Category Archives: Procurement News

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.

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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.

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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.

china

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.

5 Tips for Using Data in Procurement

This is the century of data and every purchasing professional should be a data person to some degree. How you use data can enhance your career?

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Here are five top tips to improve how you use data.

1. Source – Most organisations have spend data to analyse. Think about other sources of data – 80 per cent of stored data is estimated to be unstructured. Text analytics can give insight into supplier information on social media. Visualising social media data related to a supplier can give timely insights. Note that different parts of the world favour different social media sites, so make sure the countries where your suppliers operate are covered.

The timeliness of your source is also an important consideration. Real time data will allow you to monitor strategy implementations and allow the tweaking of plans to increase success. For example, monitoring maverick spend on a new contract means it can be quickly identified and reduced.

2. Focus – Don’t try and cover too much information in one presentation. Be concise and only include relevant information. Avoid unnecessary ‘chart junk’, the most important parts should demand the most attention. Data experts try and keep the data to ink ratio high. That way your message will be clearer and it will be more likely that your audience will remember it.

3. Story telling – People love and remember stories so include one around your data to make it captivating. You can use a narrative based around time or geography. Add human interest as this engages your audience emotionally.

For example, if you are presenting data on the success of a supplier relationship management programme, you can narrate you presentation around how the programme has developed over time and include anecdotes from individual stakeholders that highlight an aspect of the programme.

Don’t forget that the title can be used to tell the story. For example: ‘Supplier Relationship Management Data vs Improving Supplier Relationships’. The latter will instantly tell the audience what to expect.

4. Visualisation – People are programmed to understand patterns, so graphs are more instantly understandable than numbers. Use appropriate colours. You want colour to emphasise your message not detract from it. Layout the data out with the audience in mind and chose a chart that tell the story you want to tell.

Good design improves user engagement. My key bugbear is pie charts. While they look pretty, people find it hard to compare areas. Length is easy to compare so in general, bar charts are more useful than pie charts for comparisons.

5. Analysis – Use trend analysis to show patterns and to predict or forecast the future. Those that know the data will ask the best questions and be best placed to analyse it, rather than using a specialist analyst.

Access to self-service analysis tools makes this possible. Use this analysis to show your knowledge of the situation and form conclusions that will inform decision making in your organisation.

So get out there and enhance you career and improve procurement by using data effectively.

Juliet Frost is the P2P Business Analyst at the University of Oxford and a procurement and big data expert.

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.