Category Archives: Procurement News

How to change the world…like a procurement pro!

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

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This article was originally published on LinkedIn.

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

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

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

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

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

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

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

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

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

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

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

Flag it: Promote the value of social enterprise suppliers

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

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

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

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

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

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

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

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

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

Jamaica Invests in Procurement Capability

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

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

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

Certification Critical for Reform

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

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

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

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

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

“And the winner is…”: Supplier Award Schemes

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

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The Set Up

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

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

Establishing Criteria

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

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

Behind the Win

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

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

Slick and Well-Staged

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

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

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

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

Injecting Social Media into Local Government’s New Commercial DNA

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

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

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

‘Bolder and More Collaborative’

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

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

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

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

Bringing Procurement Together

I always love to see professionals getting together.

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

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

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

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

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

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

The Power of Social Media

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

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

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

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

Procurement Stepping Up

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

  1. Connect with Peers

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

  1. Connect with Suppliers

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

  1. Tracking the External Environment

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

  1. Personal and Organisational Brand

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

  1. Share Your Best Practice

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

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

Good luck!

Sourcing From China: A Guide for Small Businesses

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

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

1. Internet Search

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

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

2. Social Media

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

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

3. Online Forums

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

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

4. Trade Shows

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

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

5. Trading Companies

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

6. B2B sourcing platforms

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

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

Choose the Right One For You

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

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

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

Rethinking Suppliers: Spotting Future Crises

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

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

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

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

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

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

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

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

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

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

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

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

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

‘Uberization’ – Is Any Profession or Industry Safe?

The phenomenal global success of Uber boiled down to a simple premise – that consumers wanted a way to source a traditional service more easily and cheaper than before. Its success has given rise to the so-called ‘Uberized’ economy. But what product or service is next? 

MADRID, SPAIN - OCTOBER 14: In this photo illustration the new smart phone taxi app 'Uber' shows how to select a pick up location next to a taxi lane on October 14, 2014 in Madrid, Spain. 'Uber' application started to operate in Madrid last September despite Taxi drivers claim it is an illegal activity and its drivers currently operate without a license. 'Uber' is an American based company which is quickly expanding to some of the main cities from around the world. (Photo by Pablo Blazquez Dominguez/Getty Images)

Taxis were first, along with hotels (Airbnb), retail (Alibaba), real estate (Suitey) and car sales (Beepi). You can even look at media (Facebook) and freelancing (Upwork) and see similar disruption.

What these new organisations have in common is that they are network based, don’t own any inventory, stock or hard assets, and they all took an existing service and provided a more customer-centric, lower cost service.

Traditional professions like medicine and legal and financial services have been largely sheltered from this disruption so far, but this looks set to change.

End of the Old Guard

For some, these traditional professions have been viewed as ‘untouchable’ (this might be down to them working in these professions and trying to resist this shift), but, for others, the services offered by these professions was ripe for ‘Uberization’.

One profession viewed as ‘untouchable’ was the Legal profession and, more specifically, the provision of legal services. There is an increasing number of online start-ups aiming to provide this more ‘customer-centric’ service than has been available previously.

Not only do these companies offer a cheaper service, but also a simplified purchasing experience for individuals and organisations. Services can be purchased on a task-to-task basis, rather than paying by the hour. The concept of a set fee for services, like the offering from Avvo, is an attractive one, particularly for a procurement department.

Simplified Procurement

An overall spend figure for legal services is hard to come by, but, with global banks spending over £200bn, and spend with the UK arm of global law forms topping £28.5bn, it would be safe to give a conservative estimate of around anywhere between £500bn and £750bn.

In 2013/14, local authorities in the UK spent £156m on legal services. Although these costs were down on the previous three years, it seems there is still plenty of scope for further reduction.

While many procurement teams may have been shut out of the process of purchasing legal services, the ability to reduce the cost, while at the same time retaining the service level required by internal stakeholders, leaves procurement in a powerful position.

Put simply, procurement can make changes for the better and a good place for them to start is with these ‘Uberized’ companies. Not only could costs be reduced, but also time spent on lengthy (and often costly) tender processes.

And next…?

So if one ‘untouchable’ can fall victim to the ‘Uberized Economy’, then which one might be next? Some suggest that Financial Services might be the next profession to be ‘Uberized’.

With many similarities to the Legal profession, there doesn’t seem to be a good reason why you might end up getting your financial services via an app in the not-to-distant future.

And as people move towards vertical marketplaces, where a few things are done well, in depth, rather than the common horizontal marketplace with multiple avenues carried out in less detail, it’s likely that other professions will follow suit.

Now, if only there was a vertical network for procurement that people could take advantage of…

Do you procure legal services for your organisation? How would this impact your job – would it be a positive thing for you? Join us and start a discussion on the future of ‘untouchable’ professions.

While you’re digesting the main event, why not check out this week’s main headlines from procurement and supply chain for your Monday morning tea break…

Police asked to investigate London Garden Bridge Contracts

  • Scotland Yard has reportedly been pressed to investigate allegations the procurement process behind the capital’s planned garden bridge “was rigged”
  • The central allegation is that the procurement process was rigged and that designer Thomas Heatherwick and engineering firm Arup had been lined up to win the contracts before tenders were issued
  • Further revelations have shown that meetings were not recorded in London Mayor, Boris Johnson’s, diary, where go ahead was given for the process
  • There are also questions over how Arup won its contract, and why it was asked to resubmit its bid while other firms were not

Read the ongoing story at The Guardian

iPad Pro Launch Date Leaked

  • According to Mac Otakara, a Japanese blog, the release date for the new product is set for the 6th of November
  • Although a highly guarded secret, the blog spoke with workers in the Apple supply chain in China and gathered information from them
  • Apple still has the iPad Pro listed on their website as “Available November”, and hasn’t commented on the leak

Read more on Ledger Gazette

Demand-Driven Perishables Offer Fresh Look for Groceries

  • Up to 133 billion pounds of food is wasted annually in the U.S. alone – at a staggering cost of $162bn
  • Cognizant has created a new infographic aimed at showing how a demand-driven model can reduce inventory, spoilage and wastage
  • A demand-driven replenishment model can help grocers better anticipate supply requirements, improve storage and maintain food freshness

Check out the infographic on Cognizant

General Mills recall set to impact supply chain

  • FMCG giant General Mills is recalling 1.8 million boxes of gluten-free Cheerios, as they are thought to contain gluten
  • The company said wheat flour had been “inadvertently introduced” into its gluten-free oat flour used to make original and Honey Nut Cheerios
  • The company are unsure how much the recall will cost them in cash-terms, but look set to be the latest organisation to suffer from a reputational hit
  • The case shows that supply chains need to be aware of track and trace systems and the supply chain will be reviewed in light of the incident

Read more at the BBC

Will ‘Unicorns’ Deliver a Horn of Plenty in the Future?

Traditionally a Unicorn is a mythical creature, much wished for but seldom seen outside the bounds of the Harry Potter universe and the pictures doodled on children’s notebooks and stencilled on their bedroom walls. However, a new type of Unicorn has been coming to the fore in recent years and is multiplying fast.

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For those who aren’t aware of this phenomenon, a ‘Unicorn’ was a term coined by Aileen Lee, founder of Cowboy Ventures, back in November 2013 and used to describe a start-up company whose value has exceeded $1 billion.

When you think of unicorns in this regard, think Facebook (actually classed as a ‘super-unicorn’ thanks to a valuation over $100 billion), Slack, LinkedIn and Uber. It is estimated that there are around 80 ‘unicorns’ prancing around currently, predominantly in San Francisco, but the odds of building or investing in a billion dollar organisation are around about the same as being struck by lightning…

So what’s the secret?

It depends who you listen to, but the common consensus is that there is no secret or magic bullet to creating a ‘unicorn’. As with any start-up, innovation plays a huge role in success, but for a unicorn it’s also about catching the right wave, at the right time, and taking advantage of prevailing trends and public opinion.

These trends, and their unicorns, go all the way back to the 1960s and look something like this:

  • The development of the semiconductor (Intel)
  • The advent of the personal computer (Apple; Oracle; Microsoft)
  • Development of new networks (Cisco)
  • The Internet (Amazon; Google)
  • The rise of Social Networks (Facebook; LinkedIn)

The list looks like a who’s who of powerhouse technology companies, all instantly recognisable, all companies we have come across or used ourselves during our lives. But where will the next trend come from?

The New Unicorns

Investors and experts have begun to look to the short-term future to see where the next unicorn might come from. According to a couple of sources, the Collaborative and On-Demand Economies may give birth to the next unicorns. You probably haven’t heard of them yet, but here are just some to keep an eye on:

  • Envato – an online marketplace for creative, enabling access to freelance talent, videos and tutorials
  • Canva – an online graphic design tool, aimed at making design accessible and easy for everyone
  • Campaign Monitor – providing easy creation, sending and reporting on e-mail marketing (clients already include Coca-Cola and Airbnb)
  • ROKT – online marketing platform aimed at delivering higher engagement for service advertising

Could the ‘Bubble’ Burst?

However, all this needs to be delivered with a word of caution. Most people in business are old enough to remember the dot.com bubble of the late 1990s. What started out as a rush of new, innovative online organisations, ended with a set of spectacular failures and the loss of hundreds of millions of dollars.

This is the concern for some analysts with this new wave of technology start-ups and unicorns. Greycroft Partners founder, Alan Patricof, warns against the belief of being able to raise endless capital, with businesses vulnerable to changes in the market and the outlook.

Some organisations have lost their unicorn status, and even Facebook’s value dipped dramatically before reaching its current peak of around $225 billion.

Your Unicorn

So if you have an innovative idea, now might be the right time to get started and you could end up with a unicorn of your own. But be wary, you might want to get started soon, before someone takes your idea or the bubble bursts entirely…

We’d love to turn Procurious into a unicorn, but there’s plenty work to be done first. If you’ve got any ideas or comments about the site, we’d love to hear from you!

And just because we’re so good to you, here are some top headlines from procurement and supply chain this week…

No Evidence of Wrongdoing in London Garden Bridge Procurement

  • An audit has concluded that there was no evidence of wrongdoing in Transport for London’s (TfL) procurement for the London Garden Bridge project
  • The audit aimed to provide assurance of an open, fair and transparent process in the procurement of design and development services
  • While the audit found that in some instances where TfL policy and procedure were not fully complied with, it concluded that it had not identified any evidence that the final recommendations did not provide value for money from winning bidders
  • However, concerns have still been raised by the London Assembly Liberal Democrat Group as key documentation supporting the evaluation of the bidders had been disposed of during a TfL office move and could not be evaluated

Read more at Supply Management

Schultz stresses need for Supply Chain at top table

  • Howard Schultz, CEO of Starbucks, stressed the importance of the supply chain during a keynote address at this week’s Council of Supply Chain Management Professionals (CSCMP) Annual Conference in San Diego.
  • Schultz explained that a classic mistake made by most companies is that two areas often left behind by companies are HR and supply chain
  • Schultz argued that the supply chain needs to be at the forefront of every enterprise in the world, especially the ones that are consumer-facing

Read more of the keynote points at Logistics Management

‘Freelancing in America: 2015’ Report Released

  • Upwork and Freelancers Union released their jointly-commissioned study “Freelancing in America: 2015” last week
  • The report included a sizing and segmentation of the freelancer population, and assessed a range topics, including freelancer motivation, earnings, attitudes and outlook for the future
  • The study estimates, as of mid-2015, that overall there were 53 million freelancers in the US, representing about 34% of the total US workforce
  • Upwork CEO Stephane Kasriel stated that “strong growth in the economy and the rapid increase in full-time job opportunities, has led some number of freelancers to return to full-time employment”, showing a potential changing environment

Read the results at Spend Matters

US Car Sales on the Rise in September

  • The Big Three car manufacturers in the US projected the overall sales pace for September will top 18 million vehicles
  • General Motors Co., Fiat Chrysler Automobiles NV and Ford Motor Co. each posted double-digit percentage increases compared to a year ago
  • If volumes continue at the same rate as predicted, it would be the highest yearly volume since 2000, bringing much needed good fortune to the industry

Read more at the Wall Street Journal

Tackling the Supply Chain – Rugby World Cup 2015

On Friday night, the eighth Rugby World Cup kicked off with a hard fought win for tournament hosts England over Fiji at Twickenham. With over £1bn expected to be added to the UK economy over the next 6 weeks, how will supply chains cope with, and ultimately benefit from, increased demand?

Rugby World Cup 2015

Over the course of 44 days, 48 matches will be played out in front of a global television audience expected to surpass 4 billion people across 207 countries. It is also estimated that over 466,000 international fans will visit one or more of the 14 cities where matches are staged or fan zones are in operation.

Investment, Jobs and Opportunities

In preparation for the tournament, over £85m has been invested in infrastructure around the UK, with further investment expected in creating a ‘legacy’ for rugby around the country. Over 41,000 jobs will be created, including 16,000 related to the tournament and over 12,000 along the supply chain. In total, outputs are expected to surpass all previous tournaments at £2.2bn.

UK businesses will also see a legacy from the tournament. At the 2011 tournament in New Zealand, 52 per cent of businesses increased their international networks, and the same is expected this year in the UK.

The British Beer and Pub Association (BBPA) anticipates an additional 25 million pints will be drunk during the tournament, bringing over £86m into an industry that has been struggling in recent years.

However, it’s not good news for all companies. Thanks to a £20 million pound sponsorship deal for Heineken, Guinness has been removed from all 13 host stadia. No small matter, given that Guinness accounts for half of all pints sold at Twickenham in recent years.

Procurement and Supply Chain Matters

With the increased tourism to the host cities, there is a positive knock-on effect for supply chains across the UK too. Businesses have been encouraged to work directly with organisers and tourist boards in order to ensure that they are ready for the influx of extra customers.

As might also be expected, there have been a considerable number of opportunities for businesses to get involved with supplying the tournament itself, as well as the teams. A dedicated tender portal was set up for all official opportunities and advice given to businesses to enable them to boost their chances of winning business.

England Rugby 2015 Chief Executive Debbie Jevans was quoted in 2014 as saying that companies need to be aware of the attributes England Rugby 2015 look for when deciding on procurement options.

“Awards will generally be given to companies that are suitably qualified and can provide a competitive commercial proposal, as well as a compelling service proposition,” she said.

And with awards made for all manner of things, including security, fleet management and medal making, there is huge potential for UK business to take advantage of this great opportunity and get their slice of the pie.

And We’re Off

So, with the tournament firmly up and running, and team Procurious collectively supporting Scotland, England and Australia (or if you are like this writer, hoping Scotland don’t perform as abjectly as in 2011), it’s either time to kick back and watch some matches, or avoid them at all costs.

Just don’t be one of the anticipated 4.4 million workers who will skip work just to take in a match…

Is your business benefitting from the Rugby World Cup? What does the tournament mean for you? Let us know and tell us your stories of this, and past, World Cups.

For those of you needing something other than rugby to talk about this week, here are the big headlines in procurement and supply chain…

Plunging oil prices put question mark over $1.5tn of projects

  • Plunging oil prices have rendered more than a trillion dollars of future spending on energy projects uneconomic, according to a study that suggests that the impact on industry operators is worsening.

  • A report published Monday says $1.5tn of potential investment globally — including in North America’s shale-producing heartlands — is “out of the money” at current oil prices close to $50 a barrel and unlikely to go ahead.

  • Industry operators expect capital spending on new projects to decline by between 20 and 30 per cent on average in the wake of the price slide, says Wood Mackenzie, the energy consultancy. It calculates that $220bn of investment has been cut so far, about $20bn more than it estimated two months ago and much of it the result of projects being deferred.
  • Such a decline in spending means that the price crash since last summer — the result of weaker Chinese demand, record US production and Saudi Arabia’s decision not to cut output — could resemble the savage downturn of the mid-1980s.

Read more at the Financial Times

Target supply chain woes get serious

  • Target is now taking its supply chain problems seriously. The major retailer has been struggling with running out of stock and even having empty shelves in stores. But last week, John Mulligan, the newly appointed chief operating officer, called the company’s woes “unacceptable.”
  • “We’ve been asking our supply chain to move well beyond its original design and become more flexible in the way we serve our guests,” Mulligan said. “However, while we understand the reasons, the simple fact is that our current performance is unacceptable.”
  • Target’s online ordering and in-store pickup options have reportedly magnified the retailer’s supply chain problems. The growth in online ordering could have more widespread impacts in the retail sector, where other companies’ supply chains might not be up to the task.

Read more at Spend Matters

European auditors warn over public procurement errors

  • The European Commission and member states must do more to address problems with public procurement in EU cohesion spending. The European Court of Auditors said failure to comply with public procurement rules has been a “perennial and significant source of error in EU cohesion expenditure”.
  • It also recommended payments to member states should be suspended if shortcomings on public procurement were not rectified.
  • €349 billion (£395 billion) was allocated in the area of cohesion policy through the European Regional Development Fund (ERDF), the Cohesion Fund (CF) and the European Social Fund (ESF), between 2007 and 2013. A significant part of this money was spent through public procurement, which is governed by the EU purchasing regulations.
  • The auditors’ Special Report assessed whether the European Commission and member states were taking steps to address the problem of public procurement errors in the area of cohesion policy. It examined more than 1,400 transactions between 2009 and 2013 and detected errors relating to public procurement in around 40 per cent of all projects.

Read more at Supply Management

Canada’s biggest-ever military procurement at ‘very high risk’

  • Documents obtained by CTV News suggest that the Conservative government’s plan to overhaul the Royal Canadian Navy with a multi-billion dollar procurement to replace frigates and destroyers may be in trouble.
  • According to internal documents obtained by CTV News’ Mercedes Stephenson, the “Canadian Surface Combatant” program is at “very high risk” of running over budget, behind schedule, lacking skilled manpower, and producing inadequate capabilities.
  • The documents warn there is a risk the project, “may be unable to deliver the optimal number of ships with the capabilities necessary to meet operational requirements” and that may, in turn, lead to the navy’s “inability to deliver operational effect and/or a failed procurement.”
  • Sources tell CTV News that a fixed budget, combined with increasing costs and procurement delays, mean the navy has likely already lost one or two of the promised 15 ships.

Read more at CTV News

Chill, China’s economy isn’t collapsing: China Beige Book

  • Current market perceptions of China are “thoroughly divorced” from the reality on the ground, according to the latest China Beige Book (CCB) survey, which has found that while the economy slowed in the third quarter, there are no signs of an impending growth collapse.
  • “In the aftermath of the stock market collapse and a surprise currency action in August, global sentiment on China has veered sharply bearish—too bearish,” Leland Miller, president of CBB said. “While we have long cautioned clients against relying on rosy official views of the Chinese economy, we believe sentiment has swung substantially too far in the opposite direction,” he said.
  • Corporate revenue growth, although weaker than the second quarter, actually improved over the first quarter, and was stable in on-year terms, according to CBB.
  • While manufacturing saw its weakest performance in two years, as indicated by recent purchasing managers’ index (PMI) surveys, other sectors buoyed the economy.

Read more at CNBC

Are You Sick Of Your CFO Asking ‘Where’s The Money?’

Where’s the money? – Marisa Menezes launches The Faculty’s Making it Stick research at the 2015 CIPS Australasia Conference.  

Marisa Menezes launches The Faculty’s Making it Stick research at the 2015 CIPS Australasia Conference.

Consider this – you’re a successful CPO with a world-class Procurement team that’s brilliant at negotiating great savings and other value. Six months ago you successfully identified and negotiated contractual benefits worth millions with a critically-important supplier – at the time, there were plenty of high-fives and back-slapping amongst the team as you signed the contract and handed it over to the business owners… but fast-forward six months to the end of the financial year, and your glowering CFO calls you into his or her office to ask those three dreaded words – where’s the money?

Marisa Menezes, GM of The Faculty Management Consultants, has made the assembled procurement professionals at CISPA 2015 very uncomfortable. She’s describing a nightmare situation that has kept many a CPO awake at night – millions of dollars in identified value won by procurement failing to make its way to the bottom line, a despairing CPO and a furious CFO. The potential consequences of poor benefits realisation are frightening – apart from the obvious anguish of seeing savings going down the drain, it damages the procurement function’s credibility. Strategically-vital supplier relationships also suffer, as maverick spend damages vendors’ margins and restricts the purchasing organisation’s ability to negotiate future contracts in good faith.

But it’s not all bad news – The Faculty has a solution for Making it Stick.

Earlier this year, The Faculty Roundtable commissioned an investigation into best-practice benefits realisation, and our researchers have conducted a series of interviews and data analysis to unearth the factors that prevent Procurement’s savings from hitting the bottom line. The results were boiled down to five key hurdles to Making savings Stick, namely:

  • A lack of enterprise-wide ownership and alignment with Procurement’s targets;
  • Silo-style working environments rather than true cross-functional collaboration,
  • Maverick spend and other non-compliance that undermines Procurement’s gains and damages supplier relationships
  • Unclear benefits definitions, measurements and validation processes that haven’t been agreed upon across the organisation, and
  • An immature cost-conscious culture that hamstrings CPO-level efforts to expand the value Procurement contributes to the organisation.

No wonder CPOs are having trouble sleeping at night – as much as 50 per cent of contracted savings are not making their way to the bottom line of Australia’s leading companies, which is equal to $138.5 million dollars across the 16 major organisations that participated in this research. Overseas, the figures are even more disheartening: a report by Aberdeen Group in 2011 revealed an industry average of only 8 per cent, an incredibly low figure.

The Faculty’s Making it Stick research a call to action for CEOs and CFO to support their Procurement functions to dramatically improve benefits realisation. It requires no less than an organisation-wide change management program to drive the right behaviours around compliance and cross-functional collaboration, and this must be driven from the C-level if organisations intend to fully realise the benefits of their supplier relationships.

Marisa takes the audience through six different “levers” a CPO can pull to drive savings all the way to the bottom line:

  • Prove it – moving the Procurement team’s focus from projected to validated savings
  • Drive cross-functional collaboration, focusing on shared goals and language
  • Expand the focus beyond costs – only possible once a cost-conscious culture is in place
  • Align to business targets – without alignment, CPOs risk having their hard-won benefits dismissed as irrelevant
  • Build rigorous benefits definitions, measurement and agreed-upon validation methodologies
  • Focus on compliance – without a culture that values compliance, nothing will stick.

The Faculty’s Making it Stick report is now available for free to download. Armed with this call to action, CPOs have the tools they need to drive meaningful change, make savings stick, and sleep better at night.