Category Archives: Procurement News

ANZAC Soldiers in WWI – What Supply Chain Leaders Can Learn

How did John Monash, a Jewish son of German immigrants, become one of the greatest leaders of ANZAC forces during the First World War? And what’s its relevance to Supply Chain leaders?

Sir John Monash - Supply Chain Leaders

Recently I finished listening to Roland Perry’s audio book on ‘Monash: The outsider who won a war’, and found it a fascinating insight into early Australian military and social history.

And it got me thinking about what it was that meant that modern day universities, freeways, suburbs, scholarship funds and monuments were dedicated to and named for John Monash.

He became very famous, and if the King of England wanted to be his mate, then there must have been something special about this West Melbourne-born bloke!

You could say that Monash was pretty smart – a civil engineer, lawyer, business and artillery officer by training and profession. These skills saw him eventually become the Commander of the Australian Corps, which, at the time, was the largest individual corps on the Western Front.

Technologically Savvy

Like great supply chain leaders today, Monash was fascinated with technology, and what it could potentially do to meet his objectives. The Tank intrigued Monash and, along with the machine gun, he used it as a new and powerful offensive weapon.

Monash, like a smart manager today, encouraged his subordinates to come up with innovative ideas. One of them was a smoke canister that could be fired from artillery, providing screening for advancing troops.

He even used his legal training and knowledge of legal patents to help that soldier get that invention patented!

Health, Welfare, Blood and Guts!

Monash recorded in his diaries seeing and hearing the agonising cries and moans of injured soldiers left for dead after many of the battles at Gallipoli. It was this that led him to demand the urgent need for post combat repatriation and emergency medical treatment.

He also strongly advocated for more nursing services for recovering soldiers, which would have been a tough gig in those days.

Nothing demoralises an Army more than poor trauma health care, and Monash realised this. And any HR professional working in the supply chain knows that Health and Welfare programs work!

Leading his People

Monash’s leadership skills were second to none, especially when it came to his troops. He valued them. He wanted them alive.

He didn’t want to waste them as dispensable shock troops, as some suggest the British Commanders used ANZAC troops as, and like the movie Gallipoli portrayed them.

He went out of his way so that his troops would be given public recognition for their wins, sacrifices and heroic deeds, as censorship, particularly in newspapers, was suffocating at that time.

And what employee doesn’t crave a manger’s public recognition for a job well done? Monash understood implicitly the positive psychological effects of this.

Planning, Forecasting and Communicating

Monash as civil engineer understood the importance of intact supply chains and the logistics of moving people.

This expertise proved invaluable on the Western front. Time spent rebuilding destroyed road and rail networks, and town infrastructures, enabled the carrying of much needed supplies and reinforcements where and when he needed them.

Monash was a meticulous planner. He used all available topographical maps, often venturing into the field to survey objectives, so his soldiers could use existing terrain to their advantage and safety.

Planning skills and forecasting are nothing new to supply chain leaders, and it’s especially effective when you let your “troops” know what’s expected and up ahead.

People, Procurement and Negotiating

One of the most important tools in the arsenal for supply chain leaders, and what Monash was exceptional at, was the ability to negotiate, schmooze and defer when necessary to his superiors and reports. Or win them over with a confident well planned strategy.

Personal Fortitude, Self-development and “sucking that gut in”.

Monash, like any great leader, didn’t magically acquire “grit” or fortitude. He worked on himself both physically and mentally.

He read. He studied those around him. He picked himself up after failures and setbacks. And he was able to overcome racial slurs and innuendos, about his religious and cultural roots used by his opponents and detractors. At one stage even the Australian prime minister had it in for him!

When John Monash died in 1931 approximately 300,000 mourners turned out to pay their respects. Given the small size of Melbourne at that time, it showed how revered this great man was.

Monash - supply chain leaders
Australian Stamp Celebrating Sir John Monash

So whilst today’s supply chain leaders may not be involved in terrible international conflicts, some of the aptitudes and skills that a great Australia demonstrated over his lifetime, could be inspiring.

You can catch up with more leadership and life and style thinking at www.productiveminds.com.au.

Inspirational Words from Women in Procurement 2016

The Faculty’s Hugo Britt shares some inspirational words and thought-provoking ideas from the 2nd Annual Women in Procurement conference. 

Women in Procurement 2016 Inspirational Words

Back in March, I attended Quest Event’s 2nd Annual Women in Procurement conference in Melbourne, representing Procurious as the event’s media partner.

Literally within minutes of the conference being opened by NBN Co’s Chief Procurement Officer Coretta Bessi, I was scrambling to keep up my note taking as a flood of ideas, inspirational words and thought leadership came from the podium. And this pace didn’t let up over the two days of the conference.

Why run a conference exclusively for women in Procurement in Australia? Because the numbers are dire.

According to Jigsaw Talent Management’s Trends in Gender Diversity, the average split in the Australian national workforce is 54 per cent to 46 per cent in favour of men. But in the Procurement profession specifically the numbers are much worse – 63 per cent to 36 per cent in favour of men. Let’s not also forget the widening gender pay gap – currently averaging 17.1 per cent.

All of these figures point to an urgent need to drive change through a gathering of minds such as that seen at Women in Procurement.

Rather than try to summarise the content of the key speakers’ presentations, I’d like to share what I took as the most inspirational words and thought-provoking quotes from the conference.

Coretta Bessi, CPO, NBN Co.

“Ask yourself every day: ‘What am I doing today that will make me better tomorrow than I was yesterday?’”

Kelly Irwin, Head of Procurement Australia and NZ, Holcim

“Have the courage to leap out of your comfort zone.”

“A boss depends on authority, but a leader depends on goodwill.”

Jonathan Dutton, Director, JD Consultancy

“The secret to success in procurement is staying relevant to the vision.”

“Corporate Social Responsibility has the potential to change the fabric of our decision-making in procurement.”

Dutton’s four big critiques of modern procurement:

  1. An unproductive focus on cost
  2. Organisational isolation with no customer focus
  3. Glacial pace of procurement processes
  4. Acting without enquiry and not asking WHY.

Margaret Ruwoldt, University of Melbourne, speaking on the “Working out Loud” movement

“Hierarchical boundaries are much more permeable in a networked world. You have personal development opportunities that didn’t exist five years ago.”

“’Working out Loud’ is ‘How to Make Friends and Influence People’ meets the internet”

“Don’t wait to be plucked from the crowd – make yourself stand out.”

Jackie Aggett, Head of Procurement, Laing O’Rourke and The Faculty Roundtable member

“Courage, for me, means believing in myself, and believing my ideas are worth sharing.”

Sharon Hoysted, Procurement Manager, Supplier Management, Boeing Aerostructures Australia

“Diversity and inclusion are key to fostering a culture of innovation in your business.”

Nelli Kim, Senior Supplier Management Specialist, Telstra International Group

“If you can get through the self-doubt and give something a try, it’s a win.”

“What are YOU doing to personally manage your development?”

Professor Margaret Alston, Monash University

“Australia’s gender pay gap has grown to 17.1 per cent differential. This is simply not equitable. To achieve the same wage in Australia, women would have to work 64 days extra per year.”

Jennie Vickers, Director Australia and NZ, IACCM

“Don’t be defined by your job title or you’ll find yourself disappearing.”

“Make the case and articulate the benefits of supplier relationship management.”

Honey Meares, Procurement Manager, Supply Strategy, Genesis Energy

On clarity of purpose: “It’s important to know what you are trying to achieve.” 

Sarah Collins, Chief Procurement Officer, NSW Roads and Maritime Services

“Don’t try to change everything at once – rather, concentrate on starting the momentum.”

You can check out the full programme for the event here.

Hugo Britt is a Research Consultant at The Faculty, helping to support The Faculty Roundtable, an influential group of Australian procurement leaders, who gather to share their experiences and insights. The Faculty will be hosting their ninth Asia-Pacific CPO Forum, the region’s premier procurement event dedicated to accelerating commercial leadership at the highest level.

For more information on The Faculty Roundtable or CPO Forum, contact Program Manager, Belinda Toohey.

Curbing Public Procurement Fraud in Africa

Are we making any progress curbing public procurement fraud in Africa?  The consensus seems to be very little, although there are pockets of not quite excellence, but at least some promise.

Public Procurement Fraud

The Anti-corruption Agencies

10 years ago the World Bank reviewed the activities of anti-corruption agencies active in Africa and came to the conclusion that they were not particularly effective, despite some significant funding.  They concluded that African governments, in general:

  • lack the know-how or the political will to control corruption and procurement fraud
  • want just to be seen to be taking some action, however ineffectual it is in practice

In reality, if a study was undertaken today, the results would be about the same. This is despite efforts by the Organisation for Economic Cooperation and Development (OECD), Transparency International (TI) and Corruption Watch and others.

TI’s arm in Ghana, GII, says that their “vision is to make Ghana a corruption-free country in all spheres of human endeavour, where people and institutions act with integrity, accountability and transparency”.  Worthy sentiments, but is it just rhetoric?

The OECD tells us that “public procurement remains the government activity most vulnerable to waste, fraud and corruption due to the size of the financial flows involved”.  On average, 12-15 per cent of a country’s GDP is spent on public procurement. Some of this is wasted. However, there are no reliable statistics of how much money is lost to procurement fraud and corruption across Africa, as much of it goes unreported.

Kenya’s Procurement Woes

Despite an active but bureaucratic watchdog in Kenya: The Public Procurement Oversight Authority (PPOA), public procurement fraud and collusion in tenders is alive and well, and some say endemic. Many of the reported high value failures are in transport and logistics including railways and ports, and particularly in education.

PPOA has as its tag line “transforming procurement”. It has a laundry list of tender appeals awaiting attention and looks like it is losing the battle. Ask Haier Electrical or Hewlett Packard who together won a case against the Ministry of Education, Science and Technology in 2014 involving a project of more than US$400 million.

PwC says in a newly published report that one in every three Kenyan business leaders reported procurement-related fraud in the past two years, making it the most common type of economic crime in the country. The report faults Kenya’s procurement processes as not being robust enough to guarantee integrity at all levels.

The Politics of Preference – Women, Youth and Local Sourcing 

There is growing disquiet about preferential procurement rules and guidelines like those legislated in countries such as Nigeria.  The Nigerian government wants to help the local economy by developing emerging businesses, but new legislation on local sourcing may have the opposite effect if it is prescriptive.  Will “Made in Nigeria” allow suppliers to charge more for inferior products and services and will government buyers somehow be tempted to offer guarantees – for a fee or other benefit?

Initiatives being taken to tackle the scourge

The World Bank’s new procurement framework will allow it to better respond to the needs of client countries in Africa, while preserving robust procurement standards throughout Bank-supported projects. Since they have a portfolio of about US$42 billion in over 1,800 projects in 172 countries, this is significant.

There’s also some good news coming out of South Africa.  The Chief Procurement Officer, Kenneth Brown, has kept a low profile. Behind the scenes, his team are quietly reviewing all tenders over R10m for compliance to the rules and are looking for opportunities for cost savings.

On an expenditure of R500 billion annually, its target of savings of R25 billion looks achievable.

The State’s fragmented spending practices are now being centralised to reduce waste and get more leverage through technology. They have set their sights on some key categories: travel at R10 billion per annum, ICT, construction and leases.

The new online eTenders portal launches in April 2016 with a modest maintenance cost of just R16,000 a month. It introduces much needed transparency and will save a staggering R400 million a year that the government spends on advertising the tenders in newspapers.

Burritos and Ice Cream – Supply Chain Failure and Success

Burritos and ice cream – the contrasting fortunes of two organisations and the difference between supply chain failure and success.

Supply Chain Failure

Burritos and ice cream. Who doesn’t love them? Carne asada and guacamole. Chocolate and cherries. The combinations are endless, and so are the places that offer these tasty treats. So what can a burrito chain or an ice cream brand do to stand out from the crowd?

Chipotle and Ben and Jerry’s (known for burritos and ice cream, respectively) have both come to the same conclusion: leverage the supply chain and use it as a brand differentiator.

They have decided to draw customers in with high-quality ingredients and a transparent supply chain. Chipotle and Ben and Jerry’s as brands have both become champions of local suppliers, fresh produce, and organic and non-GMO foods.

However, if you’ve been watching the news over the past months, you’ve probably noticed one of these companies has been more successful in their mission than the other.

Supply Chain Failure

Chipotle has been plagued by outbreaks of food-borne illnesses in the past few months, to the point where they shut down all their restaurants for a day to address food safety issues. As a result of these outbreaks, there have been calls for the chain to centralise their procurement strategy and source from large, well-known suppliers, rather than working with small farmers who may not adhere to as stringent food safety standards.

Chipotle appeals to the coveted millennial market and a supply chain failure, and a failure to live up to their lofty supply chain goals, may have a severe impact on their brand value.

Ben and Jerry’s has succeeded in the arena where Chipotle has come up short. After being sold to Unilever, a multinational corporation, Ben and Jerry’s received certification as a B-Corp, essentially a company that doesn’t allow board influence to sidetrack their CSR efforts. In their case, their parent company may actually be an asset rather than an obstacle as Unilever itself is also known for ambitious environmentally friendly initiatives.

For example, the company has pledged to make a $90 trillion investment in infrastructure over the space of 15 years to build a sustainable economy and combat global warming. “Companies make up 60 per cent of the global economy. If they don’t play an active part, how can we solve this crisis?” said Unilever CEO Paul Polman.

The Role of Procurement

Procurement needs to play a central role in CSR efforts, especially when supply chain promises are a primary piece of the brand message. Procurement should be responsible for staying on top of current and potential suppliers, including second tier and beyond when possible, making sure they have the necessary qualifications to live up to your brand image.

Procurement also needs to be ready to pivot to new suppliers quickly in response to any supply chain disruptions, whether they are result of illness outbreaks, drought, or changing government regulations.

Where Chipotle failed, and failed big, was that it wasn’t just one outbreak — there were five in the space of six months. Even if they can’t be traced directly back to a weak link in the supply chain, rumours and public perception can still have damaging consequences. Of course, Chipotle isn’t the only company to have suffered from a supply chain failure. Read about a more extreme case here.

Both Chipotle and Ben and Jerry’s have proven supply chain doesn’t have to hide in the shadows; there’s a place for it in the limelight. After all, now more than ever, people want to know where their food comes from.

But from Chipotle we can see companies will suffer if they don’t live up to their brand promises. However, with proper alignment to business objectives and recognition as a strategic player, Procurement can help prevent this from happening.

Hillary Ohlmann is the knowledge base developer at DeltaBid, easy-to-use procurement management software.

Australian Shines Spotlight on Unethical Supply Chains

Australian fashion brands are bearing the brunt of increasing unwanted attention for unethical supply chains.

Fashion Unethical Supply Chains

No-one wants to talk about it. But if you’re working in procurement for the fashion industry, you’re in the hot seat.

Fuelled by consumers’ love affair for fast fashion, the fashion industry is finding ways to produce faster and cheaper apparel than ever before. The latest example of this is Kmart and Target producing school uniforms for $2 an item, in a marketing campaign that made recent headlines for all the wrong reasons, given that factory workers are paid below levels that can cover basic living expenses.

The broader industry is digging its own grave, and, in years to come, the fast fashion industry will cease to exist, warns an Australian fashion industry authority who has worked on both sides of the fence.

A Different Way to Do Fashion

Catherine van der Meulen (formally Taouk) worked her way up in her father’s teen, fast fashion brand SUPRÉ for 15 years, which specialises in mass-produced, cheap fashion. During those years, the potential issues of unethical supply chains never crossed her mind.

She’s since realised the error of her ways, designing the Raw to Store movement to educate businesses about the spectrum of impacts generated by the fashion industry globally.

“Since leaving SUPRÉ, I’ve realised that there’s another way to do business, and it’s not this ruthless, cut everyone down to make money style of business that’s operating in the fashion world today,” van der Meulen says.

“I wish I’d have known back then what I know now about ethical fashion and conscious capitalism in my days at SUPRÉ. I wish I knew that the impact of our decisions can have a negative impact on others without me even knowing it.”

Raising Awareness

But she’s making up for lost time. Late last year, van den Meulen landed the role as head of corporate sustainability at Clean Cut Fashion – Australia’s industry body for ethical and sustainable practice. The organisation connects Australia to the global sustainable fashion movement and encourages national retailers to be more mindful of their supply chain.

She has only been in the role a few months, and is starting by raising awareness and contacting the industry’s worst offenders in search of a commitment.

“I’m starting with exemplifying the ones that are doing well in creating positive impact in the industry. We want to empower the great work of the brands that are committed to change and use that to teach other brands,” she says.

Issues associated with unethical supply chains include building an entire brand on an unsustainable business model, bad publicity, consumers turning to social media to vent about brands doing the wrong thing and, of course, knowing that you’re paying workers less than they need to live on in their own countries.

Collective Responsibility

Cath-van-den-Meulen - Unethical supply chains

Cath van den Meulen

“It’s my job to look at the supply chain of these fashion brands here in Australia and open up discussions around what’s being done to improve the processes. There’s plenty of room for improvement out there. But there’s generational corporate resistance to work through,” says van den Meulen.

She hopes to bring about change among Australian fashion brands that rely on mass sales by producing ‘loss leaders’ (extremely cheap items that are highly publicised), which are commonly mass-produced in unethical supply chains and manufacturing establishments in third world countries, she says.

To highlight the sheer size of the issue of unethical supply chains in Australia, she points to the Australian Fashion Report prepared by Baptist World Aid Australia, which last year named and shamed Australian fashion brands that haven’t cleaned up their supply chain or protected workers overseas.

The report was released two years after the fatal Rana Plaza factory collapse in Bangladesh, which saw the lives of 1,129 factory workers die. This event has put a black mark against the collective fashion industry, and van der Meulen says everyone needs to take responsibility.

Australian Offenders

The Baptist report named iconic Australian fashion brands as worst performers, such as the Just Group (owner of Just Jeans, Jay Jays, Dotti, Peter Alexander and Portmans), fast retail brands like Ally, Valley Girl, Temt and Industrie, and low cost suppliers like Lowes and Best & Less.

These companies each received D or F grades because there was little evidence they were doing much, if anything, to protect workers overseas. Many had little or no publicly available information and/or didn’t respond to requests to engage with the research process.

Oxfam Australia also released a report late last year naming the Australian brands dodging workers’ rights. The report named Best & Less as making the least progress of all the companies Oxfam has been engaging and assessing. The Just Group was also named in the report as another company sourcing from Bangladesh, which has so far refused to sign the Fire and Safety Accord.

“The truth is that you can create a profitable and sustainable business model while also doing the right thing as a corporate citizen. And yet there’s so much toxic fashion out there that consumers can purchase clothing for the price of a coffee is utterly obscene. Everyone needs to take responsibility for there to be change.”

Procurement – Authentic and Transparent

And while almost impossible to put a figure on the cost of cleaning up unethical supply chains, she recommends that procurement professionals approach this mammoth task in an authentic and transparent way.

Procurement professionals need to take responsibility for what’s happening further down the supply chain, starting with an independent audit to uncover and document the issues, she says.

“Where the cotton is from that you’re using, for example, can have one of the biggest impacts on the cotton industry globally. These are questions procurement people should be asking that demand answers.”

“I recommend that fashion brands start out by doing the B Corp assessment, which take just 90 minutes and gives you a rating out of 200 to see where you stand today,” she says.

Next, work out where you can make the most impact within your supply chain, and commit to starting an improvement program.

“Just focus on one thing that will improve your supply chain by 1 per cent this year. This could include improving energy consumption or waste water, changing suppliers, or sourcing more ethically produced products,” van der Meulen says.

How can Procurement Work Smarter, Not Harder?

Time never seems to be on our side. It’s time for procurement spend its time more wisely, and work smarter, by leveraging new technology.

Z Hotels Work Smarter

Procurement, finance and operations have forever been working on ways to integrate simply and effectively. While it is reasonably simple to coordinate small teams in one office, hospitality is one industry faced with the tough task of managing spend and suppliers across multiple locations, multiple businesses within a business and a seasonal spend pattern.

Traditionally, these three departments have been engaged in a never ending paper chase between numerous locations and head office. Not to mention the arduous task of managing budgets across a multitude of locations, geographies and currencies. Until now, managing this extensive workload has meant the headcount in the back office goes through the roof and the time staff should be spent in front of the guest/client, is instead spent on pushing paper and placing orders.

Breaking with Tradition

So how do you fix this expensive problem, and work smarter?

Breaking decades’ old business patterns and cleverly using technology to simplify buyer – supplier interactions and location management. However, Z Hotels have cut administrative tasks by up to 90 per cent through simplifying and digitising many of their previously time devouring tasks.

Frontline hotel staff would spend up to five hours a week on purely administrative duties like placing orders, chasing paper invoices and pushing items through the approval process back to head office. Meanwhile, head office staff lacked the transparency and real time control on departmental spend and relied solely on location staff to be their eyes and ears.

Since bringing in a new, cloud-based procurement platform, they have cut admin duties for location staff time down by 90 per cent.

Bev King, CEO at Z Hotels, commented on the benefits of the new solution. “Customer service is at the forefront of everything we do, InstaSupply gives us the opportunity to have a much more automated solution that allows our staff to have time to focus on the service to the customers rather than try to fill the administrative gaps. The process has become very easy to use. We’re on the right track,” King said.

Supported Growth Ambitions

The platform now pulls together all orders, delivery reconciliation, stock, invoice processing, location management and budget tracking as well as a host of other functions still being refined within the portal. All this with full integration with the business’ accounting software.

When Z Hotels first brought in InstaSupply, at the end of 2014, they had big ambitions to grow. A year later, they have just opened their 10th site and are on course for another five by the end of this year.

Under the traditional model, a flurry of staff would have been brought in to handle the additional workload that growing nearly 300 per cent would have created. In fact, the head office team that deals with finance and procurement has stayed the same as it was in the beginning.

It is this ease of use that makes it a great solution for Z’s predominantly Millennial operational staff. Implementing a fully responsive, one click, cloud solution is in tune with the emergence of a dominant Millennial workforce who will no longer just get by with archaic systems and countless spreadsheets.

With a wealth of new technology available to procurement and finance teams, isn’t it time for your organisation to look at ways you could work smarter?

Watch a video on this case below:

Instasupply employs advanced cloud technology and a user-friendly web application to give users control of their time and their spend. Find out more about Instasupply’s purchase-to-pay ordering system, and supplier invoice management and consolidation functionality, at their website.

Productivity in Pharma – Growing Next Level Procurement Skills

What are the skills required to drive next level procurement? This is what the Productivity-in-Pharma Procurement Think Tank aims to uncover.

Next level procurement

This is the fourth year that the Beyond Group is holding its Productivity-in-Pharma Think Tank and it’s just a few days away. On April 26 in Basel, Switzerland, the first session of this year’s event will bring together more than a dozen Pharma companies to discuss the most pressing issues facing procurement in the industry.

This year’s event is titled “Growing the skills needed to drive next level Procurement capabilities”.  It builds directly upon last year’s sessions, where the topic was “How does procurement step above its traditional role of price management, and build connections with other parts of the company, to drive even greater levels of productivity”.

From that discussion, senior leaders of procurement, representing a broad cross section of the Pharmaceutical world, recognised that in order for procurement to accomplish this feat, new skills, capabilities and knowledge were required. By general demand, the group suggested that this year’s topic tackle this issue head-on.

We divide our Think Tank into three, one day sessions that are spaced four to six weeks apart. Each session has a particular purpose. On day one we attempt to clearly define the topic we are discussing, on day two we delve into the substance of the issues and discuss options for meeting the challenges discovered on day 1.

Lastly, on day three we try to bring our learnings together to develop applicable takeaways that can be directly applied by our Think Tank attendees.

Building Intrapreneurialism

So what are those skills that teams will need in order to reach next level procurement, and equip them to face a future that is more complex, more unpredictable and laden with technological changes?

As experienced advisors to the industry, we hear more and more about organisations attempting to build agile skills into their procurement teams and imbue them with a greater sense of intrapreneurialism. There is also an increasing recognition that many procurement teams are unprepared for this rapidly changing future.

In addition specific business skills are becoming more and more important in the framework of the procurement function. Even more critical is the need to understand how effective procurement teams of today will identify, recruit and challenge the next generation of professionals.

This year we will specifically focus on skills for new roles and capabilities which are critical to position Procurement as an end-to-end contributor. This include:

  • Business Partnering
  • Cross-Functional Project Leadership
  • Alliance Management

These skills, which have been identified as critical for tomorrow’s business landscape, will leverage the function’s unique position internally and externally, and turn it into a magnet for high-potential talent, seeking to accelerate their career towards business leadership positions.

In order to advance this conversation, and provide the very highest level of content that will challenge our membership, we have teamed up with a group of experts from industry, consulting, HR/recruiting, and academic institutions to provide the fullest and most use insights and immediately applicable takeaways for our member companies.

Kicking off in Basel

We are proud to welcome to this unique conclave, Ernst & Young consulting, Langley Search, Customer Value Management, Old Street Labs and as out academic partner, The Fraunhofer Institute/Technical University of Dortmund.  Our media partner for this event is Procurious who will be following the events and challenging our membership to bring their best game to the table.

Our first session kicks off on April 26 in Basel Switzerland, with 13 of the 15 membership slots already confirmed. If you are in the Pharma procurement field and are interested please drop us a note at [email protected].

Productivity in Pharma - Giles BreaultGiles Breault, co-founder of The Beyond Group AG, is an acknowledged expert in the field of Global Procurement, Productivity and Offshoring/Outsourcing. He has strategic and operational experience in the Pharmaceuticals, Electronics, and Aviation industries.

Productivity in Pharma - Sammy RashedSammy Rashed, Principal and co-founder of The Beyond Group AG, is a procurement strategist and productivity advisor with 25 years experience in senior management, primarily focused in the Pharmaceutical industry. He has become a recognised thought leader on growing procurement into a broader productivity champion.

Contract Lifecycle Management: Stop Being Foxed by Your Suppliers

Daniel Ball, Director at Wax Digital, explains how organisations can minimise supply chain risk through effective contract lifecycle management.

Outfoxed Contract Lifecycle Management

Today’s businesses are increasingly reliant on global, multi-tiered supply chains. While they can contain the essential ingredients for competitive advantage, cost efficiency and innovation, supply chain complexity also contributes to greater supply chain risk.

Consequently, contract lifecycle management (CLM) has become progressively crucial to organisations as they attempt to keep track of suppliers and their sub-contractors. Analyst group Gartner claims that no organisation is immune to the complexities of today’s contracts, or the pace at which businesses operate in the global economy.

Regardless of the sector you operate in, for anyone with a growing and increasingly complex supply chain, CLM has become a critical business process.

Mitigating Supplier Risk

You don’t need to search very hard to find examples of organisations whose complex supply chains have caused them significant issues, affecting both their reputation and bottom-line. Tesco’s infamous horse meat scandal is a classic example of how uncontracted and unvetted suppliers can become part of your supply chain and cause unforeseen damage.

The store was left at the mercy of the public and the media for months after the scandal broke causing huge reputational damage and financial loss to the organisation. Unfortunately for Tesco, the complexities of its supply chain meant that visibility was restricted, and it was unaware that one of its suppliers was sub-contracting work to an unknown and unvetted supplier.

Supplier risk can raise its head in many forms. The importance of ensuring all your suppliers have the necessary certifications required to work with your organisation shouldn’t be understated.

It’s irrelevant whether they are supplying food, people, commodities, electronics, or complex mechanical parts. Take the construction sector as an example. A building company’s supply chain manager will diligently vet all contractors required onsite to ensure they have the necessary health and safety certificates and public liability insurance details in place, as part of the supplier on boarding process.

But when pressed could they honestly claim to know when each of these certifications is due to expire, and that when that contractor is next onsite, his certifications are all still in date? If the answer to these questions is no, then an organisation could find itself in a very vulnerable position if an accident occurs, and the contractor’s health and safety certifications have expired.

Contract Lifecycle Management & Legal Compliance

What’s more, new sentencing guidelines have been introduced to create a more consistent and proportionate approach to sentencing for those individuals or businesses convicted of health and safety, food hygiene offences or corporate manslaughter. These new guidelines mean that all organisations should be looking to assess risk, both internally and across their entire supply chain, to ensure standards are maintained at all times.

Legal compliance with legislation such as Sarbanes-Oxley or ISO standards can also be monitored as part of CLM. The healthcare, financial services and manufacturing sectors are all subject to compliance demands. Stiff penalties can be applied if an organisation is found to be non-compliant.

Contract Management Databases

Contract management databases play an essential role in ensuring organisations know exactly when their suppliers’ contracts are up for renewal. No-one wants a contract which is no longer valid for your current business needs to roll over for yet another year. As important as that is, arguably the main benefit contract management offers is complete visibility of supplier performance and compliance.

Moving all contracts to a secure, electronic contract management database enables an organisation to practice effective contract lifecycle management and keep a firm eye on its entire supply base – both direct and indirect.

A contract management database that hosts all of an organisation’s contracts, and details on the criteria (certifications, regulatory requirements and SLAs) that its suppliers are contractually obliged to meet, enables organisations to quickly identify specific types of supplier able to compliantly fulfil a project.

It also allows organisation to identify their business-critical suppliers, and ensure their necessary certifications are in place and that any KPIs agreed at the start of the contract are being met. Some systems can even offer visibility into tier two suppliers. This is extremely beneficial if your supply chain is becoming increasingly complex, and can help identify who your critical suppliers are sub-contracting to.

Visibility at Your Fingertips

The benefits delivered by CLM are undeniable as it becomes increasingly important that organisations ensure that their compliance procedures are in place. Contracts filed away, stuffed in drawers or indexed on a spreadsheet can’t issue an alert if they’re about to expire. Nor does it make life very easy if you’re looking to identify which of your suppliers has the right credentials in place to fulfil a certain role.

Storing all suppliers’ contracts in a secure, manageable database, that is quick and easy to access, ensures that you have supply chain visibility at all times. Should the time arrive when you need evidence to defend your organisation, or pinpoint the cracks in your supply chain, you’ll certainly be glad to have this level of visibility at your fingertips.

The Evidence Behind Using DPS in Procurement

Increasing use of Dynamic Purchasing Systems (DPS) could mean the end of frameworks in public procurement. But is there empirical evidence supporting the benefits of these systems?

Evidence for DPS

In the first part of this series, we discussed the benefits and drawbacks of Dynamic Purchasing Systems for public procurement. Some of the benefits discussed were:

  • Increased Competition and Competitive Pricing
  • Spreading and Minimising Risk
  • Bridging the Talent Gap

But what is the evidence for these benefits? And will this help to lead to an increased use of Dynamic Purchasing Systems in public procurement?

Research Findings

Research published by PwC in 2011 provides some empirical evidence regarding the use of Dynamic Purchasing Systems in the EU. At this time only 1.1 per cent of procedures were DPS, with the greatest use being in Greece and the Czech Republic. Where there was joint purchasing, DPS was used less and this could be one reason why take up in the UK has been low as there has been a focus on collaborative purchasing arrangements across the public sector.

Looking at the recent contract notices (including PIN’s) on Sell 2 Wales, Contracts Finder and Public Contracts Scotland, there is evidence that Dynamic Purchasing Systems are currently being used across the public sector to source a wide range of goods, services and works. From this crude research by far the most popular category to apply a DPS to is transport with the majority of these contracts being for home to school transport.

Transport accounted for 34 per cent of the DPS contracts that were found on the above mentioned sites. Other categories where there were several DPS contracts in place included Care (12 per cent) and works/maintenance (12 per cent).

From the research it was clear that DPS is more widely used in England than in Wales and Scotland. Only 4 of the 65 contracts found were in Scotland and Wales. Possibly devolution and the application of national purchasing policies which often promote collaborative purchasing has affected this.

There was evidence of the DPS being used across the various types of public sector organisations including central government departments, local authorities, housing associations and colleges. It was the local authorities that accounted for the majority of the DPS’s that were in place, this could possibly be due to their responsibility to provide the home to school transport that made up over a third of these contracts.

From the research conducted there were no examples found within the NHS, this could possibly be due to the low number of suppliers available for some specialised products.

Industry Case Studies

Two case studies give us a more in-depth look at the use of DPS. Local Authority 1 (LA1) had set up one DPS contract for home to school transport for children. Local Authority 2 (LA2) had set up three DPS contracts, the results here focused on the health services DPS. Both Authorities stated that greater access to new suppliers and allowing suppliers to enter the system at any time were the main reasons they had used the DPS.

This was particularly important to LA2, as the contract was for the purchase of a new category area, for which new suppliers regularly entered the market. For LA1 increased competition in the market was the driving force and an increased number of suppliers would help to achieve this.

Disadvantages stated by LA1 included the need for extensive training for buyers and the market place as well as the need to resolve IT issues quickly. On a similar note LA2 stated that the resource intensive nature of dynamic purchasing systems was a downside.

Both stated that they would consider using DPS again in the future; indeed LA2 already had more than one live DPS. LA1 noted that DPS is now considered as part of their category management approach and that the changes to the procurement regulations had assisted in this. LA2 considered dynamic purchasing systems to be a valuable procurement option.

It is difficult to tell if there has been an increase in the use of DPS since the regulations changed. All of the contracts that were found during the research process were procured after 2011 when the PWC research was published and this research only covers the UK. An analysis of the number of new DPS contracts advertised in the ten weeks before the regulation changes was compared with the number in the ten weeks after the changes.

In the ten weeks before there were eight new contracts advertised but in the ten weeks after there were thirteen. This does suggest that there could be an increase in the use of the DPS however it is very early days. What it does show however is an appetite amongst public sector professionals to use this type of procurement vehicle.

In Conclusion

The practise of adding or removing suppliers to a framework is not a stranger to our private sector colleagues. However, frameworks are entrenched in the culture of public sector purchasing and, more recently, the collaborative procurement vehicles that have sprung up. In terms of the affect of the new regulations, it is still very early days and so it is difficult to tell whether the changes will drive an increase in the use of DPS.

The benefits of using a dynamic purchasing system appear to far out weigh the disadvantages, if applied to a suitable category of spend. These tangible benefits could very well pave the way for Dynamic Purchasing Systems to begin to form a more prominent role in public sector purchasing strategy.

Dear Boss, I Quit! Why Good Leadership is Key

Looking for the real reasons your staff are leaving? Instead of focusing on the ‘business’, you may want to take a look at your leadership.

I Quit - Leadership Key

This article was first published on Boxchange.

I’m sure that you, like me, are saddened every time someone in your team has resigned, (apart from the one or two rare exceptions when I have actually danced a celebratory jig around my desk, but that’s for another article!).

Mostly, my natural reaction has always been a human one I suppose. “Why would they do that?” or, “What’s wrong with them?” or even, “The fool must be leaving for money!”

But as the years rolled by I have become much wiser.

Lack of Leadership

Experience tells me that people don’t change jobs solely for money, and they almost never resign on a whim or in a fit of anger. People joined your company because they believed it was right for them, and they desperately want it to be right.

However, something, at some point, makes it wrong and if you are able to uncover their real reasons for leaving, and you should, you will find that it’s not ‘the company’ they blame. It’s not the location, or the team, or the database or the air-conditioning…

…it’s the leadership!

Of course they very rarely use that word. They may not mention management at all.

Instead they talk about “morale,” or say “communication is poor”, and, when they express frustration at the lack of clarity for their career progression, they are telling you that it’s the leaders they are leaving. After all, leaders are responsible for morale, communication and career path.

Discover the Real Reasons

And don’t be fooled by the results of your employee engagement survey – they rarely get to the heart of the matter. A ‘company’ is just a legal entity and a ‘business’ is simply a building containing a collection of desks and computers. No one resigns because of that.

It’s the decisions, the motivation, the atmosphere, the ethos, the support, the training, the vision, the inspiration and the direction set by the leadership that your employees will follow…or leave!

Take the time to have an honest look at your business or department without further delay. If you’re losing too many people, (or have high absenteeism), you need to discover the real reasons why.

If you’re not sure how to get to the root cause then ask. My colleagues and I are happy to offer our free advice, and it could transform your performance and results in 2016.

Boxchange offers a fully integrated business change solution that fits almost every conceivable change challenge your business may, or is currently facing. We focus on delivering value, return on investment & ensure effective knowledge transfer throughout.