Category Archives: Procurement News

Understanding the Alternatives to Temporary Labour

The hiring and management of temporary labour can be an expensive business. However, there are alternative ways to bolster your workforce, explains Jon Milton, Business Development Director at Comensura.

Temporary Labour

Temporary labour comes in many forms, sometimes to cover permanent workers absent from work, or to fulfil short-term demand. In each case, the hiring manager’s default position will be to hire this resource from an agency. However, just because the need is temporary and use of an agency has always been a sensible approach in the past, doesn’t mean that it’s the way it always needs to be done.

In certain situations there can be more cost effective and flexible alternatives to temporary labour, to supplement the use of agency workers. Here we highlight various options for consideration.

Reassigning a permanent worker

There may be one or more existing permanent employees who can be reassigned, seconded or trained to provide short-term cover. If it’s an important role, some businesses have permanent workers trained to step up when the need arises and their role is then back-filled with a temporary worker.

Your business may also have a number of employees currently facing redeployment or redundancy that may be also seeking new opportunities. Alternatively, the demand from across your business may be stable and large enough to justify and sustain an increase in the number of permanent workers.

Fixed term contracts

The demand for temporary workers may be stable and consistent for a set period of time in the year. In this scenario, recruiting employees to the business on fixed-term contracts may be a viable alternative to temporary labour.

Direct workers

Your organisation may be able to create a database of people who are ready-to-work on a temporary basis when called upon. This approach can be referred to as the ‘staff bank’, ‘internal resourcing pool’ or ‘benched resource.’ It typically uses an internal agency approach and contracts workers to temporary or flexible roles.

This can work well in areas of your business where your need for temporary labour is low but with spikes in demand throughout the year. From a worker perspective it can be a beneficial way to retain the skills and experience of older, possibly retired workers, who want to continue working on a temporary, part-time or flexible basis.

Limited Company Contractors

Another alternative is to contract with workers who set themselves up as a limited company. This works best for highly skilled or project-led assignments where a defined scope of needs can be set and the worker measured and paid against milestones and deliverables, rather than salaried costs. It is important to note that in some sectors, such as IT, the best qualified and skilled workers may only work on a limited company basis.

Welfare to work

Your business may be able to work with Jobcentre Plus and welfare-to-work agencies to offer employment opportunities to long-term unemployed people. These agencies focus on getting candidates job-ready, typically by assessing the specific skills you require and then providing potential candidates with the relevant training and support. This approach can be a useful way to fill entry-level positions.

Apprenticeships

If your business has an apprenticeship programme you may be able to assign the apprentice to a relevant task.

Use of agencies remains a sure fire way of meeting significant temporary staffing demand but it doesn’t have to be your only strategy. These alternative approaches can help remove or reduce demand for pure temporary labour too. The key is to plan for your workforce requirements with an open-mind and evaluate the merits of how and when you use the non-permanent workforce.

Supplier Relationship Management – Stay Ahead of the Curve

What does it take to stay ahead of the curve nowadays? Exploring why successful Supplier Relationship Management (SRM) can help procurement adapt to the circular economy.

Supplier Relationship Management - Ahead of the Curve

As a company it is important to adapt to the circular economy. The limitations and growing problems of the linear economic model, which has served us well for many decades, demands that business ‘as usual’ is unlikely to be a winning strategy in the future. The winning strategy lies within the circular economy.

The Ellen McArthur Foundation defines a circular economy as an industrial system that is restorative or regenerative by design. It replaces the end of life concept with restoration, shifting business towards the use of renewable energy and elimination of the use of toxic chemicals, which impair re-use.

Ultimately, it aims for the elimination of waste through intelligent design of materials, products, systems, technologies and business models. We could call it circular innovation.

Collaboration Is Key

Supply chains are getting more complex every day in terms of the number of involved partners and the quality and degree of interdependency between them. One of the predictions in relation to the integration of the circular economy is that complexity will increase, and collaboration with partners across and outside the supply chain will be crucial in order to stay ahead of the curve.

Procurement plays a key role in the transition. There is, for sure, more to procurement than savings. The world’s leading global companies are looking to the sourcing and procurement function to do a lot more than cut the price of supplies. Procurement needs to broaden its role in the organisation, well beyond the traditional job of negotiating with suppliers.

Suppliers, along with procurement professionals, should be involved in the innovation life cycle, from initial idea, all the way to manufacturing and continuous improvement. Innovation is happening with or without the involvement of procurement. The key question is how procurement can build competences to enable the transition?

Supplier Relationship Management – An Effective Tool

One of the ways that procurement could build competences is through supplier relationship management. Companies that have demonstrated this ability typically generate higher profits, innovate more effectively and are better able to manage risk.

Research done by State of Flux shows that the role of the suppliers will only become more important in the future. Companies are becoming both flatter and this makes them rely more on third parties. As in many other areas of life, you are only as good as the weakest part of the chain. In this case business can only be as good as its worst supplier.

The research also shows a direct correlation between companies that are leading the way in this area and strong senior backing of SRM, with 46 per cent of leading companies saying that SRM has the support of their top executives.

Customer Of Choice = Access To Innovation

Organisations that want to make a real difference with Supplier Relationship Management, or put in other words, any organisation that wants to stay ahead of the curve – need to be led by people who understand its importance. That means recognising that changing business dynamics are giving suppliers more power and choice about who they partner with, and how.

It means in turn recognising that becoming a key supplier’s customer of choice will bring access to a range of benefits, from price advantages to innovation – and that failing to do so will mean such benefits accruing to competitors instead. This understanding must be paired with a board-level commitment to investing in the technology and training that underpin successful SRM and to creating an organisational culture.

How is Big Data Relevant to Procurement?

Or perhaps better still – what on earth is big data?

Big Data

Open up any industry magazine and you’ll inevitably find a story referencing Big Data or the ‘Internet of Things’. Consultants use the terms in their sales pitches and product offerings, but there’s frequently a lack of understanding of exactly what Big Data is, and how it is relevant in a procurement context.

In this series of articles, we are looking at a few questions which should serve to give us a better understanding of this topic, and why and how it is relevant in the procurement environment.

But let’s start at the beginning…

Can Anyone Properly Define Big Data?

After a little research, it seems the answer to our first question is a resounding “No”.

If you were to ask ten procurement professionals what big data is, the likelihood is that you’ll get ten different responses. Ask ten IT professionals, and chances are you’ll get another ten, completely different, responses.

There is a great article by Gil Press on Forbes titled ’12 Big Data Definitions: What’s Yours?’. The crux of this article is that Big Data is, by its very nature, a subjective term.

While writing a much quoted research paper, US-based global consultancy firm McKinsey offered the following definition:

“Datasets whose size is beyond the ability of typical database software tools to capture, store, manage, and analyze,”

This definition came with the following caveat: “This definition is intentionally subjective and incorporates a moving definition of how big a dataset needs to be in order to be considered big data.”

The Oxford dictionary has defined the term as “data of a very large size, typically to the extent that its manipulation and management present significant logistical challenges.”

But the question here remains: what is a “very large size” and who determines if its “manipulation and management present significant logistical challenges”?

Agree to disagree

Regardless of how we define big data, there is a common understanding that over the last decade there has been an explosion of information (most of it digital). As we continue to do business and live our through digital interfaces, that volume of data is only going to grow.

Whether we call it ‘big data’, or simply ‘data’ as we have for the previous few hundred years, is a question for the marketers and tech journalists out there. The fact is that today we have access to more data about more people in more places than ever before.

The challenge is, how do we harness this mountain of data into information that we can use to make better business (or procurement decisions)?

This point was highlighted expertly by group of computer science researchers back in 2008 in this paper. While failing to define what big data actually is, the paper highlights that big data computing will “transform the activities of companies, scientific researchers, medical practitioners, and our nation’s defense and intelligence operations.” Evidently they were correct.

If that hasn’t brought us closer to understanding exactly what big data is, it’s certainly given a broad foundation on which to work. But how does this all relate to the procurement profession? That’s the question we’ll be answering in the next part of the series.

‘Productivity in Pharma’ Procurement Think-Tank

The Beyond Group are excited to announce our fourth ‘Productivity in Pharma’ Think Tank.

Productivity in Pharma

This conclave of senior procurement leaders from the Pharmaceutical industry kicked off in 2013. The aim was to create a unique, mini-MBA style environment, where the most pressing issues facing the function are explored in detail and, from which, key insights and applicable takeaways are derived.

In our first two years we deeply probed two important topics that surfaced in our original “Beyond Procurement” study:

  1. SRM and why it has failed to live up to its strategic promise
  2. Procurement’s role in driving Sourcing Innovation.

Our aim with this article is to share some of the insights from our most recent series, which focused on deeply integrating procurement into the broader productivity arena.

How it Works

We divide the Think Tank sessions into three 1-day sessions, four to six weeks apart. Each session has a particular purpose.

  • On Day 1, we attempt to clearly define the topic we are discussing
  • On Day 2, we delve into the substance of the issues and discuss options for meeting the challenges uncovered on Day 1
  • On Day 3, we try to bring our learnings together to develop applicable takeaways that can be directly applied by attendees

2015 – Outputs and Takeaways

So what were the great insights and outputs from ‘Productivity in Pharma’ 2015? All members from the 12 global Pharma companies present felt that there was increased pressure for procurement teams to step above their traditional role of price management, and build connections with other parts of the company to drive even greater levels of productivity.  The group developed several key observations:

  • Activities aimed at generating greater productivity returns must be cross functional and not purely the remit of procurement
  • Discovering met or unmet customer needs often points towards areas of collaboration that directly create customer value
  • Procurement teams need vastly improved analytical skills and tools
  • Specific tools and knowledge required by procurement teams are LEAN/Six-Sigma, Offshoring and Outsourcing, and Demand Management
  • The strongest path of collaboration for procurement teams would be to work closely with internal teams for project management, LEAN experts, outsourcing, and business analytics

During the second session the group had a chance to further refine the insights from Day 1. They delved more deeply into how other companies were recognising procurement’s contribution to value creation in non-traditional ways.

A highlight from the session was a discussion on how procurement figured into the M&A process and what skills did it need to bring to the table to be recognised as a business advisor. Lastly our Talent Development partner for 2015, Korn Ferry, provided on-line assessment for each attendee to allow individual measurement against the ideal set of skills required for CPOs in the future.

Conclusions

In our closing Think Tank session, there was general consensus that most organisations were demanding much more from procurement teams than in the past. This included operating outside of its traditional commercial/risk management role.

However, no company had fully assembled all elements, forming neither an integrated productivity function nor a consensus on guidance for procurement organisations moving in this direction.

Four key imperatives were generated for procurement teams to consider when evaluating their enhanced role as productivity leaders.

  • Mandate: Procurement teams can lead cross-functional efforts to develop a broader collaborative mandate to drive productivity.  Productivity gains are greatly magnified (sometimes more than doubled) when process are evaluated side-by-side and not purely functionally.
  • Structure: Purely functional structures are beginning to fade.  Procurement teams should embrace agile structures and project roles that attack costs in a multifaceted way.
  • Measurement: Procurement’s yardstick of performance, savings, tells only a small part of the productivity story. New methods of measurement, including the increased value perceived by customers, need to become part of our performance lexicon.
  • Skills: New skills and new roles are required for procurement leaders of the future. Three new roles were specified by the group

The intensity of these sessions left most of our Think Tank members hungry for more.  We concluded our last session recognising that skills and capabilities were going to be a defining element for procurement teams, either being recognised as true business advisors, or as those that have yet to transform.

Next Steps

Our 2016 ‘Productivity in Pharma’ Think Tank will focus on “How to grow the skills to drive next-level procurement”, in order to face the formidable challenges of the future.

We are delighted to announce that Procurious will be joining us in order to chronicle the events, conversations and outputs over the course of the three days. This is a great opportunity for our members to get to know Procurious, but also for members of the Procurious community to gain a unique insight into this event.

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 visit our website or drop us an e-mail.

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.

Building Capabilities to Do Business in Diverse Cultures

How an Australian Procurement and Supply Chain Management specialist has built the qualities and capabilities to do business in diverse cultures.

Diverse Cultures

With incredible business opportunities offered to Australia by a growing regional supplier base, developing the capabilities required to drive personal and business conversation with traders from diverse cultures is key in enabling successful negotiations.

Ahead of the 2nd annual Women in Procurement 2016 conference, we have interviewed Nelli Kim, an Australian supplier management specialist based in Hong Kong (and keynote speaker at the event) with up close and personal experience operating in a very different and challenging culture.

Nelli has excelled in her career and in 2015 was nominated as the CIPS Young Procurement Professional of the Year. She will be sharing her experiences at the event on 21 – 23 March 2016 in Melbourne. Read her interview below:

WiP: How have you approached your career progression? And what qualities and capabilities have you built that supported you in doing business in a male dominated culture?

NK: “My approach to career progression has been to ensure that I propagate my own agility, allowing me to not only respond positively to opportunities as they present themselves but also to seek opportunity in my chosen directions.  The qualities and capabilities that I have built over the last twelve months in particular are resilience, flexibility and boldness.”

WiP: What are the biggest challenges you and your organisation are facing in procurement at the moment?

NK: “The biggest challenges I face in procurement at the moment are about ensuring that my responses to situations, requests, requirements and demands of my position are proportionate to the potential outcome.  It’s not just about prioritising but also about the amount of time I can realistically assign to each task while maximising returns for Telstra and our stakeholders.”

WiP: How can attendees benefit from your presentation at the Women in Procurement 2016 conference?

NK: “Attendees can benefit from my presentation at the Women in Procurement 2016 Conference by coming with an open mind about my interpretation of working in an environment that may be perceived as male dominated.  I hope to challenge attendees to connect with each other and grow support networks that will enable rather than block their future development.”

To read Nelli Kim’s bio and find out more about Women in Procurement 2016, please visit the website here.

Did the CFO set Procurement up for Failure in Marketing?

The news last year that Pepsico had disbanded its Marketing Procurement function has been met with mixed reactions.

Marketing Procurement

This article has been reproduced with kind permission from Darren Woolley, Founder & Global CEO of TrinityP3 Marketing Consultants.

The ANA was quick to explain that this was not evidence of the failure of Procurement in marketing, which they said from their polling “was here to stay”. Likewise the WFA said that the Pepsico move was evidence of the need for a more responsive and customer centric focus to their strategy.

And while I do not believe this is the end, it does concern me that in the past 15 years there are a number of examples which suggest procurement has often been set up for failure when it comes to marketing. And I believe the person responsible is usually the Chief Financial Officer. The CFO is, after all, responsible for the financial management of any organisation, and is often the C-suite executive the procurement team report to.

Not the first marketing procurement function to disappear

While the Pepsico decision is the most high profile example of a marketing procurement function disappearing, it is not the first, and likely not to be the last. During 2007, we were working with a procurement team of a food company, who were recruiting to build a specialist marketing procurement function within procurement.

The team of three were very successful in the first year of engaging with marketing and identifying a number of major projects that resulted in significant savings including packaging design and print, media and agency fees.

In the second year, the team delivered only moderate savings as their focus shifted to process optimisation and risk mitigation as further cost cutting alone was agreed to be potentially detrimental to marketing effectiveness. In the third year they were disbanded. The reason given was the projected savings did not justify the cost of maintaining the procurement team.

The short termism of a savings focus strategy

I remember one of our procurement clients providing me with their contract that they were intending to use with the successful agency of the tender they were managing. They asked us to review the contract to see if it was suitable.

I noticed that there was a clause that the agency was responsible for identifying and delivering a 5 per cent improvement in efficiency each year of the contract with a corresponding reduction in fees and costs.

When I bought this to their attention and the fact that the efficiency of the process depended on the brand team as well, considering it was a co-creation process, they looked quizzical. They explained that this was a fairly standard manufacturing clause and wasn’t the agency manufacturing advertising?

In our discussion I was able to highlight where this metaphor did not hold up to interrogation. If you consider it to be a manufacturing process, then it is one where the product goes through iterations of design until the final product design is approved. Then a prototype is produced which again goes through iterations of approval before the project is delivered. Then the whole slate is wiped clean and the process starts again from scratch.

Ultimately, while I made the point well, it failed, as the 5 per cent reduction was already budgeted by finance to be delivered no matter if the agency was able to deliver it or not.

Is there no value in performance management?

We have found that where procurement is focused on delivering cost reduction, either to justify their existence and ensure their survival, or to deliver the objectives of the CFO, there is an underlying belief that the marketing function is a cost and not an investment.

But the fact is that technology, and especially digital marketing, means there are increasing ways to be able to track and manage the performance of the marketing plan against marketing and business objectives.

Giving procurement a broader commercial focus, and not just a cost reduction focus, would position the function as the ideal commercial partner in this accountable marketing world. The procurement team could be aligned to marketing, to manage the measurement and optimisation of the marketing function, to improve performance and return on marketing investment.

Who is focusing on risk management and contract compliance?

Technology has had another impact on marketing and that is an increase in workload. This comes as marketers are often increasing the number of specialist agencies and suppliers to implement the marketing plan across and increasing number of channels.

With a growing roster of suppliers, it means that the marketers also have an increased burden in managing the agencies and their contracts. Compounding this is the increased burden of managing issues such as intellectual property issues, consumer legislation compliance and the like.

Again, procurement as a commercial partner is ideally placed to assist marketing manage these issues to minimise risk by ensuring compliance to contracts and government legislation. It means that instead of just counting savings, there is an opportunity to account for the avoided costs that would arise through poor or non-existent compliance management.

Before anyone says it is not a big issue, most commercial lawyers will tell you that these issues are on the rise, it is just that the advertisers involved will pay significant sums and take extraordinary measures to ensure the issue does not become public.

The role of Math Men and Mad Men in marketing today?

There has been a lot of discussion about the rise of the Math Men, replacing the traditional Mad Men (and Women of course) of advertising. This conversation usually relates to rise of data scientists and econometric modelling. But in fact there is a role for a more commercially focused function within marketing.

Procurement is usually positioned within organisations as the sourcing function, but increasingly procurement has a broader role of identifying commercial opportunities to improve the financial performance of the organisation, while identifying and mitigating risk and ensuring compliance.

That is until it comes to marketing, where it appears that the CFO agenda is to use procurement simply as a razor gang on the marketer’s budget. The problem is this focus on costs is, as we have shown, is a short term strategy and overlooks the wider opportunity of having procurement act as the analytical and commercially focus partner to the marketing team. In a way they become part of the Math Men within marketing to complement the Mad Men.

Procurement is a commercial function not simply a financial one

The increasing complexity of marketing and the impact of technology has already seen the rise in the need for a more analytical approach. Rather than the CFO using procurement as a razor gang on marketing, beyond the first cut to remove obvious excesses, the role should be to assist marketing in managing and measuring performance.

After all, who better to work in partnership with marketing and help report the effectiveness of the marketing investment to the CFO and the C-suite than the procurement team? The best procurement professionals are commercially aware and analytical and able to work with their marketing colleagues to provide the increased level of analysis required in this digital and data driven world.

Ultimately it achieves the longer-term goals of any business in driving profit as no-one is able to slash their cost to growth.

Cost Breakdowns – As Much About What’s Important As About Price

“As I hurtled through space, one thought kept crossing my mind – every part of this rocket was supplied by the lowest bidder.” John Glenn, NASA

SLS-launch-at-Launch-Complex-39B-at-Kennedy-Space-Center-in-Florida-NASA-image-posted-on-AmericaSpace

Time was that the old-school view of procurement, as illustrated above, prevailed. Of course, since then, times have changed, and procurement has emerged after the Lopez era to prioritise quality alongside purchase price.

However, companies continue to hold purchase price as a primary driver in making decisions, with other factors remaining as things that need to be taken into consideration somewhere along the way.

Procurement organisations following this track are likely to find themselves under more and more pressure in the coming years without really understanding why. And it is because the concept of cost itself is changing – and nowhere is this clearer than in the cost breakdown.

Changing the Meaning of Cost

There are two things changing what cost means. First of all, procurement is expected more and more to act strategically. In addition to all the obvious costs on top of purchase price: installation, operating, maintenance, and disposal costs, procurement is expected to think several steps down the line, or at least should be.

As well as looking at short-term cost, it is important to have an idea of future prices, and therefore the behaviour of the cost drivers that might influence this. Not all purchasing is a simple transaction – suppliers need to be developed, strategies need to be formed.

In structuring cost breakdowns, procurement organisations have to ask two key questions – am I making the best economic decision today? Is my decision helping my company to gain a competitive advantage tomorrow?

Secondly, the development of information technology and increasingly globalised supply chains present a wide range of risks as well as opportunities. This all has an effect on what we mean by cost. Globalisation is opening supply chains up to new risk challenges: the unknown quantity of a new supplier from abroad, disruptions from natural disasters and political instability, differing local conditions like lead times, and growing awareness of lacking environmental and labor standards outside of the EU.

The same global media network that can feed vital information to procurement organisations also opens corporations up to risk: specifically brand damage when an environmental or labor scandal goes viral, with all the costs of revenue loss and re-call expense that come with it. Global brands like Apple and Adidas have recently become much more active on this front in China.

Coupled with incoming legal requirements in Europe, such as the UK Modern Slavery Act, procurement organisations have to factor much more into their cost breakdowns. It’s no wonder that people talk about procurement delivering value.

Procurement Value

This is a colossal amount of information to process. But procurement value is not some nebulous concept floating over all of this. It’s simply a matter of defining what is important for your company – what is going to produce value. Maybe it’s making productivity faster or better, maybe it’s reducing risk in quality or in logistics.

You can only identify this by working with your internal customers, for example, engineering and manufacturing, and working cross-departmentally. Procurement professionals will also need to be attuned to how values change across an organisation. For example, as public awareness of supply chain ethical scandals grows, procurement will be expected to value Corporate Social Responsibility as much as other departments.

Crucially, these values can define what gets prioritised in the cost breakdown and help you navigate the jungle of information out there.

This is also where technology can play a massive role. With an expanding market in procurement technology, especially in Software as a Service (SaaS) and big data analytics, there are great opportunities to bring together the data you need in one place, rent extra information from business intelligence suppliers who can turn qualitative information into figures, and understand it all in a way that makes sense to you.

As the nature of cost changes, procurement organisations need cost breakdowns that do justice to this. It follows that they need to select the right software to support new cost breakdowns.

One thing is for sure: the day of the Excel spreadsheet cost breakdown is over.

Charlotte Spencer-Smith works for POOL4TOOL, based in Vienna, Austria.

Buy vs. Lease – The Sharing Economy and Procurement

It was tarnished as a fad, or worse still, a hipster trend. But the ‘sharing’ or ‘collaborative economy’ is here to stay. This new purchasing practice is changing the way we consume products and services in our daily life.

Sharing-Economy

There is hardly an article about this new economy that doesn’t discuss the way that companies like AirBnB and UBER are disrupting consumer markets.

The number of Americans who have taken part in the sharing economy has grown by 20 per cent in the last 18 months. You would be hard pushed to name another sector that has seen a similar increase.

What is the Sharing Economy?

For the uninformed, the sharing or collaborative economy refers to the peer-to-peer sharing of goods and services (normally in place of purchasing outright), and is generally facilitated through a community-based online platform.

As is highlighted above, the sharing economy has gained a lot of traction in consumer markets such as accommodation (AirBnB), transport and ride-sharing platforms (UBER), and business funding (KickStarter). There are many, many more examples.

What is less clear is how or, perhaps more importantly, when these new purchasing practices might find their way into common procurement practice. Smaller organisations, or ones with less formal procurement processes, have allowed the use of businesses like AirBnB for business travel, although this is far from the norm.

Procurement has been doing it for years

But it poses an interesting question – is the sharing economy really any different from the age-old procurement question of ‘buy vs. lease’?

‘Buy vs. Lease’ is one of the key decisions frequently made by procurement, irrespective of the industry in question. For example, when an outlay was required for a new asset, say vehicles or fleet, the ‘Buy vs. Lease’ question would be asked (and usually answered by senior decision makers) as to whether the goods should be bought, or merely leased as required, leaving the maintenance and up-keep to someone else.

Building Furniture in Berlin

This cross over between big business procurement and the small-scale personal sharing economy was highlighted brilliantly on a recent trip one of the Procurious community made to Berlin (and was kind enough to share with us!).

Friends of theirs had recently returned to Germany after seven years living in Sydney, and had moved into a new flat. The flat came completely unfurnished (no curtains, no lights, no kitchen cupboards), so significant furniture construction was required before they could fully move in. Some of the new furniture was ubiquitous IKEA gear, and thus required nothing more than an Allen key and a lot of patience to construct.

However, other items required more work and, importantly, more tools. This included an orbital sander and other wood working tools to alter a chest of drawers so that it would fit into a small space inside the new flat.

Ordinarily this would have required a trip to a hardware store and a large outlay on new equipment that would subsequently lie redundant for years to come. But in Berlin, and many other cities around the world, there is app called peerby that can help. The app allows individuals to connect with other people locally and lease/borrow items they have (at a small cost), rather than buying their own.

Cost Considerations

Interestingly, the considerations for Buy vs. Lease are the same whether you are constructing furniture in Berlin or buying plant equipment in for a mining company in Western Australia. In order to make a good decision, buyers should consider how often they’ll use the product, how core it is to their operations (if you plan on doing a lot of woodwork, maybe its worth buying the orbital sander), the cost per use, and when the product will become obsolete.

It seems the sharing economy has merely brought an old procurement process (Buy vs. Lease) to the consumer market, meaning that purchasing practices that previously could only be leveraged by big business are now available to recreational (perhaps that’s the wrong word) furniture builders in Berlin.

It remains to be seen whether or not these practices will cycle back round again in the procurement world, but under the guise of the sharing economy.

Eternal Flame

The New Year brought the tragic news of the passing of David Bowie. The term genius is often attributed to artists, though not all deserve it. David Bowie was a true genius and more.

Eternal-Flame

Completely unique, forever surprising with a rare ability at multiple reinvention throughout his career. Bowie was responsible for some of the greatest music of the last 50 years and will continue to inspire artists and fans for the next 50.

His death has, of course, prompted a resurgence in sales of his back catalogue – to be re-discovered by new generations who weren’t previously familiar with his work but feel his influence through contemporary artists. Bowie was also a master of collaboration – one of my favourites being “Fame” co-written with John Lennon & Carlos Alomar. Here’s a 1975 clip of Bowie performing “Fame” live, in which his styling looks strangely modern.

Why is this relevant to Marketing?

There’s a common misconception among some marketers that the death of an artist makes their work freely available for use in brand campaigns. This is, of course, wholly incorrect and ignores the complex rules surrounding life of copyright in songs and sound recordings. This becomes more complicated for work where the artist and songwriter is the same person – such as David Bowie.

What’s Life Of Copyright?

As I explain in my new book Music Rights Without Fights, both songs and sound recordings have extensive periods of copyright protection during which time the rights owners have exclusive control of the work. This control includes the ability to grant (or withhold) licences for the work to be used in association with brand marketing campaigns and charge an appropriate licence fee.

What’s The Length of Life Of Copyright?

Here’s where it gets complicated – This varies by market and differs between songs and recordings. Taking the European Union (“EU”) as an example, Life of Copyright is:

For Songs & Compositions:

70 years from the end of the year in which the songwriter or composer died. Where the work has multiple creators, it’s 70 years from the year in which the last creator died.

For Sound Recordings:

70 years from the end of the year in which the sound recording was first commercially released.

What’s The Term For Music Beyond Life Of Copyright?

The common terms are “Out Of Copyright” or “Public Domain”.

So, I Can Use Anything From 1945 And Before For Free, Right?

No, wrong. It’s not that simple.

For songs, in theory, within the EU, any song written by a songwriter who died in 1945 or before is out of copyright – and hence could be used by a brand in an advertising campaign without payment of a licence fee. However, in practice copyright law allows new arrangements of out-of-copyright songs to be registered as new in-copyright works.

If your brand or agency commissions a new arrangement (or sources an existing recording) of an out of copyright song, chances are, the arrangement will have been registered as a new work which requires the usual licensing process and applicable fee.

For sound recordings, there’s a legal view that a new copyright exists in remastered versions of old recordings. If, for example, you have a CD version of a 1945 recording, the record company that remastered and released it could claim copyright in that CD recording. The only safe option is to source an original shellac 78 rpm disc from the period.

A Word Of Warning

The above guidance, whilst always subject to detailed due diligence, roughly applies to campaigns limited to EU states. However, where campaigns are made available online, other market jurisdictions come into play where rules differ.

For example, life of copyright in sound recordings in the USA is 95 years – so, only sound recordings commercially released in 1920 or before would be public domain. Likewise, life of copyright in songs varies across regions so non-geo locked online campaigns have high risks attached for those who rely on public domain status to avoid licence fees.

What Does This Mean For Procurement?

If your marketing colleagues say they’re using out of copyright music in a brand campaign, and therefore have no music line item in the production budget, alarm bells should ring. It’s rarely that simple and the cost of getting it wrong through copyright infringement far exceeds the payment of licence fees handled in the correct manner.

What Can I Do To Be Safe?

Here’s a quick check list once your marketing colleagues have told you which music they plan to use:

For Songs – you need clarity via detailed due diligence by a qualified expert on:

  • Death dates of songwriter / composer / lyricist
  • Identity of previous copyright owner (if work is assumed to be public domain)
  • Summary of markets in which the campaign is due to run
  • Cross-check against copyright legislation in those markets
  • Copyrights status of new or existing arrangement of the work intended for use

For Recordings – you need clarity via detailed due diligence by a qualified expert on:

  • Date of first commercial release in the markets in which campaign will run
  • Cross-check against copyright legislation in those markets
  • Identity of previous copyright owner (if recording is assumed to be public domain)
  • Availability of original shellac 78rpm disc that pre-dates copyright period

Want To Know More? Enter Competition To Win Free Book!

If you’d like to know more about music rights and how to license them with controlled cost and risk, we’re giving away 10 free copies of my book Music Rights Without Fights to Procurious members.

To be in with a chance of winning, follow the link below and answer all the questions there. In the event of there being more than 10 entrants who answer the first 5 questions correctly, we’ll use our fiendishly difficult tie break question to help select the winners.

The competition closes at 17:00 (GMT) on Friday the 5th of February, with winners announced the following week. You must be a member of Procurious to be eligible for the competition!

Full competition Terms and Conditions, can be found here: Music Rights Without Fights – Competition T&Cs.

ENTER THE ‘MUSIC RIGHTS WITHOUT FIGHTS’ COMPETITION

Good luck!

Think Quality Over Price When Purchasing Corporate Uniforms

Price isn’t the most important element of a uniform negotiation, according to a disruptor in the Australian uniform industry. 

Cargo Crew

An award-winning Australian uniform market disrupter has urged procurement professionals to think twice when considering haggling on price for the company’s corporate attire.

Melbourne’s modern uniform manufacturer, Cargo Crew, reveals that while procurement is far more than just being about price these days, some negotiations start and finish with price and deadline requirements. Other procurement professionals appear to be more progressive in their approach, treating the transaction as a partnership rather than a mere supplier by looking for ways to cement a strong relationship from the outset.

Choosing Quality

“We’re dealing with procurement professionals in increasing numbers, and want to help them understand the benefits of a quality uniform, which has the potential to transform the entire image of an organisation overnight,” client service director, Narelle Craig, says.

“You should never under-estimate the importance of the corporate uniform when you’re next in the market for an upgrade.

“When it comes to uniforms, price should not be the most important factor. We use audited factories to manufacture our product line, have ethical certifications not to mention using the highest quality materials and a client care team, and all of that comes at a cost. But it delivers huge value to an organisation, and removes a lot of the headaches felt by procurement professionals who have countless things to consider when ordering a uniform,” Craig says.

By choosing a quality uniform, procurement professionals are saving their company money in the long term. This is because they don’t have to replace their uniforms as often, saving the resources to coordinate re-ordering uniforms, and lessens the number of staff complaints that their uniform isn’t wearing well.

‘Fashion-Forward’ Uniforms

Cargo Crew was launched in 2002 by Craig’s sister, Felicity Rodgers, who as a fashion designer noticed a gap in the market for fashion-forward uniforms.

The business has flourished since launching its first range of Denim uniforms in 2012. Cargo Crew has dressed growing numbers of corporate Australian and New Zealand organisations including staff at Renault, Freedom Australia, ME (the bank), Dulux Group and SkyBus.

Comfort, the breathability of the fabric, attention to details such as longer length tees and shirts so staff can reach comfortably in the line of duty is paramount, Rodgers says.

“A uniform completes an organisation’s corporate story and reflect what the business stands for. Staff need to feel really good about what they wear, and again, that comes at a cost. Procurement people need to keep in mind the style, look and image they want to reflect in their brand,” Rodgers says.

“We set out to create a uniform brand that not only filled a gap in the market, but also excited and engaged our audience.”

The business is also investing heavily in operations under the watchful eye of Paul Rodgers (Felicity’s husband), who is focused on business efficiencies such as warehousing space, online ordering platforms, reporting and client management.

Cargo Crew Team

The Cargo Crew Lead Team (l-r): Paul Rodgers, Felicity Rodgers, Narelle Craig

Direct to Client Sales

Cargo Crew differs from other uniform suppliers in that it cuts out the middle man, selling a retail-quality product direct to the client rather than to a wholesaler to on-sell.

The business won the 2015 Telstra Australian Small Business of the Year Award for developing a product range with flair usually lacking in the wardrobes of corporate Australia. The Telstra Award comes on the back of 44 per cent overall sales uplift year-on-year and a growing number of corporates interested in their product, which boasts 60 variations.

In the past six months, the company’s stock holding size has grown six times. The world is sitting up and taking notice, too, with interest and orders coming from Italy, USA, UK, China, Hong Kong, Singapore, Japan, Sweden, France and more.

The emphasis on style has seen the Melbourne-based business with an online store transform the modern uniform since the company launched 14 years ago. Cargo Crew now employs 18 staff.

“We’ve noticed both small and big competing businesses try to mimic our style, brand and product range, which is actually a big compliment, but of course brings its own set of challenges to the table that we’ve had to deal with.”

Cargo Crew has increased the partnerships it has, expanded its range, held a pop-up event in Sydney and even started its own publication, The Crew Review. It also has plans under way to develop a new division of the business for corporate clients, soon to be announced.