Category Archives: Procurement News

What are the 7 Challenges Keeping PSCM Managers Up at Night?

As the modern procurement division advances to become a part of the whole organisation innovation process, so does the expectations around supply chain and procurement professionals’ performance.

overcoming-challenges

Having a deep understanding of the challenges facing executives who are ascending the procurement ladder is the first step to find strategies and inspiration to overcome them.

Research completed ahead of the Women in Procurement 2016 conference, with Purchasing and Supply Chain Managers from across a variety of sectors, has identified 7 main challenges the modern supply chain and procurement professional must break through in order to achieve the department expected results. Here is a list:

  1. Aligning procurement’s vision with the organisation’s strategy and communicating its value to the entire company
  2. Understanding how technology and processes support supplier relationships and how to lift enterprise innovation
  3. Identifying how to deliver more value to your organisation through strategic procurement
  4. Developing a winning strategy by creating a value oriented procurement department
  5. Inspiring leadership and building meaningful capabilities and skills for your team
  6. Developing the competencies to do business with international partners in challenging cultures
  7. Retaining your best talents

If some, or all of these challenges are keeping you up at night, then you are not alone.Purchasing and Supply Chain Managers managers across the country are looking for solutions to these issues right now.

The Women in Procurement 2016 conference is bringing together a panel of experts to give all in attendance some insights into how leading organisations are addressing these issues. To find out more, download a brochure here.

Can we Expect Company Loyalty to Motivate People These Days?

There are many different ideas on how to motivate staff, but the one thing that everyone can agree on is that if you are able to motivate them, then the results can be amazing.

loyalty-business-blog

If you look at any high performing company, in any sector, then you will find they have a very motivated workforce. Is this a chicken and egg problem? Which came first – the motivated staff to drive results or the results successes giving motivation back to the people?

Having worked with many companies in many sectors I know this ‘good motivational spiral’ to be true, and indeed the ‘downwards motivational spiral’ can be true too. The other thing I have noticed is that ‘loyalty’ – the desire for people to put in extra effort through a sense of pride and belonging – can be a factor, but only if the unit is small enough.

Creating Shareholder Value

Over the last 10 years there has been the on-going trend towards ‘global’ companies and ‘matrix’ organisations. This has had an interesting effect on loyalty – it has broadly destroyed it.

The bigger the company, the more they re-organise and constantly restructure, the less people appear to identify with it. The concept of creating shareholder value as a key goal is still talked about in big companies, but almost nobody (apart from very few at the top who hold massive share options) actually cares. Why should they put in extra work just so that some anonymous pension fund can make more money in 10 years time?

What is interesting is how loyalty can still be a real motivator if you can make your ‘unit’ feel that it has an identity of its own, and that the people in it can see how their extra effort can have a direct result on helping others who they work with or interact with directly.

The motivational psychologist Victor Vroom ( what a great name for someone studying motivation – VROOM!) had four ‘gateways’ of motivation that you had to pass before anyone would be motivated. In simple terms its ‘Could. Would. Would. Desire’. Could I do it? Would it make a difference that I can see? Would anyone notice? Do I desire the outcome? The middle two gateways are focussed on this area of belonging – if I can see my actions make a difference and people notice then that can be a great motivator. If I have to go through some massive IT change that is only of benefit to people in head office who I never meet then I am not going to be motivated to do anything more than the minimum required.

Losing a Sense of Belonging?

This then prompts the question of how big a unit needs to be before you lose this sense of belonging? My experience is that firstly they can be very small – a group of 6 people in a depot or office unit can build a great sense of loyalty. At the other end of the scale I think 100 people starts to get to the limit.

I worked with an incredibly successful Belgium food company. Even though their world wide network of sellers came from 40 different countries, the total group was only about 90 people and the sense of loyalty, even in this highly dispersed and nationally diverse situation, was amazing. Likewise you can go to massive head offices of 1000 people all in one building and nobody feels any connection at all.

There is a dark side to this – get too strong a sense of loyalty to a small unit and you run the risk of many small silo mentalities causing the matrix to malfunction. This is always a risk in modern business –but my challenge would be that we are better off creating really strong identities in smaller groups.

Do not try and get a corporate sense of belonging, you will waste your time. Nobody really cares about your corporate behavioural values – too many people can see how they are not being lived out in big corporations so they just destroy the sense of belonging, not enhance it. Instead think small – how can we bring back that sense of common purpose.

Perhaps we should take a lesson from history – go back to roman times and start organising our companies in units of 100 and no more. Wouldn’t you just love to have on your business card the job title ‘Centurion’ – that really would be motivating!

Automating Procurement Management Is A Way to Drive Efficiency

Procurement management is a critical process and technology has been playing a major role in driving its efficiency.

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The procure-to-pay cycle, which involves everything from requests-to-suppliers to final payments, requires solid control and faster turnaround. It helps improve organisational efficiency by a big margin. According to FSN, an independent research and publishing organisation, “Automating the procure-to-pay process will be the easiest way to drive significant benefits for any organisation, whether it is a large public sector company or a small trading firm.”

The traditional or manual procure-to-pay process is exceptionally labor and document intensive. It involves processing mountains of paperwork, cutting through bureaucracy for purchase-order placements, gaining budget approvals and managing payments. That’s time-consuming and error-prone and brings low supplier satisfaction. But with automated procure-to-pay systems, work becomes much simpler.

The Benefits of Automation

Procurement efficiency can trigger a chain reaction that leads to better efficiency and a healthy return on investment. Experts point out that organisations using automation have an average of two-day purchase-order cycles, compared to the 7-day cycle for firms that use the manual process.

Automation of the procure-to-pay cycle streamlines the process and delivers key benefits like:

  • Faster communication with suppliers

Automation provides real-time interaction with the suppliers, which reduces time-consuming paperwork. Suppliers can instantly access the documents, contracts and the information that helps them understand the process completely. Employees get to access best practices online, deliver faster decisions and select the best course of action. Faster decision-making helps to improve efficiency of the procure-to-pay cycle.

  • Quicker cycle times with purchase orders and approvals

In most organisations, workers spend most of their time drawing up contracts and reworking them to incorporate changes. But with automation of contracts, management becomes easier. Online templates, where minor changes can be easily incorporated, help to save time.

You need not reinvent the wheel all the time by creating contracts from scratch for every supplier. Existing contracts can be stored and reused as and when required. Receipts, invoices, account information and other documents can be easily replicated with appropriate templates readily available within the system.

  • Instant data capture

The procure-to-pay cycle is extremely paper intensive. Online invoices, receipts and bills, which can be easily mailed to suppliers, reduce the effort and time spent on manualkeying. With the proliferation of mobile devices, apps can be used by employees to validate documents and upload relevant information from any part of the company. Therefore, an employee from the warehouse can easily send real-time information, which can be monitored by the accounts department instantly.

  • Better audit trail

The use of standard templates, online interactions and real-time document uploads create an audit trail that can be instantly identified. All communication with suppliers and other pipeline partners is captured. It can be referred to in case of disputes. Multiple stakeholders and departments can simultaneously view the interactions, and thus facilitate greater visibility and transparency.

  • On the go authorisation

Once the invoice has been generated, it requires approvals from different departments. Automation can trigger electronic authorisation and the data can be immediately entered for final processing. Multiple approvals can be configured within the system. Mobile access authorisation helps fast-tracking the approvals for users on the go. The system also sends email alerts for pending work, thus reducing the cycle time.

  • Faster payment cycles

Automated procure-to-pay has reduced supplier lead times, creating better trust for company actions. Executives can streamline company strategies to ensure that employees and stakeholders are trained to access and utilise the system for better outcomes.

Organisations that have automated procure-to-pay systems have clear advantages over those who continue with manual processing. Automation helps in driving up efficiency and utilising your workforce for developing effective strategies.

Ashly J is veteran industry expert working as a Marketing Operations Manager in India. She focuses on growing Expenzing procure-to-pay systems as an open source product, and communicates the value of identity to customers, partners, and the larger community, by targeting specific markets through segmentation and analysis.

David Bowie and Procurement – Dealing with Ch-ch-ch-ch-changes

Bowie_Changes

Ch-ch-ch-ch-changes, (Turn and face the strange),

Ch-ch-changes, Don’t tell them to grow up and out of it,

Ch-ch-ch-ch-changes, (Turn and face the strange)

Ch-ch-changes, Where’s your shame,

You’ve left us up to our necks in it, Time may change me,

But you can’t trace time.

I recently sat through a presentation on dealing with change and being resilient. Sadly most of what I took away was negative, telling people to “get over it”. It reminded me of the Bowie song, and I decided to write some thoughts about change management down.

A former manager of mine once said, “Gordon, in procurement we are basically change agents.” Every organisation needs to bring about changes in its management and policies, but besides the improvement of systems, there must be a change in the people as well. If not then the thousands of dollars invested will go to waste. Therefore every organisation needs to support the employees in the process of making transitions or changes. These individual transformations can be traumatic and may involve a lot of power loss and prestige issues.

In reviewing the range of literature there are some guiding principles for change management that have jumped out:

  • People – the main point to address are the people who impact or who are impacted by the change being proposed. Therefore there is a need to address the “human side” systematically
  • Change starts at the top – if you haven’t got buy in from decision makers, its unlikely that the change will happen. If the exec champions the change, then the change will be made.
  • Burning platforms – if there is a reason for the change to happen that everyone can relate to, the change becomes smoother. A friend once said to me that he had found lots of issues with a process that could have caused a large problem, however he couldn’t make those changes because they had “got away with it”!
  • Empower the “bottom” – although it starts at the top, it’s imperative that those directly affected have the chance to shape the nature and implementation of the change. This may then head off any disruption part way through.
  • Be realistic with the change – if you try and change too much too soon, you may end up actually losing ground like Evil Knievel and his Snake river canyon jump
  • Communication – I am planning the next article to discuss more on this important aspect, but suffice to say, the type of communication and the language you use is important.
  • Scenario plan options – I have written previously about the need to scenario plan.

Change Models

Here are the most used change models with a summary of them:

Kubler-Ross

The-Change-Curve

The Kubler-Ross Change Curve (which is also known as the 5 stages of grief) is a model consisting of the various levels or stages of emotions which are experienced by a person who is soon going to experience change. The 5 stages included in this model are denial, anger, bargaining, depression and acceptance. This model was introduced by and is named after Elisabeth Kubler-Ross in a book called ‘Death and Dying’ which came out in the year 1969.

The ADKAR Model

This Model was created for individual change management by Prosci. This model demonstrates the 5 ingredients needed for change to be possible and successfully implemented. These 5 ingredients are given as follows:

  • Awareness – Awareness is a very important building block that helps one understand why change is important and needed.
  • Desire – The desire to be a part of change and support it is another vital ingredient.
  • Knowledge – The desire is incomplete without knowing how change can be brought about.
  • Ability – Even on having the desire to change and the knowledge to bring about this change, things can go in vain if the individual does not have the ability to grow with it.
  • Reinforcement – This building block is important to sustain the change.

John Kotter: 8-step Strategy for Change Management

John Kotter suggested a strategy for change management consisting of an 8-step process to deal with change:

  • Create: Establish a feeling of urgency or hurriedness towards change.
  • Build: Formulate a guiding coalition.
  • Form: Develop a strategy to bring about change. This requires having a plan and a vision.
  • Enlist: Communicate or put forth the vision or strategy for change.
  • Enable: Empower the employees for taking action to incorporate the changes.
  • Generate: Formulating and generating short-term goals and achieving them
  • Sustain: Capitalisation of wins or gains in order to produce bigger results.
  • Institute: Incorporating new and better changes in the workplace culture.

Kurt Lewin – Force Field Analysis

This is a tool used to understand what’s needed for change in both corporate and personal environments. Typically used in the change part of his Freeze, Change, Refreeze model.

Lewin wrote that “An issue is held in balance by the interaction of two opposing sets of forces – those seeking to promote change (driving forces) and those attempting to maintain the status quo (restraining forces)”.

Essentially you brainstorm what would drive change or what would stop it, and the scale of each of the forces. You then identify what you can do to affect those forces; i.e increase driving, decrease restraining, eliminate restraining, add new driving, or turn a restraining into a driving force.

Summary

The common point about change is dealing with people as individuals and recognising that everyone reacts to change differently, its critically important therefore not to tell people to shake it off, or tell them they are overreacting, people deal with change differently and if we don’t acknowledge the issue, people won’t really change and will find more passive ways to resist, when the ideal is to accept and even drive the change though.

Remember people are the most important asset for change, so as David Bowie said…”Ch-ch-changes, Don’t tell them to grow up and out of it”.

Why Procurement’s Time is Now: An Interview with Tony Megally

The Source’s new Managing Director, Tony Megally, shares his views on the state of Australian procurement talent and what it takes to set up an effective retention scheme. 

Tony Megally

 

 

 

 

 

It seems that Australian businesses have begun to realise the value that a highly functioning procurement team can bring to an organisation.

Obviously, this is reliant on the ability of procurement leaders to attract the right talent to the function. How do you feel about the current stocks of procurement talent in Australia?

There is definitely a short supply of high quality procurement professionals across the local market. It seems that organisations are either doing their best to retain top procurement talent or competing to attract talent. Industry related experience in some sectors, for example FMCG and Retail is increasingly becoming an essential requirement, and that is adding further challenges in the recruitment process.

Organisations are focussing on the talent shortage by looking to hire from offshore markets. We are increasingly receiving mandates from our clients to reach out to procurement communities across the UK and South East Asian regions.

As the procurement function continues to mature, what do you see as the critical skills and capabilities that procurement professionals need to possess today?

No matter how technical and analytical your skills are, employers are looking for commercially minded procurement professionals with strategic agility and strong business acumen who can communicate, influence and add value to stakeholders.

A great procurement function serves the whole business and the traditional procurement skill set is not enough. Procurement professionals should look to continually develop their interpersonal, strategic thinking, networking, influencing and leadership skills.

There is a lot of talk about Millennials at the moment, both in terms of how to attract them and once you’ve done that, how to motivate them to perform. Do you have any insight into how procurement teams might manage employees from different generations?

I think the challenge for many CPO’s and Senior Procurement Leaders is understanding which generations are represented in their team and what their expectations are, and how they will best perform and progress their careers. This will all help with succession planning or more broadly, talent management.

For example, Gen Y/Millennials will probably respond well to becoming a “champion” of a particular project or subject matter, having a strong mentor, a clearly defined career path and access to senior decision makers. We are starting to see an interesting management trend emerge with Millennials acting as social media advisors to their less digital savvy Gen X and Boomer leaders.

This reverse mentoring role is enabling greater collaboration and innovation amongst diverse generations in the workplace and giving Millennials a sense of empowerment and ownership.

Holding onto great talent is as important as attracting the right people to work in your business in the first place. There is no point signing great talent if you don’t have a plan in place to keep them.

Do you have any observations as to what makes a good talent retention policy? Is there anything in particular that the top talent is looking for in order to stay?

Having interviewed thousands of candidates over the years, it’s very clear that money alone won’t retain top performers.   People want to feel valued, trusted and respected. They are looking for on-going personal and professional development opportunities and to work within a flexible team focussed environment where they can make a meaningful difference, and be recognised for their contribution to a team’s or organisation’s goals.

Poor leadership is one of the top reasons many people leave, even top performers. A good talent retention policy is certainly nice to have however in a fiercely competitive market not everyone will stick around. I strongly believe that CPOs and Senior Procurement Leaders who are inspirational, engaging, communicative and authentic will win in the end!

Black Friday over as Nestle reveals darkest of supply chain disclosures

Another week, another procurement scandal. It came as quite a shock when Nestlé self-vilified and admitted to slave labour within their supply chain.

Slavery

Whether you’ve heralded them for their honesty or condemned them for not doing enough, we can at least be glad that the issue of slavery within supply chains is once again at the forefront of people’s minds and being addressed. 

In other news, The Digital Market place has launched G-Cloud 7 and we’ve made it through another Black Friday (thank goodness). 

To get you up to speed or just to refresh your memory we’ve compiled a succinct summary of a week in procurement. 

1) Nestlé admits to slavery within its supply chain

Nestlé has self-disclosed the presence of slave labour used to catch fish in Thailand that ultimately ends up in its supply chain. It’s a bold move from the organisation and has been widely regarded as a positive one-  both to hold their hands up and admit fault and to endeavour to put something in place to ensure it stops happening.

Nestlé launched a year long internal investigation last December, after a number of their fish products were linked to unregulated working conditions. 

Verité, a non-profit organisation whose mission is to ensure “that people around the world work under safe, fair, and legal conditions” were commissioned by Nestlé to produce a report for this investigation and interiewed over 100 people. One worker told the organisation “Sometimes, the net is too heavy and workers get pulled into the water and just disappear. When someone dies, he gets thrown into the water.” 

It is rare for a company such as Nestle to report on such negative findings and not surprising that their move has been applauded. Mark Lagon, president of the non-profit Freedom House, a Washington-based anti-trafficking organization has described the move as “exemplary” and he is not alone. 

Others have been more cynical. Does Nestles implementation of an “Action Plan” to tackle this issue prove their genuine engagement with and commitment to ending slave labour and improving working conditions across all of their supply chains?

Articles referenced:

http://www.verite.org/research/promoting-responsible-labor-practices-fishing

http://www.theguardian.com/global-development/2015/nov/24/nestle-admits-forced-labour-in-seafood-supply-chain

http://in-cyprus.com/all-companies-have-slave-labour-in-supply-chains-tesco/

http://www.theglobeandmail.com/report-on-business/international-business/european-business/nestle-admits-slave-caught-seafood-present-in-its-supply-chain/article27445511/

2) Did you succumb to the pressure of Black Friday?

Black Friday is a fairly established tradition in the USA and fast becoming so in the UK (and other countries) with an estimated  £810 million spent in 2014. For retailers and supply chain managers Black Friday coupled with Cyber Monday (who knew that was a thing?) presents a logistical nightmare- and you thought being the shopper was the stressful part? 

Shops are expected to be well-stocked, well-staffed and well-run. We live in an age where selling out is absolutely not an option and supply chain managers need to prepare accordingly with contingency plans in place. 

Articles referenced:

http://www.supplychaindigital.com/supplychainmanagement/4176/Planning-for-Black-Friday

http://www.supplychaindigital.com/supplychainmanagement/4168/Supply-chains-under-pressure-as-Black-Friday-looms

3)  UK Government launches G-Cloud 7 

On Wednesday 25th November, G-Cloud 7, which caters to suppliers selling cloud-based services, went live and the government announced the 1,616 suppliers who have been appointed to the framework (an 11.2% increase in suppliers from February’s sixth iteration).

Government frameworks are time and cost effective for both public sector organisations and those supplying to them, excusing the need for individual procurement contracts. The 

A Digital Outcomes and Specialists (DOS) framework, the first of its kind, has opened for submissions in the hope of making the procurement of technology services ever more efficient and fair. This framework is set to go live in April 2016 and will allow public sector organisations to compare and buy digital inclusion training services and assisted digital support. As with G-Cloud frameworks, organisations will be able to “buy services more quickly because they don’t have to run a full OJEU (Official Journal of the European Union) tender.”

The Digital Market Place has explained the reasons for launching the DOS: “Suppliers told us that the application process for the Digital Services framework was demanding. Buyers told us that they wanted to evaluate suppliers against their specific needs. The need for digital services across the public sector are so diverse that we decided the most appropriate place for in-depth evaluation of a supplier is at call-off stage, against the specific buyer problem.” Because suppliers will be able to informally respond to buyers before competition starts, the process will allow the buying process to be “open, fair and transparent.”

Articles referenced:

http://www.cloudpro.co.uk/leadership/5597/g-cloud-7-goes-live-with-new-services-in-digital-marketplace

http://central-government.governmentcomputing.com/news/g-cloud-7-goes-live-as-procurement-reforms-continue-4736146

https://assisteddigital.blog.gov.uk/2015/11/19/digital-training-and-support-framework-is-open-for-submissions/ 

https://digitalmarketplace.blog.gov.uk/2015/11/20/themes-from-supplier-responses-to-draft-documents/ 

4) Renewable Energy Procurement

 – China RE100,  an initiative committed to 100% renewable electricity, held a workshop to educated business on renewable energy procurement. 

– “The gathering brought together representatives from a variety of associations, companies and financial institutions and sparked discussion around ‘Financial Models and Risk Management for Corporate Renewable Energy Procurement’ in China.”

– “Corporate demand for renewable energy is rapidly increasing in China, now the largest investor in the market worldwide – in 2014, the total amount of investment increased by $US89.5 billion. “

-“Wang Weiquan, Deputy Secretary of CREIA spoke of renewable energy policy and legislation in China, and Peng Peng, Policy Lead of CREIA went into further detail about tariffs, subsidies and direct purchase options for renewable power in China.” 

– Discussed options for a greener and more sustainable society.

Articles Referenced

http://there100.org/re100

http://www.theclimategroup.org/what-we-do/news-and-blogs/businesses-learn-about-renewable-energy-procurement-in-beijing/

5) MSPs to call in IT firms after criticism of public sector procurement system

The Public Audit Committee will take evidence from Scottish Government permanent secretary Leslie Evans in two weeks’ time after claims were made claims there is “something very wrong” with the procurement system in central government. 

https://www.holyrood.com/articles/news/msps-call-it-firms-after-criticism-public-sector-procurement-system

Agility – Making Flexibility Look Like the Plan

As usual, I take the topics for my blogs directly from my past experience as CPO or, more recently, the work we do with our clients and partner companies. This blog is no different.

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Lately, it seems to me that in virtually every meeting, every executive development seminar we host, and every conference I attend, the word ‘agility’ has crept into the business lexicon and now sits in a central position in all that we discuss.

Hardly a sentence passes without someone extolling the need for agility, the benefits thereof and the mandate that they have received from a corporate demigod to be agile. I must also admit that as executive advisors, we are not immune from this lexographical frenzy and, likewise, have laid the ability to develop your function, yourself, your people and your very survival at the foot of the ‘agility’ alter.

Defining Agility

All of the common definitions of agility run something like: “ability of a business to rapidly respond to internal or external factors, change flexibly, with minimal interruptions and without losing momentum.”

But, as usual, after hearing yet another colloquy about agility, I began to think, what exactly does this mean, and in particular what does it mean for high-performing procurement teams?

“The claustrophobia of narrow mandates and inflexible policies make ‘agility’ sound either like an unobtainable nirvana or something akin to irresponsibility”

So where does all this noise about agility come from? While I may not have a complete answer, surely uncertainty is at least one parent of agility. Supply chains spread across the globe, unpredictable economics, demand variability, war, strife, politics and even weather have all conspired to create an increasingly uncertain business climate. Uncertainty defies orderly planning and presumably, if you’re agile enough, you can surf this unpredictable landscape with little or no visible effort.

But let’s get beyond the simplistic definitions. They are fine, but the realisation of this seemingly perfect state of affairs is often unreachable in the day-to-day world that most senior procurement teams (that we know) find themselves in.

The claustrophobia of narrow mandates, inflexible policies that circumscribe everything from bidding policies to the scope and mandate of the function, overlaid with financial, ethical, sustainability and a myriad of other policies and procedures, makes agility sound like an unobtainable nirvana or something that is akin to irresponsibility.

I am equally frustrated when I try to reconcile what I see as our clients’ every day pressures and the lofty concept of being a highly agile function. So recently, I tested this. I asked the leaders of an extremely high performing procurement leadership team what exactly was agility to them, and more importantly, since they had just done a full executive stakeholder review; how did their internal clients think procurement could demonstrate agility?

Well to be truthful, there were a lot of good answers, some insightful, and others sign-posting the way for procurement to become a trusted business partner, but what stuck with me most (and sadly might be the real state of affairs), came from one senior leader who suggested that clients defined procurement agility pretty narrowly. They defined agility as “procurement getting out of the way and allowing me to conduct business with anyone whom I want to.” Painfully, it dawned on me that this is precisely how many of our internal clients see the function.

The Perception of Agility

Well, what to make of that? You can assume that that was the answer from a unenlightened client and not to be seriously considered, but since that epiphanic moment, I have tested this with several other senior procurement teams and find that more oft than not, this is closer to the real perception of procurement agility.

The follow-on question is, of course, two fold: firstly, how does Procurement actually demonstrate agility, so it is recognised by peer organisations, senior executives and is the operational reality, and secondly, how does a highly agile procurement team demonstrate this to the mass of unbelieving functions?

Blogs are, in the words of a former boss, just short enough to get you into trouble and not long enough to get you out, so I will not try to solve both questions here. I attempt to answer here only the first question. In our work with many clients, and from our own experience, we have some thoughts on how procurement demonstrates agility;

  1. Never stop planning. We are all used to the annual planning cycle that somehow has an end where implementation begins. This is too narrow a view. Develop an adaptive planning cycle that is constantly reconsidering where you are in your plan so you can capitalise on short-term opportunities. Remember, agility is not improvisation, it is adaptation.
  2. Devolve approval chains. Trust your people to do the right thing and allow more executional freedom than you are comfortable with.
  3. Develop a propensity-for-action. Reward people for making choices and taking actions even if it results in a poor outcome. Action is better than inaction and almost any outcome can be reversed.
  4. Invest in thinking time (perhaps the toughest thing to do). Invest in spending time with your leaders to deeply discuss objectives, barriers, ways to overcome them and new ways of doing things.

Will all of these combined make procurement magically agile? – probably not, but it will set forth a path toward agility that will separate your team from the usual procurement team that is prevented by (or worse) hides behind organisational inertia, obstructive rules and overlapping restrictive mandates.

Lastly, I would suggest from my own experience, to go talk with your CEO and explain to him how you perceive the agility of procurement and get his/her wisdom. Good CEOs will guide and provide useful insight – others might just tell you to get out of the way and let your business clients deal with anyone they see fit.

Want to Know Where Your Clothes Came From? There’s an App for That!

A new app, developed in Australia, hopes to give consumers the information they want on the supply chains producing their clothing.

bangladesh_building_collapse

We’ve covered ethical fashion in great detail on Procurious in the past. Most of our coverage has focussed on the public’s desire for cheap, rapidly produced garments or ‘fast fashion’ as its been dubbed.

This business model has had a huge impact on the supply chains of leading retailers, as they push to make the latest fashions available quicker and for a lower price. Many have resorted to shifting production to the developing world in a bid to reap the benefits of low cost production as a means to keep price down and maintain margins.

As these practice have become public, many firms have been accused of scrimping on safety and ignoring labour and environmental concerns in the their supply chains, and have faced harsh criticism as a result.

The Turning Tide

While this fast fashion business model has dictated the retail garment industry for the best part of a decade now, it appears that the tide is starting to turn. Many consumers are now prioritising the ethical footprint of their purchasing, just as much as cost and style.

Companies like Patagonia (who we’ve written about before) and KowTow have started appealing directly to consumers’ better judgement by creating a business model that focuses on sustainability first.

Even H&M, long condemned for its questionable supply chain practices has released a ‘conscious collection’ of sustainably produced garments. However, many have accused the firm of ‘green washing’ as, although it is producing a small amount of clothing sustainably, the vast majority of the company’s range still follows the fast fashion model.

There’s an App for That

Regardless of motive, this shift in consumer psyche has spawned a new app called ‘Good On You’. Developed in Australia, the app gives shoppers the ability to understand the ethical impact of the clothes they are buying, directly through their smart phone.

The app analyses clothing ranges based on the three broad categories – environmental, labour and treatment of animals – before creating a final rank for that brand.

‘Good On You’ doesn’t currently carry out its own auditing, instead analysing firms’ current accreditations from organisations like Fair Trade, Ethical Clothing Australia and other non-governmental organisations.

The app aims to inform customers of brands’ practices and supply chains, and call out firms using sustainability as a marketing tool, particularly when they don’t have credentials to back it up.

Speaking on the opaque nature of sustainability marketing and supply chains, Co-Founder at ‘Good on You’, Gordon Renouf said; “We want brands to say exactly what they’re doing, to be transparent about the supply chains, to show where their factories are so other stakeholders and unions can check on them.”

Find out more about the company’s aim here and download the app before you next go shopping!

Making Your Department Sexy

Every functional department needs to find its rightful place in the business hierarchy. So what can you do to help it achieve the sexy status it deserves?

how-to-promote-yourself

And before you even think of saying, “we’re doing a really good job – that is what people will notice!” – forget it. Of course you are doing a good job, but these days that is not enough. You have to show it too.

The first thing you need to do is strut your stuff, show your wares and make them want your services – find out what you are good at and market yourself.

Lose the Mission Statement

Rule number one – if you have a mission statement then throw it away – it has already fulfilled its purpose by getting you to think about what you do. It is useless to market yourselves. In fact it’s worse than useless because it often has a bad effect on others.

Put it this way – just how thrilled would you be if you got sent a copy of the Accounts Department mission statement? Would it lighten your burden? Would you think: “Ah! Now I at last can see their purpose in life I will for evermore integrate with them seamlessly”?

You need to work out what you’re good at – how you impact the wider community, what are the practical things you do for them, and why do you make their life better? Next you need an influence plan, and that should have named individuals on it representing no more than ten per cent of the company.

If you think a plan means putting a display board up in the canteen so everyone can see us –think again. It’s limp, unfocused and unprofessional. Your message is too important to let it dribble out to people who are grazing, rather than go-getting.

Craft Your Message

If you need some help in formatting this idea then why not ask your own marketing department? Perhaps you buy some marketing and creative services in – you may even get it for free if you sell it as part of the process of ‘getting to know you better’.

Take your ten per cent target and use your carefully crafted marketing material with laser like accuracy to get up close and personal. If you make it important then so will your target audience. This is line fishing for powerful marlin, not drift netting for common herrings.

Get the Right People

So you‘ve got yourself a good story – but do you have the people to back it up? Is your group bursting with talent that is the envy of the rest of the organisation? If not then you need to something about it. The simplest tool of all is often overlooked – go find the best people and ask them to join you. Top talent is always interested in self-development. They often have the ability to persuade their own management to let them do things. Best of all they are usually a bit vain and easily flattered.

This doesn’t have to get tangled up in job specs and grade issues. Perhaps they could have some relevant work experience for a short while, or work on a joint project with you. If you can get some fresh blood into the camp, it can have a rejuvenating effect on the whole team. Start looking at the way your team does things. What impact do your people have? Not just from the point of view of their skills.

This sort of profile-raising is not going to be without its side effects, which are worth heading off early if possible. Firstly when you tell people what you can do for them, you can expect the initial response to be a lengthy list of all the things you haven’t done well. This is great feedback – it may not feel like it at the time, but it’s gold dust. Remember, before you stimulated them into complaining, the problem was even worse because you didn’t know about it.

The Future

So where does the future lie for making your department the sexiest around?

The truth is that the skill and attractiveness of your players will make the difference. Does this mean you need only Brad Pitt and Angelina Jolie look-alikes in your group? Absolutely not. Lasting attractiveness has always been more to do with passion, knowledge and focus than surface looks. And the good news is these are things that can be taught, so everyone can be sexy if they want.

Can Re-Shoring Explain China’s Faltering Economy?

China’s economic slowdown is starting to send reverberations across global markets.

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While it’s too soon to panic about Chinese growth figures, the engine behind the world’s economic growth for the last decade or so does seem to be spluttering a little, and this is a worrying sign for some market sectors.

Just what is causing this slowdown?

Many are attributing a slowdown in Chinese manufacturing levels as a key driver for the nation’s economic downturn. The numbers seem to back this up. The Chinese Purchasing Managers Index (PMI), a metric that measures economic activity based on the activity of procurement departments (learn more about this indicator here), hit a two-year low in July 2015, following a fifth consecutive month of contraction.

The significant drop in the PMI is usually in line with a decrease or slowdown of manufacturing in a country. A potential cause for this slowdown could be a preference from firms in the west to move operations away from China.

There seems to be two main drivers for this behaviour. The first is that ‘low-cost China’ isn’t so low cost any more. The second is an increasing preference for ‘re-shoring’ or ‘near shoring’.

When Low Cost Isn’t Low Cost

Firms that moved their operations to China between 10 and 20 years ago are finding that labour rates for Chinese workers are far more expensive than they once were. This is removing one of key motivators for both relocating operations to China in the first place, as well as maintaining these operations now.

It’s estimated that Chinese incomes are increasing by as much as 20 per cent year-on-year, a rate much higher than most of the rest of the world. Many foreign firms are now looking to other developing markets in Asia and Latin America, in order to take advantage of lower cost bases.

Reassurance in ‘Re-shoring’

The other practice driving a move away from Chinese manufacturing is ‘re-shoring’ or ‘near shoring’. This involves firms moving previously outsourced operations much closer to home.

David Simchi-Levi, a professor of engineering at MIT, suggests that this may be a key factor in China’s manufacturing slow down. He highlights a study carried out by MIT in 2012 that suggest 15.3 per cent of US firms were ‘definitely’ planning to move operations back closer to home and that 33.6 per cent of firms were ‘considering’ similar action.

To highlight acceleration in this area, Simchi-Levi points to a more recent study by AlixPartners that shows 32 per cent of firms are already re-shoring and 48 per cent of firms are in the process of doing so within the next three years.

Closer to Home

It seems that as Chinese wages continue to climb, organisations have less of a stomach for the other issues that have accompanied Chinese based production, such as questionable safety records, long lead times and high transportation costs in favour of options that are closer to home.

While a large number of firms have to ability to move production very quickly, clothing producers being one clear example, China has been able to build a significant domestic technology and hi-spec manufacturing industry that will mean firms with more technical specifications may find it harder to move away from their traditional Chinese production centres.

It will be interesting to see if the move from traditional manufacturing to a more technology-based economy will help to arrest the economic slowdown, and re-affirm China’s place as a powerhouse economy.