Category Archives: Procurement News

Step 1: Brush Your Teeth Step 2: Change the World

“Molly, the reason you got less than Thomas, is because you are a girl.” We take a look at some of the highlights of this year’s International Women’s Day…

The #MeToo and Time’s Up movements have triggered an intensely powerful outpouring of testimony and solidarity among people around the world.

But this is only the beginning of the story.

The broader issues of systemic workplace sexism and the fight for meaningful inclusion undeniably stretch far beyond the entertainment world.

We need look no further than our own procurement backyard where women account for just 20-35 per cent of procurement association memberships, represent just 30 per cent of attendees and 20 per cent of speakers, and earn up to 31 per cent less than their male counterparts.

Time is most definitely up for our own profession to tackle this issue and celebrate more fully the dynamite contributions made by talented women to their businesses and to the profession.

And judging from the overwhelming response to our A Wise Woman Once Told Me campaign, you think so too!

A Wise Woman Once Told Me…

For International Women’s Day (IWD), we decided to pay homage to the wisest women we know with a new campaign entitled “A Wise Woman Once Told Me…”

Last year, we launched Bravo, a Procurious group, to both celebrate and promote women in procurement and campaign against the profession’s current gender disparity.

For IWD we asked procurement professionals across the globe to join Bravo and share the best advice a woman has ever given them.

Here are some of our favourite responses and action shots from the day…

Our youngest supporter and proud feminist shares the best advice he has ever received from a woman in his life… And what great advice it is too!
Procurious’ Melbourne contingent ready for an International Women’s Day celebration
Procurious founder Tania Seary shares the best advice she’s received from a woman…
A Procurious member shares their advice
Delegates at SAP Ariba live in Las Vegas created an amazing “A Wise Woman Once Told Me…” wall

Literary heroines from across the globe were very well represented…

Poignant advice from diarist Anne Frank
Advice from Hogwarts’ wisest witch
Matilda also had some wise words to share with the procurement community…

International Women’s Day 2018  – By the Numbers

Events, campaigns, protests and celebrations across the globe marked 2018’s International Women’s Day.

This year’s theme was #PressForProgress, a call-to-action to press forward and progress gender parity.

With the World Economic Forum’s 2017 Global Gender Gap Report findings telling us that gender parity is over 200 years away – there has never been a more important time to keep motivated and #PressforProgress.  – International Women’s Day

Some key events from this year’s International Women’s Day…

Pay Disparity is Child’s Play

“Molly, the reason you got less than Thomas, is because you are a girl.”

Stark pay gaps between men and women prevail across the world, which is why one Norwegian financial trade union, Finansforbundet, launched one of our favourite campaigns for this year’s International Women’s Day.

In the video, a group of children are asked to fill two vases with blue and pink balls.

Once they’ve completed the task they are rewarded with jars of sweets.

But the boys get more.

As you might predict, the confused children are quick to condemn the explanation they are given that boys get more simply because they are boys.

Unequal pay is unacceptable in the eyes of children.

Why should we accept it as adults?

Bravo – Join the campaign

There’s still time to join Bravo on Procurious and take part in our Wise Woman campaign.

Sign up here to join. 

We promise to donate £1 to Action Aid – a charity committed to ending the inequality that keeps women and girls locked in poverty – for every person that joins Bravo before 12th March 2018 – that’s the end of the day today! 

In other procurement news this week…

KFC: Back to Bidvest

  • It hasn’t been a (finger-licking) good month for KFC WHO experienced widespread distribution problems after it decided to switch its logistics contract from Bidvest to DHL, resulting in the closure hundreds of outlets and disappointment of thousands of fried-chicken fans
  • Last week, it was reported that KFC would be returning, in part, to its ex-distributor Bidvest, who will supply up to 350 of its 900 restaurants
  • Bidvest has pledged “a seamless return” and a KFC spokesperson said “our focus remains on ensuring our customers can enjoy our chicken without further disruption.” Let’s hope they don’t cluck it up this time!

Read more on BBC News 

Lego goes green

  • Lego has started using polymer from plants in some of its toys as part of a move away from oil-based plastics.
  • The Danish firm’s first bioplastic offering is made from sugarcane and will be used in “botanical” elements including leaves, bushes and trees
  • The bioplastics are set to appear in stores later this year as Lego moves towards sustainable raw materials in all its products by 2030
  • Tim Brooks, vice president of environmental responsibility at Lego said: “We are proud that the first Lego elements made from sustainably sourced plastic are in production and will be in Lego boxes later this year. This is a great first step in our ambitious commitment of making all Lego bricks using sustainable materials.”

Read more on Supply Management 

UK Accuses Russia Of Massive Cyberattack on Global Supply Chains

Maersk, TNT and other global companies that suffered nearly a billion dollars in collective damages were not the intended targets of a Russia-launched cyberattack. How, then, were they infected?   

wk1003mike/Shutterstock.com

“The UK government judges that the Russian government, specifically the Russian military, was responsible for the destructive NotPetya cyberattack. Its reckless release disrupted organisations across Europe costing hundreds of millions of pounds. “We call upon Russia to be the responsible member of the international community it claims to be, rather then secretly trying to undermine it.”

This statement was part of the UK Government’s unusual step last week of publicly accusing the Russian military of being behind a cyberattack. The White House also called out Russia, issuing the following statement: “In June 2017, the Russian military launched the most destructive and costly cyberattack in history. This was also a reckless and indiscriminate cyberattack that will be met with international consequences.”

Experts believe that Russian hackers launched 2,000 “NotPetya” attacks in the early hours of June 27 last year. NotPetya was designed to masquerade as ransomware, but was soon revealed to be wiper malware with the purpose of destroying computer systems, erasing data and disrupting business operations.

Global firms were collateral damage

One of the consequences of living in a connected world is increased vulnerability to indiscriminate cyberattacks, even for organisations that are not the hackers’ intended victims.

NotPetya’s primary target was a shipping company in Ukraine, which has been locked in conflict with Russian-backed separatists since 2014. However, the virus-like nature of the cyberattack meant that businesses with strong trade links with Ukraine, including parts of FedEx, Danish shipping giant Maersk, UK manufacturer Reckit Benckister, and Dutch delivery firm TNT were also affected. Pharmaceutical firm Merck & Co and FedEx reported permanent damage to the systems, while a West Virginia health system had to replace its entire network after being attacked.

Russian officials have responded that the claims are “groundless” and that Russian businesses were among those whose systems were affected.

Read more: Wall Street Journal

 

In other news this week:

Unilever Publishes Palm Oil Supplier Data

  • In a move to boost transparency, consumer goods giant Unilever has published the location of over 1,400 mills and over 300 direct suppliers of palm oil.
  • The palm oil industry is under increasing pressure from consumers after revelations of deforestation and human rights abuses in Indonesia and other countries.
  • A spokesperson from Unilever said the company hoped that sharing the information would be the start of a new industry-wide movement towards supply chain transparency.

Read more: The Straits Times

 

Tennessee Truck Dealership Selling Dirty Engines

  • A loophole in emissions control laws has enabled a truck dealership to sell Peterbilt and Freightliner trucks with rebuilt diesel engines that spew 40 to 55 times the air pollution of other trucks.
  • The New York Times reports that the loophole is being “championed” by Environmental Protection Agency administrator Scott Pruitt after the Obama administration failed to close it.
  • The trucks are known as “gliders” because they are manufactured without engines and are later retrofitted with the rebuilt, 1990s-era engines recovered from salvage yards.

Read more: New York Times

 

CIPS Announces New Group CEO

  • The Chartered Institute of Procurement & Supply (CIPS) last week announced the appointment of Malcolm Harrison (FCIPS) as Group CEO.
  • Currently Chief Executive Officer of the Crown Commercial Service at The Cabinet Office, Harrison will take over the post from the current interim CEO, Gerry Walsh, in July 2018.
  • The announcement comes nearly one full year after the sudden passing of former CEO David Noble in February 2017.

Read more: https://www.cips.org/en-cn/news/news/cips-announces-group-ceo-appointment/

Warfare Just Got A Whole Lot Cheaper

The US Navy’s recent purchase of two drone-incinerating laser cannons signals a turning-point in the ever-rising costs of sourcing – and firing – high-tech weaponry.

Andrii Vodolazhskyi/Shutterstock.com

Remember the USS Zumwalt? Launched with much fanfare in 2013, the guided missile destroyer was equipped with 155-millimeter advanced gun systems, designed to fire the Long Range Land Attack Projective, a GPS-guided shell with a range of 60 miles. At an eye-watering $800,000 a round, however, the guns were simply too expensive to fire, and were soon replaced with a more affordable system.

Zumwalt provides an extreme example of the prohibitive cost of firing a weapon at sea. At its cheapest, a typical shipboard gun and missile arsenal costs $5,000 per shot.

That’s why the US Navy’s procurement of two high-powered lasers – developed by Lockheed Martin at $75 million each – will change the game for the expense of firing weaponry. One of the lasers is designed for testing on land, while the second will be installed aboard an Arleigh Burke-class destroyer by 2020.

The lasers are so cheap to run because firstly, solid state lasers run on electricity rather than chemicals, and secondly, they do not fire a projectile at all. A pulse of directed energy costs under one US dollar each – that’s $799,999 cheaper than the Zumwalt rounds. At present, the lasers are primarily defensive, with the magazine limited only by the amount of energy pumped into it. Using 150 kw of power per shot, they are able to destroy small boats and shoot down unmanned aerial vehicles (drones). Upgrading their power to 300 kw could allow them to destroy fast-moving anti-ship missiles, while 1000 kw (one megawatt) worth of power could burn through 20 feet of steel in one second, easily enough to neutralise a fighter jet.

The Navy is clearly anticipating ordering more lasers. The contract with Lockheed Martin includes options worth an additional $800 million (nearly $950 million in total) to buy another 10 weapons and equip over 10% of the fleet’s destroyers with high powered lasers.

The lasers were purchased against the background of China’s reported testing of a ship-mounted rail gun, a weapon that uses powerful electromagnets to accelerate projectiles to over 3km/s. Again, these weapons are expected to be cheaper to fire than conventional guns as they will not require explosives or propellant to launch ammunition.

Several US contractors have attempted to build a rail gun including BAW Systems, which created a prototype, but the project was scrapped due to budget issues.

Chinese rail guns aside, observers have speculated that the 300 kw laser’s ability to destroy small boats is a direct response to Iran’s use of “swarm boat tactics” in the Strait of Hormuz. Iranian fast boats, typically armed with anti-ship cruise missiles and torpedoes, set off in an asymmetrical, dispersed fashion from hidden harbours in the Persian Gulf and then converge to surprise-attack an enemy ship. Laser weaponry has been mooted as the most promising solution to ward off this form of attack.

Meanwhile, Lockheed Martin has developed a ground vehicle-mounted laser system that can burn through tanks, and is working on an anti-missile laser that can be mounted on fighter jets. Defence contractor Raytheon built a laser that could be fired from a moving helicopter, along with a drone-destroying, laser-mounted dune buggy. Similarly, Boeing has developed an anti-drone laser cannon.


In other news this week:

Japan launches its own Belt and Road Initiative

  • Tokyo is deepening economic ties and security cooperation with multiple countries in an apparent bid to counter China’s Belt and Road Initiative.
  • Japan’s Foreign Minister Taro Kono has recently completed a tour where Japan made investment announcements in areas including Southeast Asia, Sri Lanka, Pakistan and the Baltics.
  • Tokyo has launched a US$200 billion infrastructure plan as they actively propose an alternative to the Chinese Belt and Road. Previously, the single biggest competitor to the Belt and Road Initiative was the Trans-Pacific Partnership trade pact, which collapsed after Washington withdrew.

Read more: http://www.scmp.com/news/asia/article/2132811/japan-takes-lead-countering-chinas-belt-and-road-initiative

Hummus crisis!

  • Drought in India, the world’s largest producer of chickpeas, has resulted in several years of poor harvests and rising costs of products such as hummus globally.
  • India has had to buy chickpeas from growers in other countries, putting pressure on supply and driving up prices. British supermarkets have reported a 12% rise in a single year.
  • The unexpectedly severe drought has affected hundreds of million of people who rely on the harvest in India itself.

Read more: https://www.nytimes.com/2018/02/08/business/hummus-chickpeas-prices.html

FAA Drone Licensing Unpopular

  • According to a report from Gozmodo, the US Federal Aviation Administration has only acted once to enforce its licensing requirements for the operation of commercial drones.
  • The FAA began requiring licenses in 2016 for people operation drones for commercial use, including photographers, crop-sprayers, and pilots delivering goods via drones. Hobbyists are exempt from the license requirement, although all drones need to be registered. The licensing system is unpopular, with drone pilots having to pay $150 and pass a 60-question test with a 70%+ score.
  • Goods delivery via drones is an area of key interest for supply managers worldwide, along with associated regulatory and cost burdens.

Read more: https://www.gizmodo.com.au/2018/02/basically-no-one-is-getting-fined-for-flying-drones-without-a-license/

From Cannonballs to Mobile Apps: The Fight Against Modern Slavery

Disney, Walmart and other big players have partnered with Humanity United to launch Working Capital, a $23 million early-stage venture fund aimed at creating scalable, ethical supply chain innovations.

Image: Royal Navy Brig “Acorn” chasing a slaver vessel in 1841, by Montague Dawson.

In 1808, the Royal Navy established the Preventative Squadron, tasked with suppressing the Atlantic slave trade by patrolling the coast of West Africa. By 1860 the Squadron had captured 1,600 slave ships and freed 150,000 Africans. In the meantime, America fought a long and bloody civil war before the Emancipation Proclamation could finally be enforced through all regions.

Abolition in the 19th century – in the very simplest terms – was driven firstly by a change in the law, then enforced with the barrel of a British frigate’s cannon or a Union Army soldier’s rifled musket.

In today’s fight against modern slavery, we’re seeing a new wave of legislation, including the UN Global Compact, the UK’s Modern Slavery Act, France’s Duty of Vigilance law, Holland’s Child Labour Due Diligence law, and similar legislation being considered in Switzerland and Australia. Yet, as we know, the insidious nature of modern slavery means the perpetrators are considerably more difficult to identify than they were 200 years ago. That’s why modern slavers must be fought not with guns, but with tech solutions that remove their sources of income.      

Big names behind venture launch

Working Capital was launched by Humanity United last week with the goal of “accelerating supply chain innovations to enable corporations to operate more transparently and ethically around the world”. The launch made headlines due to the leading brands that are on-board with Working Capital, including: Walmart Foundation, C&A Foundation, Stardust Equity, Open Society Foundations (Soros Economic Development Fund), The Ray and Dagmar Dolby Family Fund, and The Walt Disney Company. The fund also received £2.5 million in sidecar grant funding from the UK’s Department for International Development.

Ed Marcum, Managing Director at Working Capital, said in a statement that “There is a growing market demand for more transparent and responsible corporate supply chains. We see an opportunity to invest in emerging solutions that will meet the demands of large multinational corporations while also benefiting millions of vulnerable workers.”

A press release from Humanity United says the fund focuses on product traceability, worker engagement, sourcing platforms, risk assessment, and ethical recruiting tools by investing in emerging technologies such as blockchain, machine learning, artificial intelligence, digital identity and Internet of Things (IoT) solutions. 

Two tech platforms that are about to be scaled up

 At present, Working Capital’s portfolio of slavery-fighting tech solutions lists two organisations:

Provenance: Described as “Fairtrade on the Blockchain”, Provenance is a technology platform that uses blockchain to enable brands, suppliers, and stakeholders to trace products along their journey from producer to consumer.

Ulula: A software and data analytics platform that allows organizations to engage with workers in real time to measure and monitor labour-related risks, creating more responsible global supply chains.

Watch this space

As companies such as Provenance and Ulula use this cash injection to maximise their impact, be prepared for the appearance of anti-slavery plug-ins to existing systems or even mobile Apps that rate and lock-out the use of risky suppliers.

While 19th century slavery was fought on the battlefields and on the high seas, the 21st-century frontline exists on the smartphones of procurement professionals around the globe. 


In other Procurement news this week:

 Germany’s biggest trade union strikes

  • About 260 companies were affected by thousands of striking metal and engineering workers in Germany last week.
  • The IG Metall union wants an 8% pay rise and reduced hours on full-time pay to enable workers to care for children or elderly or sick relatives. The IG Metall union has 3.9 million members.
  • The companies involved are currently willing to negotiate on pay not on reduced hours.

Read more: https://www.reuters.com/article/us-germany-wages/german-industrial-workers-start-24-hour-strikes-in-row-over-pay-hours-idUSKBN1FK0GA

 

Bananas threatened with extinction as history repeats itself

  • The Cavendish, the world’s most popular type of banana, is facing extinction as a fungus known as the Panama Disease takes hold.
  • The first strain of Panama disease, known as Race One, wiped out the Gros Michel banana in the 1950s, previously the world’s most popular banana.
  • The current strain (Race Four) now attacks Cavendish and other cultivars. 47% of bananas grown worldwide are Cavendish, with 55 million tonnes grown per year.

Read more: http://www.bbc.com/news/uk-england-35131751

 

Facebook reports more active users, less time spent on site

  • Users spent approximately 5% less time on Facebook, which translates to around 50 million hours a day, from October to December 2017.
  • Facebook’s Mark Zuckerberg commented that the priority was encouraging more personal interaction among users. Active users rose 14% to 2.13 billion people in the same three months.
  • Facebook’s annual advertising revenues jumped 47% to over $40 billion, while profits jumped 56% to $16 billion. Despite these figures, the company is adjusting its News Feed to prioritise posts from friends and family and make sponsored content less prominent.

Read more: http://www.bbc.com/news/business-42893051

Dude, Where’s My 3D-Printed Car?

3D printers have been around for 30 years, yet the prediction of “one in every household” has not yet come to pass. When will this technology really hit the mainstream, and how will it impact our careers in procurement?  

For those of us keeping an eye on the coming megatrends that will impact the procurement profession, the list of technological disruptions is a familiar one. Big data, cognitive technology, cybersecurity and blockchain are frequently included in “what’s next” articles, but here’s the thing – rather than being futuristic ideas that are 5 to 10 years away, all of these technologies are already here. What’s lacking is our ability to unlock the full (and vast) potential of these disruptive forces.

This concept holds true for another frequent inclusion in this list – 3D printing.

3D printing is still regarded as a futuristic technology despite the first additive manufacturing equipment being developed in the 1980s. The 30-year technology is seen as revolutionary even today because it is constantly evolving, and has not yet realised anywhere near its full potential. Every year we hear of innovative companies utilising 3D printing to produce cars, trucks, aircraft, clothing, firearms, and even body parts, yet these advances still tend to be reported as the “experimentation” rather than a new way of doing things.

When will we know that 3D printing has truly arrived? Perhaps it will be the day that you can walk into the showroom of an average car dealer and be told that 90% of the cars for sale are 3D printed. Or maybe when it becomes normal practice to go online to build a custom pair of sneakers that are 3D printed and delivered to your door. Or when organised crime catches on to the potential of 3D tech to print unheard-of amounts of firearms, counterfeit products, and drugs.

Meanwhile, keep an eye on the innovators who are helping push 3D printing ever-closer to the mainstream while regulators scramble to keep up. In just the past two weeks, we’ve seen:

What does the rise of 3D printing mean for our procurement careers?

3D printing means that every organisation will become a manufacturer. Instead of scouring the global supply chain to find the widget that’s required, the role of supply management risks devolving into two basic steps:

  1. acquiring the 3D model
  2. ensuring your organisation’s printer has the raw material it needs.

Doesn’t sounds like a very fulfilling career, does it? To take things one step further, consider the fact that it doesn’t take a human procurement professional to perform either of those tasks. End-users could source 3D models themselves, while 3D printers are intelligent enough to manage their own stocks of materials, just as an IoT-enabled laser printer re-orders its own ink when supplies are running low.

Here’s the good news, though – the result of being freed up from the tactical work of sourcing means that the profession can concentrate on the strategic projects that we really want to be doing, rather than just responding to a buy signal.

Image from Pinshape.com.

Is The Economy Heating Up, Or Cooling Off?

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

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

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

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

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

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

ISM Report On Business

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

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

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

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

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

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

The Jaggaer Juggernaught Rolls On

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

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

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

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

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

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

A Spend Management “Super Suite”

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

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

What’s next? 

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

Introducing the Lavergne Procurement Matrix

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

researcher97/Shutterstock.com

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

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

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

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

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

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

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

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

And with the keywords added:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The Lavergne Procurement Matrix is protected by copyright.

Would You Order A Tesla Electric Semi?

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

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

What can the Tesla Semi actually do?

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

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

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

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

What’s the cost?

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

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

Will we see these trucks on the road in 2020?

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


In other news this week:

NAFTA Negotiations Struggle Onward

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

Read more: CBC News   

Calvin Klein Bypasses Retailers For Holiday Shopping

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

Read more: Wall Street Journal

New Procurement Benchmarking Report Released

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

Get the report here.

IT Procurement Without a Tech Strategy Is A Recipe For Disaster

If you’re struggling to effectively run your IT procurement processes, it might be time to evaluate your strategy!

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

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

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

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

Digital transformation and disruption

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

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

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

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

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

What should an IT strategy include?

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

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

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

The benefits of an IT strategy

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

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

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

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

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

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