Category Archives: Procurement News

From the Backroom to the Boardroom

The rise of the Chief Supply Chain Management Officer

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Global directional level corporate and policy decision making corridors are going through unprecedented changes. These dramatic shifts have been largely influenced by the increasing importance boardroom executives attach to supply chain management.

Today, the skills and knowledge of supply chain management professionals are increasingly being utilised, with forward-thinking executives and policy makers now officially accepting the chief supply chain management officer as a member of the C-Suite.

Drawing on a sample of international organisations, including Fortune 1000, FSTE 250, JSE 100 companies, and public sector organisations with a combined revenue or spend of well over a trillion USD, the study by Professor Douglas Boateng[1] examined director perceptivities on the strategic importance of supply chain management and, in particular, the increasing boardroom role of the chief supply chain management officer.

C-suite executives that took part in the longitudinal study included CEO’s, CFO’s, COO’s, directors, and officers from manufacturing and production, mining and recourses, food and beverage, government, agriculture, logistics and public sector organisations.

The Chief Supply Chain Management Officer

The chief supply chain management officer, who often takes responsibility of functions such as procurement, logistics, customer service, and operations, is known to possess the tools needed to innovatively lead value-driven initiatives across such functions, as well as within business units and across broader value chains.

With such sought after skills, it is not surprising that 48 per cent of the above-mentioned research study’s respondents agreed that the chief supply chain management officer will become a standard C-Suite role within ten years.

According to the study, well-crafted supply chain management strategies are considered to be most critical for, among other things, long-term wealth creation, small business development, government service delivery quality, industrialisation, national economic development and job creation.

In terms of wealth creation, 70 per cent of the global executives that participated in the study saw supply chain management and procurement as aspects that they considered to be crucial for long-term wealth creation.

In addition to this, 64 per cent and 66 per cent of the executives agreed that supply chain management and associated procurement aspects has a direct impact on small business development and job creation.

This emerges as particularly significant when compared to the percentages received for perception of logistics’ and finance’s impact on small business development, which came in at 6 per cent and 12 per cent respectively.

Growing Recognition of Supply Chain

In relation to complex supply chains, such as government, where service delivery quality is critical for value creation, 34 per cent of global respondents viewed the supply chain management function as essential to the success of quality service delivery. This is an increase of 19 per cent over a four year period.

This significant increase highlights a growing recognition that the supply chain should no longer be viewed in terms of ‘cost of ownership,’ but should rather be regarded in terms of its overall impact on business and society.

Such support of the role of supply chain management in the successful realisation of public sector services and initiatives can further be seen in various governments’ active use of supply chain management to not only improve public sector governance and delivery, but also to add more value to resources, stimulate SMME growth, and create sustainable jobs.

In terms of the C-suite executive having the dual responsibility of directing acquisitions and payments, 86 per cent of the global executives saw this as creating ethical and conflict of interest challenges. Although there seems to be a general consensus, the 14 per cent increase over a four year period clearly indicates that there are concerns among the C-suite members.

Finally, when it comes to the impact of supply chain management on industrialisation and national economic development, the study found that 68 per cent of global executives supported supply chain management and procurement as having direct impact on industrialisation and national economic development.

Transformation of the C-Suite

Based on these statistics it is evident that supply chain management has emerged as a prominent topic on both public and private organisations strategic agendas, and dramatic shifts in director level perceptions relating to the role of the chief supply chain management officer in organisational decision making, is leading to the transformation of the C-Suite.

Additionally, a clear recognition by director-level executives of the increasingly important role that supply chain management occupies in the overall organisational environment, highlights the growing influence that the chief supply chain management officer will come to exert in the boardroom and policy making corridors.

The findings clearly support Groysberg, Kelly and Macdonald changing C-suite assertions in the Harvard Business Review in March 2011[2].

Professor Douglas Boateng is an International Professional Director and an Adjunct academic; a Fellow of the UK Institute of Directors; Africa’s 1st ever appointed Professor Extraordinarius for Supply and Value Chain Management; and CEO of PanAvest International and Partners.

Professor Boateng has been publicly acknowledged by the Commonwealth Business Council for contribution to international supply chain management and emerging world long term economic development. 

[1] Boateng, D., (2015) Gauging director level perceptivities on aspects of supply chain management- A global longitudinal study

[2] Groysberg, B., Kelly, K. and Macdonald, B., (2011). The new path to the C-Suite. Harvard Business Review March

‘Rethink Supply Chains’ – The Innovation Challenge to Fight Labour Trafficking

The Partnership for Freedom launched its ‘Rethink Supply Chains‘ competition last week, aimed at providing a technological solution to help fight labour trafficking in global supply chains.

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In International Labour Organisation (ILO) estimates that there are 14.2 million people around the world who are victims of forced labour in industries such as agriculture, construction and manufacturing.

The goods and service provided through these industries are often purchased or used by consumers who are none the wiser, thanks to a lack of transparency in supply chains.

Formed in 2012, the Partnership for Freedom is an American-based public-private partnership, which brings together organisations and governmental departments such as the Department of Justice, the Department of Labor and Steven Spielberg’s ‘Righteous Persons Foundation‘.

The Partnership challenges individuals and organisations to create innovative solutions to human trafficking challenges. In 2013, it launched its first Challenge, “Reimagine”, and granted $1.17 million to fund two winning innovative models, aimed at improving the infrastructure of support for survivors of modern slavery in the United States.

Challenge Two – Rethink

Now, Humanity United, the organisation leading The Partnership for Freedom, has announced the second challenge in its set of three – Rethink Supply Chains.

With a fund of $500,000 for winning solutions, Rethink Supply Chains seeks new ideas, tools, and efforts that use technology to combat and prevent labour trafficking in global supply chains.

The challenge encourages developers, designers, advocates, and innovators to focus on one or more of the following areas:

  • Workers’ Voices: Tools that help workers to share information and foster community, access resources, and report labor violations to businesses, governments, NGOs, or each other in the most safe and secure ways possible.
  • Recruitment: Tools to improve the transparency and accountability of the labor recruitment process, encourage responsible practices for employers and recruiters, and empower workers to more safely navigate the recruitment process.
  • Traceability: Technologies that enable businesses, workers, governments, and NGOs to track, map, and/or share information on commodities, products, and labor conditions in supply chains at high risk of forced labor.

Eliminating Human Trafficking

Randy Newcomb, President and CEO of Humanity United, stated, “The scope of this issue is enormous. We need new actors, new skills, new data, new ideas and new energy to improve anti-trafficking efforts around the world.”

This was also emphasised by Ambassador Susan Coppedge of the U.S. Department of State’s Office to Monitor and Combat Trafficking in Persons, who said, “Forced labor has no place in our global supply chains nor in the goods and services we buy every day.  We look forward to the innovative ideas and designs we anticipate from this Challenge as we seek to eliminate human trafficking from the global marketplace.”

How to Get Involved

All the details you need to know about the competition can be found here. The deadline for initial solution submission is the 13th of December, with finalists being announced during January 2016.

Entries can be submitted by individuals who are resident in the United States, or organisations with the United States as their primary location for business. Rules and Terms & Conditions can be found here.

If you can’t take part, you can support the campaign and follow the competition on social media, via Facebook and Twitter. Also stay tuned to Procurious, as we will publish the finalists next year and keep you all posted with the winning solutions.

If you are thinking about taking part, please let us know! We’d love to tell everyone your story and why you think your solution will help to end human trafficking and forced labour for good.

Stopping Redlining in its Tracks

How the new wave of contract management software is reducing time spent negotiating.

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Is it possible to use data analytics and clause standards to make the contract negotiation process more efficient? Certainly there are situations where standard contracts are routinely used, and it’s undeniable that this saves time and money.  For example, imagine how much longer standard real-estate processes would take if each time an agreement had to be drafted by scratch.

However, there are also many situations where individual situations call for the drafting of a unique agreement.  Lawyers may argue that, by nature, the art of drafting contracts is so complex that it would be nearly impossible to use any form of analytics to assist in the process.  But the new wave of contract drafting and management software is seeking to defy that argument.

Kingsley Martin of KMStandards (publisher of ContractStandards) suggests there are three main metrics that define the success of a contract negotiation process.  All of these metrics overlap to some degree.  These are:

  1. Quality is defined by such things as how well it achieves its purpose, how much consideration it generates over time, its completeness and accuracy;
  2. Cost is the cost of the negotiation and administration including all expenses related to litigation and disputes; and
  3. Time spent on negotiations, administration of the contract including the time required to handle litigation or disputes.

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Newer technology is seeking to help optimise all three of these aspects of the contract management process by measuring metrics on contracts for various purposes.  An analysis of this data could lead a system to automatically produce contracts with optimised terms – i.e., the terms in the past that have required the least amount of time to negotiate.

It could even predict what agreement parties will arrive at for the sale or purchase of a product and/or service. This new technology will stop redlining in its tracks!

What are your thoughts? Do you believe that standard contract language can help reduce unnecessary negotiation? Can you think of any other ways technology could work towards optimising the contract management process?

ContractRoom, home of #HappyContracting – making the world more agreeable one happy contract at a time. Negotiate less, Agree More! Contact us for a free demo @ www.contractroom.com.

All for One, Innovation for None

Another public procurement price analysis article has made national headlines recently, found here on BBC News.

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Many thanks to Market Dojo for giving Procurious permission to republish this article.

The Home Office conducted a study into police procurement trends across 20 common items including batons, uniforms and helmets.

I haven’t read the Home Office study in detail, but these kind of reports can err on the side of rudimentary:

Humberside bought police helmets for more than £43 each while most other forces acquired them for under £30.

This can indicate a savings potential and is undoubtedly a good place to start your evaluation for cost reduction opportunities.

However when you simply compare two purchase prices, rarely, if ever, does the analysis also delve into key contractual differences such as payment terms, rebates, catalogue pricing discounts, minimum order quantities, annual purchase volumes, inclusion of delivery costs, what delivery service levels, product warranties etc.

Then you have the question on whether the specifications are the same.  Perhaps Humberside has identified a more costly product that leads to a 20% better safety record from head injuries.  Might that not justify the additional cost?

There is a long perceived view that rationalisation and aggregation leads to cost reduction.  For example, in the same article Policing minister Mike Penning was quoted:

“For too long the police have approached the market in a fragmented way, buying equipment in small amounts and to varying specifications.

“It makes no sense for forces to buy separately when money can be saved if they act together.”

Bigger procurement is not always better procurement

Interestingly Spend Matters UK recently re-circulated an older post of theirs outling how bigger procurement is not always better procurement.  Please do have a read as it provides excellent insight that we won’t duplicate here.

What we’ve seen is that many of our clients run reverse auctions on aggregated volumes, rather than spot-purchases.  They are very successful in doing so.  That said, even very low value auctions of a few thousand pounds have lead to 30%+ savings, so bigger isn’t always better in our view too.

Large spend values attract large suppliers with the notion being procurement teams can exercise their leverage and use economies of scale to secure better pricing.

Lower spend values attract smaller suppliers and generally there are a lot more of them in the marketplace, which can equate to increased competition and better savings.

Perhaps the price differences seen with the police, assuming they are not associated with contractual or specification issues, are less to do with failure to aggregate demand and more to do with ineffective negotiations for their own requirements? 

One step forward, two steps back

One adverse side-effect to bundling up contracts into an aggregated demand is that it diminishes competition.

Taking say £200m of spend that is today fragmented across many hundreds of suppliers and bundling it into a single contract prohibits SMEs from retaining business.  As a result some may perish whilst others downsize.  The large company that wins the contract swells significantly to cope with the demand whilst other large businesses (if there are any) stay as they are or also downsize from losing their portion of the fragmented spend.

Fast forward a year and the market only has one real candidate who can cater for the demand – the incumbent.  This becomes a very poor market to negotiate in.

And so the cycle continues whereby it is decided to fragment the contract into smaller packages to increase competition, except this time there isn’t as much liquidity.  So we’re back where we started except with worse market conditions.

Innovation triumphs over imitation

As we’ve just noted, consolidated contracts diminish competition.  With less competition, there is less imperative to differentiate.  There will be fewer SMEs in the market and they are typically regarded as the key source of innovation with their agility and drive to increase market share.  Local police authorities will have their hands tied and won’t be able to engage with the SMEs and so those remaining will have little incentive to innovate.

Furthermore, the other suggested strategy in the BBC article was to standardise the products. This again reduces innovation, as the product spec. would be based on what already exists, not would could be.  Once that spec. is agreed, the market is closed out to new ideas.  This contradicts with the relatively recentreforms to the EU Procurement Directives.

So what should we do?  

We should be focusing on driving the market forward and negotiating effectively within that market.  A fragmented market can be your best friend, not your enemy.  Procure on best value, not just best price.  Don’t focus on Purchase Price Variance but on lifetime costs.  Improve through innovation.

We could go on but there’s a risk we’re sounding like a Baz Luhrmann song!

Hopefully we make ourselves clear but more importantly, what do you think about this suggested police procurement strategy?

Market Dojo is a pioneering software-as-a-service (SaaS) company that offers professional, intelligent and easy-to-use online negotiation software and accessible eSourcing software. Find out more at www.marketdojo.com.

How to change the world…like a procurement pro!

If you’re bored of cutting deals and meeting with the same old suppliers you might be starting to wonder, “what’s next?” 

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This article was originally published on LinkedIn.

The good news is, as you’ll see in a moment, there’s a simple way to re-energise your procurement career. The even better news is, your boss will love it because you will be delivering tons of value for your organisation and making the world a better place.

If you haven’t already, it might be time to think about social procurement.

Social procurement has nothing to do with buying stuff on Facebook. (Having said that, I believe social media has a massive role to play in procurement so please, join me on Procurious to see why!)

No, social procurement is where social impact and procurement meet. By directing even a small portion of our organisation’s spend, towards social enterprises, we can make a real difference in the lives of marginalised groups such as the long-term unemployed.

According to Social Traders, a leader in the development of social procurement in Australia:

A social enterprise is an organisation that; is driven by a public or community cause, be it social, environmental, cultural or economic; derives most of their income from trade, not donations; uses the majority of their profits to work towards their social mission.

With social enterprises now operating in a vast array of industries from facilities maintenance and cleaning to printing and web design, it is no longer a question of if you will do business with them, but when. It is also easier than ever, with intermediaries like Social Traders providing valuable services that help bridge the gap between large government and private buyers and social enterprises.

So where to start? Most procurement professionals I know aren’t sitting around looking for something to do and social procurement can seem like that ‘nice-to-have’ project we just don’t have time for. In reality, many organisations are already doing social procurement. The opportunity for procurement professionals is to Find it, Flag it and Facilitate it.

Find it: Identify social enterprises in your spend and supply base

One of the most important roles for any procurement professional is providing useful intelligence to the organisation regarding its suppliers. Often this means analysing spend data and interpreting it to provide meaningful insights that inform better decision-making.

In the case of social procurement, simply being able to identify social enterprises, particularly within the long tail of vendors that characterises most spend profiles, can mean the difference between creating and destroying social value for your organisation. Again, intermediaries like Social Traders have large databases of social enterprises that can assist with this task.

Flag it: Promote the value of social enterprise suppliers

As leaders in the organisation, particularly when it comes to supplier relations, procurement professionals have to take a position on value. If all we talk about is savings, then that is all that will be expected of us. People will look elsewhere for other forms of value.

Social value is still a source of competitive advantage in many industries, but increasingly it is becoming an expected norm, by customers, employees and shareholders alike. Promoting the role of social enterprise suppliers and measuring social impact as part of our decision making, positions procurement professionals as key contributors to organisational strategy.

Facilitate it: Make it easier to do business with social enterprises

Sometimes the best thing a procurement professional can do for the organisation, is get out of the way! Particularly with smaller suppliers (which social enterprises often are) the role of the procurement professional is more ‘facilitator’ than ‘manager’.

The day to day operational relationship with the supplier likely sits elsewhere in the organisation, but the policies and process set by Procurement can either help or hinder these relationships. Rather than treating all spend outside of Procurement’s control as ‘leakage’ or ‘maverick spend’, acknowledge that social enterprise development is a strategic objective.

Providing policy exemptions or tweaking procurement processes to make it easier to do business with social enterprises, can promote social value with minimal resource effort from Procurement.

So, if you’re ready to start using your procurement super-powers for good, then I have an invitation for you. There’s no catch and it won’t cost you a cent.

Please join me at the upcoming launch of Social Traders Connect. It’s a great opportunity to find out more about social procurement, meet with social enterprises and hear from peers who are using procurement to create social value in their organisations.

But don’t stop there. If you have social procurement questions or experiences of your own that can help others, please share them via the comments below or reach out to me via Linkedin or Procurious for a confidential conversation.

Jamaica Invests in Procurement Capability

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400 procurement professionals from the Jamaican public sector have undergone extensive training in procurement practices. Some of those involved in the initiative were sent as far away as Canada and the United Kingdom to receive their education.

The move comes as part of a concerted effort from the Jamaican government to transform its procurement operations and ultimately deliver a more effective and efficient public service.

Of the 400 people trained, 300 received instruction under a certification series delivered by the International Procurement Institute, 40 received training in procurement law from the Osgoode Hall Law School, York University, Canada, while another 60 people were trained in E-procurement by Crown Agents and European Dynamics in the United Kingdom.

Certification Critical for Reform

Malisa McGhie (Senior Procurement Analyst in the Procurement and Asset Policy Unit in the Ministry of Finance and Planning) discussed the training as critical for the ongoing development and success of procurement and the public service in Jamaica, claiming that the certification of procurement officers is a key component of the reform process.

“Procurement practitioners must also be trained in what the standards are and understand how to actually execute, those types of procurement, to meet international standards,” said McGhie.

Echoing discussions both here on Procurious and in the procurement media in general, Senior Director in the Procurement and Asset Policy Unit, Cecile Maragh, highlighted the importance in improving the profile of the procurement profession in Jamaica.

“We have to make sure that public procurement is seen as a profession and not a clerical function.  It is not just something that you receive specifications and go to tender. It requires analytical thinking, it requires market research, so persons undertaking this function must understand that public procurement is in fact, a profession, and it should be treated as such,” she said.

The Finance Ministry has committed to training a further 500 procurement professionals over the coming three years.

“And the winner is…”: Supplier Award Schemes

Award schemes come in a considerable variety of shapes and sizes. Likewise the concept of ‘developing’ your suppliers leaves a wide spectrum of potential, with a carrot at one end and a large stick at the other.

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The Set Up

Start with defining the effect you want the scheme to have on your suppliers. Are you looking to genuinely reward the best suppliers? This could be by giving them something meaningful, or by using the process to give them contacts and insights into your own company.

On the other hand are you looking to use the process to highlight to non-winners that they are losing out – perhaps that they may even be under threat as a result. Both of these are possible to achieve, but you may set the process up differently depending on your needs.

Establishing Criteria

Next consider how the awards may fit into other measurement programs. If you have an existing appraisal process then it must be related to the awards scheme – if not then one or other of them will suffer a serious credibility crisis. If you don’t have an established scheme, then an awards ceremonies can be a good launch pad to announce them, and to show that there will be winners from the process.

There is a second strong connection between award schemes and supplier ratings – they both only really generate value over time. Suppliers will need to see that the success criteria are not just one-off political choices, and the process is really about developing them – not just an excuse to tell them all to reduce prices or leave the room. It will probably take two or three years to properly establish an event as a key focus for your supply base.

Behind the Win

The most effective awards schemes use the event to genuinely share learning across the supply base. This can be a two edged sword. You want to reward your best suppliers, and you need to make sure you are not asking your best performers to simply give away their competitive advantage in public. With this in mind, get them to share by focusing more on the ‘how’ and ‘why’ of their performance.

In too many ceremonies they simply tell a chronological story, which is not nearly as helpful to others as learning what the drivers, attitudes and obstacles were to success. Also ensure that your suppliers speakers are well practiced, that you have worked together on not only the content, but also the style of any presentations made.

Slick and Well-Staged

This last point confirms that it should be a well managed, well prepared, and a well staged process. The winners would know in advance and can work on helping the development messages. It is not necessary to have fanfares, glitter and repeat sound blasts of Queens’ ‘We are the champions’.

It is important to fund it well, making it slick and professional. Brief your own senior managers who may attend so that they both give a consistent message – and you can use it to engage in a subtle bit of supplier conditioning. External speakers are very effective, they can add a new dimension to the process and give it a ‘special event’ feel.

All suppliers should have some chance to contribute. Don’t just talk ‘at’ your suppliers, make opportunities for them to feedback. Having done this also ensure you manage expectations on how you are going to use this feedback – this will be an important convincer that the process is one to be taken seriously.

Supplier events therefore can be an excellent tool to develop your supply base, and like any tool, planning and practicing its use will make it that much more effective.

Injecting Social Media into Local Government’s New Commercial DNA

A good dose of social media activity could help local government make the most of the sweeping EU Public Contracts Regulations 2015 (PCR2015).

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Local authorities have been advised by Crown Commercial Service (CCS) that these new regulations would require “a complete reversal of the commercial DNA in the public sector”. While attending the East England Local Government Association (EELGA) Procurement Masterclass in Cambridge last week, it became apparent that UK local government has a mighty task ahead of them.

Moving forward, the public sector will need to place far greater effort into pre-tender activities (identifying needs, market research, supplier engagement) and into post-tender activities (contract management, continuous improvement, negotiation), instead of focusing as much on the tender itself.

‘Bolder and More Collaborative’

In the UK, local government procurement spend is estimated to be approximately £57 billion annually. EELGA, an association created by the 52 local councils in the East of England, is a catalyst for collaborative working – bringing together groups of councils to harness their collective expertise, strength and knowledge.

According to the EELGA Procurement Lead, Eddie Gibson, the new regulations will requireprocurement professionals to become bolder and more collaborative”.

Martin Reeves, Chief Executive of Coventry City Council and National Procurement Champion for Local Government, told the Society of Procurement Officers National Conference in February 2015 that, “although the procurement profession had an excellent reputation for compliance, procurers needed to be innovative, risk-taking, adventurous and even disruptive.”

Maybe that’s why I was called in to speak at their Masterclass!

Bringing Procurement Together

I always love to see professionals getting together.

Why? Because as many of you know, one of the reasons why we started Procurious is that I worry that large portions of the procurement profession are ‘uncontacted’, that much of our ‘tribe’ is working in isolation, unaware that there is a whole universe of knowledge available to help them do their jobs better and learn. 

Apparently, there are more than 3.5 million procurement professionals in the world, but there are probably less than 500,000 who we can readily connect with.

So where are the other 3 million procurement professionals? What are they doing? How are they surviving/thriving/developing?

 We know that in the case of EELGA, there are at least 100 procurement professionals connected through that group.

Before I started Procurious, I was a member of a regional community, similar to EELGA, on the remote content of Australia. Our community has a Procurement Roundtable of 30 leading Australian companies at its core, and has shown me the benefits and growth achieved by collaborating, learning and working face to face.

Procurious encapsulates all those learnings in an online environment that helps connect procurement communities around the world. Nobody need work in isolation any more. In fact, I hope that Procurious is showing that there are indeed significant opportunities in us all working together.

The Power of Social Media

Social media presents a great opportunity for any group to expand their influence, get noticed for their activities across the board, attract talent, expand their supplier markets and market intelligence gathering opportunities and, with Procurious, potentially work collaboratively across borders and certainly with other public sector professionals in the UK.

To provide a bit of context prior to speaking at the conference, we had a look at the Top 10 suppliers (by value) to UK Local Government.

The Top 10 suppliers had an average of 40,000 followers on LinkedIn and 16,000 followers on Twitter. Admittedly these suppliers exist on a national, and often international, scale, but their social media presence allows them to be part of the conversation and be instantly recognisable when people search for them.

The benefit for procurement here is that these suppliers’ social media accounts are often a valuable source of information about their businesses. From press releases to new products offerings and beyond, these accounts represent a great, public source of information for procurement to access.

Procurement Stepping Up

At the conference, I threw out five challenges to the attendees at the Masterclass that you may also like to take up:

  1. Connect with Peers

Think about your LinkedIn or other social media accounts. Are you missing any important connections? Are you connected to everyone in your regional peer group? Take 5 minutes now to find out.

  1. Connect with Suppliers

Are you connected to your key suppliers on social media? How could you be using social media to connect with other suppliers, or gather market intelligence or widen sourcing possibilities?

  1. Tracking the External Environment

What tools are you using to keep track of the external environment and your extended supply chain? Consider what social media platforms you could use for this and what information you might be able to access.

  1. Personal and Organisational Brand

What does your profile say about you as an individual? How about your organisation’s profile? Take the next 10-15 minutes you have free to have a critical look at your own profile. Make sure your information is up to date, you have a good profile picture and you are calling out interesting, shareable and compelling information and content for people to see. 

  1. Share Your Best Practice

Could you contribute to an ‘open-source’ project for procurement? Is there any good/best practice from your organisation that you think people would benefit from? Get on to social media and make this available – it will promote your organisation as a thought leader, but also raise your profile.

There you go, five quick challenges that will help inject social media into your DNA and help build your profile and the image of the procurement profession.

Good luck!

Sourcing From China: A Guide for Small Businesses

It doesn’t come as a surprise that China ranks amongst the most popular destination for global outsourcing. Though its relative cost of manufacturing has increased in the last few years, it isn’t comparable to the costs in most of countries in the world.

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It is still one of the cheapest places retailers and manufacturers to source goods or some parts required for producing their goods. If you are looking to source from China, establish good relations with source suppliers in China and conduct smooth global sourcing processes, you can adopt the following 6 means to complement your outsourcing strategy and solutions.

1. Internet Search

It is true when they say that whatever you need these days will be found within the realms of the mighty internet. Search engines such as Google or Bing will display list of suppliers and their procurement services within seconds. You can filter or streamline your search as per your requirement.

Make sure that you consider the reviews of each supplier even before you get in touch with them. Most importantly, ensure that the supplier is a legitimate one. An internet search is not only quick but also cost-effective and location independent.

2. Social Media

Social media has proved its worth time and again for businesses. More and more companies are taking an initiative to pursue social media presence in order to connect with potential customers and buyers. Social media offers a direct channel of interact between suppliers and buyers. It is also a good place to gather reviews and feedback from other customers of your potential supplier. This may help you in understanding suppliers better and take decisions based on the gathered data.

On the other hand, it is important to remember to do due diligence as some of the reviews may be fabricated, unverified or doctored by the suppliers themselves. Be cautious and you will cut down the risk of getting up at the bad end of the deal.

3. Online Forums

There are numerous forums online that talk about topics related to sourcing in China. In case you have any industry-specific query about strategic sourcing or want suggestions, you can contact different forums.

Different members of the forum will definitely respond and help you in identifying suppliers and quality of China products. Online forums are the best place to connect, network and interact with many people from the same industry at once.

4. Trade Shows

This is one place where you get the opportunity to meet the suppliers in person. You can directly talk to them and inquire about their company, production capacity, quality control procedures and the like. Trade shows offer a platform where you can gauge a supplier’s culture and compatibility with that of your own, which may aid in better decisions.

Direct interaction also fosters better evaluation of suppliers, their overall abilities and what exactly they can offer you. Almost all companies that are a part of trade shows are legitimate, thus relieving you from the worry of being involved with an incompetent supplier or a fraud.

5. Trading Companies

You may find some trading companies within your own country that deal with global sourcing. You may get in touch with them and seek their assistance in finding China sourcing agent for yourself. Trading companies can help you search suppliers, narrow down your search and get you in touch with potential suppliers. They usually have insights that will help you in making informed decisions.

6. B2B sourcing platforms

There are several B2B sourcing platforms that offer a list of service providers and goods suppliers. Some of them include Made-in-China.com, Alibaba and Global Sources. These platforms will enable you to find localised results such as ‘verified supplier’, ‘accredited supplier’ or ‘onsite supplier’. B2B sourcing platforms not only provide you a credible list of suppliers but also of those who are blacklisted or banned from supplying products.

This will help you in identifying and establishing business relations with the right people without jeopardising your business or any other risks. Most of these platforms offer services that protect the buyers, such as credit check and supplier-capability assessment checks. Remember that ‘verified supplier’ only means that their existence of the sourcing company is verified; it does not assure the reputation and quality of the suppliers. Do your homework carefully before taking the final leap.

Choose the Right One For You

There is no restricted on the number of means you opt for. If you are satisfied by the supplier you met at a trade show, feel free to take the relationship ahead; if you have been referred to a supplier by a trusted person in a trading company, you can take the next step; if you feel you have gained enough information through online search and consulting various forums, don’t be afraid to contact the supplier.

If you are uncomfortable with just an online search to validate your sourcing strategy, then you can spend more time by attending fairs, talking to various trading companies, scouring through forums and then make an informed decision.

As the Director at Excella Worldwide, Shruti Agrawal is a strategist with an Electronics Engineering background and always on the lookout for ways to challenge and disrupt business models to make them better. Connect with @Excella_WW on Twitter.

Rethinking Suppliers: Spotting Future Crises

81 per cent of procurement execs fail to include key insights from global suppliers into wider business reporting.

Businesses fail to include key insights from global suppliers into wider business reporting

The latest survey from Proxima reveals that businesses need a rethink on how to better engage suppliers to spot future market crises and opportunities.

The research highlights that many businesses are potentially limiting their capability to gauge market activity using critical insights derived from supplier sentiment.

The research found that news media is a key source with 65.3 per cent of respondents using it to monitor market sentiment. Commodity pricing and currency volatility came in close second and third as key sources with 61 per cent and 57.6 per cent, respectively, of respondents advising that they primarily look to this as an indicator of market movement. 

Although an encouraging 57.6 per cent of procurement respondents indicated that they are looking towards their suppliers for insight into the wider market, a staggering 81.2 per cent confirmed that although they see the value in monitoring market sentiment, they do not include key findings and insights into the reports or dashboards that they present back into the wider business. 

Guy Strafford – EVP, Chief Client Officer at Proxima, said: “This statistic suggests that there is perhaps a slight disconnect between information being collected from suppliers and insight that business leaders need to make strategic decisions. If the procurement team is unable to bridge the two, this insight is often, unfortunately, kept within the procurement department, leaving the rest of the business to their own devices. This often leads to divisional leaders looking externally for the same information.”

7.6 per cent of respondents stated that they did not measure market sentiment at all with 26.3 per cent saying they lacked the necessary resources (budget or people). Of those that do, news media is the single most important source of information (21.7 per cent). A surprisingly small number (8.8 per cent) of respondents indicated that they use the Purchasing Managers’ Index (PMI) as their most important tool for gauging activity on the market.

Strafford added: “The study highlights the overreliance on news media as the primary source of information, when by its very nature, news is an explanation of events that have already occurred. Businesses are therefore making important decisions based on historic data that is not necessarily real-time nor forward-looking. Businesses need to have their fingers on the pulse, and gaining valuable insight from suppliers could significantly help companies to glean sentiment on the ground that ultimately helps them make better decisions in real time.”

Alongside news media, insight from suppliers is the most important source of market sentiment for 21.7 per cent of respondents. It is surprising, therefore, that almost a quarter (24 per cent) engage with their suppliers only once a year or even less frequently. The largest group (28 per cent) gauge market sentiment with their suppliers on a monthly basis. 

Strafford said: “Even though supplier insight is clearly valued as a monitoring tool, the Procurement team is faced with a further challenge that many business leaders simply want to keep suppliers at arms length – either driven by culture, their experiences or for strategic reasons – and will resist integrating suppliers closer to their operations.” 

The results potentially raise questions regarding whether the procurement and supplier management functions currently have the right tools for capturing, and forums for presenting, supplier information back into the business. 

“Less mature procurement functions, defined by their size, scope of influence and heavy focus on savings, will often struggle to connect deeper supplier insights back into other business activities”, added Strafford. “As a result, these functions (not for lack of want) cannot achieve wider benefits such as supplier-led innovation, more flexible terms and faster responsiveness to demands.