Category Archives: Procurement News

Thinking the Unthinkable – Big Ideas on Supply Chain Risk

How does the bird flu crisis affect supply chains?

2030 may seem like a long way away right now, but if you are planning your procurement strategies, you need to be thinking that far ahead. But what are the unpredictable risks in the supply chain that represent your ‘blind spots’?

As the news broke over the weekend about another avian flu crisis in the United States, North American organisations and supply chains could be forgiven for thinking that they have already had their fill in 2015.

In what is seen as the most significant outbreak of avian flu in over 30 years in the US, 16 states have declared states of emergency and are now quarantining affected farms. At Sunrise Farm in Iowa, one of the biggest farms in America, over 4 million birds will be lost, accounting for over 1 per cent of all the egg-laying hens in America.

Poultry exports are worth over $5 billion to the US economy, but the overall cost, as well as the knock-on effect to businesses further down the supply chain, is difficult to estimate. In Iowa alone, farmers are already predicting losses of $850,000 each, assuming that the outbreak can be contained.

2015 – A Bad Year

And this is just the latest in a long line of supply chain issues that have had a major impact in North America in 2015.

  • Winter Storm Juno – hit the Eastern United States in January, causing record snow falls and transportation disruption
  • Port Strikes – West Coast ports shutdown due to strikes, costing the US economy $2 billion per day
  • Tornados – the Midwest was hit by tornados, causing widespread destruction and killing 2 people

However, it’s not just North America that is seeing supply chain disruption on a greater scale than normal. A ‘once in a decade storm’ hit New South Wales last week, closing roads, cancelling ferries and causing massive disruption.

Unpredictable Risk

While 2015 has been hard on a number of supply chains, these are by no means isolated incidents. Friday the 24th of April was the second anniversary of the disaster at Rana Plaza in Bangladesh. A building collapse killed 1,134 people, the vast majority of whom were involved with making clothing for western markets.

While conditions are improving and better measures are in place to stop something similar happening again, progress is slow, while the demands for so-called ‘fast fashion’ hampers ethical considerations and makes wholesale change difficult.

However, all of these issues, all the risks are outlined above are unpredictable, making it extremely difficult for organisations to protect themselves completely from the fall out.

Protecting the Supply Chain

One of the themes of the Big Ideas Summit will be what procurement’s ‘blind spots’ are. While risks occur in an unpredictable fashion, organisations cannot let them be ‘unthinkable’ and need to understand what could be done in order to mitigate emergent risks.

  • Map your supply chain – know where your suppliers are and where your products are coming from. Where are the potential issues of getting your product from its creation to your end customer?
  • Identify transportation weaknesses – consider the port strikes in America as an example. Where are your products routed through? Can you find good alternatives in the event of a crisis? Is it worth splitting that load now?
  • Calculate costs – if you can understand the potential cost to your business of a failure in the supply chain, then you can use these figures to build support in the business for your plans.
  • Prioritise your risks – is there a particular item that is critical in the supply chain? Know everything there is to know about these items so that you can prioritise correctly.
  • Plan and prepare – Fail to prepare, prepare to fail. This is exactly what will happen if you haven’t spent some time carrying out analysis and understanding where your risks might come from.

There is no such thing as ‘no time’ to do this. The time you spend now may save you time and money further down the line.

Have you got any other suggestions? Can you think of any other ‘blind spots’ that exist for procurement and supply chain? Visit the Procurious Group for Big Ideas and tell us what you think – we’d love to use some of these to quiz our experts later this week.

Meanwhile, here are the other stories making headlines this week.

US Defense sustainability embrace a goldmine for Aussie innovators

  • The US Department of Defense’s multi-billion-dollar Net Zero Fund offers a huge potential market for Australian energy efficiency and sustainability companies.

  • Net Zero is a significant undertaking by US Defense to, in effect, green the military and supply chains. It aims to bring civilian sustainability measures into the defence arena and as the Defense literature states this can be done “while also maximising operational capability, resource and availability and wellbeing”. The funds being made available for Net Zero are therefore to be allocated to improving not just the energy usage of the US military, but also to retrofitting a potential 200,000 installations globally in an environmentally sustainable manner. The value of the installations alone is put at a conservative US$141 billion.
  • This presents a massive potential market for Australian applied research and Australian companies to offer environmentally sustainable solutions and energy efficiency to the US defence industry and the workshops aim to facilitate such contracts…

Read more at The Fifth Estate

Apple Watch: supply chain strain is the new norm

  • This week sees the launch of the Apple Watch. However, with rumours of 1 million pre-orders in one day in the US alone and the firm now pushing estimated delivery times for its product into June, speculation is rife that its supply chain may not be able to keep up with demand.
  • This type of speculation ahead of a big launch is nothing new. Recently Samsung was forced to admit that it may be unable to fulfil the 20 million pre-orders received for the new Galaxy S6 and S6 Edge.
  • Reports indicate that shipping of the product started in the US a week ahead of the April 24 launch date. It is also likely that the company’s procurement leaders have taken the required steps to achieve supply chain agility and where possible, spread risk across multiple suppliers.
  • This ‘supply chain strain’ has become the new norm in the consumer- driven world of high-tech gadgetry, where all eyes are on the newest and most innovative devices. For some companies, the struggle to meet demand is regarded as an endorsement of a product’s popularity. In fact, from a reputational perspective, a stock surplus would probably be more damaging to the company’s brand, than a supply shortage.

Read more at The Telegraph

Could the Groceries Code Adjudicator increased powers change procurement?

  • Founded in 2013, the Groceries Code Adjudicator (GCA) is a supermarket watchdog set up to regulate the relationship between food retailers and their suppliers. Its intention is to ensure the fair treatment of suppliers to reduce their exploitation.
  • We were met with news earlier this year that Tesco is facing a formal investigation by the GCA, after suspicion arose that it breached regulations on supplier contracts. After Tesco overstated its profits, the GCA looked into the supermarket chain and found ‘reasonable suspicion’ that it had breached the code of practice for grocers. It’s not just retailers that have shown unethical treatment of suppliers: world-famous food brand Heinz has come under fire for reportedly doubling the length of time it takes to pay suppliers.
  • The GCA has been granted increased power through new legislation and now has the power to fine retailers up to 1 per cent of its annual UK turnover. That means that the GCA could sting Tesco with fines of up to £400 million. Suppliers may soon enjoy a more equal relationship with retailers and the tough terms that they have previously had to cope with could ease. Food retailers may need to modify how they operate to ensure compliance and the procurement process could well be among these changes.

Read more on Supply Chain Digital

Top-performing supply chains: Pharmaceutical companies

  • Supply Chain Insights studied balance sheet patterns for over 2,000 public companies and shared those results with over 150 executive teams.
  • Progress in driving supply chain excellence in this sector is stalled. The reason? With a growth agenda and intense investment in research and development (R&D), growing regulation, and the building of global capabilities, the last decade has been a time of change for the global pharmaceutical companies. Their progress has not been equal to that in the consumer goods or food and beverage industries. The many mergers and acquisitions among companies in this category have also slowed progress in achieving supply chain excellence.
  • With a focus on both performance and improvement, which company did best? In the pharmaceutical industry, it is tough to judge which company is the leader—that is, who has the best metrics. The company posting the best performance in the portfolio of metrics is AstraZeneca; however, the company is not improving (as measured by the Supply Chain Index for the two periods studied). The companies making the greatest improvement are Biogen Idec and Novo Nordisk. Moreover, most companies in this sector are making progress on individual metrics, but not on the entire portfolio.

Supply Chain Insights: Best pharma companies

Read more on Supply Chain Insights

What are our procurement ‘blind spots’? Register for the Big Ideas Summit and contribute to the discussion with 40 influential thought-leaders and our 5000+ strong Procurious community.

How much are you worth? Average UK procurement salary on the rise

According to The CIPS/Hays Salary Guide and Procurement Insights Report 2015 published last week, the average salary for all UK procurement and supply chain professionals has increased again, and by more than the national average. But what impact will this have in the ‘War for Talent’?

How much are you really worth?

The annual survey, involving more than 3000 procurement and supply chain professionals, looks at salaries and rewards across the profession. In 2015, it found that the average pay award in procurement was 2.5 per cent, considerably higher than the national average of 1.7 per cent.

Top Salaries, No Equality

In real terms, what this means is an average salary for procurement and supply chain professionals of £41,661. When looking at the individual job roles, the average salaries are now:

  • Procurement Director – just over £89,000
  • Head of Procurement – £64,000
  • Category Manager – £42,000
  • Senior Buyer – £35,000
  • Buyer – £27,000

Although salaries are on the increase, there is still a lack of equality between men and women in the profession. At all levels apart from tactical roles, salaries for men were higher than those for women, with the greatest inequality at the advanced professional level, where the difference was as much as £10,300.

The salary also found that professionals who held MCIPS accreditation earned on average 23 per cent more than their peers without the qualification.

Junior Roles on the Rise

What might be surprising to many people is that the biggest annual increase was seen in junior procurement roles. Assistant Buyers gained on average a 4.2 per cent increase in their salaries, while Procurement Directors reported only a 3.3 per cent increase.

The rise in the wages of junior roles highlights an important issue for procurement, even in light of it being one of the fastest increasing professions in the world. A lack of professionals starting in the junior roles means that organisations now have to work harder to attract and retain their employees.

The War for Talent

The ‘War for Talent’, as coined by McKinsey in the 1990s, is still firmly in place in the procurement profession. The number of procurement jobs available has increased significantly, with Hays Recruitment seeing a 40 per cent increase this year alone.

This increase has left many employers struggling to find the right, skilled employees to fill these roles. Of the number of avenues open to organisations when looking to attract new talent to their organisations, social media is one of the most powerful.

Platforms like Twitter, LinkedIn and Procurious can help employers check out potential employees, get to know them in more detail and also be noticed as an ‘employer of choice’ in the industry. But social media is by no means the silver bullet for procurement recruitment. Without new ideas, the work that procurement has done to get to the executive table may be undermined.

‘People’ is one of the key topics at the Procurious Big Ideas Summit on April 30th. Procurious has gathered 40+ of the biggest influencers in procurement and will be getting their ideas on the future for ‘people’ in procurement (among a host of other topics). Join in, ask questions, watch exclusive video content and contribute to all the discussions by here

In the meantime, here are some of the top stories making the headlines in procurement this week.

Exploitative fashion retailers named and shamed

  • Australian fashion companies lack transparency around their supply chain or do not have full knowledge of where their raw materials are being sourced from, leaving workers including children at risk of exploitation, an audit has found.
  • The Australian Fashion Report 2015, launched by  international development organisations Baptist World Aid and Not For Sale, which aims to empower consumers with the knowledge needed to purchase fashion ethically – this year assessed the ethical practices of 219 clothing brands — and found that popular retailers including Rockmans and Lowes are some of the worst offenders.
  • Many brands now produce in Bangladesh, which in recent years has become wildly popular for ready-made garment suppliers and where the wage is approximately $39 a month, 75 per cent cheaper than China.
  • Corporate governance researcher with the University of Technology in Sydney and a researcher with the thinktank Catalyst Australia, Martijn Boersma, said: “For Australia, the bulk of our imports come from the Asia-Pacific region where it is estimated 78 million children are involved in child labour. The deeper supply chains are, the more difficult it is for them to be monitored.”

Read more at Mamamia and The Guardian

Hilton hotels to improve animal welfare in supply chain

  • Hilton Worldwide is to implement new measures to improve the welfare of animals in its global food supply chain. The hospitality company said it would begin to eliminate the use of cages for egg-laying chickens and gestation crates for breeding pigs.
  • All hotels in the Hilton Hotels & Resorts, Waldorf Astoria Hotels & Resorts, Conrad Hotels & Resorts, Canopy by Hilton and DoubleTree by Hilton brands, will ensure that chickens are not confined in cages by 31 December 2017. By the end of the year after that, all pork products will have to be come from suppliers that house breeding pigs in groups, rather than gestation crates.
  • The changes, announced in conjunction with the Humane Society of the United States, will initially apply in 19 countries and will be adopted in other markets as supply becomes available. Jennifer Silberman, vice president, corporate responsibility for Hilton Worldwide,  said the company was committed to addressing key issues throughout its business and supply chain.

Read more at Supply Management

Internet of Things will deliver US$1.9 trillion boost

  • DHL and Cisco have jointly released a new Trend Report focused on the Internet of Things (IoT) at the DHL Global Technology Conference in Dubai. DHL and Cisco Consulting Services are also collaborating on a joint IoT innovation project that will improve decision-making in warehouse operations with near real-time data analytics based on Wi-Fi connected devices.
  • Ken Allen, CEO DHL Express and board sponsor technology, said: “At Deutsche Post DHL Group we have a deeply held belief in the positive powers of global trade. There is huge potential for countries to further increase their connectedness and prosper through trade, integration and technology. We believe the Internet of Things will be a primary enabler of this transformation.”
  • The Trend Report, which estimates that there will be 50 billion devices connected to the Internet by 2020 compared to 15 billion, looks at the potential impact this technological revolution will have on business.
  • The value at stake, combination of increased revenues and lower costs that is created or will migrate among companies and industries when new connections are made, reveals the huge potential when the Internet and networks expand their connections to warehousing, freight transportation and other elements of the supply chain.

Read more at m2mnow

‘SWL Australia’ opens for business

  • Science Warehouse is a leading provider of on-demand procurement and managed catalogue solutions that deliver purchasing efficiencies and control, spend visibility and drive savings. The Software-as-a-Service (SaaS) solution boasts dozens of clients across the UK public sector including higher education and the NHS, as well as corporate clients in the construction sector.
  • During the past 2 years it’s been developing a presence in Australia, working in partnership with the leading Australian spend analytics provider, Purchasing Index ANZ.  The Charles Perkins Centre (CPC) at the University of Sydney has been live with the Science Warehouse solution since 2014 and has already seen CPC users buying from over 2 million live products.
  • In response to very positive feedback from other potential Australian customers, a new subsidiary (SWL Australia) has been formed with offices in Melbourne.
  • Richard Shine, Science Warehouse Sales Director said – “This is a fantastic opportunity for Science Warehouse to really showcase a market-leading solution.”

Cabinet Office procurement plans almost “perverse” and “draconian”

  • Reaction has been swift to a reported move by the Cabinet Office to include two subtle but radical provisions in the government’s Small Business, Enterprise and Employment Act which could shake-up local government procurement.
  • The Act, which became law last month, is said to contain two clauses which appear to give the Cabinet Office authority to investigate and challenge local authority procurements. The majority of the Act does not affect procurement, but two clauses appear to have relevance.
  • Responding to the bill’s provisions, the ICT leader at one London local authority said, “At a time when we’re looking to devolve spending decisions and empower local communities the Cabinet Office have introduced provisions which could, somewhat perversely, do exactly the opposite. Not sure why these powers were introduced.”
  • The National Outsourcing Association (NOA) has described the proposals as “almost draconian.” Kerry Hallard, chief executive of the NOA said, “Now that the government has the ability to implement measures relating to public procurement as it sees fit, it is imperative that this new power is not used callously.

Read more at Government Computing

Slavery in Supply Chains – A Modern Day Risk

The case of the 550 fishermen freed from slavery conditions in Indonesia (as reported on Procurious), highlights a wider issue of slavery in supply chains across the globe.

Modern slave trade in fast fashion and electronics

We might think that slavery is a thing of the past, or limited to the developing world, but increasingly that’s not the case. A few weeks back, Procurious highlighted the issue of apparent ‘sweatshop’ conditions here in the UK in the fashion industry, where workers with poor English skills are being paid less than half of the minimum wage to produce garments for high street stores.

Not many people realise that the clothes they wear, the mobile phone they use and the food they eat can often come from supply chains where there are conditions of slavery or forced labour. And as demand for products grows, along with the expectation of paying lower prices on the high street, these incidence of these conditions is increasing.

Slavery Bill

The issue of modern day slavery is being given focus at the highest level of government in the UK. The Modern Day Slavery Bill is currently being debated in the UK parliament and is aimed at forcing large companies to disclose the actions they have taken to ensure that their supply chains are free from slavery, trafficking and child and forced labour.

However, there are criticisms that the bill doesn’t cover everything it needs to. According to an article in The Guardian newspaper at the end of March, the current wording of the bill only requires the large companies to report on supply chains which have parts in the UK, or where products are brought back to the UK for sale.

This omission potentially renders the bill powerless to stop UK-based companies profiting from slavery in overseas supply chains, particularly where there are wholly owned subsidiaries in other countries. There are also criticisms over a lack of consistency in reporting, as firms will not be told what to include, as well as how this law would be enforced.

Individual Responsibility

While it will be interesting to watch the debate on the new bill in the UK, particularly as the General Election approaches, there is also an argument for individual and organisational responsibility.

According to CIPS, businesses can take three basic actions to combat slavery in their supply chains:

  1. Understanding and commitment – know what modern day slavery is and commit to taking a proactive role to end it.
  2. Leadership on auditing – engage in rigorous audits of supply chains.
  3. Accountability – be accountable for business relationships and work to eliminate vulnerabilities in supply chains.

As Procurement professionals, we have the ability to influence what is happening in this particular area through our interactions with supply chains and second and third tier suppliers.

  • Putting into place POLICIES to prevent, detect and eradicate modern slavery within their own operations
  • Establishing PROCESSES to identify vulnerabilities
  • PLANNING for situations where corrective action is needed

Supply Chain Risk

So why are we focusing on this? At the Big Ideas Summit on April 30, some of the leading procurement influencers will be discussing Risk and what the ‘blind spots’ are for the profession. In looking ahead towards 2030 and beyond, it’s worth considering that that modern day slavery could still be something that is present in supply chains and something that organisations will have to deal with.

Is this a risk that can be mitigated? Can it be passed on to someone else? From our point of view as procurement professionals, the answer to both of these questions has to be ‘no’. The only way to look at and tackle a risk like slavery is to meet it head on. And this can come down to taking responsibility at a personal and organisational level.

Next time you’re in the shops, think about where that t-shirt was made or where that coffee came from. When you’re dealing with suppliers, do you know what their suppliers are doing? What are the policies you have in place and are you collaborating with suppliers closely enough?

This won’t be solved overnight, but if each individual takes responsibility, then it can be beaten in time.

Have you got any thoughts on supply chain risk and modern day slavery? Why not pose a question to our experts at the Big Ideas Summit on this and see what they think? Get involved at www.bigideassummit.com, join the Procurious Group, or add to the conversation on social media using the hashtag #BigIdeas2015.

In the meantime, here are some of the top stories making the headlines in procurement this week.

Fashion brands make positive strides towards detoxing supply chains 

  • In an update of its Detox Catwalk campaign, which charts the progress by 18 companies, Greenpeace East Asia has listed their achievements and commitments over the past four years.
  • The companies represent 10 per cent of the $1.7 trillion dollar apparel and footwear industry, the environmental campaign group said. Brands including Adidas, Benetton and Limited Brands, the parent company of Victoria’s Secret, were praised for ensuring data on hazardous chemicals in their supply chains is published on the global online platform IPE.
  • C&A and H&M are among brands that have eliminated PFCs, while Levi Strauss, Mango, and Marks and Spencer are among fashion companies working towards the elimination of APEOs and phthalates in their supply chain.
  • However, Nike and Li-Ning were criticised for not doing enough to ‘detox’.

Read more at Supply Management

Is this the biggest threat to Alibaba?

  • JD.com, China’s largest online direct sales company, is set to be the new challenger to ecommerce giant Alibaba. It has announced UNIQLO as the newest international brand to partner with the company by opening a flagship store on its marketplace platform, enhancing its reputation further within the industry.
  • The new UNIQLO flagship store is part of JD.com’s industry-leading marketplace, which is increasingly becoming the platform of choice for both domestic and internationally renowned brands and manufacturers seeking to reach the company’s massive base of active Chinese shoppers. The addition of UNIQLO adds to JD.com’s growing reputation as the go-to destination for shoppers looking for authentic, high-quality goods in a broad and growing range of categories.
  • UNIQLO will also become the first international clothing brand on JD.com’s marketplace platform to warehouse its merchandise in the company’s facilities. By using JD.com’s complete logistics solution, UNIQLO is enabling customers in eligible areas to take advantage of JD.com’s unparalleled same- and next-day delivery service.
  • JD.com is the largest online direct sales company in China. The company operates 7 fulfilment centres and a total of 123 warehouses in 40 cities, and in total 3,210 delivery stations and pickup stations in 1,862 counties and districts across China, staffed by its own employees. The Company provided same-day delivery in 134 counties and districts under its 211 program and next-day delivery in another 866 counties and districts across China as of December 31, 2014.

Read more at Supply Chain Digital

Bulgaria among Top 10 in EU by Transparency in Public Procurement

  • Bulgaria is among the top 10 in the EU by transparency in public procurement and among the top 5 by electronization of the process, according to Economy Minister Bozhidar Lukarski.
  • Citing statistics of the Sofia-based office of the European Commission, Lukarski noted that Bulgaria was among the top 10 in the EU by transparency in public procurement and among the top 5 by electronization of the process.
  • Lukarski vowed that e-public procurement would be universally available in the EU by 2020.
  • He expressed satisfaction that the European Commission had backed the attempts of Bulgaria to boost the development of the country’s northwestern region, the poorest region in the EU.

Read more at Novinite.com

Basware buys UK’s e-procurement network Procserve

  • Basware, a provider of P2P, e-invoicing and network connectivity solutions (and now trade financing as well), said the deal with public sector e-procurement vendor Procserve “significantly strengthens Basware’s position in the public sector, combining Procserve’s UK government experience with Basware’s established global expertise in purchase-to-pay and e-invoicing.”
  • Spend Matters offered their thoughts on the acquisition, saying: ‘It is smart for Basware to use its appreciating currency and balance sheet to acquire volume, but also to purchase technology that could potentially be used elsewhere in its solution portfolio (outside of just targeted efforts in the UK public sector).
  • ‘On a comparative basis, Basware has continued to struggle to date on the e-procurement side of P2P, and while Procserve has focused on the UK public sector, there might be elements of the solution that architecturally and on the product-level could improve Basware’s overall capabilities to more effectively compete against providers like Coupa, Ariba, SAP and Oracle on a global footing for integrated P2P deals.’

Read more on Spend Matters UK

4 technology trends we’ll tackle at Big Ideas 2015

4 technology trends for 2015

New innovations in technology have the potential to transform supply chain management, whether that be through streamlining inventory, improving accountability, or providing your existing operations with a shot in the arm… But it’s a tough job to constantly stay ahead of the curve – how are you supposed to know if the trend you’re picking is going to be a winner, and not just some flash-in-pan?

At the Procurious Big Ideas Summit on April 30, Oracle’s Tim Hughes (along with other industry experts) will explain the current state of play and give Procurious’ digital delegates an insight on what’s to come next.

Today we’re climbing into our driverless cars and talking all-things Tech. Here are four big tech trends that have the potential to drastically change the face of procurement forever.

  1. Big Data

We are a society of data producers and like it or not, our entire digital activity is being carefully monitored and recorded. In 2013 Facebook was recording in excess of 4.5 billion ‘likes’ everyday. That number has likely skyrocketed since. Interactions like this and billions of others across the globe are being captured, stored and utilised to build a more accurate picture of how we behave and interact with our environment. So far, so Orwellian. Big Brother is always watching.

But we shouldn’t fear this omnipresence… Big data has already been utilised successfully to track the spread of disease, predict election results and assist in emergency management situations. For procurement professionals big data can be harnessed to forecast market trends, understand supplier risk, identify new savings, create collaboration with suppliers and understand how environmental factors could impact supply.

  1. Apps

Despite early adopters integrating mobile technologies into their business processes over the last five years – the mobile business sector is only just starting to find it feet. Apps have surged to prominence in recent years with mobile web users spending a staggering 86 per cent of their browsing time in apps, opposed to only 14 per cent in traditional mobile web browsers. With the gap between these statistics widening year upon year, the age of the app is well and truly upon us.

We’ve become so accustomed to checking our phone in our personal lives; it should come as no surprise that more importance is being placed on the mobile in our working lives too.

As workplace apps reach new levels of capability and maturity we can expect to see procurement teams leveraging mobile devices to better streamline tried and tested (but sometimes archaic) processes. How about approving purchase orders for offsite staff on the fly? Utilising cameras for receipt and barcode scanning in warehouses? Generating real-time reports on the go, or utilising GPS positioning to understand precisely where is inventory is flowing? These suggestions are only the tip of the iceberg…

  1. The Sharing Economy

Thanks to companies like Airbnb, Uber, Hassle and Netflix we are seeing a fundamental shift in the way consumers pay for products. No longer do we ‘buy and own’ products – instead we’re borrowing and renting with a much higher frequency.

These changes in the way we consume films, taxis and hotel rooms are being reflected in the corporate world as more firms look to leverage ‘pay-as-you-go’ ownership models. This is a structural change in purchasing habits that procurement managers will likely have to manage more frequently in the future. We’ve already seen an emergence in the IT procurement space with the prominence of cloud computing and software as services, the big question is – which spend categories can we turn our eye to next?

  1. Social Media

Clearly, this point is close to our heart at Procurious. Social media has well and truly embedded itself in our personal lives and its importance is starting to be realised in our professional lives as well.

In 2014 the number of Internet users worldwide stood at a colossal 2.4 billion. 2 billion of those were also frequent social media users.

On Twitter more than 500 million tweets are sent in a single 24-hour period, meanwhile two people sign-up to LinkedIn every second, and 50,000 job applications are submitted over the course of a day. Every one of these statistics is astonishing in isolation, but it’s not just the big boys that are dominating our social habits – specialist vertical networks such as Spiceworks (for IT pros), OilPro (for oil and gas professionals), and Procurious are starting to find their own followings.

In-fact many of the large ERP’s (SAP, Oracle, IBM Emptoris etc.) have already integrated social media technology into their standard offerings. The strategic importance of this technology is illustrated by SAP’s acquisition of Ariba and recently Fieldglass.

While you often think of social media as a place for just sharing compelling content, short and snappy anecdotes, and authentic stories, it’s actually much more than that… Procurement and supply chain professionals are already well accustomed to working globally, often in a virtual team environment with cross-cultural suppliers and stakeholders.  Social media actually makes this process easier by facilitating networking, strengthening the sense of personal brand, and providing the collaborative tools to facilitate more effective work. Along with ongoing advancements in Cloud technology, social media certainly has a very important role to play in the future days of procurement.

What’s your Big Idea? On 30 April, Procurious will host a world-first cost leadership think-tank at The Soho Hotel in London that will be amplified to our 4500 members across 100 countries through a mixture of videos, interviews, social media and feature-writing. Discover more at www.bigideassummit.com, join our Procurious group, and Tweet your Big Idea using #BigIdeas2015

The Easter Supply Chain – Optimisation and Collaboration

Did you over-indulge at the weekend? Did all the kids’ Easter eggs make it to the Sunday morning Easter Egg Hunt? Whether your Easter delicacy of choice is the humble egg, sweets like jelly beans and marshmallows, or something more like a Spanish torrija, you may not realise the complicated supply chain that is required to help the Easter Bunny complete his deliveries.

easter-eggs-637110_1280

 

In the UK, Easter sales of chocolate make up 10% of the figures for the entire year. According to the National Confectioners’ Association in the USA, around 70% of the Easter sweets purchased are chocolate, which works out to a whopping $2.1 billion spend.

And it’s not just the confectionary market that will see an increase in sales over the Easter period. According to a survey by Evans Distribution Systems, $2.9 billion will be spent on clothing and fashion, while a combined $2.7 billion will be spent on flowers, greetings cards and decorations.

Delivering all this chocolate, sweets and other items to stores requires a mammoth effort from logistics organisations around the world. Shipping efficiency, customer location, order quantities and supply chain management all have to be reviewed in order to keep up with the demand.

In the USA, Hersheys opted to optimise their supply chain around the elements of customer geographical location and grouping stock-keeping units with product groups. It is estimated that by doing this, and using off-the-shelf software, the organisation has saved itself in excess of $15 million per year.

Just Born, a confectionary manufacturer who are responsible for America’s favourite non-chocolate treat, the Peep, changed their supply chain strategy in order to cope with the huge demand for their products at Easter.

The organisation now uses distribution centres and 3PL to break bulk orders for more efficient delivery to retailers. Just Born also shares these centres with other organisations, with this collaboration further reducing the costs associated with deliveries.

An increasing use of technology for inventory management and planning is making life easier for organisations too. Barcodes can be used to manage inventories more efficiently, while also allowing for real-time tracking of stock at both distribution centres and retail outlets.

Further advancements in technologies such as ERP and MRP systems will allow organisations to further increase efficiencies, while increased collaboration will benefit not only the whole industry, but also the consumer.

So just remember, the next time you crack open that chocolate egg, there’s more than a simple process required to get it from manufacturer to shelf (and that’s before the Easter Bunny gets involved!).

If you have any ideas about the technologies being used in procurement and supply chain, or any advancements that could make a difference in the profession, let us know and we’ll add it to the discussion at the Big Ideas Summit. Or why not tell us by joining our Procurious group, or Tweeting your Big Idea using #BigIdeas2015.

Read on for the big procurement and supply chain headlines making the news this week.

Jamaican Government to spend $51m on eProcurement

  • The money will be spent on its electronic procurement system to strengthen its public procurement for purchasing and tendering agencies and suppliers.
  • The purchase will enable all of these activities to be automated and integrated in a single portal.
  • Just over $31 million will go towards the hosting server and electronic procurement system, scheduled to be in place by July.
  • Other amounts include $1.47 million to be set aside for training, $575,000 for a final project evaluation and a project audit costing of just over $1 million.

Read more at Supply Management

Advanced announces place on NHS SBS procurement framework

  • Healthcare software provider, Advanced Health & Care, has been named as an approved supplier on the NHS Shared Business Services (NHS SBS) Healthcare Clinical Information Systems framework.
  • Advanced is one of 26 suppliers to have been chosen for the framework
  • The new framework, which has been divided into six lots, is valued at up to £1.25 billion.
  • It will operate for four years with a potential two-year extension and is free for any NHS organisation to access.
  • The aim is to offer providers a more cost effective means of procurement when tendering for healthcare systems.

Read more at Shared Services Link

Businessfriend – a new way for execs to do business

  • Businessfriend was one of the new technologies that had been launched at the International Consumer Electronics Show in Las Vegas
  • The app allows multiple networks and platforms to be pulled together into one place, decreasing the time taken to manage all of them
  • It has already been described as “Facebook meets LinkedIn, with a little of Office365 sprinkled in there…”
  • The programme boasts up to 2 gigabytes of free cloud storage, video chat, instant messaging, as well as adaptability to contract management systems that can be linked up into the functionality

Read on at Supply Chain Digital

Companies focusing on supply chain innovations in food and beverage industry

  • Organisations are looking to their supply chains in order to find success in food and beverage
  • Mondelez, Diageo and Nestle are just some of the big names looking at their practices to find new innovations
  • These include reduction of packaging, commitment to sustainability and reducing waste
  • It is hoped that more will follow suit when the savings from these activities become clear

Find out more at fooddive.com

Why we’re talking managing talent at Big Ideas 2015

4 ways of attracting new talent

On 30 April Procurious is gathering the Procurement world’s most influential minds for a discussion on the future of the function. The Big Ideas Summit will take place physically in London, but will be made available to attend digitally across the world through Procurious.com.

We’ve identified risk, technology and talent as three areas that will play a critical importance in the future development of function. In order to address these important areas and provide some background into the discussions and debates that will take place on the day of the summit, we have dedicated a series of blog posts on these topics. Keep your eyes peeled for our overview of technology and risk, but…

Today we are talking talent

In this piece we’ll be highlighting some of the high level trends that are impacting the way procurement teams manage talent. Be sure to stay tuned to Procurious as we’ll be deep diving into each of these topics over the coming weeks.

Hiring is up!

According to LinkedIn (which is quickly becoming the world’s largest recruitment organisation) firms will be looking to hiring more people in 2015, and will have a higher budget to do so. A survey run by the social network suggested that 63 per cent of recruiters will have a higher hiring volume in 2015 than in 2014, and that 46 per cent of recruiters will have a higher budget over the coming year (up from 28 per cent in 2013).

The rise of Intrapreneurship

Intrapreneurship is a term popularised by Howard Edward Haller in in the late 70’s. So, while the concept is not new, it’s certainly seen a revival in recent years.

The practice of intrapreneurship involves bringing an entrepreneur-like mind set and business practices to a larger, more established organisation. The rise in intrapreneurship has been attributed to increased competition in traditional markets from smaller more agile organisations. Larger organisations are realising that in order to remain competitive they need to innovate… Enter the Intrapreneurs.

The war for talent

Would it surprise you to learn that procurement is one of the fastest-growing professions in the world? Our increasing demand for talented professionals is outstripping supply. Procurement also competes for talent. We compete with other functions and other business. If you don’t have a sound talent acquisition and retention strategy you’ll be left behind.

As a consequence we have seen salary inflation and a lot of bad hires. It is a candidate-centric market.

One area that procurement teams may be missing a beat on is the art of attracting passive talent. LinkedIn suggests that while 75 per cent of potential candidates are passive in their job search (meaning that you have to go and find them) only 61 per cent of organisations have a strategy for attracting passive candidates.

Social Media

Discussion at the Big Ideas Summit will also focus around the critical and growing role that social media is playing in attracting and retaining top talent.

Social media can be utilised by firms to not only list job postings, but also to represent a business’s mission and value (which can be vital to attracting talent) and to evaluate the cultural fit of potential candidates.

The labour market is tightening, which means the need to engage, retain, and up skill your existing resources is growing.  The participatory and collaborative nature of social media is inherently suited to peer-to-peer learning which is both highly effective (learn real life lessons from subject matter experts), accessible (it can be accessed across multiple devices at a time convenient to the learner) and extremely cost effective (Procurious, for example, is currently offering the entire suite of online learning modules free to members for a limited time).

Social media also offers candidates a unique opportunity to elevate their personal brand as well as the profession. As a platform it is the perfect tool to share knowledge, ask questions, engage in discussion and spread influence.

As we get closer to Big Ideas Summit 2015 we’ll explain how you can use social media to both attract new talent, and up your own networking game.

What’s your Big Idea? Discover more at www.bigideassummit.com, join our Procurious group, and Tweet your Big Idea using #BigIdeas2015

Carnival Corp announces new CPO

Carnival Corp announces new CPO

The world’s largest cruise company has announced that Julia M. Brown will become the company’s CPO. The role of CPO is a newly created one for Carnival and it’s hoped that Brown will be able to strengthen strategic partnerships with the company’s network of suppliers around the world.

Brown will be tasked with improving efficiencies and driving strategic sourcing across the company’s nine brands, which are spread across the globe. It’s thought that combining the purchasing power of these brands will lead to significant costs and efficiency savings.

On the announcement of the new CPO Arnold Donald, president & CEO for Carnival Corporation & plc said: “We are excited to have Julia join us as part of our global management team and take on this new role that will be critical in helping us further leverage our scale, accelerating our drive to double-digit returns on invested capital.”

Brown comes into the position with a solid background in procurement having previously held the role of CPO at Mondelez and Kraft, as well as strategic roles with Diageo, Gillette and Clorox.

Speaking on the need for the new role of CPO Carnival Corporation’s Chief Operations Officer Alan Buckelew said: “As we have become increasingly global, the role of coordinating our procurement and supply chains has become more and more complex. At the same time, our global sourcing function creates opportunities for us to improve guest experiences onboard our ships and collaborate across our brands to operate more efficiently. Julia brings a depth of leadership and experience that will help us capitalise on those opportunities, as we build on the success our teams have already achieved.”

What’s the real impact of the UK 2015 budget on procurement?

Last Thursday, UK Chancellor George Osborne outlined his fifth and final budget for the current parliament. Many analysts viewed this budget as pivotal as it helps to highlight the state of the economy in the run up to the General Election in May.

George Osbourne delivering the UK Budget

For many others, however, the pre-election budget amounts to no more than political positioning and posturing – a chance to take a free swing at opposition policy. The policies are subject to the outcome of the election and many are never implemented.

However, taking the Budget at face value and assuming that some of these policies will be implemented, what does it mean for procurement and supply chains? Procurious aims to talk you through some of the detail here.

The Budget – Key Points

First we need to summarise a selection of the key announcements. For a more detailed run-down, click here.

  • UK economy grew 2.6 per cent in 2014, faster than any other advanced economy
  • Record employment in the UK, with jobless rate to fall to 5.3 per cent this year
  • Trade deficit figures “the best for 15 years”
  • Inflation projected to fall to 0.2 per cent in 2015
  • Borrowing set to fall from £97.5bn to £12.8bn in 2017-8
  • Beer and cider duty cut; spirits and petrol duty both frozen
  • The tax-free personal allowance to rise to £11,000 in 2017-8

From a business point of view, the news somewhat mixed.

  • Tax on “diverted profits” to come into effect next month
  • Annual bank levy to rise to 0.21 per cent, raising an extra £900m
  • Supplementary charge on North Sea oil producers to be cut from 30 per cent to 20 per cent while petroleum revenue tax to fall from 50 per cent to 35 per cent.
  • New tax allowance to encourage investment in North Sea
  • Review of business rates but no details

Behind the Figures

Experts were largely positive in response. James Sproule, Chief Economist at the Institute of Directors, stated that although the economic recovery was taking longer than anticipated, “the immediate news was encouraging with employment rising to record levels”.

Also, despite concerns about the UK’s debt position, Sproule said, “the degree to which government and businesses are beginning to pay down their debt is an encouraging trend”.

However, it would be naïve to assume that it was all good news for the UK. Despite a more positive outlook and plans to end the public spending ‘squeeze’ a year earlier than planned, an additional £30bn in savings still needs to be found over the course of the next parliament. This means austerity measures and spending cuts will have to continue.

From a business point of view, this mean less business in the private sector, tighter budgets and the requirement to look further afield for new opportunities.

George Osborne pointed towards this when highlighting China as a major export market in the coming years. With an export target of £1 trillion by 2020, an increase in funding to the UKTI is a good start. But Allie Renison, Head of EU and Trade Policy at IoD, argues that a focus on one economy is not necessarily a good idea.

“Focusing the extra funds on China raises questions about the wisdom of prioritising one geographical market over another. The Chinese economy is changing, and consumer preferences are shifting with it. We have not yet seen the expected boom in demand for services materialise, at least not in the financial and associated business services sector.”

Impact on Procurement and Supply Chains

What does this all mean for procurement and supply chain in the long run?

Mentions of procurement were mostly limited to the public sector and increasing efficiency requirements. Without any details provided, there was talk of cuts to NHS procurement, something that is currently under examination by Lord Carter, the chair of the NHS procurement and efficiency board.

The long-term future may also hold more autonomy on spend in public sector procurement. Councils in Greater Manchester are being given more administrative power over income, with many seeing this as a test case for more regional powers.

The freeze on fuel duty will provide relief for logistics organisations too, as well as removing cost from many supply chains. This should provide more opportunity for supply chains to focus on increasing efficiency and diversity, assessing appropriate routes for both import and export, as well as where further improvements can be made.

The government has been challenged to help supply chains more when it comes to identification of these opportunities. Allie Renison argues “much more emphasis is needed on specific sector supply chains, to help identify where gaps exist, both in terms of research and practical support.”

In the coming weeks, we will return to this debate as policy announcements are made by the leading political parties. Procurious will look to assess these policies, their impact on procurement and what the overall impact of the General Election will be.

In the meantime, here are some of the other major procurement stories making the news this week.

Supply chain changes could cut food waste

  • Changes to the supply chain could save millions in food waste by increasing the life of products, according to a study. WRAP estimated an increase of one day on product life across a range of foods could prevent around 250,000 tonnes of food waste each year.
  • The study, Reducing food waste by extending product life, examines how ‘use-by’ and ‘best before’ dates are set by food manufacturers, brands and retailers, for foods that typically have a high level of waste. They included sliced ham, potatoes, apples, minced beef, juice, chilled pizza/chilled ready meals, bread, chicken breasts, bagged salad and milk.
  • It estimated the potential overall tonnage and financial savings by scaling-up data from these products to all food groceries.
  • It also urged manufacturers and retailers to challenge the safety quality ‘buffers’ to find opportunities to extend product life. It calls for a standardised approach to ‘open life’ guidance – the time food is deemed safe or retains its best quality once opened – and that it should be used only for food safety rather than quality.

Read more at Supply Management

OPEC won’t take fall for low oil prices

  • Oil producers outside OPEC must cooperate to boost falling crude prices as the cartel refuses to take responsibility alone, the Saudi oil minister has said. “We refuse to take responsibility alone because (OPEC) produces 30 per cent of market output and 70 per cent comes from outside,” Ali al-Naimi said in remarks carried Monday by the Saudi Press Agency (SPA).
  • Crude prices slumped by about 60 per cent between June and February, weighed down by a glut of global supplies and concerns about stalling demand. The slide was exacerbated in November when Organization of the Petroleum Exporting Countries (OPEC) refused to cut production to rescue falling prices, saying it wanted to maintain its market share.
  • The 12-member group, led by top producer Saudi Arabia, pumps around a third of the world’s oil but other major producers, such as Russia, are not tied by its decisions. Asked whether OPEC would be willing to work with non-members, Naimi pointed to the crash of 1998 when the cartel cooperated with other producers to cut output and support oil prices.

Read more at Industry Week

PC supply chain has weak order visibility

  • With Intel having recently lowered its revenue forecast for the first quarter, sources from the upstream supply chain have pointed out that channel demand remains weak and order visibility until the third quarter is still unclear. Despite the fact that Microsoft is planning to release Windows 10 in August and offer free upgrades, the sources are concerned that the move may not boost PC sales much in the third quarter.
  • Demand for PCs has been weak in the first quarter as related players have not been able to come up with attractive new features for their products, causing a slow digestion of channel inventory and forcing Intel to reduce its financial forecasts.
  • Although PC players are expected to reduce their inventories to safe levels by the second quarter, weak demand from the channel, especially in Europe is expected to continue impacting PC sales in the quarter

Read more at Digitimes

UK government publishes details of new public sector procurement apprenticeship

  • The UK government has published details of a new public sector procurement apprenticeship. The two-year apprenticeship standard covers “all three aspects of the commercial life cycle: pre-procurement, sourcing and contract management”, with an assessment at the end and a requirement to achieve the CIPS Level 4 Diploma in Procurement and Supply.
  • The apprenticeship covers early market engagement, sourcing, contract agreements, supplier management and category management. A description of the role of “public sector commercial professional” said: “In the public sector a commercial professional’s role is to support the transformation of the way that the best quality public services are delivered, while securing value for taxpayers’ money. Experience will be gained working on high-profile, high-value, high-risk projects that affect millions of people and are worth billions of pounds each year.”
  • The government said the standard was not yet ready to use but will replace current apprenticeship frameworks by 2017/18.Read more at Supply Management

How can we procure in a smarter way?

The need for smarter procurement

Procurious is in Cardiff for Procurement Week 2015. We sat in on the 4th FAPPE (Faster Adoption of Public Procurement in Europe) Meeting where the group discussed  pertinent issues that need addressing when deciding on a roadmap for smarter procurement.

We’ve taken these concerns and have chosen to present them to you in the form of an infographic.

Smarter procurement infographic
Smarter procurement infographic

FAPPE is the brainchild of Rui Patricio – the Managing Director (Procurement & Innovation Management Consulting) of Digitalflow. Digitalflow is a Portuguese boutique consulting firm that offers a full range of services to support the implementation of business-to-government processes making use of electronic platforms.