimise the amount of excess stock we produce.  On the occasions when disposal of products is necessary, we do so in a responsible manner and we continue to seek ways to reduce and revalue our waste.

“This is a core part of our Responsibility strategy to 2022 and we have forged partnerships and committed support to innovative organizations to help reach this goal.

“One example is our partnership with the Ellen MacArthur Foundation’s Make Fashion Circular Initiative, where we join other leading organisations to work towards a circular fashion economy.”

What the critics say

The news has sparked a great deal of controversy in the media with critics describing the practice as elitist, wasteful and unethical.

Kirsten Brodde, who leads the Detox My Fashion campaign at Greenpeace, spoke to The Guardian arguing that Burberry  “shows no respect for its own products and the hard work and natural resources that are used to make them”.

“To learn that a major fashion house with power and authority is choosing to add even more retail waste to the billions of tonnes offloaded to landfills and oceans around the world every year is reckless and arrogant” said Niamh Odonoghue for Image.

“The stuff that Burberry is burning is not waste – it is surplus, which is a very different concept. It is perfectly useable stuff,” said Orsola de Castro, co-founder of Fashion Revolution, a not-for-profit group that campaigns for greater transparency in the supply chain, speaking to the Independent. 

“Designer fashion is still, undoubtedly, all about class – or, rather, about staying away from anyone not part of the elite,” said Billie Esplen for the News Statesman

In a world where there is increasing pressure for big brands to lead the charge on ethical and sustainable business, is Burberry’s behaviour completely unacceptable? Will the outrage sparked by this news story encourage luxury fashion brands to reconsider their approach to managing surplus stock? Let us know your thoughts in the comments section below.

In other procurement news this week…

Lidl revealed as worst supermarket for recyclable plastic 

  • Less than three-quarters of the food retailer’s plastic packaging is widely recyclable, found a Which? investigation that surveyed 27 popular own-brand groceries from the UK’s 10 biggest supermarkets
  • Lidl came bottom of the pile with 71 per cent of its packaging widely recyclable, Morrisons emerged as the frontrunner with 81 per cent
  • All the supermarkets surveyed by Which? signed up to the UK Plastic Past in April, which vowed to make all plastic packaging reusable, compostable or recyclable

Read more on Supply Management 

Rising trade costs could pose a ‘dairy dilemma’

  • Even if the government strikes a trade deal with the EU, impacts on the supply chain, such as non-tariff trade barriers and labour shortages, could lead to spiralling costs for dairy companies, a report by the London School of Economics
  • The report, commissioned by Arla, said longer waiting times for customs inspections at the border would increase trading costs because of longer hours for lorry drivers
  • The report warned of extra delays because the UK Customs Declarations Service would have to deal with 250m declarations per year after Brexit, 100m more than the 150m it was designed to handle, which could further compound the £111 figure

Read more on Supply Management 

Adidas pledges to go green by 2024 

  • Adidas will only be using recycled plastics for all their products beginning in 2024. Earlier this week, the Financial Times reported the move that will feature the company removing new plastics from their athletic wear, which includes polyester
  • Polyester is currently found in 50 percent of Adidas’ products, which has become a popular material to create athletic wear with
  • This is the latest sustainable move by Adidas, who has sold one million shoes that were made with recycled plastic from the oceans

Read more on Green Matters

One Year On: Has Grenfell Changed Procurement?

How can procurement professionals learn from the tragic events at Grenfell tower in June 2017? 

Sasa Wick / Shutterstock.com

It’s just over a year on from the Grenfell Tower fire, which claimed the lives of 72 people and marked the UK’s worst residential fire since World War Two.

With the Grenfell Tower Inquiry ongoing; there are still so many unanswered questions regarding the circumstances of the fire. And for those directly impacted by the events, the trauma experienced is still very present.

As several victims and commentators have pointed out; those who lost their lives should not be allowed to die in vain. There are opportunities to learn, to improve policies and to ensure that the mistakes that were made will never be made again. Procurement should be at the forefront of these changes.

Last month, Claire Curtis-Thomas, British Board of Agrément chief executive, spoke at a select committee hearing on Dame Hackitt’s review of Building Regulations. She labelled the procurement process a “fundamental problem” that has led companies to become “complicit in poor outcomes”.

Has Grenfell changed procurement?

Alan Heron, director of procurement at Places for People (PfP), is one who believes the landscape has now changed for procurement. “It took something as horrible as Grenfell for people to realise there’s a consequence to looking for the lowest price,” he asserts. “It’s refocused everyone away from ticket price and back to value, which is where it should have been all along.”

A recent report conducted by Fusion21 investigates how procurement professionals working in the housing sector are reacting and adapting to the tragedy.

Throughout April and May 2018  Fusion21 surveyed 80 procurement professionals working for organisations that
collectively own more than a million homes.

The results suggest that social landlords are placing a much greater emphasis on quality when making procurement decisions following the fire.

  • 50 per cent of respondents said the Grenfell Tower fire has meant their organisation now places greater emphasis on quality when making procurement decisions. Among those who said Grenfell had not affected their organisation’s approach, were many who stated that quality was already vital
  • These professionals stated that there is now a greater focus on quality especially in relation to fire safety, and ensuring contractors had completely up-to-date information
  •  75 per cent of procurement professionals described compliance as “extremely important” when achieving value for money

Sarah Rothwell, Head of Member Engagement at Fusion21 explained “we conducted our Procurement Trends research in order to find out what was most important to procurement professionals after a hugely challenging couple of years for everyone in the housing sector.

“It will surprise no-one that, in the wake of the Grenfell Tower tragedy, the work of procurement teams around compliance hasbeen the focus of renewed scrutiny. The research findings [confirm this].”
Concerningly, 55 per cent of respondents admitted to feeling  some pressure to procure at the lowest price and one respondent, wished Grenfell had altered the emphasis their organisation placed on quality.
In other procurement news this week…

EU warns the US and China against a trade war

  • US president Donald Trump, Russian president Vladimir Putin and China have been urged to work with Europe to avoid trade wars and prevent “conflict and chaos”
  • Last week, European Council president, Donald Tusk, lambasted the US president’s constant criticism of European allies and urged him to remember who his friends are when he meets Mr Putin
  • He said that Europe, China, the US and Russia had a “common duty” not to destroy the global order but to improve it by reforming international trade rules

Read more on The Independent

Could automation increase modern slavery?

  • In its annual Human Rights Outlook, Verisk Maplecroft warned “drastic” job losses caused by robot manufacturing were predicted to cause “a spike in slavery and labour abuses” over the next 20 years
  • It said more than half of jobs across the ASEAN-5 countries of Vietnam, Cambodia, Indonesia, Philippines and Thailand could be lost to automation, which could push already at-risk supply chain workers into forced labour
  • Women are likely to be disproportionately affected because of their high representation in the garment, textile and footwear industry, an area that is particularly at risk of automation, the report said

Read more on Supply Management 

Brexit puts food supply chains at risk

  • Perishable goods are particularly at risk when supply chains are delayed, and U.K. and EU food producers are on edge as the clock ticks down toward March 29, 2019
  • Earlier this year, food suppliers and manufacturers signed onto a manifesto advocating for frictionless trade and innovation-focused regulation
  • If, post-Brexit, enhanced border controls and regulatory checks are implemented between  nations, delays and even failed deliveries could result
  • With negotiations in flux, many U.K. and EU businesses have taken matters into their own hands. Several European companies are planning to relocate parts of their supply chain out of the U.K. About one-third of U.K. businesses with EU suppliers plan to replace them with British vendors

Read more on Supply Chain Dive

Is Australia’s Proposed Modern Slavery Bill Well Below Par?

Australia’s new modern slavery bill is a welcome development in the fight to end slavery worldwide. But is the proposed legislation up to standard? 

In April 2016 the UK passed  new legislation, the first of its kind, making it compulsory for all businesses with a turnover of over £36 million to prove they have taken steps to remove slave and child labour from their supply chains.

Legislation like this, which also exists in France the Netherlands and the US,  forces big organisations to fully audit their supply chains and has consequently put pressure on smaller businesses to eradicate the practice too.

This week, Australia announced it would be following suit, proposing a Modern Slavery Bill, which uses the UK’s act as a model.

The bill, introduced by Assistant Minister for Home Affairs Alex Hawke, “seeks to stamp out the sale of any product in Australia that involves non-voluntary labor” and will require Australia’s organisations with an annual consolidated revenue of more than $100m (around 3000 businesses) to publish annual statements on the efforts they are making  to tackle modern slavery in their supply chains. These statements will have to be signed off at board level and published within six months of the publication of their annual reports.”

The Department of Home Affairs will also start publishing an annual statement on possible modern slavery risks in commonwealth procurement.

The proposed bill follows the Federal Government’s announcement in May that $3.6 million would be provided to the Department of Home Affairs for a new Anti-Slavery Business Engagement Unit to manage Modern Slavery Reporting Requirements by large businesses.

Part of this task will be overseeing a publicly accessible central repository of businesses’ Modern Slavery Statements, as well as providing support and advice to businesses on modern slavery risks.

The announcement was well received by anti-slavery charity walk Free Foundation. “The Australian Government’s commitment to support an Australian Modern Slavery Act with a new, well-funded unit is clear progress towards the Act’s effective implementation” said Jenn Morris,  Chief Executive.

Is the proposed modern slavery bill up to scratch?

Australia’s proposed Modern Slavery Bill has sparked some controversy amongst charities and human rights campaigners for a number of reasons.

  1. The bill proposes that only businesses with a revenue of over $100m must audit their supply chains. The Law Council has argued that the revenue threshold should be much lower – no higher than $60m to demand compliance from more organisations
  2. The bill doesn’t demand that there will be a public list of who must report. Without this information, if companies fail to act, this fact will remain hidden
  3. The bill does not propose any penalties for organisations that fail to report their findings or report incorrect or misleading information on the steps they have taken to combat modern slavery. Clare O’Neil, the shadow minister for justice said “we shouldn’t be leaving it to business to police themselves on slavery”
  4. The government have not established an anti-slavery commissioner to enforce the legislation nor vowed to provide access to a national redress scheme for victims of modern slavery

Keren Adams, director of legal advocacy at the Human Rights Law Centre, said “It’s absolutely the right step for the government to be introducing legislation to help flush out abuse, but today’s bill is missing some vital ingredients that would make it effective in doing so.”

Modern slavery: know the signs

Procurement and supply chain professionals are uniquely positioned to identify and tackle modern slavery in their supply chains. But you need to know the signs…

Firstly, it’s important to understand and look for the red flags, which might be extremely subtle. The likelihood of modern slavery is increased in conflict zones and unregulated sectors, particularly if the jobs are low-income and do not require education or specific skills. Migrant workers, women and children are among the most vulnerable.

Circumstances when passports or identification documents have been removed, excessive recruitment fees are subjected upon migrant workers or subcontractors further outsource work without prior consent are all indicators of exploitation.

Encountering one of these situations may not in and of itself amount to modern slavery but your organisation mustn’t assess anything  in isolation. It’s important to look for the series of signals in order to  decipher whether they paint a clear picture of modern slavery.

“Procurement teams are on the frontline,” Fiona David, former Executive Director Global Research  – Walk Free Foundation asserts. “They manage supplier relationships, they understand the business, the risks and the regions in which they operate. The indicators of modern slavery, being a grievous crime, is actually quite easy to identify, when you know what you are looking for.”

But advocacy groups and investigative reporters mustn’t be the sole figures doing the digging to reveal incidents of modern slavery.

“CSR and Procurement teams should work together across the sectors on these issues, as addressing modern slavery is a “pre-competitive” issue.  Companies can’t compete on sub-standard ethical and criminal practices.”

Have a listen to our recent webinar on modern slavery, Procurement Unchained. 


Jaguar Land Rover (JLR) warns of mega Brexit costs 

  • JLR has become the latest firm to warn of the costs of losing frictionless trade between the UK and EU.
  • JLR said more than 40% of parts going into cars built in the UK were imported from Europe and it spent £5.37bn with EU suppliers in 2017-18.
  • “A bad Brexit deal would cost Jaguar Land Rover more than £1.2bn profit each year. As a result, we would have to drastically adjust our spending profile; we have spent around £50bn in the UK in the past five years – with plans for a further £80bn more in the next five. This would be in jeopardy should we be faced with the wrong outcome” said Ralf Speth, CEO of JLR.

Read more on Supply Management  

Donald Trump imposes first tariffs on China

  • Punishing American tariffs on Chinese imports took effect early on Friday, marking the start of President Donald Trump’s trade war with the largest US trading partner and intensifying the anxieties of global industry.
  • The arrival of the long-threatened tariffs marked the failure of months of dialogue between the world’s two largest economies
  • An industrial survey confirmed that companies were white-knuckling their way through Trump’s intensifying, multi-front trade assault.

Read more on the Telegraph

Grenfell: Inspectors label procurement a ‘fundamental problem’

  • A leading industry certification and inspection body has labelled the procurement process a “fundamental problem” that has led companies to become “complicit in poor outcomes”.
  • Speaking yesterday at a select committee hearing on Dame Hackitt’s review of Building Regulations, British Board of Agrément chief executive Claire Curtis-Thomas said the procurement process for main contractors represented a “real problem”.
  • In Dame Hackitt’s post-Grenfell review of Building Regulations, it was suggested the industry should take the lead and decide for itself how to improve building quality and standards.

Read more on Procurious