Category Archives: Procurement News

A question of ethics: procurement managers accused of bribery

We’re kicking-off the working week with a handful of weighty issues, namely: ethics surrounding procurement, the state of US manufacturing, and Ebola. Eyes down for our pick of the web’s biggest stories.

Bribery in procurement

Bribery tag on procurement managers ‘unfair’

  • Suggestions that bribery is rife among procurement managers in hotels is unfair, with professionals calling for more attention to be paid to the actions of suppliers and other hotel staff.
  • The issue came up in a panel session at last week’s Hotelier Middle East Procurement Summit, which took place at The Ritz-Carlton DIFC in Dubai on November 4.
  • Fairmont Dubai purchasing manager Jean Manuel said: “In each [hotel] there should be a strong policy on bribery. And it should not only be for procurement. It should be for all the organisation because it is always implied on procurement, which is really very unfair, because it should be everybody.”
  • Nair had begun discussing the issue by citing a survey of suppliers byHotelier Middle East earlier this year, in which 55% said they had been asked to offer a monetary bribe, while 72.6% said they knew of other supply firms that were using bribes.

Read more on Hotelier Middle East

Levi Strauss’ smart thinking on supply chain ethics 

  • Levi Strauss announced last week that it will partner with the International Finance Corporation to reward suppliers in developing countries who score highly on environmental, health, safety and labour standards.
  • The reward for such ethical activities will be lower cost rates on working-capital financing. The apparel manufacturer’s efforts are a great example of the economic benefits that can accrue to companies that pursue sustainability and promote ethics in their supply chains.
  • A recent study by Software Advice, an SCM software consultancy, showed that consumers would pay more for ethically made products.
  •  One group of respondents said it would pay an average of $18.50 more if the raw materials were sourced ethically. Another said it would pay $19.70 more if the product had a carbon emissions offset, and the third group said it would pay $27.60 more for a product made in a facility with good working conditions.
  • The consultancy admits there can be a gap between what survey respondents say and what they will actually do. Still, says Forrest Burnson, market research associate at Software Advice, procurement and supply chain professionals can’t ignore the fact that consumers are aware of where and how their products are made and who made them. And that awareness can even extend to perceptions of outsourcing.

Big oil cutbacks deal supply-chain pain

  • Belt-tightening by big energy majors faced with plunging oil prices is battering the finances and share prices of their suppliers, as investors reassess the sector’s ability to keep gushing cash.
  • A growing list of delayed or cancelled projects, seen by some investors as a healthy move by majors to rein in capital spend after a poor history of returns is working its way through corporate earnings; it has already pummelled the share price of some European suppliers seen as financially fragile.
  • Fugro, once seen as a blue-chip on Amsterdam’s benchmark index, has had more than 30 per cent of its stock-market value wiped out in a week since scrapping its dividend. It is seeing trade swings more suited to a small-sized firm: on Thursday its one-day gain was 28 per cent.
  • The worst of this volatility may yet be to come, analysts and fund managers warn, as the recent fall in oil prices – triggered by a supply glut as well as worries over cooling demand – and the delayed effect of capital-expenditure cuts keeps up the pressure on companies to plug balance-sheet gaps. “Oil services firms are like euro zone banks a few years ago. There’s a lot of damage in the sector and it could get worse before it gets better,” said Arnaud Scarpaci, fund manager at Montaigne Capital.

Read more at Reuters Africa

President Obama announces plans to boost US manufacturing

  • US president Barack Obama has unveiled new executive actions to strengthen the functioning of US manufacturing supply chains. Aimed at fixing what is perceived as “the innovation gap faced by small manufacturers”, the Department of Commerce’s Manufacturing Extension Partnership, which serves over 30,000 US manufacturers each year, will build new capabilities at its state-based centres and pilot a competition for $130 million (£81.3 million) over five years across 10 states to help small manufacturers adopt new technologies and bring new products to market.
  • As part of the Supply Chain Innovation Initiative, the National Institute of Standards and Technology Manufacturing Extension Partnership (NIST MEP) will deploy new tools to help small manufacturers access advanced technologies, new markets, and growth capital.
  • These tools will help connect small manufacturers with testbeds housed at national research facilities to test new technologies, helping small manufacturers bring to market novel products and processes.

Read more at Supply Management

CEVA and FedEx leverage expertise to help Ebola response

  • FedEx and CEVA have both been using their expertise to aid Ebola stricken countries in west Africa in recent weeks.
  • CEVA, one of the world’s leading supply chain management companies, airlifted more than 70 tonnes of urgent supplies to Monrovia, Liberia on 10 October to assist in ongoing efforts to combat the West Africa Ebola outbreak. The airlift was chartered by the US Agency for International Development (USAID), the lead government agency coordinating US Ebola response efforts which has been working to expand the pipeline of medical equipment and supplies to the region.
  • Included in the shipment were infrared thermometers, disinfectant backpack sprayers, tents, and plastic fencing to be used in the construction of Ebola treatment units. The supplies were sourced by USAID from multiple locations around the world and delivered to CEVA Charter Services at Liege Airport in Belgium. From there, CEVA loaded the cargo onto a Global Africa Cargo MD-11 freighter aircraft for a direct flight to the Liberian capital of Monrovia.
  • CEVA Logistics Corporate Account Manager, Marc Burgard, said: “This was a really important charter, and we were honoured to have been able to play a part in the Ebola response.”There were several challenges along the way because of the diverse locations of the  items involved, the urgency of the job and the number of time zones concerned, but the charter arrived safely in Liberia.”

Read more at Supply Chain Digital

Supply chain woes at Tate

  • Tate & Lyle’s first-half results came hot on the heels of a profit warning in September, so the figures, though bleak, were at least anticipated. They reflect serious operational and supply chain disruption caused by the polar vortex in the US and the temporary shutdown of Tate’s Singapore sucralose factory. Tate’s logistics cracked under the pressure and it was forced to shell out £31m to get orders to customers, including sending goods by costly air freight.
  • And it didn’t help that sucralose prices fell faster, and for longer, than anticipated, slicing £18m off profit. Finally, the hit to earnings was compounded by currency headwinds.
  • Finance director Nick Hampton said Tate had been caught out by the supply chain issues and that the challenging first half had exposed cracks in the system. These are now being addressed, but Mr Hampton said Tate needed to build a more integrated and better-run global network to deal with the increasing complexity of the business, which included greater visibility over supply and demand. He said £100m is now being spent, both to boost capacity and make it more flexible, putting inventories closer to customers.

Read more at Investors Chronicle

Supply chain utilizations drop as China 4G development lags

  • Following the release of the iPhone 6 coupled with less-than-expected 4G developments in China, handset vendors in China anticipate limited 4G handset shipments throughout the end of 2014 into the second quarter of 2015.
  • Handset vendors in China had aggressive plans to push 4G handset sales in the country but as subisidies from local telecom vendors ended coupled with factors such as lagging awareness of the technology and consumers waiting for the iPhone 6, they witnessed less-than-expected 4G shipments, a trend that is expected to wither into 2015.
  • Supply chains do anticipate orders for the technology throughout the end of 2014 but believe the vast majority of orders will not come until the first and second quarters of 2015 when vendors prepare to release new units in the second and third quarters of 2015. China handset supply chain makers such as Kuangli Photoelectric Technology meanwhile have seen their utilizations drop as the trend occurs, with Kuangli’s dropping from 95% in the second quarter of 2014 to 60% in the third quarter.
  • Digitimes Research said major China-based handset vendors including Coolpad, Lenovo and Xiaomi Technology are unlikely to reach their shipment goals set for 2014 due to slow sales of 4G models in the third quarter and gloomy prospects for the fourth quarter.

Read more at Digitimes

Feminist t-shirts ‘sweatshop’ row

UK politicians Ed Miliband and Nick Clegg have made headlines for the wrong reasons… this and more in our weekly news-blast of procurement’s biggest stories.

Feminist t-shirt labour row

Feminist t-shirts ‘sweatshop’ row

  • A women’s rights charity behind a t-shirt campaign now caught up in controversy over claims the products were made in “sweatshop” conditions has said it will order the clothes be withdrawn from sale if the reports are proven.
  • The T-shirts, proudly worn by Ed Miliband, Nick Clegg and Harriet Harman proclaiming their feminist credentials, are made by women workers being paid just 62p an hour, the Mail on Sunday reported.
  • The paper said its investigation had found the t-shirts with the slogan “This is what a feminist looks like” were being produced on a factory on the Indian Ocean island of Mauritius where the women machinists sleep 16 to a room.
  • Fashion retailer Whistles, which sells the garments for £45 each, described the allegations as “extremely serious” and said it would be mounting an urgent investigation.

Read more on MSN

Britain’s drone tech future relies on supply chain know-how

  • An interesting article has appeared in The Telegraph on the rise of drones and the economic benefit they could bring to the UK. It is penned by Michael Minall – Aerospace and Defence Director at Vendigital.

  • Developing a supply chain for drone production is such a significant challenge as the current aerospace sector is already competing for capable capacity in the supply chain. The task of making enough commercial aircraft to meet rising passenger numbers (20,000 over the next 20 years) means that many manufacturers are working at stretched capacity. To combat this, innovators of drone technology must move now to engage in supply chain mapping and open a dialogue with key suppliers regarding future business needs, communicating their requirements in terms of volumes, key capabilities and location.
  • Michael also touches on the potential skills gap, highlighting how unpopular engineering has become as a degree subject. So in order to source staff with the desired technical skills, firms should be prepared to take action at a grassroots level.

Read more at The Telegraph

CIPS Pan African Procurement Awards winners revealed 

  • The winners of the CIPS Pan African Procurement Awards 2014 were announced at a ceremony in Johannesburg, South Africa.
  • Awards in 10 categories were presented to organisations in the public and private sectors, and two postgraduate awards and nine certificates of recognition were also handed out at the celebration at the Premier Hotel OR Tambo.
  • The evening included a speech from Jimmy Manyi, president of the Progressive Professional Forum and former CEO of government communications and information systems for the Republic of South Africa.
  • Award highlights included: Most Procurement & Supply Orientated CPO/CEO of the Year: Garry Pita, Transnet, CIPS Young Procurement and Supply Chain Management Professional of the Year: Lindiwe Ntuli from NECSA, while Kamogelo Mampane was awarded the CIPS Fellowship.

Supply Management has published a list of the winners in full

Ben Ainslie Racing

Olympian partners with high-tech procurement company in bid to win America’s Cup

  • Ben Ainslie Racing the racing team set up by Olympian and America’s Cup winner Ben Ainslie has partnered with high-tech procurement company Matrix in a bid to win the America’s Cup with as green a boat (and surrounding infrastructure) as possible. Through buying components from within the UK, especially the Solent area close to their workshop in Portsmouth, reducing the impact on the environment and boosting the local economy.
  • The technology will enable BAR to support smaller businesses, taking advantage of the best of British tech and innovation; in contrast to other teams such as Oracle Team USA who wouldn’t tend to look for smaller suppliers, the BAR and Matrix partnership aims to support British businesses.
  • Matrix already enjoys long term relationships with around 78 local authorities and the wider public sector including the NHS, higher educational establishments, schools, police authorities and the not-for-profit sector through the procurement of temporary staffing.
  • The buying platform opens late November, with Matrix and BAR hosting  a supplier day open to all suppliers interested in working with BAR.

Read more at Ben Ainslie Racing

New security solution to protect against supply chain attacks in enterprise

  • Micron, Wave Systems, Lenovo, and PC Bios software vendor American Megatrends plan to develop enterprise-class security for enterprise class IT business systems.
  • The solutions to strengthen the BIOS specific feature called Core Root of Trust for Measurement (CRTM) to protect against current and emerging pre-boot threats within the supply chain. The companies intend for these solutions to form the basis of a new industry standard designed to ensure the integrity of the supply chain.
  • The comprehensive enterprise security suite will serve to protect memory content from its inception in manufacturing throughout a computing device’s life cycle.  It is hoped that a centrally managed security solution (working in conjunction with a client’s core root of trust for measurement) will provide client system integrity throughout the supply chain.

Read more at EE Herald

Paddy procurement halted as Punjab exhausts CCL

  • The paddy procurement in Punjab has been stopped midway as the state has exhausted its first installment of cash credit limit (CCL) of Rs. 8,000 crore received from the Centre, and the second installment of Rs. 10,000 crore has not arrived despite several frantic reminders by the state.
  • It is a crisis-like situation as the state government has not paid the farmers since ten days for the large quantity of paddy procured by Punjab. About 40 lakh tonne of paddy still remain in grain markets waiting to be procured by government agencies.
  • So far, payment has been made for 55 lakh tonne. Other farmers are awaiting payment while agencies have already obtained the grain from them.

Read more at Hindustan Times

Standardised procurement could save English fire services £18 million a year 

  • Fire and rescue services across England could save £18 million annually by standardising and streamlining the way they buy firefighting clothing and equipment, according to a joint report from the Department for Communities and Local Government (DCLG) and the Chief Fire Officers Association.
  • A report commissioned by DCLG found fire services buying identical kit at vastly different prices, with variations of up to 200 per cent. It cited examples including a pair of protective trousers costing between £125 and £274, a fire helmet costing £105 to £131, and the price of a fire coat ranging £220 to £366.
  • Concluding that fire and rescue authorities could achieve savings of £18 million from a total spend of £127 million a year, the report suggested the savings could be even greater if applied to all purchases by all fire services, which spends an estimated £600 million each year on buying equipment and fire engines.

Read more at Supply Management

10 years of supply chain CSR

We’re leading this week’s news headlines with a decade of supply chain corporate social responsibility presented in an easy-to-digest infographic. It’s like Christmas has come early…

Ten years of supply chain’s corporate responsibility

  • A new infographic which highlights the high-profile events that have driven global momentum for business and supply chain responsibility over the past decade has been created by the Supplier Ethical Data Exchange (Sedex).
  • From the Morecambe Bay tragedy in the UK in 2004 to the horsemeat scandal which rocked industry last year, the Sedex infographic puts the spotlight on the events that have driven global momentum for CSR and supply chain responsibility.

View the infographic in full below (thanks to edie.net):

Infographic: 10 years of supply chain CSR

 

Carlsberg pours Office 365 into supply chain operations

  • Danish brewer Carlsberg has deployed Office 365 in a bid to help the company manage its supply chain operations around the world. The Carlsberg Group is deploying Office 365’s integrated productivity and collaboration services to underpin the Carlsberg Supply Chain (CSC), an initiative to help streamline the company’s global supply chain operations.
  • Since 2000 the company has expanded from a local production base of just six markets to servicing pubs and restaurants in over 140 markets, and the company has launched what it calls “GloCal,” an attempt to improve its operational efficiency by centralising management of its procurement, production, logistics and planning functions.
  • Etienne Dock, vice president of IT architecture and sourcing at Carlsberg said the company is using Microsoft Exchange Online for email and calendaring; Microsoft Lync Online to connect via web conferencing and instant messaging; teams are collaborating on projects using Microsoft SharePoint Online; and employees are adopting the Yammer Enterprise social networking platform for messaging and collaboration.

Read more at Business Cloud News

DHL Supply Chain wins new five-year contract with Volvo Cars

  • Under the new contract, DHL will manage four shared use local distribution centres. Deliveries will take place through the night using DHL’s Auto Alliance collaborative platform. During the day, deliveries are made through the same day service to all of Volvo Cars UK dealers. This service incorporates flexible driver departure times to even the most remote dealers, meaning an enhanced, more efficient delivery service nationwide.
  • Michael Martin, VP Business Development, Automotive, DHL Supply Chain added: “DHL is delighted to be working with one of the world’s leading automotive companies to drive forward innovative approaches for exceptional customer service. “This new contract heralds a new partnership between DHL and Volvo Cars, which will see us deliver an innovative service-level delivery network, resulting in increased efficiencies”.
  • A new fleet of increasingly fuel-efficient vehicles will be deployed, with more than 35 trucks that feature forward facing cameras, Microlise vehicle tracking to increase fleet performance, full closure tail lifts to maintain high safety standards and state-of-the-art double deck trailers specifically designed for working in the Aftermarket environment.

Read more at Supply Chain Digital

Huawei boosts European procurement spend to more than $4 billion

  • The Chinese IT company spent $3.4 billion on components, engineering and logistical services in 2013 but plans to increase this to $4.08 billion by 2015.
  • At its European Partner Convention in Germany the firm, which deals with more than 3,000 suppliers in Europe, said spending was “gathering further speed” as part of plans to expand in the region.
  • Kevin Tao, president of Huawei Western Europe, said: “Europe remains our top investment destination. “Europe’s fertile IT environment, and the trust of our valuable European partners, has enabled us to get us to get where we are today. As our engagement with the European business environment deepens, procurement will be continually increasing to fuel this expansion.”

Read more at Supply Management

Competition from China PC supply chain to remain strong in 2015

  • Although demand for PCs has started recovering recently and shipments in 2015 are expected to remain at the same level as in 2014, Taiwan’s supply chain is still facing fierce competition from China-based component makers, according to sources from the upstream supply chain.
  • The sources pointed out that the hinge industry is one of the major battlefields for Taiwan makers, as China-based manufactures such as GT Technology have been expanding their presences in the monitor and all-in-one PC industries. Although notebook hinges are still supplied mainly by Taiwan-based companies, China makers’ aggressive moves have created strong pressure.
  • In addition to hinges, the competition between Taiwan and China makers has also grown fierce for components such as batteries, cooling modules, cables and connectors.

Read more at Digitimes.com

Stay up-to-date with Procurious




My three CIPS Australasia conference highlights

This is the fifth article in a fortnightly series from Gordon Donovan.

With the dust having now settled, this won’t be a blow-by-blow account but instead I’ll share my key highlights from the event.

The CIPS Australasia conference took place across a jam-packed two days – here are my key takeaways from three of the highlight speakers:

CIPS Australasia conference 2014

David Noble, CIPS CEO

The key theme of this year’s conference encompassed the issues of change in business and the global economy. In opening David addressed the rapidly changing business environment and highlighted the key factors are affecting modern supply chains and that the conference would hinge upon. Namely: technology, talent, transformation, and tomorrow.

The advance of technology is constant, so it’s critical that today’s procurement professional has an acute understanding of what this key enabler can deliver. Complexity has rendered traditional tried and tested change management plans obsolete. This has called for a more innovative and creative range of solutions that are flexible, adaptable and agile allowing the organisation to change direction quickly to meet market challenges. Only one third of procurement professionals are ready for the challenges ahead according to CEOs.

In an unpredictable volatile world, the need to make sense of the future will be an important and critical competency for procurement leaders.

David demonstrated that CIPS is now a true global institution, boasting offices throughout the world and a truly worldwide membership base. The following was also shared with delegates from CIPS HQ at Easton House:

  • Licensing the profession is a multifaceted approach
  • Chartered status will follow from Jan 2015
  • Fellowship remains highest CIPS qualification level
  • CIPS is now holding regular CEO supply forums to both brief and be briefed by the C suite
  • There will be three routes to obtain chartered status which will require 30 hours of CPD to maintain annually
  • A new concentrated focus on ethics and walk free foundation

Sam Walsh, CEO of Rio Tinto

A detailed account of Sam’s key note speech “The golden age of procurement” can be read on Procurious here, but here’s a primer for those unfamiliar with his words:

Sam revealed that most companies are not making the most of the possibilities of procurement. In fact, research showed that when it comes to procurement, 50% to 90% of companies recognise that they do not employ best practices

“Shift your perspective.  Instead of spending your whole time obsessing only about the top line, and the bottom line, focus on the middle line as well.”

Sustainability was also a key focus for the Rio Chief: “So the saying goes, we are what we eat. In business, we are what we buy.”

A note on new talent struck a chord with the millennial’s in the room. Sam mused that today’s procurement professionals require a much wider skills-set than was needed when he first started as a trainee buyer.

Mark Donaldson VC, Corporal

The highlight of the conference for many… Mark’s keynote speech was about transforming you and your team – good leaders create other leaders and not followers.

He reminded delegates that knowledge alone rarely changes behaviour; behaviour changes behaviour with practice, and with repetition the knowledge becomes practiced and ingrained. Further adding that exposure to new things increases behavioural change. Longer-lasting change takes a great deal more time to properly bed in.

Mark warned against the dangers of becoming too emotionally attached to a plan – reminding all that plans often fail due to this blind spot. Letting emotions in also places limits on flexibility.

But Donaldson didn’t finish there, he instead went on to reminisce about the end of the day he received his VC: “I was a bit tired and hot and was running out of water, and as I sheltered behind a vehicle I noticed a young soldier returning fire whilst bleeding profusely as he had been shot in the head. ‘you don’t stop, so I don’t stop’. If we think we have been having a bad day, ask yourself the following: Have I run out of water? Is it over 40 degrees in my work environment? Have I been shot at for three hours? No, well not so much of a bad day then…”

Awards Dinner

Congratulations to the winners of the CIPS Awards – at The Faculty we were especially proud to see so many of our Roundtable members and their teams collecting accolades.  A complete list of winners is below:

Best Cross-Functional Teamwork Project

  • Alcoa of Australia

Best Example of Socially Responsible Procurement

  • Department  for Communities and Social Inclusion
  • Ministry of Social Development

Best Infrastructure or Capital Works Project

  • Transurban

Best People Development Initiative

  • Telstra Corporation

Best Process Improvement Initiative

  • Santos Limited

Best Supplier Partnership

  • Centennial Coal

Most Improved Procurement Operation

  • Thiess Pty Ltd
  • Fonterra Co-operative Limited

CIPS Australasia Procurement and Supply Chain Management Professional of the Year

  • Kevin McCafferty – Fortescue Metals Group

CIPS Australasia Young Procurement and Supply Chain Management Professional of the Year

  • Bree Pitcher – Stanwell Corporation Limited

CIPS Australasia Overall Winner

  • Santos Limited

CIPS Australasia Leadership Award

  • Sarah Collins – Roads and Maritime Services

‘Weak’ UK supply chain is holding back investment

The British are coming! Controversial acceptance speeches, staunch warnings, and more – feature in our weekly news blast.

Twilight of supply chain
If quality doesn’t improve, could this be the twilight of the UK’s supply chain?

 

Business calls for measures to boost supply chain

  • Weaknesses in the UK’s supply chain are holding back industrial investment, according to British business. Industry is calling on the government to help boost competitiveness with measures to incentivise innovation, improve financing and resolve a crippling skills gap.
  • Close to 80 per cent of companies say improving the quality of Britain’s supply chain will be crucial to future growth, according to a study published on Monday by the Confederation of British Industry and consultants AT Kearney.
  • Industry’s call is made more urgent after the Bank of England’s chief economist Andy Haldane last week warned that productivity remained 15 per cent below pre-crisis levels despite unprecedented declines in wages.
  • Yet in a blow to the CBI’s findings, some global manufacturers said Britain’s relatively high costs would remain the biggest deterrent to investment. “It’s far more expensive . . . here,” said Neeraj Kanwar, managing director of India’s Apollo tyres. “The UK as far as manufacturing is concerned is not lucrative at all.”

Read more at FT.com

Top transport, logistics, supply chain operators in Malta honoured

  • Noel Ellul, an expert in transport and logistics in Malta with a career spanning over 40 years, was awarded the ‘Outstanding Achievement of the Year’ honour at the first TransLog Awards to be held.
  • Key transport, logistics and supply chain stakeholders operating in Malta were recognised with awards in 12 different categories at the TransLog Awards presentation ceremony held at the Intercontinental Hotel.
  • Organised by Support and Supply Management Group (SSM) and marketing communications agency BPC International, and supported by HSBC Bank Malta, the TransLog Awards attracted nominations from both Maltese and regional businesses operating in Malta.

Read more at Times of Malta

Osborne poaches Balfour Beatty supply chain manager for director role

  • Mr Robeson joins Osborne from Balfour Beatty Construction Services UK, where he worked in supply chain management until September 2014, according to his LinkedIn profile. He has also worked for Wates Construction and Berkeley Homes.
  • Osborne said Mr Robeson would bring experience and expertise in supply chain relationship development, procurement best practice and added value realisation.
  • Osborne Construction managing director Andy Steele said: “I am delighted to welcome John to the Osborne Construction Leadership Team. John will help us improve on stakeholder engagement and further us to increase our operational excellence agenda.”

Read more at Construction News

Stirling Prize winner hits out at UK procurement

  • Stirling Prize winner Steve Tompkins has criticised the UK’s procurement system for freezing out young practices.
  • The Haworth Tompkins director contrasted the “increasingly bureaucratic” British system unfavourably with that found overseas where greater weight is often placed on talent and ideas.
  • He said his own practice had struggled to break into new typologies because PQQs in this country so often demand prior experience. “The whole procurement structure in this country is increasingly bureaucratic,” he told BD after scooping the Stirling Prize on Thursday night for the Everyman Theatre in Liverpool. “The number of hurdles you have to pass through to get a commission is daunting and the amount of design work you have to do is daunting, demoralising and very wasteful.
  • He continued: “It’s increasingly hard for young practices to get in at all. I wish that was a debate we could have with the procurement process.”

Read more at bdonline.co.uk

Supply chain boost with new Discovery Sport

  • The first Land Rover Discovery Sport has rolled off the production line at Jaguar Land Rover’s (JLR) Halewood site, with the UK supply chain benefiting from £3.5bn in contracts from the new vehicle.
  • The latest model in the range has created 250 manufacturing jobs in Halewood as the result of a £200m investment.
  • Fifty-five suppliers have also secured a total of £3.5bn in contracts to support production, which has led to the safeguarding and creation of more than 1,000 UK jobs, JLR said.

Read more at Insider Media Limited

Germany wants cleaner, kinder textiles supply chain

  • Gerd Müller, Germany’s Minister for Economic Cooperation and Development (BMZ), launched a new Textiles Alliance in Berlin late last week. Its goal is to help move the international textile supply chain toward better labor and environmental practices.
  • Müller’s ministry wants to see improvements at every link in the supply chain – from the cotton fields through the textile dyeing and clothing production process to distribution and retail.
  • Among other aims, the Textiles Alliance seeks decent wages, an end to forced labor and child labor, respect for safety standards, and a stop to the use of certain particularly environmentally toxic chemicals in the textiles supply chain.
  • Membership in the alliance is voluntary, however, and while the ministry reported that 29 textiles companies and associations had joined the Textiles Alliance in time for the launch, many key industry players and associations in Germany gave notice that they would not join.

Read more at Deutsche Welte

HGV driver shortage may affect UK supply chain

  • Members of the British International Freight Association – who tend to be truck hirers delivering container and trailer imports from ports to distribution centres – have reported significantly increased waiting times for an available vehicle, much higher costs from haulage companies and surcharges from some shipping lines.
  • The implementation of the new HGV driver regulations – the Driver Certificate of Professional Competence (CPC) – in September has already contributed to a lack of new drivers within the logistics and distribution sector, and the shortage of drivers has been compounded by the imports forecast, as well as the earlier-than-expected peak season.
  • BIFA director general, Robert Keen said: “New HGV drivers are urgently required in the UK logistics business to help alleviate the problems caused by the current shortage, which is leading to significant pressures on logistics costs.”

Read more at Supply Management

Are we in the Golden Age of Procurement?

Rio’s CEO says it’s time “to meddle in the middle”

Rio Tinto’s CEO Sam Walsh put a spotlight on the value that can be delivered by both the C-level and procurement shifting their focus from the top and bottom-line to the “middle line”, when he spoke at the CIPS conference in Sydney last week.

Sam Walsh - CEO Rio Tinto

He said most companies were not making the most of the possibilities of procurement. In fact, research showed that when it comes to procurement, 50% to 90% of companies recognise that they do not employ best practices. This is despite research also showing that companies who get their procurement operations to the standard of the best – can increase their profit margins by 15 per cent.

“Shift your perspective.  Instead of spending your whole time obsessing only about the top line, and the bottom line, focus on the middle line as well.”

Even though turnover and profit are critically important, you don’t hear many people talking about the cost of sales or improvement in their working capital. Have you ever turned on Bloomberg in the morning and heard them say, “Today, Unilever’s cost of sales went up by 3.5%?”

“The middle line is frequently where you can make most difference, securing your competitive advantage, proving your value, showing your mettle,” said Sam.

In encouraging the procurement profession to seize the opportunity, he said “And if the middle’s in a muddle? Meddle! You won’t regret it! You might just make a tonne more money.”

In his speech “The golden age of procurement“ Sam shared some of his thoughts about the importance of procurement from the perspective of a global chief executive. In opening, he mused that there has never been a more exciting or important time to work in procurement. Sam cemented the fact that a lot has changed since he first started out, and went on to praise today’s women and men that are pushing forward, making businesses more innovative, productive, and creating the partnerships that will see us into the future.

One of the areas highlighted for “meddling in the middle” was to focus on innovation.

“You need to collaborate to compete,” said Sam.

Rio Tinto has a whole raft of strategic partnerships that are incredibly beneficial. Strategic partnerships with academic bodies, research institutes, as well as suppliers.

Working closely with key partners, Rio Tinto has established a great record in innovation. Its ‘Mine of the Future’ programme has been developed working with companies like Hitachi, Atlas Copco, Komatsu, Bridgestone, and General Electric. All of which are producing stunning results.

“You might have read about driverless cars in the papers. Rio Tinto already has 53 driverless trucks operating in the Pilbara. Collectively they’ve driven 3.9 million kilometres, and are all operated remotely using GPS,” Sam said.

Another area recommended for “meddling in the middle” was sustainability.

“So the saying goes, we are what we eat. In business, we are what we buy,” he said.

Rio Tinto spent around US$26 billion dollars last year. The decisions it make about where and how it invests this spend can have a huge impact. An important part of its approach is to source locally, and it applies this same approach in other markets as well. For example, at Rio Tinto’s new mining lease area in South Africa’s KwaZulu-Natal region, the company is investing time, money and skills as one of the major employers in the region to develop lasting community businesses that can supply the mine.

Sam reminds us however that all of this doesn’t come without effort; that it’s about getting the skills right too. He says that today’s procurement professionals require a much wider skills-set than was needed when he first started as a trainee buyer at General Motors Holden.

“Today’s procurement professionals need to work smarter, harder and faster.  Procurement used to be predominantly focused on achieving security of supply. Today, we’re operating in a business environment that is far more volatile, uncertain, complex and ambiguous than it was when I started out,” he said.

“We’re getting increasingly used to economic, political, and environmental shocks. As procurement professionals we need to be on top of these changes as and when they happen, we need to negotiate contracts that can withstand sudden and dramatic economic change.”

One of Australia’s top procurement job goes to…

Today marks a big day.

Procurious member, and reigning Asia-Pacific CPO of the Year, Visna Lampasi has been announced as Head of Group Procurement at Australia’s largest retailer, Woolworths Limited.

Visna Lampasi Woolworths

In what was no doubt a hotly contested role, Visna will lead the procurement of all goods not for resale across the Woolworths Limited brands including Woolworth Supermarkets and Petrol, Liquor Group, Big W, Masters Home Improvement, ALH Hotel Group, Woolworths Money, Everyday Rewards and Ezibuy.

For those unfamiliar with Woolworths Limited, the group of companies has approximately 200,000 staff Australia-wide with an annual revenue of $60 billion – one of Australia’s leading groups.

If anyone is up for the task of delivering commercial value in such a high profile role, Visna is having taken out the title of The Faculty’s CPO of the Year 2014 earlier this year.

Visna’s career background spans across a number of procurement roles, most recently operating as infrastructure company Leighton Contractors’ Chief Procurement Officer where she established an award winning social procurement program.

Procurement veteran and Procurious founder Tania Seary welcomed the announcement: “I haven’t had the opportunity to work closely with the Woolworths Procurement team, but I understand they have been through various transformations.

“Within the Australian procurement landscape, the team would be regarded as a mature procurement function,” said Seary.

“Having gotten to know Visna over the years, I know she’s a very talented and tenacious procurement professional who will undoubtedly identify a multitude of sources of untapped value within the organisation.”

Industry peer and Rio Tinto’s General Manager of Global Process Architecture, Cindy Dunham echoed Seary’s sentiments:

“I’ve had the pleasure of working with Visna on a number of procurement professional bodies and know that she’ll bring a great depth of knowledge and experience to the Woolworths Group.

“Visna’s large network is complemented by her industry leadership, influencing skills and dedication. I look forward to her continued commitment to raising the profile of procurement in Australia.”

The Faculty’s CPO of the Year judging panel chairman Dr. Karen Morley also congratulated Visna on the new role.

“Visna’s track record of achieving commercial outcomes, leading cultural change, and balancing social outcomes in tough project management environments sets her up well for further success.”

From the team here at Procurious we’d like to congratulate Visna!

For those wanting to know how she does it, stay tuned for some exclusive procurement advice from the woman of the hour coming soon.

Risk of business disruption has increased by a fifth – which countries are affected?

A new report reports that a fifth of the world’s countries are at risk from business disruption… this and more in our weekly news blast:

Supply chains at risk from civil unrest and war

Risk of business disruption has increased in a fifth of countries

  • The risk of business disruption due to civil unrest has increased in a fifth of countries over the past quarter, according to a report.
  • The ranking of 197 countries, which assesses the likelihood of strikes, protests and ethnic and sectarian conflict impacting business operations, includes 11 states that are considered to be “extreme risk”. These include Syria at number one, followed by the Central African Republic, Pakistan and Sudan.
  • Maplecroft’s Civil Unrest Index shows risk has increased most in Hong Kong over the past three months, due to the pro-democracy demonstrations. This was followed by Liberia where there has been mounting unrest as a result of the Ebola virus outbreak.
  • Maplecroft said firms operating in and sourcing from these countries “faced severe disruptions”. Factories in Vietnam were forced to suspend production during anti-Chinese protests in May 2014, and anti-government protests in Thailand, culminated in a coup and “shut down much of the country’s commercial centre”, halving projected GDP growth to 2.5 per cent.

Read more at Supply Management

World Bank to launch procurement app

  • The World Bank plans to release a mobile application that will give users access to comprehensive procurement data from 2004 to 2014.

  • The new app, which is being rolled out amid an ongoing controversial procurement reform process within the institution, aims to provide more transparency and accessibility to donors and recipients. Once downloaded, the app will be fully functional offline, allowing those in the most remote places full access, according to Joao Veiga Malta, practice manager at the bank’s Governance Global Practice. “What we wanted to do was to be able to provide you the procurement information that the bank had with an easy reach [so] that you did not necessarily need a masters in statistics in order to be able to do an analysis.”

  • The app, Veiga Malta explained, will show the distribution of awards by country and can be organized by civil works, goods, consulting services and nonconsulting services. Users can search by fiscal year, economic sector, donor country or recipient country, and will be able to see graphs, pie charts, ratios, trends and rankings.

Read more at Devex.com

New Spanish brand enters the hot fast fashion market

  • When most people think of European clothes, they immediately think of haute couture creations from Paris with astronomical price tags. If not that, there are the giant label’s prêt-à-porter incarnations which fetch similarly high prices. So the idea of clothes from sunny Spain with price tags on T-shirts at P299 can be a surprise.
  • Those T-shirts come from Sfera (pronounced es-fera), a fast fashion brand from the Spanish company Grupo El Corte Ingles. The company is the largest department store chain in Spain, and under its umbrella, it has travel agencies, convenience stores, and home and DIY stores.
  • Sfera opened its first Asian venture in SM Makati, right inside SM’s department store. “We believe that [the Philippines] is a very mature market, and [it] can give us feedback… [on] the behavior and the Asian taste of the customer,” said Guillermo Lopez Garcia, an international manager from Sfera, as he discussed why the brand decided to bring its fashions here. “We believe that if we can compete and succeed in the Philippines… we can succeed anywhere.”

Read more at Business World Online

Supply chains conservative about 4G handset development in China during 4Q14

  • Handset supply chain makers are continuing to see the effects of lagging 4G handset sales in China as vendors clear out reserves of 3G units.
  • Both vendors and retailers in China are still clearing reserves of 3G handsets as sales have been stagnating following decisions by major China-based telecom providers to end handset purchase subsidies.
  • The subsidies spurred a wave of handset purchasing throughout 2013 into 2014 and were expected to continue for 4G units. However, most telecom providers have limited or even stopped such moves and have yet to reissue new plans for helping to push 4G handsets in China.
  • Panel makers and touch panel makers have seen the brunt of the situation in 2014 and expect conservative orders to China during the fourth quarter of 2014 as a result.

Read more at Digitimes

Kaiser moves to remake its supply chain

  • Kaiser Permanente is trying to remake the hospital supply chain, Forbes reported.
  • The California-based integrated provider is using new software to try and make the ordering and use of supplies for its 38 hospitals, 9.5 million members, 17,000 physicians and 48,000 nurses more efficient and less costly, according to Forbes contributor Steve Banker.
  • That’s a change from Kaiser just five years ago, when nurses and other frontline healthcare workers were responsible for tracking down and ordering supplies, which were often siloed in multiple locations throughout the system. Recalled or expired supplies had to be discovered and returned in a virtually manual process. That form of supply chain management often meant that providers had time taken away from caring for patients.

Read more at Fierce Health Finance

Thyssen to manage Airbus Helicopters supply chain

  • German industrial group ThyssenKrupp  has agreed a deal with Airbus to manage the supply chain of metallic raw materials for Airbus Helicopters.
  • ThyssenKrupp said its Aerospace division would manage procurement, logistics, quality assurance and fine-tuning the management of blanks – unfinished metal that is stamped out of larger pieces of material – for Airbus Helicopters worldwide. It said the cooperation would take place for the “coming years”, without being more specific.
  • ThyssenKrupp Aerospace is part of the group’s Materials Services division, which distributes materials and provides technical services for the production and manufacturing sectors.

Read more at Reuters.com

Initiative to reduce fertilizer use for commodity grain crops launched in US

  • Environmental Defense Fund (EDF) has launched a new, collaborative initiative to eliminate fertilizer pollution as a major environmental concern in the United States. The effort will engage farmers and businesses throughout the supply chain to transform the way fertilizer-dependent grain crops are grown and sourced.
  • “If we’re going to meet food demands for a growing population, we’ve got to decouple production from pollution as soon as possible,” said David Festa, EDF vice president. “The most promising way to accomplish this essential task is by collaborating with decision makers at every point in the U.S. grain supply chain — from retailers and food companies to agribusiness and farmers.”
  • “Our long-term goal is to make the entire U.S. grain supply sustainable — good for farmers, good for the climate and good for our waterways,” said Suzy Friedman, director of EDF’s Sustainable Sourcing Initiative.

Read more at OCJ.com

UK public procurement organisations praised for insurance framework project

It’s a win for Procurious-favourites YPO (and partners)

A collaboration between the largest public procurement organisations in the UK to reduce duplication of effort and achieve savings has taken home the Best Public Procurement Project gong at the CIPS Supply Management Award 2014.

CIPS Supply Management Awards 2014

What was the idea?

The joint venture was headed by the Crown Commercial Service, and YPO, ESPO and NEPO. It provides the public sector with quick and easy access to a wide range of insurance services, including property, liability and motor cover. Since its launch in February 2013 it has already been used by over 260 customers from across the public sector, delivering savings of some £7.6m. It’s also worth noting that individual customers such as local authorities have saved over half a million pounds on their insurance costs.

Of the 29 suppliers on the agreement, a healthy percentage – over 25 per cent are SMEs. This goes some way to demonstrating how the Government’s commitment to improving public sector business opportunities for smaller businesses is working.

The CIPS judging panel said:

“The team demonstrated a creative approach to a category in which procurement can find difficulty gaining traction in.  There is evidence of not only real cash savings but a team that engaged widely with stakeholders and the wider market to deliver outstanding results”.

On the win Sally Collier, CEO of the Crown Commercial Service exclaimed: “I am absolutely thrilled. This is a tremendous accolade for our highly successful collaboration with YPO, ESPO and NEPO. It recognises our commitment to delivering savings for the taxpayer and improving efficiency by working closely with customers and constantly innovating to meet their needs.” 

Paul Smith, Procurement and Supply Chain Director of YPO offered: “The award is a fantastic recognition of the hard work and commitment of all collaborative partners. The aim was to deliver a single approach to insurance procurement across the public sector, streamlining processes and achieving efficiencies. I am delighted that this has been realised and many organisations are already reaping the financial benefits.”

Paul Smith and YPO previously featured in our ‘Is the UK more risk averse than the rest of Europe?’ article. Read it here.

Could Uber’s business model tackle procurement’s next challenges?

In a week that saw the CIPS Conference juggernaut roll into town, and Tesco (still) reeling from overstated first-half profits [more on that here] – you might have missed the following nuggets of news:

The Uber business model could transform supply chain

Copy Uber’s model to tackle procurement’s next big challenges

  • According to CIPS economist John Glen, speaking at the CIPS Annual Conference in London last week, Uber is not actually in the business of taxis.
  • “Uber is in the business of looking out into the world where there is excess capacity and resources that are not being fully utilised and matching the resource with customers who want to use it,” Glen told delegates.
  • “How do you look at capacity that exists within your own business that is not being currently fully utilised, that you could rent out to someone else or use in imaginative ways?”
  • He continued: “We now have to start to be very clever about how we form alliances with our supply chain, how we understand what it is our customer wants, how we use technologies that are out there cleverly with assets and customers in different geographies, and that is going to be our world in the next 12 months and beyond.”

Read more at Supply Management

Rating agencies’ demands pose threat to commodity supply chain

  • Commodity-price spikes could become more common if credit rating agencies drive up the cost of capital for leading trading houses, forcing them to hold less inventory, a leading consultancy has warned.
  • In a new report on the commodity trading industry, co-authored by Graham Sharp, one of the founders of Trafigura, the consultancy says that by including debts associated with trading in its calculation, the agencies could drive up the cost of traders’ capital. As a result, these companies would have “significantly less incentive” to hold high volumes of inventory and resolve potential supply disruptions.

  • The big commodity traders are drawing greater attention from investors as they issue more bonds and financial instruments to help finance the acquisition of assets that range from coal mines to storage terminals and petrol retailers.

Read more at the FT.com

California launches high-speed train procurement

  • The Californian high speed rail programme envisages provision of a ‘one seat ride’ between Los Angeles and San Francisco by 2028 within a budget of $68bn.
  • Expressions of interest are to be submitted to the California High Speed Rail Authority by October 22 from potential suppliers of high speed trainsets for the planned 836 km network that would link the San Francisco Bay Area with the Los Angeles basin by 2028.
  • ‘We are going to have the first true high-speed rail system in America and industry leaders from around the world are eager to talk to us about why their trains should be running on our tracks’, commented CHSRA Chief Executive Jeff Morales. ‘This is a big moment for our programme.’

Read more at the Railway Gazette

H&M’s environmental sustainability coordinator on sustainable materials

  • The Guardian spoke to Erik Karlsson, H&M’s environmental sustainability coordinator, about the environmental credentials of the new line and the H&M partnership with Jeanologia.
  • He revealed: H&M has been working with more sustainable materials for many years now. Currently, we are the largest user of organic cotton. Our ambition now is to be able to close the loop on textiles, ie produce new fibres from old clothes. In this collection we have two products with recycled cotton from our garment collecting program.
  • To create Conscious denim, washes have been scored red, yellow or green (where green indicates the toughest criteria) for water consumption and energy consumption. To meet Conscious denim standards at H&M, garments must be made with organic, recycled or climate smart cellulose materials and the washing process should score ‘green’.

Read more at The Guardian

Hermes on equality in the supply chain

  • Retail Week has published an article that highlights the success Hermes has had in bringing about equality across the business.
  • The writer – Carole Woodhead, is CEO of Hermes.
  • Women hold a third of the main board positions at Hermes UK. In addition, 25 per cent of all senior management positions are females, as are more than 60 per cent of our field team leaders. In terms of the supply chain sector, women are extremely well represented at Hermes and the company is above the industry norm.
  • We have also recently welcomed Clare Bottle to Hermes who has taken up the position of head of courier service. Clare brings more than 20 years of industry experience to the team, previously working as national logistics manager at Lafarge Tarmac. Clare is also vice-chair of Women in Logistics UK and a trustee of Transaid.

Read more at Retail Week

Coca-Cola green branding devalues the colour’s ethical heritage

  • The cola wars are back on again with the launches of Coke Life and Pepsi True but their use of green branding leaves a sour taste in the mouth, says Chris Arnold, creative director, Creative Orchestra and author of Ethical Marketing & The New Consumer.
  • It’s packaged in a green container which implies it’s some kind of natural, ethical, environmentally-friendly product. What’s more, Coke has spent over 100 years associating the brand with the colour red, so this seems a betrayal of the brand to suddenly go green.
  • With two brands, that aren’t exactly seen as ethical brands, their use of green just devalues the use of the colour green and it’s association with natural and environmental products. Coke claims the green is inspired by the green leaf of the Stevia plant. Seriously?

Read more at Marketing Magazine