Category Archives: Procurement News

Fight Or Flight? How To React To Change

Curl up in a ball, or seize the moment – what’s the best way to move forward in a period of uncertainty and change?

One thing we know, given the past 18 months, is that dramatic political change leads to economic uncertainty. With protectionist sentiment rising, trade remaining stagnant, the US economy led by a skittish and unpredictable President, a host of unknowns around the Brexit fallout, European elections, abandoned trade deals and other shocks, it’s hard to know how to plan ahead.

Elevated uncertainty can lead organisations to perform the enterprise-level equivalent of curling up into a ball. Projects and investment plans are deferred, fewer workers are hired, risk-aversion goes through the roof, short-termism triumphs over long-term growth and earnings take a hit as consumers decrease their spending.

Three high-profile panellists debated this issue at PIVOT: The 10th Asia-Pacific CPO Forum, offering delegates some very different answers to the question of how to react to change. A consensus was reached, however, around one point – the importance of agility.

Giles Breault, Founder of The Beyond Group, shared this gem: “If you believe that necessity is the mother of invention, I’d say uncertainty is the mother of agility.”

A willingness to adapt and adjust

Agility must be encouraged not only at the process level, but at the senior and strategic level too. This means having the ability, and willingness, to change plans at a moment’s notice. Breault told the audience: “When you’re living in an uncertain environment, you need to constantly plan, revisit and do course corrections. Similarly, you need to demand of your suppliers that they’re doing the same thing.”

Does this mean long-term business plans are now unrealistic? It depends entirely on your approach. Companies that “set and forget” three, five, or even ten-year plans, and then stick doggedly to the path, will quickly discover just how rapidly those plans become obsolete.

Increasingly, best-in-class executives are those that possess a degree of flexibility in how their mind works, have a degree of empathy with their people and the market, and can remain confident in the face of ambiguity.

KPMG Australia Chairman Peter Nash said that “there are still many CEOs today who revert to rigid process and a doctrine of control in reaction to issues faced by the business. They draw the decision-making up to themselves and push down their commands. I expect in the future we’ll see a more agile form of CEO emerging.”

Breault also comments on this outdated method of reacting to change, and ties it to redundant leadership skill-sets. “Many executives are finding themselves in an uncomfortable position as they realise that the skills which landed them in their roles aren’t the skills that will keep them there. The very things they congratulated themselves on achieving won’t keep them employed.

“For example, of the fifteen major corporations we’ve talked to, a total of zero had a specific program for digitalisation. These organisations have no plan how to move ahead, which is absolutely stunning.”

Take responsibility for staying informed

Peter Nash told panel facilitator Keith Bird (MD, The Faculty) that CPOs need to take responsibility for informing themselves about changes on the horizon. “Read about the issue, talk to people in your network and find out how it will impact your business by discovering how it’s impacting other businesses. It’s important to have a high degree of personal responsibility when it comes to keeping yourself informed.”

Embrace change

Nash says organisations should make time to examine how they get things done. “Are they tied to rigid processes or to certain types of thinking, or have they moulded their organisation into something more fluid? Do they test new ideas, adapt to disruption and engage with the community? Organisations that are more adaptive will be far more successful than others.”

Looming disruption or inevitable change doesn’t have to be scary. George Boubouras, Managing Director and CIO of Contango Asset Management, had this positive message to share with Forum delegates facing change: “Challenge yourself and prepare for the exciting time ahead! Embrace the disruption with enthusiasm and look at how you can contribute to it.” 

Trailblazing CPO Commercialises Procurement

Broadspectrum CPO Crowned Asia-Pacific’s CPO of The Year

Flipping the old perception of Procurement as a back-room entity on its head, Broadspectrum CPO Kevin McCafferty has been recognised for introducing a value-based approach to procurement and dramatically transforming the function into a customer-oriented, bottom-line focused team.

McCafferty’s achievements in consistently achieving both financial and operational objectives were celebrated at last night’s CPO Forum Gala awards, hosted by leading procurement consultancy The Faculty.

Overseeing a procurement spend of $1.8 billion, Executive General Manager, Procurement Australia and New Zealand, Kevin McCafferty won the 2017 CPO of the Year award, after significantly increasing spend under management and delivering over $50 million EDITDA benefits, against an initial target of $30 million.

Broadspectrum CFO Vince Nicoletti, said: “Since joining two years ago, Kevin has made a significant difference to the procurement function within Broadspectrum. His strong transformational change leadership has seen the area move to a more strategic function within the business, which is now delivering bottom-line results and benefits.

“Most importantly, he has up-skilled and lifted capability across his team and enforced process discipline by implementing appropriate technology and system solutions.

“Kevin and team have also driven commercialisation of procurement and supply chain services into Broadspectrum’s contracts with clients.”

60 Seconds With Kevin McCafferty

Procurious managed to steal 60 seconds with CPO of the Year Winner, Kevin McCafferty, who discussed the number one skill for CPOs of the future.

CPO of Year Winner, Kevin McCafferty : “The key to our success is being recognised at the highest levels of the organisation as a team that creates shareholder value.

“What I discovered when I first started this role was that the approach to procurement was very inward-facing, while the rest of the organisation was focused primarily on the customer. This difference in our focus represented a lack of alignment, so my priority has been to change the thinking across the three teams under Procurement’s umbrella.”

The CPO of the Year award highlights the importance of the CPO role in organisations by recognising a remarkable commercial leader who is making a demonstrable difference to business results, having regard to the circumstances of different industries, budgets and the diversity of procurement team size and experience.

The Faculty’s Founding Chairman, Tania Seary, said: “This significant change projects undertaken by our new CPO of the Year, Kevin McCafferty, highlights how modern procurement teams are driving business innovation by putting the end-customer and shareholder value first.”

“By enabling procurement leaders to drive cultural change internally, Broadspectrum has achieved both bottom-line company benefits, as well as delivering true business and commercial partnering, in a remarkably short period of time.”

About The CPO of the Year Award

The CPO of the Year Award is a flagship initiative of The Faculty, created in 2012 to recognise and celebrate the achievements of procurement professionals across Asia Pacific.

For the past 5 years the Award has celebrated someone who has been assessed as an outstanding leader, a prominent contributor to their business and the broader profession, leading delivery of high ROI, and exceeding performance expectations. The Award is a measure of executive presence, commercial insight, people leadership abilities, innovation, professional advocacy, technical ability and integrity.

The 2017 Judging Panel comprised Ms Sharyn Scriven, Group Manager, Metering Dynamics; Michelle Loader, Chief Executive Officer, Chandler Macleod Group and Matt Perfect, Founder Impact Spender. The meeting was chaired by Tony Megally, General Manager, The Source.

For more information on CPO of the Year click here.

About The Faculty

The Faculty is Asia Pacific’s leading procurement advocates, highlighting the integral role procurement has to play in protecting margins, brand and growth for over thirteen years. Through consulting, professional development and creating knowledge networks for CPOs to share best practice learnings, The Faculty helps business to accelerate and optimise their procurement investment.

For more information on The Faculty click here.

What To Do When Slavery Is Revealed In Your Supply-Chain

It’s the stuff of every CPO’s worst nightmare; finding evidence of slavery within their organisation’s supply-chain. Sadly, it’s probably more common than you think…

It’s relatively easy to turn a blind eye to modern slavery, particularly when it’s not happening on your own doorstep.

It’s also easy to assume that modern slavery isn’t a prevalent issue in today’s society.

But the stats don’t lie. The Global Slavery Index 2016, produced by the Walk Free Foundation, revealed that over 45 million people are estimated to be affected by modern slavery, more than in any other period in history.

58 per cent of those living in slavery are based in five countries:

  • India
  • China
  • Pakistan
  • Bangladesh
  • Uzbekistan

India, China, Pakistan and Bangladesh all provide low-skilled labour for industries such as food, production, textiles and technology. Uzbekistan is a major cotton exporter.

The Global Slavery Index, which resulted in 42,000 interviews spoken in 53 languages across 25 countries, helps governments, organisations and communities to stay focussed on eradicating modern slavery wherever and whenever it occurs.

Perhaps, given the overwhelming statistics, it’s a case of when, not if, modern slavery will be discovered within your supply chain.

So what do you do when it is?

Red Flags: What will you find?

Firstly, it’s important to understand and look for the red flags, which might be extremely subtle. The likelihood of modern slavery is increased in conflict zones and unregulated sectors, particularly if the jobs are low-income and do not require education or specific skills. Migrant workers, women and children are among the most vulnerable.

Circumstances when passports or identification documents have been removed, excessive recruitment fees are subjected upon migrant workers or subcontractors further outsource work without prior consent are all indicators of exploitation.

Encountering one of these situations may not in and of itself amount to modern slavery but your organisation mustn’t assess anything  in isolation. It’s important to look for the series of signals in order to  decipher whether they paint a clear picture of modern slavery.

Developing a Corrective Action Plan For Modern Slavery

Fiona David, Executive Director of Global Research for the Walk Free Foundation, has some words of guidance and reassurance “My first tip would be ‘don’t panic’.  We know that modern slavery exists in supply chains, so if you find it, you are looking in the right places. The issues that are identified will drive the response”.

Companies responding to modern slavery should develop a corrective action plan based on two fundamental priorities:

  1. The first is short term priority; immediately protecting the victims involved in order to end the abuse
  2. The second is the long term priority.  Companies must find solutions to eradicate the underlying problem which allowed modern slavery to exist in the first place. This may require fundamental shifts in business models or the nature of supplier relationships

These two priorities should underpin every company policy, which should be focused on finding solutions rather than punishments. Critically, those within the organisation and supply-chain must feel safe and confident to speak up, and not fear punishment or recrimination.

Advice from the Walk Free Foundation

  • Be open about what you’ve found: “Companies such as Marks and Spencer, Nike and Rio Tinto and Fortescue Metals Group have all been open about risks identified and violations.”
  • Collaboration is key: Fiona is keen to remind organisations that “no one company can address [modern slavery] in isolation.” Organisations must collaborate with suppliers, competitors in the sector, governments, NGOs, and civil society.
  • Does your organisation have a part to play? Perhaps the culture within your organisation has fuelled the occurrences of modern slavery within your supply chain. Maybe you’re applying unrealistic pressures and time frames? This could be inadvertently encouraging suppliers to use unreliable operators resulting in excessive working hours or under unacceptable work practices.
  • Grievance Mechanisms:These are a formal way for workers to lodge complaints and resolve working condition problems. As well as improving employee satisfaction and productivity, these are crucial in safe guarding workers’ rights. Safe helplines or whistle-blowing procedures must, Fiona explains,  “be freely accessible in appropriate languages, regions and throughout your supply chain, without fear of recrimination.”

What not to do

It might have crossed your mind that an easy solution to tackling, or simply avoiding, modern slavery in your supply-chain would be to pull out entirely from high-risk countries.

Removing Bangladesh, for example, from your supply-chain could be a quick solution to a complicated problem, right?

Wrong!

Communities in countries with high proportions of modern slavery are in desperate need of the economic opportunities your organisation provides. Taking your business elsewhere would only worsen the situation.

Fiona explains the importance of global supply chains because they “create employment and other opportunities for economic and social development, and pathways to help those break the cycles of poverty.” Similarly “immediately terminating supplier relationships is often not the right answer because it can drive the issue further underground.”

The correct, and most socially aware, response is to continue sourcing from these high-risk countries whilst ensuring you have credible audits and systems in place to address any potential problems.

Fiona also makes the important point that “Modern slavery occurs in every country whether developed or under-developed” and so it cannot be avoided simply by vetoing certain countries.  “A recent case found Hungarian workers being exploited in conditions described as ‘modern slave labour’ in a factory in Yorkshire, England.  This factory produced beds, which were supplied to British high street retailers such as John Lewis and NEXT. ”

Procurement needs to share the work load

“Procurement teams are on the frontline,” Fiona asserts. “They manage supplier relationships, they understand the business, the risks and the regions in which they operate. The indicators of modern slavery, being a grievous crime, is actually quite easy to identify, when you know what you are looking for.”

But advocacy groups and investigative reporters mustn’t be the sole figures doing the digging to reveal incidents of modern slavery.

“CSR and Procurement teams should work together across the sectors on these issues, as addressing modern slavery is a “pre-competitive” issue.  Companies can’t compete on sub-standard ethical and criminal practices.”

Searching for modern slavery within your organisation and acknowledging its presence might be one of the tougher pills to swallow but any CPO with a conscience would prefer to reveal and address it head-on. Surely that’s better than burying heads in the sand?

And, as Fiona reminds us “Not only is it the right thing to do morally, but it is also legally required. With laws in the UK, EU and US and debates in Australia about whether to adopt equivalent laws, increasingly it is no longer a voluntary issue, businesses must look at these issues and report on them.”

Fiona David, Executive Director of Global Research,  Walk Free Foundation, will be delivering a keynote speech at PIVOT: The Faculty’s 10th Annual Asia Pacific CPO Forum.

Do CEOs Dream Of Robotic Sheep?

…Or are they kept awake at night worrying about how to adapt their business to a robotic-centred future? KPMG Australia Chairman Peter Nash reveals two concerns playing havoc with the sleep patterns of business leaders.

How can I adapt my business to a robotic future?

The thing about technological disruption – and machine intelligence in particular – is that people tend to regard it as a challenge to deal with at some point in the future. The key to understanding the scope of the challenge is to break it down into two categories – disruption that we’re already dealing with, and disruption that is yet to emerge.

Robotic process automation (RPA), for example, has been around for decades, with disembodied robot arms a common sight on production lines. Typically, they automate a series of existing processes that were once carried out by humans. We’re just starting to realise the full potential of RPA, with the emergence of bots that sit inside software to automate administrative labour becoming more common.

From his viewpoint into many of KPMG’s client organisations, Peter Nash has seen what an RPA bot is capable of. “If you go into any call centre, you’ll observe staff doing a series of processes as they engage with customers – typically around data capture and data entry. Through observation, you can create “process flows”, and then build software that can be inserted into the call centre and automate the data capture. That’s a classic example of robotic process automation, and it’s happening at pace.”

Interestingly, RPA is resulting in the reshoring of capability from overseas. Nash comments: “You can track the life cycle of offshoring and reshoring. 10 years ago you may have had 100 people doing a job in Australia for the cost of $5 million. Those 100 jobs were offshored to India, resulting in costs being reduced to $1 million. Today, with robotic help, you can have only 10 people doing the same work that 100 used to do – at a cost of $0.5 million. Yes, 90 jobs have disappeared, but there’s the exciting potential for completely new jobs to be created with each technological leap.”

“Artificial (or Cognitive) Intelligence, for example, is only just beginning to emerge. People are very excited about AI’s enormous potential, but at present it’s essentially a solution looking for a problem.”

How do I effectively harness innovation?

Nash comments that there are several models that have emerged in the ways corporations seek to harness innovation. “Many CPOs look for innovation to emerge from down the line, and encourage people, whether they’re in-house employees or suppliers, to bring ideas forward. Other organisations set up innovation capability ‘hubs’ or ‘accelerators’. Another approach is to acquire, or partner with, innovation capability outside of your organisation. Some business are doing a mix of all three.”

“What’s encouraging is that most businesses understand that today, it’s innovate or perish. A culture of innovation, partnered with a culture of flexibility where people have the ability to react and respond to disruptive technology, will ensure businesses are able to take advantage of anything that comes their way.”

KPMG Australia Chairman Peter Nash will deliver a keynote speech at PIVOT: The Faculty’s 10th Annual Asia Pacific CPO Forum.

 

Rising Stars: I Fell Into Procurement (With Style!)

Did the ISM and ThomasNet 30 Under 30 Rising Stars always have a burning desire to embark on a procurement career or were they late converts? Procurious investigates….

Last month, THOMASNET and ISM announced the 2016-2017 winners of the 30 Under 30 Rising Supply Chain Stars award, presenting the profession with an inspirational batch of role models who are sure to attract more Millennials to the supply management profession.

Procurious has been lucky enough to sit down with many of the winners to find out what the award means to them, what it takes to be one of the  30 Under 30 Rising Stars and the key skills needed for a procurement and supply chain career.

But how did these rising stars first embark on their careers? Were they passionate about procurement from the offset or did a chance encounter or inspiring internship inspire them to “fall into” procurement later down the line?

Andrew Bagni, Procurement Manager at General Dynamics Mission Systems recalls that “ten years ago supply chain wasn’t as hot a topic as it is today. Specific supply chain degrees weren’t offered at my college at the time but this is now an option for students.”

Perhaps it’s not surprising, then, that 66 per cent of this year’s 30 Under 30 Stars didn’t plan a career in procurement.

The Slow Burners

Bagni applied for an internship with General Dynamics “in the hope of gaining some of the business experience l was lacking at 18 years old! I  worked the internship for the summer, which went really well and carried on throughout college whilst I was studying business management. It’s not been a lengthy career so far but the whole of my career has been spent working in supply-chain despite having fallen into it completely by chance.”

Nick Imison, Subcontract Administrator at Northrop Grumman Systems Corp, had a similar experience to Bagni: “I fell into it sideways. I was a finance major. I went to job trade fairs, interviews, and just wasn’t passionate about finance. One day I stumbled on a supply-specific career fair, which was put on by the University of San Diego who push undergrads and postgrads to the supply chain field. They were very convincing and introduced me to the many sides of the business, giving me a holistic view. That piqued my interest and, from there, I enrolled in a few supply-chain courses.

Corey Gustafson, Senior Buyer at Deluxe Corporation initially attended school in Wisconsin to train in engineering, ” I went on a programme  that focused on the printing industry including graphics and communication management and eventually  started taking a procurement and supply-chain management course. The instructor happened to be the program director for the supply-chain programme and it was the best course I’ve ever taken. I was interested in the way the function  impacts the business and wanted to continue with to focus on that.

The Die-Hard Procurement Pros

Not all of the 30 Under 30 winners came to procurement by accident, however.  Barbara Noseda, Global Sourcing Associate at Johnson & Johnson, has a particularly notable passion for, you guessed it,  shipping containers! “I know it might sound random” she says, “but I swear it’s the truth! I did my bachelors degree agree around shipping and logistics in Hong Kong and  then went into supply chain.  Even  today, every time I can get on a project about shipping containers I jump on it.”

Matthew Montana, Category Lead at Pacific Gas and Electric Company, was also interested in supply-chain at the offset, “supply-chain really caught my attention. I liked the analytical aspect and qualitative aspect. There’s a good balance between creative thinking and working with numbers. It’s the balance of quantitative and qualitative that really drew me to supply chain.

And Matthew has another reason to be passionate about procurement. His father also works for Pacific Gas and Electric. “He’s been in supply chain for several years now. Growing up and seeing him work there and seeing how good the company has been to him and his good career influenced me. It’s a good company and a good industry. I had inside info and insight from him so he was one of my mentors early on.”

Amanda DeCook, Sourcing Associate A.T. Kearney, knew exactly where her career was headed, “I knew which University I was going to and I knew I wanted to pursue a Business Major. Michigan State University’s Eli Broad College of Business has the best supply chain program in the USA, and I loved the tangible,  practical skills involved in the course.”

Indeed, several of the 30 Under 30 stars credit their colleges for propelling their careers. Jeff Novak believes his “college had a lot to do with [his career choices]. I went to Penn State Uni,  which is one of the top supply-chain schools in the states, if not the world. It seems that however your procurement or supply-chain journey starts out, you could have a vibrant and successful career ahead of you- take it from the 30 Under 30’s!

The 30 Under 30 Rising Supply Chain Stars will meet for the first time as a group at ISM2017, where ISM and THOMASNET.com will roll out the red carpet to celebrate the winners’ achievements and broadcast their success stories to other young people considering a career in supply management. 

Executive Recruiter: 4 Must-Have Attributes For Aspiring CPOs

Procurious caught up with Naseem Malik, Managing Partner at the Chicago-based supply management executive search firm MRA Global Sourcing, to find out what attributes recruiters are looking for in the next generation of top CPOs.

Naseem Malik has gone from sourcing goods to sourcing talent. After gaining 15 years’ experience as a procurement practitioner, Naseem turned his full attention to something he enjoys most – leveraging his network, connecting the dots and finding the best talent in the profession. Naseem is also a member of the ISM2017 Conference Leadership Committee, and has some excellent tips for getting the most out of ISM’s biggest event of the year. But first, Procurious asked Naseem for his views on what makes a candidate ideal for a CPO-level role.

Naseem, as a specialist in supply management executive search, what are the top attributes you look for in aspiring CPOs?

Based on the trends we’re seeing and what our clients have typically asked for, there are four stand-out attributes that we look for in a CPO-level candidate.

First, and foremost, they need to have a broad perspective. Companies are asking specifically for candidates from different industries to their own, as this brings about fresh, disruptive and innovate thinking.

Secondly, the candidate should be someone who can earn themselves a seat at the table with the CFO and CEO. They can do this by talking confidently about what they can bring to the business in terms of supply and market intelligence, data analytics, and leverage their own broad perspective. They should focus on the things that matter most to the C-Level – risk, compliance, and technological trends.

Operational know-how is also important, particularly change-management skills. Does the candidate have the emotional intelligence (EQ) to truly collaborate? Are they able to engage, influence, persuade and lead people in a global environment, including those that don’t report to them?

I’d like to add a fourth attribute here that ties the other three together, and that’s humility. Yes, you need to be able to talk confidently about your accomplishments, but this has to be balanced with humility and an awareness of your place in the corporate pecking-order. Humility will lead to credibility, which will pay off down the road.

 You mentioned that you got into executive search because of your love of networking. Can you share any tips for effective networking?

Everyone now needs to have a social presence, and continually build upon that presence online. However, without some sort of face-to-face follow-up, your online connections can be specious. To truly leverage the power of your online network, you need to meet people face-to-face at conferences, make phone calls and gather referrals. Face-to-face networking will help you grow you online network, and vice-versa.

Another piece of advice is to embrace the concept of “pay it forward”. Always see if there’s something you can do to help people in your network – for example, see if there’s someone who you can connect them with to help solve a challenge they may be facing. Again, it will pay off in the long-term.

What are you most excited about seeing at ISM2017?

Besides attending Procurious’ “Network Your Way To The Top” session, you mean?

As a member of the Conference Leadership Committee, I’m really excited about ISM2017 because every year we’re seeing the conference gaining incrementally in attraction. There are more people attending than ever, and I don’t think that’s only due to the prospect of meeting Mickey Mouse at Disney World – it’s about the quality of the speakers, the excellent content and the companies attending (Apple, Google, Salesforce and others). The keynotes, including David Cameron and Colin Powell, are also fantastic. Personally, I’ve been involved in helping ISM find good speakers, great topics and promoting the event.

What are your top 3 tips for getting the most out of a procurement conference?

Network – take every opportunity you can to build your network at the event. After the event, follow up with all the people you’ve met, and also be sure to connect with the speakers or presenters you were most impressed by. Consider writing a blog article to share your thoughts and to keep the momentum going.

Have a plan before you go to the conference. There are a lot of learning tracks, lots of great presentations, but there’s only a finite number of sessions you can attend. It pays to have an attack plan before you go. You can target a specific learning track, or mix and match.

ISM’s Learning Tracks are designed to help guide delegates through the maze of options available. As a committee member, I have joint responsibility for the “Outside” track. Outside sessions are all about learning new and effective ways of improving your skills and establishing your relevance, including career-building, building your professional presence, honing your networking skills and building high-value relationships.

There’s still time to register for ISM2017, taking place in Orlando, Florida from May 21-24.

Planning to attend ISM2017? Don’t miss out on Procurious Founder and CEO Tania Seary’s top tips on how to Network Your Way To The Top on Tuesday May 23rd, 3.45pm.

Desperation: Somali Piracy Back On The Rise

After a relative hiatus over the past five years, international supply chains are once again threatened by a resurgence of piracy off the coast of Somalia.

At the height of the Somali pirate crisis in 2011, 151 vessels were attacked in one of the world’s busiest shipping routes. Thousands of hostages were taken and billions of dollars were lost in ransom, damage and delayed shipments.

An unprecedented international response saw the dispatch of over two dozen vessels from the EU, the U.S., China, Russia, India and Japan, which succeeded in reducing the number of attacks down to only 17 in 2015, mainly involving smaller fishing vessels.

However, last month, dozens of armed men in two small skiffs captured the Aris 13, an oil tanker flying the flag of Comoros, and escorted it to be ransomed in the semi-autonomous northern Somalian region of Puntland. The vessel was attempting to pass through the Socotra Gap, a route between Ethiopia and the Yemeni island of Socotra, when it was boarded by pirates. The route is often used by vessels as a shortcut to save time and money, but has been identified as a high-risk area by anti-piracy groups. According to reports, the Aris 13 was “low, slow and too close to the coast”, making it an easy target for armed attackers.

The Aris 13 was the first large commercial vessel to be captured since 2012, when the Greek-owned MV Smyrni, carrying 26 crew and 135,000 tones of crude oil, was held in a pirate anchorage for 10 months before being released for an undisclosed ransom.

Speaking at a news conference in late April, U.S. Defence Secretary Jim Mattis told reporters there have been “five or six” piracy incidents in the region in the past two months. An anonymous defence official told The Washington Post  that the increase in pirate activity could be linked to complacency among shipping companies, who may have relaxed their security procedures (such as carrying anti-boarding devices and armed contractors) in recent years.

What drives people to risk piracy?

Whilst the international naval response to the piracy crisis has been effective, the situation is expected to continue until the root cause is tackled – the lack of authority of Somalia’s central government. The country has been labelled a “failed state” since a bloody clan-based civil started in 1991. Other factors that drive piracy include:

  • Widespread drought and famine
  • Local anger over illegal foreign vessels fishing in Somali waters
  • Extreme unemployment with no factories or industry
  • Very low earning for fishermen (approximately US$5 a day)
  • The lure of high potential earnings from piracy and ransom money
  • Cash from piracy providing the first boom in living memory in coastal towns.

Reports are also emerging of piracy on the rise on the other side of Africa, along Nigeria’s coastline. Pirates have taken to kidnapping crew members for ransom along the major oil shipping route. Previously, hijackers would siphon off oil from commercial vessels, but now that oil prices have fallen, abductions have proven more lucrative.

In other news this week:

Uber to unveil flying taxi service by 2020

  • Uber has announced “Elevate”, a flying taxi service featuring electric vehicles capable of a vertical take-off and landing.
  • Users will be able to book a ride with their mobile phone app, with Uber’s marketing team already spreading the message of “push a button, get a flight”.
  • The biggest selling point of the urban air network is that it would be able to avoid congested streets in busy cities. The service is expected to launch first in Dubai and Dallas.

Read more at Smartcompany.com.au

 ISO 20400 launched to support sustainable procurement

  • The world’s first international standard for sustainable procurement was launched last week. ISO 20400 was created with the input of experts and industry bodies from over 40 countries and is expected to increase supply chain transparency globally.
  • The Standard is applicable to any organisation, public or private, irrespective of size and location.
  • Read more about the background to ISO 20400 in Procurious’ interview with committee member Jean-Louis Haie.

Access ISO 20400 here.

One Skill To Rule Them All

Want to know what it takes to really make it in the procurement world? Cognitive tech expertise? A firm background in supply management? Nope – 72% of the ISM and ThomasNet 30 Under 30 Stars agree there’s another, essential ingredient to success…

Last month, THOMASNET and ISM announced the 2016-2017 winners of the 30 Under 30 Rising Supply Chain Stars award, presenting the profession with an inspirational batch of role models who are sure to attract more Millennials to the supply management profession.

Procurious has been lucky enough to sit down with many of the winners to find out what the award means to them, what it takes to be a 30 Under 30 Rising Star and how they embarked on a career in supply management in the first place. We’ll be revealing all of our findings throughout this series of articles but first up, what key skills are the winners acing?

You can forget prioritising the development of your tech skills. It turns out that communication is absolutely the crowning glory of all procurement skills.

Communication is king

72 per cent of 30 Under 30 winners named communication as one of the top three skills that have been essential for their success, which is unsurprising given the nature of most procurement and supply roles. Nick Imison, Subcontract Administrator at Northrop Grumman Systems Corp,  reminded us, “You often have an extremely short period of time to capture someone’s attention, explain why you need to go down a given path and  effectively relay what it is you’re trying to accomplish.”

Corey Gutafson, Senior Buyer at Deluxe Corporation, explained that he had to hone his communication skills very quickly at the start of his career. “If I’d had to do a five-minute presentation when I was in high school, I might have passed out from nervousness.  But communication in supply management is HUGE! Whether it’s via email, on the phone, presenting online or in person, we’re always talking with many different stakeholders and suppliers. If you’re not a good communicator, you’re going to have a difficult time.”

Barbara Noseda knows a thing or two about communicating under different circumstances. As a Global Sourcing Associate at Johnson & Johnson, she is very much in a global role which might mean she begins the day focusing on Europe and ends it with Africa. As such, she sees enormous value in being conscious of global differences and managing these, as well as being able to communicate effectively internally. “I’m a big fan of CQ (Cultural Intelligence) and I think it should be given much more importance. But internal communication is also important. As a sourcing associate, I often find myself talking with CEOs, having  to explain what I want and packaging it in a way that means they see the benefits.”

Know your data

“It might be cliché but in today’s world you have more data at your fingertips than ever, which means data analysis skills are crucial” says Matthew Montana, Category Lead at Pacific Gas and Electric Company. “It’s important to be able to manipulate data and use it to your advantage.” Indeed, 45 per cent of the 30 Under 30 Stars rated data analytics as one of the top three skills for procurement professionals.

Imison describes data analysis as the “ability to look at a given situation and provide some sort of useful evaluation, such as selecting the best path to go down from a financial perspective.”

But being great at data analytics isn’t just about … well,  being great at data analytics.  Gustafson has found his data skills have worked wonders for his relationships with senior team members. “It’s helped me develop some strong relationships with some of my older colleagues. I help them with analysing data and they can  help me with things like contract terms or negotiation tactics. If you don’t have tech savviness, it can take four or five hours to do a 20 minute job due to lack of efficiency.”

You can’t go wrong with a generous helping of these key skills either…

Some of the other key skills highlighted by the 30 Under 30 winners include:

  • Team work
  • Adaptability
  • Dependability
  • Perseverance
  • Flexibility
  • Empathy
  • Time management

It’s interesting to see that the majority of skills highlighted are “soft skills” (although we hate calling them that!)

Abhishek Dahiya, Chief of Staff for Global Materials Dell Technologies,  thinks it’s important to stay up to date with the latest developments in the industry. “An openness to learning things that are out of the scope of your job makes you perfect for that job!”

And, of course you can’t go wrong with a persistent attitude, even if it’s in the form of some good old-fashioned relentless pestering as Amanda DeCook, Sourcing Associate A.T. Kearney, points out. “Sometimes you have to have the confidence to just go for it; pick up the phone and cold call a supplier. It can be scary but the worst-case scenario is that they won’t answer. And if they don’t, embrace that can-do attitude and keep calling (whether it’s three or four times) until they do!”

The 30 Under 30 Rising Supply Chain Stars will meet for the first time as a group at ISM2017, where ISM and THOMASNET.com will roll out the red carpet to celebrate the winners’ achievements and broadcast their success stories to other young people considering a career in supply management. 

Duty of Care Law: You Got The Green Light In France!

France’s new legislation, The Duty Of Care Law will prevent serious human rights risks and threats to fundamental freedoms. Will other countries follow suit? 

It would be wise for procurement professionals to pay close attention to France’s new sustainable procurement legislation.   The Duty of Care law, which affects organisations with over 5,000 employees, is likely to have some influence on other nations,  starting with those in the EU.

If similar human rights legislation is implemented across the globe; forewarned is forearmed, and sustainable, ethical procurement is a hot topic that’s only getting hotter!

Whilst the progress of global sustainability standards have traditionally been  pushed by individual businesses and activist groups, things are changing. This month saw the publication of ISO20400,  (International Standard for Sustainable Procurement), which creates a standard for every organisation in the world to follow.

The Duty of Care Law

In its much-awaited decision last month, the French constitutional council has given a  green light to the “Duty of Care” law (Devoir de Vigilance) although they stated that there remain some provisions to the French constitution.

The major points of the law, requiring French companies with at least 5 000 employees, including in their French direct or indirect subsidiaries (or 10 000 employees in their direct or indirect subsidiaries worldwide) to develop a diligence plan (“plan de vigilance”), are recognised of general interest. The intent is for the diligence plans to prevent serious risks related to human rights and fundamental freedoms, health and safety of persons and the environment. The constitutional council considers however that the sanctions initially included in the law violate the constitutional principle that penalties must have a sound legal basis. As a result, the civil fine of up to €10 million, as well as its increase to €30 million in case of damages that could have been prevented by implementing the diligence plan, are removed from the law.

Developing A Diligence Plan

The obligation of implementing a diligence plan however, as well as the formal notice and the civil liability mechanisms in case of lack or deficiency of the diligence plan, are constitutional. Consequently, companies are still compelled to implement a diligence plan, even if the law loses some of its deterrent effect, which makes for the first law of this type: it introduces an obligation much more stringent than a mere reporting obligation, such as the ones required by the UK Modern Slavery Act or the California Transparency Act. Companies are required to implement specific concrete actions and cannot limit themselves to reporting on what they do (or do not do).

There are also some talks of developing similar regulations at European Union level.  Eight national parliaments have called for a corporate duty of care towards the human rights and local environment impacted by the company’s operations. They have jointly proposed that the European Commission take action on this matter. This shows that the French “Duty of care” law is indeed the first step of a generalized global movement requiring companies to address their Corporate Social Responsibility (CSR) risks, including throughout their supply chain.

This article was first published on the EcoVadis Blog

Procurement Is Everywhere But It Wears Hundreds Of Disguises

When procurement wears a mask, layers of stage make-up or one of its other many disguises, you might find it tricky to identify. But, as Daniel Ball explains, procurement is everywhere and in all of our organisations- it might just be presenting itself in a different way…

It’s fair to say that, as a concept, procurement tends to be associated with large businesses.

However, any organisation from the smallest to the largest buys things that they need from chosen suppliers. And, however small the organisation, they face much of the same procurement challenges that we all do. So why do we not consider them all to be ‘in procurement’?

The many disguises of procurement

In reality, the entry point starts when a business begins and evolves in sophistication and complexity with their growth. Although we think of procurement in terms of an established function, role or set of rules, much of the practical procurement going on out there is actually in a formative or evolutionary stage, depending on the maturity and needs of the organisation in question.

This is a vital insight for those of us working to support the procurement profession. We have to remember that we’re not dealing with a perfect procurement-badged world, nor one which conforms to all of the industry buzzwords and ‘best practices’.

In most cases, we’re dealing with people in a state of flux, who might well not call themselves procurement professionals; after all, there are hundreds of different guises in which procurement presents itself. This is particularly prevalent in high growth mid-sized businesses who are feeling the pain of change or ‘growing up’ more severely than most.

What challenges do mid-sized companies face?

Wax Digital wanted to find out what kind of challenges mid-sized companies are faced with during expansion.  We asked 200 senior business management and procurement professionals at fast-growth, mid-sized UK businesses about the pain points they have experienced as their organisation has grown.

Without giving too much away, here are 3 of the key highlights our research uncovered; demonstrating the kinds of procurement-related issues hampering their ability to support business growth.

  1. 83 per cent of respondents surveyed said they didn’t challenge their suppliers on cost or performance adequately, whilst 78 per cent struggled to control spend, citing departmental purchasing autonomy as a problem. Three quarters also said that they don’t have sufficient purchasing technology or systems in place to keep up with the pace of growth.
  2. UK mid-sized businesses have a broad range of growth challenges that are all linked back to both upstream and downstream procurement needs. Even though they’re not yet talking procurement these businesses are dealing with procurement’s problems and need a solution.
  3. In fact, mid-sized businesses are perhaps the segment of the UK economy most in need of professional procurement practice. Their reasons for, and rate of, change are so extreme they must get their house in order before it becomes too unwieldy and difficult to control.

The results of the research will be revealed in full next week via Wax Digital’s website.

What are your media consumption habits?

Wax Digital are conducting a quick survey to understand more about how procurement professionals use media for work. If you’ve got a few minutes spare to tell us how you stay on top of latest industry news and trends, we’d love to hear from you!  It’s just a few simple questions on your media consumption habits. And, to say thanks, we’ll put your name into a draw to win a £200 donation to a charity of your choice.  Complete the survey here.