Category Archives: Procurement News

Supplier Collaboration? You Must be Joking

There are numerous articles talking about the value that remains untapped within the supply chain, if only buyer and supplier could collaborate. But what does it mean to collaborate?

Collaboration is key

If you were to look up the definition of Collaboration, it is either:

  1. To work together
  2. To co-operate treasonably with the enemy

And for many procurement professionals, number two may still be closer to the mark than number one!

Assuming the correct definition in this case is ‘to work together’, what could collaboration offer the buyer? What is the untapped value in the relationship?

Supplier Innovation

Following the award of the contract, between order placement and delivery, there is time. What if the supplier could apply their knowledge and experience during this time to see if they could deliver the contract for less?

This is called ‘Supplier Innovation’ and involves the supplier applying their expertise and knowledge to the contract in the post-contract award phase to save the buyer money.

The real question is, if the supplier could deliver the contract for less, would they tell the buyer? Unfortunately, in most cases, the answer is no.

If Supplier Innovation occurs between order placement and contract delivery, theoretically it could be applied to all contracts. Therefore, in order to access the untapped benefits of supplier innovation, the buyer needs to ensure the correct incentives are in place before awarding the contract. But how can you do this?

Gain Share in Contracts

The answer is relatively simple. In order to collaborate, both parties need to understand how they benefit – answering the “what’s it in for me?” question. Unless both parties see value in collaboration, it is likely to remain an ‘if only’ situation.

For suppliers to collaborate with buyers, they need to see financial benefit. One way traditionally used to incentivise suppliers is a Gain Share. A gain share is a risk/reward commercial model used to incentivise suppliers to achieve specified objective. If the supplier achieves this objective, they receive more revenue.

Gain shares have some interesting characteristics which include:

  • The objective is pre-defined and negotiated prior to contract award – This is counterproductive to encouraging Supplier Innovation, as the supplier does not know if innovation is possible until they are in the post-contract award phase.
  • Gain shares can be complex and time consuming to negotiate and therefore used selectively – This is also counterproductive to encouraging Supplier Innovation, as the buyer needs this capability in all its contracts.
  • Gain shares are a risk/reward model – Again this is counterproductive, as, by definition, you cannot predict if innovation will occur and therefore it has to be achieved without increasing the risk of the supplier.

It seems clear that there is untapped value within the supply chain, if the buyer and supplier collaborate. Yet, how this is to be achieved while using current commercial models remains a mystery to many.

If we could have supplier Innovation available within all our contracts, encouraging and rewarding suppliers when they innovate without risk, costs or effort to either party, have we finally found a way to access the untapped potential that resides within the supply chain?

Well, there may be a new option that both buyers and suppliers can use – The POD Model. The model is a scalable (can go into every contract) model that encourages suppliers to innovate (without increasing the supplier risks) within the contract. If innovation occurs (without making it a supplier obligation), it generates additional savings for the buyer and increased profits for the supplier (addressing the “what’s in it for me?” question). And best of all, it’s free!

So no, we’re not joking when we talk about collaboration. Can you afford not to?

About the Author POD Procurement: POD Procurement created The POD Model and provides consulting and training on its implementation. The POD Model is free to use and can be found on the CIPS knowledge website. For additional information please contact [email protected]

Big Data Will Revolutionise Supply Chains – And Here’s Why…

We know what you’re thinking – “Not another article on data”! But stick with us as, like data itself, the information on it keeps evolving. And can you really ever know all there is to know about data for your business?

Big Data Will Revolutionize Supply Chains - And Here's Why...

Every individual in an organisation comes into contact with data, and is in some way responsible for that data too. We all spend a lot of time with data at home too – it helps to inform our personal purchasing decisions, from coffee to holidays.

Using Data

The main problem, from both a personal and organisational point of view, is how to use the data we have (this is, of course, after working out what data to use first). For now, we’ll just focus on organisational data that can be used to inform procurement and supply chain decisions.

Increasing connectivity, plus an abundance of devices with the ability to collect data, means that decision making and analytics can be carried out with a greater wealth of information. In procurement, this data helps inform spend analysis, identification of correlations and drivers and trends across purchasing activities.

Identification of trends helps procurement create accurate predictions and improve spend management by knowing when and where items are being used and at what rate. This can assist with assessment of requirements, standardisation of products in a catalogue and will ultimately make a positive difference to budgets.

Data Quality

Dr David Hames, Founder of Science Warehouse, believes that data will be a driver in organisations in the future, both in B2B and B2C transactions. Speaking to Procurious at the Big Ideas Summit 2015, he caveated this by highlighting a concern that many procurement professionals have – data quality and integrity.

In order to be used effectively, David states that data needs to be:

  • Cohesive
  • Comprehensive
  • Accurate and detailed
  • Subject to Quality Control from experts

It’s difficult to guarantee all of these, but unless you can be confident in the quality of your data, you can’t be confident in the value of your analytics.

Cyber Security

Data integrity is another concern for organisations. Greater connectivity has lead to concerns that individuals are organisations are more vulnerable than ever to cyber attacks.

Sony Pictures, Ashley Madison, Carphone Warehouse and the US Government – in the past 6 months all of these have been high-profile targets for cyber attacks.

A report by Quocirca this year highlighted the concerns that organisations have around data security and data protection. Only 29 per cent of the organisations surveyed marked themselves as very confident about data security (this figure dropped to 16 per cent across the retail and distribution industries), while 10 per cent they were not confident at all.

Those who were very confident showed common policies around education of employees, defined and streamlined approaches to security and highly co-ordinated approaches to both internal and external threats to security.

The Secret to Good Data

Is there a secret to good data? We’d love to say that there is an easy solution for organisations, but it’s not as straightforward as that.

Good starting points include training and educating employees, having robust processes and policies and having someone who can check the quality of the data in the systems.

And, if you’re using an integrated system for procurement and other departments (e.g. Finance; IT), make sure your data is good before you switch on, otherwise you’re going to be fighting a battle from the off. Good data in, good data out. Bad data…well, you know the rest.

Do you have a secret to good data? A success story of leveraging data in procurement and reducing costs? We’d love to hear all about it, so get in touch.

And to set you up for your water-cooler/coffee line conversations this week, here are all the key headlines in procurement and supply chain.

Coca-Cola bottlers agree three-way Europe merger

  • Three of Europe’s main bottlers of Coca-Cola products are to combine in a $27bn deal to simplify manufacturing at the world’s largest drink maker as it seeks to cut costs at a time when consumers are shifting away from its famous sodas.
  • Coca-Cola Enterprises, the US-based bottler with exclusive Coke licences in several western Europe countries, will merge with its Iberian and German counterparts in the latest consolidation of the Coca-Cola Company’s supply chain.
  • The merger comes as Coca-Cola is confronting a decline in fizzy drinks sales, especially in developed markets, which make up almost 70 per cent of the company’s overall revenues. In response, the drinks group is looking to cut costs to boost profitability. Initiatives have included reducing the size of beverage bottles, generating more profit per ounce, as customers fall out of love with excess.
  • In an internal memo to staff, James Quincey, president of Coca-Cola in Europe, said the deal would improve the company’s ability to respond more swiftly to changing consumer trends. He added that the merger would enable the bottlers to improve efficiency in its supply chain, sales and distribution.

Read more at the FT

Britain in Summer Rush of Supply Chain Contracts

  • Supply chains for two of Britain’s largest defense programs have benefited in the last few days from a rush of production contract awards by industry primes BAE Systems, General Dynamics and Lockheed Martin.
  • By early August, with Parliament on its summer recess and people’s minds here turning to the beach, it’s normally a quiet time on the announcement front for defense. The last few days were different, though. Fourteen contracts from across supply chains that include equipment from Austria, Germany and the US, as well as the UK, were announced for three British programs.
  • The contracts illustrated the increasing globalization of defense supply chains and emphasized the continued willingness of the British to look overseas for equipment. It’s something the British government hopes to see reciprocated more by its allies.
  • International supply chains, and Britain’s role in them, were on British Procurement Minister Philip Dunne’s mind when he visited Washington recently and talked up Britain’s ability as an equipment supplier. “We have been actively encouraging US and other non-UK domicile primes to come into the UK to explore our supply chain,” he said in a speech July 28.

Read more at Defense News

Fast fashion propels Zara into shopping stratosphere

  • Amancio Ortega, the co-founder of Zara, is now the world’s second-richest man, putting him above Warren Buffet and just behind Bill Gates. On Wednesday his Inditex parent company, under which Zara sits, reached a valuation of €100 billion for the first time in its 30-year history.
  • Of the eight brands housed under Inditex, which was founded by Ortega and his former wife Rosalia Mera in 1985, Zara is the flagship and, as of December 2014, represented 66 per cent of total sales.
  • Zara’s in-house design team can have an item in stores within three weeks. That’s three weeks from the beginning of the design process to the time it lands on the shop floor for us to buy.
    Where most companies will lock in 100 per cent of the forthcoming season’s stock six months in advance, Zara only locks in 15 to 25 per cent that far in advance, according to tradegecko.com.
  • By the start of the season that percentage will have increased to 50 or 60 per cent, meaning the remaining 50 to 40 per cent is still up for discussion; if a new trend appears mid-season, Zara has the capacity to follow it and get its interpretation into stores, while its competitors can’t.
  • Similarly, if things aren’t selling, it has the ability to alter them or simply discontinue supply. This is aided by the fact that between 51 and 55 per cent of Zara’s clothing is manufactured in what the company describes as “proximity” markets; Spain, Portugal, Turkey and Morocco, instead of Asia.

Read more at Telegraph

Cargill to map canola oil supply chain

  • Food firm Cargill is to map the supply chain of its high oleic canola oil as part of a transparency initiative.
  • From October, the ‘Knowing Your Roots: from farm to table’ programme will take customers and consumers through the whole supply chain, from seed development and the farmers who grow the canola, through oil processing and packaging, to the food service operators and food ingredient manufacturers who use the product, and to consumers.
  • Cargill said it could provide a transparent supply chain because it is a high oleic canola oil supplier and also a seed company. “Understanding where food comes from is a priority for consumers,” said Kristine Sanschagrin, marketing manager of Cargill Specialty Seeds & Oils. “This initiative offers our customers the opportunity to tell that story.

Read more at Supply Management

Trust, Shame and Reputations – Truth & Lies in Accounts Payable

It’s comforting to think that if fraud exists, it exists elsewhere – anywhere in fact other than right now – in your organisation and your own department.

Truth and lies in accounts payable

Thanks to APN for granting Procurious permission to republish this article

In fact, it’s that assumption which makes life a whole lot easier for those hoping to embark on a life of Accounts Payable (AP) crime.

Of course, no-one likes to think that someone they work with could be capable of fraud, and yet the truth is – fraud happens – and it happens quite a lot. And you’re not looking for a shady character in a badly judged mac with dodgy eyebrows. Statistically it’s likely to be “John” who’s worked for the company for the last 15 years. Perhaps “John” feels entitled after all the unrecognised hard work he’s put in. Perhaps it’s his way of righting a long standing wrong. Who knows.. but most of all – John is doing it because he can.

Of the many high profile fraud cases of recent months – they have all carried some element of shock – the trusted Head of Lloyds Fraud and Security for example, or the Manager of the Birmingham Dental practice involved in a £1.4m invoice fraud. Both were trusted employees with considerable access to the financial systems and the knowledge of how to navigate around them to their own advantage.

So we know that an excess of trust plays into the hands of fraudsters – but in some cases there’s another set of human emotions at play too – shame, embarrassment and perhaps corporate ego, or pride.  Back in the early 2000s, I had some involvement with a large (and to remain nameless) organisation who fell victim to a series of “threshold frauds” (those where the invoices sat just within the threshold for approval).

Percentage wise, the amounts were tiny – but after two years – the scheme had netted the perpetrator a considerable fee. And although the employee was “asked to leave”, the matter was not taken further – in a damage limitation exercise for the reputation of the organisation. So instead of serving as a warning to others, the fraudulent activity was swept under the carpet.

As it’s unlikely (and not particularly desirable) that we collectively decide not to trust our employees and fellow colleagues – it makes sense to adopt practices and technologies which can allow us to indulge our natural instincts while keeping appropriate checks in place. Most of the time people conducting fraud are simply taking an opportunity – it’s not necessarily a lifestyle choice and they’re not necessarily experts at hiding their actions.

For example, many fraudsters are caught because when something works once, they’ll try it again and again until they forget to be cautious. Implementing a series of automation solutions can provide many of the answers, but only if it’s placed at the centre of a tight set of thoroughly examined procedures.

Of course, a tightening of processes within accounts payable can have significant effects on areas other than just controlling fraud. If payments are being analysed for duplicates and master supplier files are being checked for erroneous entries and the AP manager has a new step by step process to follow from receipt of PO through to payment, analysing a series of pre-determined metrics along the way – then the cost per invoice goes down and the savings go up. All of which is good news for the business and great news for the reputation of the AP department.

Twelve Warning Signs to Look Out For

  • Invoices from various suppliers on similar stationary
  • Suppliers with incorrect VAT numbers
  • Transactions which are out of the ordinary – ie late at night
  • Excessive voids or credits in the receivables ledger
  • Large number of invoices, especially to a particular supplier, just beneath the approvals threshold
  • Few, or unclear reasons for a particular service
  • Suppliers with PO Box addresses, home addresses etc
  • Erratic employee behaviour – always in early or late
  • Sudden, or unexplained employee departure
  • An increase in duplicate payments
  • Excessive amounts of rounded up, or down invoice amounts (frequently ending in 5 or 0)
  • Above average payments to a supplier

 “Fraud and falsehood only dread examination. Truth invites it.” Samuel Johnson.

Accounts Payable News® (APN) is a trusted information base with direct access to 14,000 key decision makers in the finance sector across a variety of different industries. 

Does Artificial Intelligence Have A Place In Procurement?

With the recent innovations in artificial intelligence, will the supply chains of tomorrow be at the mercy of robotic overlords? If so, do we have anything to fear?

Does artificial intelligence have a place in the supply chains of the future?

There’s a change happening on factory floors the world over, as robots and automation increasingly replace the manual (human) workforce of old. We’ll dip into the possible effects artificial intelligence (AI) could have on production and procurement practices as we go along, but first, a bit of scaremongering… Elon Musk has previously aired his own warnings while giving a talk to students from Massachusetts Institute of Technology (MIT), saying:

“I think we should be very careful about artificial intelligence. If I had to guess at what our biggest existential threat is, it’s probably that. So we need to be very careful… I’m increasingly inclined to think that there should be some regulatory oversight, maybe at the national and international level, just to make sure that we don’t do something very foolish.”

Of course it’s perfectly natural to fear change. We must also be mindful that artificial intelligence is still very much evolving, and at this stage it’s an unknown quantity. There are some camps that fear the worst, that AI represents the destruction of mankind, with robots and humans embroiled in a bitter battle for survival. Flesh vs. circuits, the human condition vs. sentience…

Not so according to Mustafa Suleyman – Head of Applied AI at Google DeepMind, who instead believes that this modern intelligence will help tackle some of the biggest problems facing the world today (think access to clean water, financial inequality and stock market risks). Indeed, the work of DeepMind was something Wired Editor David Rowan touched on at Procurement Leaders’ London gathering earlier this year.

David told us how DeepMind had created a “generalised artificial intelligence” – the earliest example of which was able to not only play Space Invaders, but master it to become the best player in the world. While this demonstration is certainly impressive, how can it translate to real-world scenarios?

The answer lies in Big Data as DeepMind observed: “We have global information overload from overwhelming systems complexity – they’re so complex and interlinked it’s possible that the US financial crash in 2008-9 caused the Egyptian revolution” [a time of widespread corruption and a stagnant economy that led to a national bread shortage].

If all of this (Big) Data is just sitting around, waiting for consumption, then why shouldn’t we make it available to robots for analysis and dissemination?

Indeed, the significance of Big Data has not gone unnoticed by procurement’s leading lights…

A 2010 paper entitled ‘Artificial intelligence in supply chain management: theory and applications’  reviewed the past record of success in AI applications to SCM and identifies the most fruitful areas of SCM in which to apply AI.

Similarly in an incredibly-thoughtful piece, Author of Supply Chain Visability.com -Jonah Saint McIntire, observed: “In time, as new generations of the AI are deployed, something truly game changing will occur. This is because machine learning will cross human learning capabilities fairly slowly. Remember that intelligence is modular and, as a result, machines may exceed humans in some forms of learning while lagging in others. The real breakthrough occurs when all necessary forms of learning are dominated by AI rather than human intelligence.”

He goes on to make a bold claim : “Our ability to manage data to the advantage of our supply chain and company will become a significant, perhaps even singularly important, part of supply chain visibility. It’s within the context of a mounting tsunami of data and the need for data-management that we must expect increasingly “intelligent” software to be deployed. The main users of supply chain visibility will probably switch from people to computer programs.”

This ‘bold claim’ was supported in an article written by Lora Cecere, founder of Supply Chain Insights – in which she said:

“Today’s supply chains are more complex than before. While the structured data and the systems that use them will not go away, new forms of data offer new opportunities for companies to solve previously unanswered problems. These new data types—from mapping and GPS sensors, to voice, images and video—do not fit into traditional applications or data models. That’s the bad news. The good news, as we learned in a survey of 53 IT and supply chain managers, is that companies are beginning to recognize that they have a problem and that they need to respond. While there is a general lack of understanding of big data terms and technologies, there is an awareness that supply chain best practices are moving from insights into supplies to leveraging insights into demand.”

If AI can help us realise that we have a problem, why then should we be fearful of this new technological dawn?

John McAfee – infamous programmer and creator of the world’s first antivirus software,  has long insisted “that if you are a ‘routine cognitive worker’ following instructions or doing a structured mental task,” then it is your job that’s most at risk from the inevitable rise of the machines… How does this make you feel? As ever we’re keen to hear your thoughts, so fire away in the comments below.

Meanwhile here are the other stories you need to be reading in procurement and supply chain this week.

Fears over state of Chinese economy increase supply chain risk

  • Concerns over the financial health of Chinese businesses have pushed supply chain risk up for the third consecutive quarter, according to the latest CIPS Risk Index.
  • Worries a speculative equity bubble is about to burst, and that state lenders have been supporting employment by lending to struggling businesses, meant the index rose to a figure of 80.1 in the second quarter of 2015. This compares with a reading of 78.7 for the first three months of the year, and the highest since the end of 2013.
  • Andrew Williamson, global leader and leading economist at Dun & Bradstreet which co-produces the index, said: “We became increasingly concerned in April that corporate finances in those industries that clearly have excess capacity were becoming increasingly distressed. Local governments have been propping up employment by pressuring banks, further exacerbating legacy financial misallocations in the country.
  • CIPS economist John Glen said: “The increasing trend in global risk that was observed towards the end of 2014 and predicted to increase in the early part of 2015 has materialised.

Read more at Supply Management
UK companies to produce anti-slavery supply chain reports, says UK PM

  • Companies with turnover of more than £36 million will have to publish an annual slavery and human trafficking statement, under a clause in the Modern Slavery Act that comes into force from October. 31 Jul 2015. The measure will cover all businesses who do business in the UK and have supply chains elsewhere in the world, UK prime minister David Cameron said.
  • The statement must describe the steps taken to ensure slavery and human trafficking is not taking place in any of a company’s supply chains or their own business – or state that they have taken no steps on this. Speaking in Vietnam, Cameron said that the “scourge of modern slavery has no place in today’s society and I am proud of all that Britain is doing to wipe it out … But there is still much more to do”.

  • The planned disclosure measure “is one of the first of its kind in the world and it will be a huge step forward, introducing greater accountability on business for the condition of their supply chains,” Cameron said.

Read more at Out-Law.com

Supply Chain Risk: Five Worst Offending Countries For Human Rights Violations

  • Awareness of supply chain risk has been steadily growing among publicly listed companies all over the world. Today’s news is not reassuring: the risk of organizations breaching international human rights regulations has risen significantly over the last quarter as key Asian economies adapt to tougher economic conditions, according to a report just out.
  • Rising labor costs in China have led companies to diversify their supply-chains into other high-risk countries such as Vietnam, especially for electronics, apparel, and footwear says the British Standards Institution (BSI). Its latest Risk Index Report out today identifies China, India, Vietnam, Bangladesh and Myanmar as the five highest risk countries for human rights violations.
  • These countries account for 48 per cent of global apparel production, 53 per cent of global apparel exports and 26 per cent of global electronics exports – making it very clear which are the industry sectors most likely to be at risk. The latest report also warns that efforts by Asian governments to boost their economies are resulting in a greater prevalence of child labor abuses to become more present in supply chains.

Read more at Forbes

Barclays Africa launches supply chain challenge

  • Barclays Africa Group Ltd (Barclays Africa) has launched the Barclays Africa Supply Chain Challenge, the first of several initiatives being driven into Africa with the aims of sparking ideas to drive the digital evolution on the continent.
  • According to Stephen van Coller, Chief Executive of Corporate and Investment Banking at Barclays Africa, the Challenge is about improving supply chain transparency for African businesses. “The journey of a product from manufacturer to consumer is often disjointed and inefficient and there is currently a huge amount of interest in finding ways to increase the transparency of provenance, not least of which is the use of blockchain technology,” commented van Coller.
  • The Barclays Africa Supply Chain Challenge is open to entrepreneurs and developers, between the ages of 18 and 35, who are based in Africa.

Do Fixed Price Contracts Endorse Embezzlement?

For many years Buyers have used ‘fixed price’ contracts – a contract that stipulates the final price regardless of the outcome.

Embezzlement

There are a couple of common reasons why buyers use them. The first is to move the risk of the contract going over budget to the supplier. The second is to encourage the supplier to act appropriately and encourage them to complete the work under budget if possible.

While the buyer might think this represents smart procurement, this might not be the reality.

Unwelcome Contingencies

Suppliers are very familiar with fixed price contracts and recognise the risk being moved onto them. Their response is to modify their submitted price to include a contingency fund (price + contingency = submitted price).

In moving to a fixed price commercial model, the buyer is making a statement that they believe the contract has a high probability of going over the initial estimates and hence want to move the risk of this occurring onto the supplier. It is the act of pre-empting risk which pushes the supplier to include a contingency in the price.

Horror stories abound about suppliers under-estimating requirements and ending up absorbing much higher costs than expected when delivering the contract. While these stories are used as the justification for fixed price contracts, in reality this occurs less often than most believe.

If it was a common occurrence, suppliers would either go out of business due to additional losses, or refuse to accept a fixed price contract. The reality is that to deliver the requirement, the supplier generally gets their initial estimates correct or consumes a small percent of their contingency fund.

Here’s the issue…

From the suppliers’ perspective, a fixed price contract is a risk/reward model, and regardless if they deliver the contract for the stated cost or less, they invoice for the full amount. Here is where we hit an issue – assuming that in delivering the requirement the supplier has not consumed all of their contingency fund how does the supplier invoice for the full amount?

There are a couple of options here.

  1. Invoice based on Stated Costs: The buyer and supplier agree to invoice based on stated costs i.e. phase 1 will be invoiced for X, phase 2 for Y, etc. This will enable the supplier to invoice for the agreed amount. The issue for the buyer is lack of detail behind the invoice and being unable to quantify what has been purchased if challenge
  2. Itemised Invoices: The supplier provides itemised invoices, enabling the buyer to assure the business of what has been procured. The fixed price was justified based on the contract requiring a certain number of assets to deliver it (an asset could be Personnel, Resources, Time or Goods).

Yet in delivering the contract, the supplier has not utilised their full contingency fund and therefore not required all the assets predicted. This results in the supplier submitting invoices that include assets that were not actually required by the buyer, but that the supplier has to include in order to ensure numbers add up to the full amount. This could be interpreted as an act of embezzlement.

Wait…what?

Embezzlement is an act of dishonestly withholding assets for the purpose of conversion (theft) of such assets, by one or more persons to whom the assets were entrusted”

Either the buyer naively expects that the contract requires the supplier to utilise their full contingency fund, or is endorsing the ’embezzlement’ by paying for assets they know have never been delivered!

Assuming the buyer knows a contingency has been added, when they agree the fixed price, not only were they agreeing to the predicted costs but agreeing to pay the contingency fund too. In effect they have guaranteed to pay more than is required – a great way to reduce procurement savings.

Any Alternatives?

We are not actually stating fixed price contracts are embezzlement but it makes one wonder. Fixed price contracts introduce supplier risk, more often than not to the detriment of the buyer. If buyers could encourage suppliers to collaborate and deliver the contract under budget for mutual financial benefit, it might be a better solution.

A nice theory, but up until now, a fixed price contract has really been the only viable option. However, there is a new option for both parties to use – The POD Model for Supplier Innovation. The model enables a buyer to revert back to a standard price based contract, the supplier is only paid for what it takes to deliver the contract and the supplier is incentivised to deliver the contract for less to achieve higher profits. This approach results in higher procurement savings, the right supplier attitude and clarity on invoicing.

So, it is maybe now time to review the use of Fixed Price Contracts?

POD Procurement created The POD Model and provides consulting and training on its implementation. The POD Model is free to use and can be found on the CIPS knowledge website. For additional information please contact [email protected]

What Do We Really Mean When We Talk ‘Talent’ In Procurement?

Depending with whom you speak, you get very different views on the subject of talent in procurement.

What do we mean when we talk 'talent' in procurement?

 

When we say talent, we don’t mean the ability to sing, dance or unicycle down the street whilst juggling flaming swords (although that would be a useful skill to have…), but having the skills and knowledge necessary to cope with the expanding role of procurement in organisations.

In some sections of the procurement profession, authors and business leaders believe that procurement is ‘doomed’, with procurement struggling to attract the right, talented individuals into the profession, while simultaneously limiting itself by not developing the right skill sets to deal with the changing role.

On the other side, some business leaders believe that the next generation is key and that, with a bit of effort, procurement can turn this around and attract the key talent it requires. By using social media, CPOs can understand how to stay ahead of the game and attract good procurement professionals, while strides can also be made by investing time and effort at university level students.

The Bad News

Spend Matters Editor, Jason Busch, argues that procurement skill sets are not changing with the times, or at least not changing as quickly as the skill sets in other parts of the organisation. A further argument is that the people who you have in procurement now, are not necessarily the people you need to take the profession that next step.

It has been widely quoted that 70 per cent of companies in the UK feel they have a shortage of skilled staff. The story is the same across the world, with similar results being posted in Australia and North America.

CPOs are expecting and demanding more from their teams, but have concerns that individuals are missing the crucial skills required for success. Among the ‘missing’ skills are some biggies too:

  • Negotiation
  • Stakeholder Engagement
  • Strategic Thinking
  • Adopting of Technological Enablers

However, for some, the issue is being able to combine all the basic procurement skills with subject matter expertise, something that is becoming less common in an age where the workforce is more mobile and less likely to stay in one place for an extended period of time.

What’s the Problem?

For a while now, associations such as CIPS and ISM, and organisations like Procurious, have been trying to change the perception of procurement as a career. However, old attitudes and perceptions are proving hard to shift.

The next generation coming through education now are looking at procurement and not seeing the potential for advancement and a perceived limited career path is dulling the attraction. It’s only recently that procurement or supply chain heads are taking up executive positions at major organisations in the public eye (think Tim Cook at Apple).

Financial compensation at the top level of the profession is also not keeping with pace with other functions. While CFO compensation has gone up by double digits on average each year, in some cases CPOs have been lucky to see a 3% to 4% increase.

The Good News

If that all sounds pretty bleak, there is light at the end of the tunnel. In the first 6 months of 2015, organisations have been making very public efforts to attract new talent and showcase procurement.

The UK Government has launched a new public sector procurement apprenticeship scheme, highlighting the experience to be gained working on high profile, high-value projects that affect millions of people. You can find out more about the scheme here.

Other organisations, like NHS Procurement and Skills Development Scotland, are actively working with universities, realising that by recruiting these fresh minds, they are also accessing a valuable source of innovation, new strategic viewpoints and thought processes.

How to Do It

There’s no sure-fire way of attracting the ‘right’ talent to your organisation as different people always look for different things. But we’ve pulled together some good tips for you to think about:

  • What is Procurement? – Define it well, offer prospects, tell the wavering students why this is a great opportunity
  • Pass on Skills – Around 60 per cent of procurement uses mentorship; ensure that skills are passed on and not lost
  • Professional Development – A big one for the ‘millennial’ generation, but critical for helping to retain talent too
  • Interesting Roles – Being able to be mobile, work on different projects and gain experience across the function
  • Grow Talent – Make sure you hire the right people. Assess things like cultural fit and personal values
  • Social Media – Don’t underestimate the power of social media and learn how it can benefit you

Procurious founder Tania Seary is travelling through Australasia in the next few weeks and will talk about procurement talent. Why not let us know if Tania is visiting your organisations, or contact us if you’d like to get her to come and talk to you.

Meanwhile, here are the big news headlines that should be catching your eye in procurement and supply chain this week.

Key takeaways from George Osbornes’s summer Budget

  • The government announced plans for a new apprenticeship levy, which would be paid by all “large employers”. Eddie Tuttle, senior policy and public affairs manager at the CIOB, said: “The government has set itself an ambitious target of delivering 3 million apprenticeships over the next five years – equivalent to 600,000 new apprenticeships a year. The introduction of a new apprenticeship levy is a big ask for business, but one that recognises the acute skills shortages industries such as construction will face in the future unless significant investment is made in training. And if the government is to deliver on its ambitions, more needs to be done to promote construction as a viable career path.
  • An increase in the national minimum wage, now branded the “National Living Wage” that will rise to £9 by 2020, should help some low paid workers. Iain McIlwee, chief executive of the British Woodworking Federation, says: “And looking at the direct impact on SMEs in the construction supply chain, while an increase in the minimum wage for the lowest paid is welcome, we cannot ignore the fact that such increases have a knock-on effect throughout a business, creating inflation in a firm’s total wage bill.“Our latest State of Trade survey among Britain’s joinery manufacturing firms already reveals that 73 per cent of respondents had seen a sharp increase in labour costs, and this is fast becoming a constraint on business.
  • The government is inviting bids for a new round of Enterprise Zones, which will encourage towns and districts to work with local enterprise partnerships to develop bids.
  • And finally: Public sector pay will increase by 1 per cent a year for four years from 2016-17.

Read more at Construction Manager

Nordic report calls for less fast fashion

  • A new report which has mapped out a more sustainable road-map for the Nordic textile industries recommends that replacing fast fashion, reducing resource inputs and encouraging local sourcing should become key priorities.
  • The report was commissioned by the Nordic Council of Ministers and includes work from the National Institute for Consumer Research, the Sustainable Fashion Academy, the Nordic Fashion Association/nicefashion.org, the Swedish Environmental Research Institute and the Copenhagen Resource Institute.

Read more at Ecotextile [subscription site]

India’s Snapdeal to invest $200m in strengthening supply chain services

  • India’s largest online marketplace, Snapdeal, is planning to invest around $200m in bolstering its supply chain services including warehousing, logistics and training and sale assistance.
  • The company aims to be able to host around 1 million sellers over the next three years.
  • In March, Snapdeal had acquired a 20 per cent stake in Gojavas that helps it with last-mile delivery. Following the acquisition, Snapdeal had committed to invest between $150 and $200m over the next one year in logistics and supply chain.

Read more at LBR

What I Learnt At The Social Enterprise World Forum

Social Enterprise World Forum (SEWF)

Last week I attended Social Enterprise World Forum (SEWF) 2015 in Milan, Italy. It has been described by some as the “Davos meeting” of the Social Economy.

Procurious asked whether I’d like to report on my experience for the community – how could I not accept? It brings me great pleasure to present you with some interesting  takeaways through my seasoned CPO’s eyes:

First of all, a bit of background…

Social Economy in the European Union counts as 10 per cent of the European economy (GDP) and represents more than 11 million workers (4.5 per cent of the active EU population).

Social Entrepreneurship is 7.5 per cent of the active population in Finland, 5.7 per cent in UK, 5.4 per cent in Slovenia, 4.1 per cent in Belgium, 3.3 per cent in Italy, 3.1 per cent in France, etc.

Basically, the main objective of Social Businesses is to generate a significant impact on society, the environment and the local community.

Indeed Social Enterprises contribute to smart growth by responding with Social Innovation to needs that have not yet been met.

They also create sustainable growth by taking into account their environmental impact and by a long-term vision. For example Social Enterprises often develop efficient ways to reduce emissions and waste or use of natural resources.

They are the heart of inclusive growth due to their emphasis on people and social cohesion.

During the three day event the sessions with key expert speakers (movement leaders, policy makers, investors, entrepreneurs) covered several topics linked to social entrepreneurship such as Innovation, Social Impact, Impact Investment, Inclusion, Welfare, Social Justice, Environmental Sustainability and the Sharing Economy.

Besides GDP, the “Social Progress Index” is often talked about. This is a real way to measure the social impact and the “Value” generated across a country.

I realised, better now it had been confirmed to me, this is really a new growing “world” that has the potential to have an impact on Procurement and Supply Chain too.

Social Businesses can offer a wide range of products and services, not only to serve consumers  and public sector, but also to profit companies. 

In fact if we look at the potential products and services provided by the Social Enterprises (as well as their level of quality and competitiveness), profit companies should seriously consider to explore and buy from them.

Social Value was one of the big themes discussed (somewhat passionately) at the 2015 Procurious Big Ideas Summit. Watch a video of the panel session in question here

Additionally, the social impact of that kind of sourcing may positively affect the companies’ CSR programme.

Regulations may also help to expand the sourcing from Social Enterprises and the diversity suppliers base, for instance look to the “Suppliers Diversity Programme” in the US.

Furthermore I was involved as moderator and interviewer at the SEWF speaker’s corner and had the chance to meet several international charismatic Social Entrepreneurs who shared their experience. Out of this came an extraordinary selection of ideas to supply profit companies.

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Why Supply Chain Risk Should Be On Your Corporate Agenda

Contribute to a wider understanding of organisational barriers to supply chain risk management.

The effect of natural disasters on your supply chain

Over the past decades the world has experienced several major natural and manmade disasters. Events such as the 2010 Eyjafjallajökull eruptions in Iceland and the 2011 Tōhoku earthquake and resulting tsunami in Japan have a profound impact on companies operating in the same country or even on the other side of the world.

The increased complexity and global nature of modern supply chains has the direct effect of reducing visibility of suppliers across the supply chain. Few organisations are aware of the full risks that second and third tier suppliers pose (Jüttner, 2005; Manuj and Mentzer, 2008), whilst a survey by the Business Continuity Institute found that more than 40 per cent of reported supply chain disruptions originate with second- and third-tier suppliers (Business Continuity Institute, 2013).

Supply chains are subject to a wide range of risks on both domestic and international level. Increased complexity of supply chains makes it more difficult to assess the likelihood and impact of disruptions, thereby potentially increasing the risk exposure. In addition to risks resulting from increased supply chain complexity, firms are exposed to operational disruptions due to quality problems, supply variability and capacity constraints. The past decade has also shown an increase in disruptions following natural disasters and terrorist attacks (Sheffi and Rice, 2005).

The direct effect of supply chain risks

Operating in such a connected world with high volatility hampers organisations in fulfilling their primary goal: shareholder value creation. In carrying out its business operations to maximise shareholder wealth a firm is exposed to risks that, once materialised, can have negative operational consequences and cause disruptions. Kleindorfer et al. (2003) exhibited how supply chain disruptions have a significant detrimental impact on both short and long-term operations and

financial performance. Shareholder value decreases by almost 11 per cent by these disruptions (Hendricks and Singhal, 2003) and organisations that experience disruptions, on average, experience a 40 per cent stock price decline (Hendricks and Singhal, 2005).

The effect of natural disasters on your supply chain

Implementing the right strategies

Implementation of a business continuity plan, dual sourcing strategy, and close cooperation between supply chain partners are mentioned as the most used actions in order to reduce exposure of the supply chain to potential disruptions or to mitigate the impact (MIT Forum for Supply Chain Innovation, 2013). There is however an inherent struggle with mitigating supply chain risks in today’s globally linked organisational models. The networks of interrelationships that build up a typical supply chain in its entirety hold exposure to risk. Whilst one link in the chain may bear the direct impact of a disruption, the actions of other members in the chain will have consequences for the entire network.

Research suggests that companies with mature and flexible supply chain and risk management capabilities are more resilient (lower impact and faster recovery) to supply chain disruptions. These companies have a clear focus on proactive (ex-ante) SCRM as opposed to only taking a reactive (ex-post) approach. This in turn leads to better operational and financial performance compared to firms with immature SCRM capabilities (MIT Forum for Supply Chain Innovation, 2013).

Overcoming organisational barriers by strengthening the business case

Even though advances are made, supply chain risk management activities still take up organisational resources in terms of managerial time, increased buffer inventory, etc. The major losses incurred by organisations in the aftermaths of events such as the Iceland volcano eruption and the tsunami that hit Japan, have shown that proactive SCRM is still in its infancy with most organisations. Several leaders have however emerged and shown the distinct value of proactive SCRM, thereby increasing the business case for organisations.

Saenz and Revilla (2013) demonstrate the importance of proactive and reactive strategies in dealing with unexpected disruptions through the example of how Cisco Systems, a communication

technology firm, successfully mitigated the impacts of the 2011 tsunami in Japan almost without a loss in profits, whilst the total economic losses are estimated on at least $217 billion. Having developed their risk mitigation strategies after the difficulty in dealing with the Hurricane Katrina’s aftermath, Cisco was able to evaluate the disruption impact for more than 300 suppliers – from tier 1 to raw material providers, listed more than 7,000 affected parts by number, assigned a risk rating to each part and charted a mitigation response within 12 hours.

Case studies like this help strengthen the business case for implementing (proactive) SCRM strategies. The apparent lack of proactive SCRM strategies adopted by organisations is an area that requires further research in order to convince business leaders of the importance of SCRM (Simangunsong et al., 2012).

Have your say

To assist practitioners in this analysis, the below survey has been created. Based on the findings of the survey responses and follow up interviews we will be able to identify what kind of risk mitigation strategies are used in specific industries and gain deeper insights into strategy selection antecedents and organisational barriers. By completing the survey below you will directly contribute to this valuable analysis and as a thank you, you will receive a free copy of the academic research once it is completed. Completing the survey will take approximately 10 minutes and it will be open until the 26th of July.

Contribute to a wider understanding of organisational barriers to supply chain risk management.

For any questions or further information, don’t hesitate to contact me directly.

How to Achieve Award Winning Procurement – Learn from the Experts at Lloyds Bank

In the latest in the series of articles on the CIPS Supply Chain Management Awards winners from 2014, we look at Lloyds Bank.

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Lloyds Banking Group is a financial services group with millions of UK customers and with a presence in nearly every community. A household name on the high street, the Group thrives based on how well it serves customers, on relationships within the communities that it serves and on helping Britain prosper.

Whether through retail banking, financial services or investments, there are probably few people in the UK who haven’t interacted with a part of the Lloyds Banking Group during their lives. What many people may not immediately associate with the Group is a very successful procurement function.

However, over the past three years, and against a backdrop of great public scrutiny and a recovering economy, the function has played a key role in the successful achievement of Lloyds’ overall business goals. Under the banner of ‘Simplification Sourcing’, a procurement programme was developed with the aims of reducing cost to the bank and improving the overall capability of the procurement function.

The function achieved their goals, but also put measures in place to ensure that the changes and processes would be sustainable in the future. Last year, the team was recognised with the CIPS Award for the ‘Most Improved Procurement Function’.

Andy Collopy, Operations and Property Sourcing Director, talks to Procurious about what the award means for The Group Sourcing team within Lloyds and what’s next for the function.

How did you get started in procurement?

It’s the old cliché but I kind of fell into Procurement back in 1996 as part of an organisational change. I moved from a Logistics role into Procurement and have never looked back. I remember the conversation as if it were yesterday – “We are removing a layer of management in Logistics, Andy, so your job has gone. We think you would be good at Procurement. Do you want to give it a go?” The rest, as they say, is history.

Procurement hooked me in from day 1 when I completed my first deal, negotiating the new pallet contract. I soon realised the power of Procurement when I saved the company more money in an afternoon’s intensive negotiation than I had in 2 years in Logistics through incremental efficiency.

What prompted you to submit a nomination for the award?

The main reason was that the timing was right.

Lloyds embarked upon a Simplification journey in 2011, which ran until the end of 2014 (we are now in Simplification 2 – the sequel!). We felt as though we had achieved a great deal in the 3-year programme, and getting recognition for this from external sources, as well as from our internal stakeholders, was an important part of recognising our achievements.

I have always been a fan of the CIPS/Supply Management awards since I was part of the GSK team that won the Best Use of Technology award back in 2003. I also had the honour of being on the judging panel in 2009, and saw all the hard work that went into both the submissions and judging. I was keen for us to compete against the best.

The CIPS/Supply Management awards evening is always a great evening too, to recognise great work that the function does and catch up with old colleagues.

What is the ‘Simplification Sourcing’ programme?

Simplification Sourcing was the brand name for the programme. There were 9 key elements to the Transformation programme:

  • Vision & Strategy – Set out the 3yr strategy for Group Sourcing as part of the overarching bank strategy to be “Best Bank for Customers” and “Helping Britain Prosper”
  • Internal Client Management – Ensure that everything we do in Group Sourcing is closely linked with our internal clients’ goals and objectives through strong relationship management, with financial benefits interlocked into the Business Units P&L
  • Business Sourcing Process – Execute sourcing activity through an integrated process that starts with business needs, marries this with the supply market capability to deliver an optimal outcome for the bank in terms of competitive advantage, risk management and responsible business
  • Supplier Management – Apply segmentation to effectively manage all our suppliers from a basic risk and conduct assurance perspective, as well as work with our strategic suppliers to deliver value beyond the basic contractual terms
  • Contracts & Legal – Working seamlessly with Legal to deliver an end to end contracting process that ensures correct terms are used, negotiated and stored
  • Sourcing Transactions – Enabling the “Right Way to Buy” through user friendly Requisition to Pay processes and compliance management
  • Risk & Quality Assurance – In an increasingly regulatory environment, providing control on all aspects of Procurement from basic supplier assurance to checking the quality output of sourcing plans and supplier management rigour
  • People – Building human capability through tailored learning & development programmes, as well as key talent management and succession planning
  • Change Management and Communications – Embedding sustainable change through a co-ordinated change and communications programme to ensure that key messages and deliverables land with colleagues, stakeholders and suppliers

Has it lead to greater collaboration between procurement and the rest of the business?

Definitely. I do think that we had a real need in Lloyds to change the bank, both in terms of how we serve our customers, as well as fundamentally restructuring the cost profile of the bank. This sense of purpose galvanised people around a common goal, and Group Sourcing under Michael Whitby’s stewardship seized this opportunity to play a pivotal role in the future success of the Group.

The past 3 years has elevated effective third party spend management to being one of the key levers in the bank’s forward success. We find now that we have created the ‘pull’ factor with our stakeholders, as they understand what we can do for them. Our aim now is to keep this momentum and build upon it.

What was the most critical part of the plan for procurement?

Given the need to fundamentally restructure the cost profile of the bank, a key element of the plan was to deliver significant savings in the third party spend profile. Group Sourcing achieved £560m savings over the 3-year period. The key part of this was the interlock with the business’ bottom line, which saw a 16 per cent reduction in the Group’s cost base over the period, which was a key commitment given by the bank to the City back in 2011.

This achievement should not be under-estimated, given that in many organisations I have worked in; Procurement struggles to justify its savings to key stakeholders such as Finance. This is not the case at Lloyds. This credibility has created the space to allow Group Sourcing to start to influence the wider agenda of the Group.

How have you ensured that the success you have had is sustainable?

A key part of the programme delivery was to ensure that what was created was enduring. From a process perspective, we achieved this through robust change management at the time and built the key infrastructure to be able to monitor progress moving forward and address any potential deterioration. Performance Dashboards exist for all the main elements of the sourcing process e.g. contracts, supplier management.

The more challenging element has been embedding cultural change with our colleagues in Group Sourcing. Behavioural change is a key challenge in any organisation from my experience and it takes time.

In developing the capability of the team to meet the targets we set ourselves, we have focussed on the softer skills of influencing, engagement, relationship management and authentic leadership, as well as the traditional elements such as negotiation and effective project management. This work is never done however we have seen a step change in a number of our colleagues over the past 3 years, which has been great to see.

What’s next for the function?

A good rest! No, only joking. As I mentioned earlier, as we closed out our successful Simplification 1 programme at the end of 2014, we quickly ramped up for Simplification 2. Some of this involves sustaining what we achieved in Simplification 1, but we are also looking at new elements.

While Lloyds has always focussed on its customers, our intensity to get this right under our key aim, which is to become the “Best Bank for Customers”, means that we are increasingly looking at how to achieve this. Procurement is beginning to play a key role here, bringing market insight from our strategic suppliers to the Group to stay ahead of the competition.

This can be seen in a number of ways such as suppliers helping Lloyds re-design its processes from a customer perspective i.e. end to end customer journeys, to bringing new and innovative ideas to the Group to support the ever growing Digital Banking agenda.

Where do you see the future of the profession as a whole and how can social media play a role?

This is a really interesting question. I often read articles that say Procurement won’t exist in 10yrs time as a distinct function, or category management is as strong as it ever was. My sense is that being in a position to leverage the market, and blending this with stakeholder intimacy is the most effective formula.

Third party spend continues to grow as a percentage of the overall cost base of most corporations, so the need for effective Procurement will not go away. So we are in a good place in my opinion.

I sometimes have interesting conversations with senior stakeholders, where they are willing Procurement to take the lead, yet often see reticence from the function. My view is we need to be more confident in our capability as I was all those years ago in that first pallet deal!

In terms of social media, Procurement is a laggard here. I do think that we need to up our game and embrace this medium, especially with our suppliers. This area has so much potential, and we need to push our technology partners to come up with innovative ways to interface with suppliers in both an open and confidential way, given the nature of what we do.

For more on the CIPS Supply Management Awards, and the Procurious Knowledge Partnership with CIPS, visit our website

What can bitcoin do to support supply chain transparency?

Most people have heard of bitcoin as a digital currency, used by individuals and organisations to pay for goods, services and other items online. What you might not have heard of is how bitcoin technology could aid supply chain transparency.

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Ethics and sustainability in the supply chain have been talked about at length, with organisations being pushed to ensure that they are operating correctly. However, what is less clear is how organisations can do this to the end of each of their supply chains, for all their products.

And this, according to a number of thought leaders, is where bitcoin technology can play a role.

What are ‘bitcoins’ and ‘blockchains’?

For those of you who are unsure what bitcoins are, it is an online payment system supported by open source software, described as the first decentralised digital currency. For more detail, there are a number of good videos available, like this one.

Supported by open source technology, bitcoin is not owned or operated by one individual or organisation. It is free to use (apart from an optional transaction fee) and can reduce the costs of transactions for merchants compared to credit cards.

The technology behind it is referred to as ‘blockchain’. The blockchain records all the transactions in a publicly available ledger. The ledger keeps track of what users are spending, provides authentication and keeps track of where the currency is.

Applicability in Supply Chains

There are two key ways in which the blockchain technology can be applied in a supply chain. First, the same technology could be used to track products and inventory through a supply chain, confirming receipts and automatically releasing payments to suppliers. This could help to trace items across a decentralised network.

The technology could also help to reduce transaction fees for organisations in their supply chains, as well as speed up payment, with a transaction normally processed within an hour, compared to the usual two to three days.

The second aspect is to aid transparency within supply chains. Blockchains can be adapted to keep track of what is going into a product, who has handled it, ultimately revealing publicly the full supply chain.

Using an app or website, an individual could stand in a shop holding a piece of clothing and be able to trace it all the way back to the farm that supplied the cotton. The information could be used to highlight working practices on the farm, use of pesticides, Fairtrade considerations and more, leading to far greater transparency.

Tracing the supply chain through the use of a ‘product passport’, showing the change of ownership of items through the supply chain and highlighting each step in the process. This would help to facilitate an understanding of the transactions from end to end.

The Challenge

The immediate challenge for this is being able to supply the information that would support a supply chain blockchain. The highly complex nature of organisational supply chains and the large number of suppliers mean that, although this technology could be used to increase transparency, there would be considerable work required in advance of opening this up.

This is a challenge that can also be seen as a call to action for the procurement and supply chain profession. Gordon Donovan, Principle Consultant for The Faculty, talks about creating a ‘supplier wiki’ to build the knowledge of the entire supply chain.

By getting the profession involved to fill in the whole picture, a database could be created, allowing the support for the supply chain blockchain. This could be the future, but procurement needs to be involved to ensure that the right information is made available.

If you have any thoughts on the creation of the supplier wiki, or how we could kick this off, please get in touch. We’d love to hear your thoughts!

In the meantime, here are some of the key procurement and supply chain headlines this week.

Corruption in African Procurement

  • Eighty per cent of South African companies consider political interference in the public procurement process in Zimbabwe to be a regular occurrence
  • The University of Stellenbosch survey also reported that 60 per cent of respondents thought the same was true in South Africa
  • Issues highlighted included bribery of public officials and corruption in the awarding of government tenders
  • The survey said awareness campaigns and training or policy development should be encouraged to help companies overcome these issues

Read more at Supply Management

Hi-tech Firms ‘Right-Shoring’ Supply Chains

  • The fifth annual UPS ‘Change in the (Supply) Chain survey’ has highlighted an increase in ‘right-shoring’ in manufacturing supply chains
  • The survey polled 516 senior supply chain executives in the high-tech industry in North America, Europe, Asia, the Pacific and Latin America.
  • While many firms still operate a strategy of low cost labour, an increasing number of hi-tech firms are bringing supply chains closer to home
  • It is thought greater flexibility in supply chains is behind the increase in both ‘right-shoring’ and ‘near-shoring’

Read more at TT News

British Manufacturing Rises in May

  • After a seven-month low in April, British manufacturing experienced a slight increase during the month of May
  • The Purchasing Managers’ Index (PMI) for manufacturing rose from 51.8 to 52.0 in May due to strong domestic demand
  • However, weak exports and the effects of the weak oil and gas sector have caused the annual predictions to be revised
  • In the UK, the strongest market was consumer goods, with investment in the economy also rising slightly

Read more at Reuters

Amazon Starts Hiring Push in US

  • The online retail giant is hiring 6,000 workers to staff its distribution centres across the country
  • These new workers will join Amazon’s current 50,000 US-based workers across a number of states
  • The hiring push comes as Amazon opens new centres to speed up delivery times, particularly for its ‘Prime’ service

Read more at Supply Chain Digital