Category Archives: Procurement News

Closed for business: US West Coast ports shutdown amid dispute

Supply chains across America are facing up to six months’ disruption after 29 ports on the US West Coast, including the two busiest ports in the country, were partially shutdown over the weekend.

An on-going dispute between the Pacific Maritime Authority (PMA) and the International Longshore and Warehouse Union (ILWU) over contracts and working conditions, has led to major delays in the loading and unloading of cargo.

The disruption reached its peak on Sunday morning, with approximately 34 container ships anchored along the Californian coast waiting for access to the ports of Los Angeles and Long Beach.

Labour Dispute

The PMA and ILWU have been locked in contract negotiations since the end of June last year, when the previous contract ended.

Unfortunately, relations between the two parties have soured, with the PMA accusing the ILWU of a deliberate slow-down of work in recent months, something that the ILWU has attributed to changes in practices by the shipping companies. With neither side willing to back down, negotiations have stalled.

In response to the slow-down, the PMA took the decision to suspend port operations for six weekend and holiday days in February, stating that they were unwilling to pay the high overtime rates for weekends and holidays when productivity was so low.

With conservative estimates placing the cost to the US economy at $2 billion per day, President Obama has sent Labour Secretary, Tom Perez, to get negotiations back on track and a deal in place.

Supply Chain Pressures

However, even if a deal is agreed soon, it could take anywhere between two and six months for port activities to return to normal levels. This would then lead to a far greater impact on supply chains already experiencing severe delays to deliveries of a wide range of goods, including agricultural produce, car parts and clothing.

Exports of fresh produce to Asia have been heavily impacted, with many US suppliers now looking to domestic markets for sales as other customers cancel orders. There are also concerns that many retailers will be unable to stock spring clothing lines, leading to lower incomes over March and April.

In the car industry, both Nissan and Toyota have been forced to airfreight parts for US manufacturing operations due to the disruptions. Honda has also confirmed a slow-down in US production due to shortages of parts normally shipped from Asia to the West Coast.

Lack of contingency

There are concerns that many of the companies affected don’t have the necessary contingency plans in place to mitigate the risks of the disruptions. It is felt that many were unprepared for the dispute to last as long as it has and that it has left companies exposed to the delays.

Although some companies like Nissan and Toyota have been able to take steps to mitigate the disruption by using other transportation methods, others have not been able to act in the same way, compounding the delays in the supply chain.

One high-profile victim of the dispute is McDonalds. As Procurious reported earlier this year, the disruption at the coastal ports lead to shortages in produce exports and rationing of fries in Japan. This was a contributing factor to the company’s first full-year loss in the region in 11 years.

For more on this story, follow these links:

http://www.supplychaindigital.com/supplychainmanagement/3831/What-happens-if-the-US-ports-keep-closing

http://www.usatoday.com/story/money/cars/2015/02/14/asian-automakers-parts-cars-port-strike/23380041/

http://www.ft.com/cms/s/0/2be1ed0a-b23a-11e4-80af-00144feab7de.html#axzz3Ru37cVTq

Read on for the other procurement and supply chain stories making the headlines.

Heathrow Airport procurement director offered exec committee place if he ‘reshaped’ function

  • Ian Ballentine, procurement director at Heathrow Airport, was offered a seat on the executive committee if he could “reshape” the function within a year of joining the firm.
  • Ballentine joined the firm in November 2012, and in late 2013 he joined the committee. He said: “I took the job here because the previous chief exec said: ‘I need someone to come on board and really reshape procurement for what I think it can become in an organisation, and if within a year you can demonstrate you can do that then I will give you a place on the board’.”
  • Ballentine started out in charge of procurement for the operations division of Heathrow, but following his success his role was widened to include the remaining IT and construction divisions in a new merged function. His work revolved around changing perceptions of procurement as being “bureaucratic”, “slowing things down and not adding value” to “really demonstrating the savings off the bottom line”.

Read more at Supply Management 

Food chain is an easy target for criminals, says safety chief Alan Reilly

  • Food fraud is still seen as an easy target for criminals and the authorities are not organised enough to tackle the criminals, the outgoing Food Safety Authority of Ireland(FSAI) chief executive Alan Reilly has said.

  • Prof Reilly said food companies must have a threat assessment procedure in place to identify where the food supply chain could be vulnerable to fraud.

  • “The longer that food chain, the more things that could go wrong and the more opportunities for criminals to get in and do things like food substitution and animal species substitution, to bulk out products, to dilute down high-value products like olive oil and so on,” he said.

  • “The food chain is still seen as an easy target for criminals. There is big money to be made in food fraud and at the present moment I don’t think we are organised enough to tackle some of the criminals out there. It does need co-operation across all the agencies of the State, gardaí, customers and the food regulators have to work together to tackle the problem.”

Read more at The Irish Times

BT’s ‘near-monopoly’ on rollout of rural broadband sparks concerns

  • Plans to put a publicly-funded £45.5million superfast broadband contract on to the open market were abandoned after BT refused to bid and left only two potential bidders, a leading member of the project team has revealed.
  • Commissioning group Connecting Devon and Somerset had said last year it would launch a tender process which would take coverage up to 95 per cent of all properties.
  • A previous £94 million contract with BT only promised that 90 per cent of businesses and residents across the two counties would see data transfer speeds increased by 2016.

Read more at Western Morning News

Church charity to research FTSE 100 supply chain slavery links 

  • A church-based charity is to lead research aimed at uncovering potential links between human trafficking and the supply chains of FTSE 100 companies.
  • The study by Us, with the help of Finance Against Trafficking, Ecumenical Council for Corporate Responsibility (ECCR), and Rathbone Greenbank Investments, is motivated by concerns the companies may inadvertently become involved in human trafficking through links with suppliers around the world.
  • Rachel Parry, global relations director for Us, said: “We want to see FTSE 100 companies better informed to help them ensure there is as little risk as possible that their supply chain is somehow touched by the traffickers’ trade.”

Read more at Supply Management 

Supermarkets should encourage small suppliers, not bully them

  • The news that the grocery industry watchdog is investigating Tesco over its alleged mistreatment of suppliers is unlikely to have shocked many. Supermarkets aren’t renowned for treating their suppliers well – particularly those small businesses that don’t have the muscle to put up a fight against unfair contracts and late payments. And as margins shrink in the groceries sector, the supply chain represents an obvious target. The insolvency specialist Begbies Traynor reckons as many as 100 food and drink manufacturers could go bust this year because of the supermarket price war.
  • The irony is that all the evidence suggests consumers are looking for more choice in their supermarket shopping – not ever more brands of washing powder or baked beans, but new products and new product categories. The supermarkets need more innovative smaller suppliers offering artisanal products, not fewer, yet their behaviour is driving firms out of business.
  • Research sponsored by the online grocer Ocado underlines the point. Its poll of shoppers, conducted by YouGov, found that 38 per cent actively seek out small label products when they’re in the supermarket and that 51 per cent rely on their supermarket to introduce them to new products. A third said they were more likely to shop in a supermarket they believe is supportive of smaller businesses.

Read more at The Independent

Kimberly-Clark names SVP global supply chain

  • Kimberly-Clark Corporation has appointed Sandra MacQuillan, 48, to the newly created position of SVP, Global Supply Chain. MacQuillan joins K-C from Mars Inc., where she served as Global Vice President, Supply Chain for Global Petcare. She will be joining K-C in the second quarter.
  • With her appointment, MacQuillan will have global responsibilities for procurement, transportation, continuous improvement, sustainability, and quality, safety and regulatory operations. Labor relations and workforce issues across product supply will also be coordinated at a global level. She will also lead the company’s Global Supply Chain Council, which will be comprised of supply chain leaders from across the globe, and will build the next generation of supply chain capability at the company. She will report to Thomas J. Falk, chairman and CEO, and become a member of K-C’s global senior leadership team.

Read more at Consumer Goods Technology

5 factors to consider when deciding on a supplier

What are the top 5 factors you consider when deciding to partner with a supplier?

Hi there! For an up-to-date article on this topic, please go to: https://www.procurious.com/procurement-news/critical-factors-when-selecting-your-suppliers


The second part of the discussion wrap this month looks at the factors that are considered when deciding on supplier partnerships. The top five factors were (in no particular order):

  • Cultural Fit – including values
  • Cost – covering price, Total Cost of Opportunity (TCO)
  • Value – value for money and value generation opportunities
  • Experience in the market and current references
  • Flexibility
  • Response to change – in orders and products
  • Quality – covering product and service quality and quality history

Okay, we know that’s seven but it was hard to split a couple of the more popular ones!

Other factors suggested by the community included trust and professionalism, strategic and process alignment and technical ability.

The final factors are worth investigating in more detail. It’s critical to have executive level buy-in from both sides otherwise it can cause the relationship to stall. Supplier innovation should also be considered, particularly in line with any cost-cutting or process streamlining efforts by the supplier, as this may in turn lead to value creation for the purchasing organisation.

Finally, it was recommended that buyers should be aware of the breakdown in business percentage on both sides. You neither want to represent a high percentage of the supplier’s business, nor do you want to rely on the supplier too heavily.

For more on this theme, check out the following articles:

The Importance of SRM – https://www.procurious.com/blog/in-the-press/three-key-insights-on-the-importance-of-srm

Take a ‘joined-up’ approach to logistics – https://www.procurious.com/blog/in-the-press/in-logistics-take-the-joined-up-approach

Considering the Right Outsource Partner – http://www.fronetics.com/7-things-consider-choosing-right-outsource-partner/

Meeting of minds in pharmaceutical purchasing

The Beyond Group AG (“TBG”) will be launching its 2015 Productivity-in-Pharma Think Tank, building on the success of their 2014 gathering of minds of senior procurement leaders in the industry.

nikkytok/Shutterstock.com

Kicking off in Frankfurt Germany on April 21, three separate day-long sessions (concluding in September) will help frame the discussion of what is the future of Procurement within the Pharma industry over the next several years.

Drawing together a select group of procurement professionals representing 15 of the world’s leading Pharma companies, TBG and its partners (EY [Ernst & Young], Korn Ferry, UBS, and others) will deeply explore the issue of “Transforming the Procurement organization to become a recognised productivity engine”.

The 2015 series promises to be the most intensive, content-packed, and insightful of this groundbreaking series.

Contrasting with the traditional conference environment, TBG’s Think Tank gatherings offer ‘learning collaboration’ through in-depth & insightful exchanges among industry peers, academics, thought leaders and practitioners. These intensive sessions build upon experience, expertise, and research in a closed-door environment where executives can really get into the detail of their challenges and aspirations. From this gathering of minds, TBG publishes key findings, generates new research and creates a close community of leaders who explore the biggest opportunities to develop Procurement’s role.

Conceived by Giles Breault and Sammy Rashed, principals and co-founders of The Beyond Group AG, the Think Tanks have quickly evolved into a new model where “content is king” and outcomes are published and presented to the wider procurement community. Some of the feedback gathered from previous participants include:

“The Productivity Think Tank concept is a great opportunity bringing together a focused group of international peers around a relevant topic. Half-way between a symposium and structured meetings with peers, the Think Tank combines the benefits of both worlds with deep analysis, strong networking, useful outcomes, and applicable takeaways”

“It’s a mix of academic expertise, real world experience and cross-industry best practices which allows us to collectively create solutions that fundamentally change the way we look at procurement and value its contribution”.

This year’s European series is limited to a maximum of 15 member companies. It will be followed a new series for the North American region this fall and expanding to the Asia market in 2016.

For more info please contact us at [email protected] or visit our website at www.beyondgrp.com.

Straw houses: no need to fear the Big Bad Wolf

We’re all familiar with the tale of the three little pigs and how the Big Bad Wolf blew down the first little pig’s house, a questionable dwelling built entirely from straw.

Apart from having us wonder how it stood up in the first place without a frame, we all grew up knowing that a house made of straw was a bad idea.

However, an engineering research project in the UK is showing that maybe the little pig was ahead of his time in construction innovation. This week, the first straw houses offered on the open market in the UK are up for sale.

So huff and puff as much as you like, but you’re going to have to try harder than that to blow these houses down!

Building with bales

The research project was the brainchild of the University of Bath and Modcell, a specialist architectural firm. The hope is that the research, and the subsequent sale of the houses in Bath, will lead to the wider use of straw bales in construction.

The benefits of using straw are worth noting. Straw bale houses are more environmentally friendly to build and maintain than traditional brick houses and with proper care, the house will last for up to 100 years.

As straw is a natural material, the requirement for the production of raw materials will be reduced. This will in turn lead to a lower carbon footprint for the supply chain as the processes for manufacturing cement and firing bricks, both of which require high energy usage and generate substantial waste, will not be required.

Straw can be sourced relatively easily. Each year, UK agriculture produces an estimated four million tonnes of straw, of which only a small proportion is used, with the remainder just being burned. A new house would require seven tonnes of straw to build, meaning that there would be a potential to build half a million new homes from the straw produced each year.

Not only are the building method and supply chain more environmentally friendly, but also the houses themselves have significantly lower running costs and environmental impact. The bales provide highly efficient insulation and retain heat more effectively than their brick counterparts. The expectation is that the houses in Bath will have energy bills that are up to 90% lower than similar houses in the area.

Innovative construction

In recent years, the construction industry has made significant strides to reduce the environmental impact of and waste in its supply chain. Innovations have included:

  • The ‘house in a box’
  • The use of recycled materials in concrete – leads to reductions in fossil fuel and greenhouse gas production, rain acidification potential and waste
  • Bio-based composite building materials
  • Roof tiles that remove nitrogen oxide from the atmosphere

It’s hoped that these innovations, plus the potential for a wider market for straw houses, could lead to a much more sustainable supply chain and industry as a whole.

For more on the straw houses go to http://www.modcell.com/.

Read on for more of the biggest stories commanding headlines right now:

New guidance aims to keep products of pirate fishing out of UK supply chain

  • Illegal “pirate” fishing damages the environment and human rights, and leads to economic losses of as much as $23.5bn (£15.3 bn) a year, according to fresh guidance which aims to help British businesses keep illegal fish products out of the supply chain and stamp the practice out.
  • A briefing published by retailers, conservation and human rights groups sets out in full how retailers and suppliers should act to end the long-term threat to the oceans, while building up legal and sustainable fisheries.
  • The briefing by the British Retail Consortium, Environmental Justice Foundation and WWF UK is to inform UK industry, retailers and brands of the risks associated with illegal, unreported and unregulated or pirate fishing. It offers advice on risk-assessment and mitigation, and encourages action to prevent illegal fishery products entering UK supply chains. As much as 26 million tonnes of illegal fish products is involved annually.

Read more on The Guardian

Fresh row for Tesco as supermarket giant demands suppliers cut prices as food commodity values fall

  • Tesco risks a fresh dispute with suppliers after it demanded they cut their prices or risk being dropped from supermarket shelves.
  • The grocer has written to suppliers asking them to reflect recent falls in the cost of commodities such as wheat and sugar. In some cases, those who do not decrease their prices have been told they risk being ditched by the supermarket in favour of cheaper rivals.
  • The revelation comes only days after the grocery giant faced a fresh investigation into claims that it bullied firms that it buys goods from. A probe by the supermarkets watchdog the Grocery Code Adjudicator has begun over allegations it charged huge sums to place suppliers’ wares on prominent shelves, even if they were not on promotion.

Read more at This Is Money

How Will Global Supply Chains will be Impacted by Obama’s Budget?

  • In his 2016 budget plan, to be unveiled today, President Obama will propose that U.S. companies’ overseas profits be taxed to fund a major boost in infrastructure spending. These tax proposals could change the way the Tax Efficient Supply Chain (TESC) operates.
  • When highly profitable companies pay little in the way of taxes, negative press coverage can ensue.  But CEOs are asked by financial analysts about their corporate wide effective tax rate (ETR) all the time. This can be a no win situation for a CEO. A company with a high effective tax rate is at a significant disadvantage to industry competitors with low tax rates, particularly in the company’s ability to grow the business. And ultimately a CEO’s tenure is often most strongly impacted by the financial community’s view of his company’s performance.  Not surprisingly, many large companies have restructured to lower their tax burden; it is not unusual for these companies to lower their ETR by about five percent.
  • While supply chain cost savings fall to the pretax bottom line and improve a company’s Net Income position, corporate tax restructuring increases deferred revenues.  Some large corporations are sitting on tens of billions in deferred earnings that can’t be used for stock owner dividends, without being taxed at US rates, but can be used to fund growth and thus future earnings, in a variety of ways.

Visit Logistics Viewpoints to read more

Distribution demands drive investment in logistics properties

  • Ecommerce is fuelling a boom in logistics property investment in Europe, as retailers try to keep pace with changing consumer demands.

  • Investors pumped €19.8bn into properties such as warehousing and distribution hubs in 2014, a seven-year high and a 34 per cent jump year on year as companies scramble to adapt to evolving supply chains and developers position themselves to profit from the thriving sector.

  • The UK led the way, with investment in the sector jumping 65 per cent to €7.9bn, according to Property Data. But investment accelerated on the continent too, as European eretailers expanded and cross-border ecommerce took off.

  • “You’re doing the stuff inside the distribution centres that you used to do inside the shop . . . Companies are having to reorganise their distribution logistics,” said Alan Braithwaite, chairman of LCP Consulting.

Read more at the FT.com

The businessfriend platform offers new way for supply chain execs to do business

  • In a world full of technology, it can become a hectic existence trying to wade through the myriad of business apps as part of your day-to-day working life. But there is a new platform on the horizon which could solve this issue for supply chain executives.
  • Businessfriend is the one-stop communications channel that helps you stay connected with the people and professionals that matter the most to you. Whether that be warehouse operatives, production line managers or managing directors. Consolidating the noise with one effective business communications platform, businessfriend launched on 6 January during the three day CES event in Las Vegas, and it promises to redefine how business is done in the supply chain sector.
  • Glen White, Founder and CEO of businessfriend, said: “On any given day, the typical young professional can have as many as five platforms open to get them through their day. “We offer one complete forum that enables constant connectivity for optimal business communications. One mobile app, one desktop, any device – no more juggling apps.”

Read more at Digital Supply Chain

McDonald’s and the Challenges of a Modern Supply Chain

  • Recently, McDonald’s, the world’s iconic largest food service provider, has been (forgive the cliché) through the grinder. Poor performance has led to the departure of its CEO and plenty of critical attention in the business pages. Part of this story relates to the provenance, or origins, of its products: Chains that provide more upmarket “fast casual” dining such as Panera, Chipotle, and Shake Shack have brands that speak of freshness, health, and trustworthy sourcing.
  • In 2010, I wrote an HBR article predicting increased interest in supply-chain transparency: firms needed to develop strategies for knowing and explaining where stuff comes from. Since then the idea of product provenance has steadily crept up the corporate agenda and is now a compulsory issue for boards and governments. In the UK, for example, legislation is in progress that would build on the California Supply Chain Transparency Act, potentially applying to wider range of firms. Across Europe, the 2013 horsemeat scandal generated widespread panic about contaminated meat. In a wide range of industries — electronics, software, toys, aerospace — provenance is increasingly a critical concern.
  • McDonald’s woes offers three lessons for others about supply-chain transparency. Visit Harvard Business Publishing to read them.

How to navigate the tricky path to procurement accreditation

At Procurious, we are all about changing the face of procurement and encouraging and engaging with the next generation of procurement professionals.

Discussion wraps allow us to consolidate the knowledge of the whole community and keep the conversation going on the key issues and themes.

Achieving and Leveraging Professional Accreditation

People are constantly looking to develop personally and professionally. A number of questions have been asked about accreditation – routes for achievement, how it can be leveraged, is it worth it and how to get into it.

There are a few routes for accreditation open to procurement professionals, with the most common being CIPS through study and exams, an MSc through an accredited university or distance learning.

While there was no consensus on the best route to take, there was a consensus that having these qualifications and being a member of CIPS was necessary for procurement professionals and often used as a requirement for recruitment.

Things to consider when selecting a route were:

  • Practical application
  • Acceptability in your organisation
  • Balance of theory vs. practice
  • What your long-term career goals are
  • What you as an individual want to do

One of the agreed themes was that many organisations would sponsor studying through the CIPS route, as they push for their departments to be adequately qualified.

Having achieved MCIPS, or other accreditation, the question was could you leverage it in salary or promotion negotiations.

The consensus from the community was that these qualifications added value to your personal offering, but that having them would not normally lead directly to an increased salary in isolation.

It was important to demonstrate improvements, highlight practical applications and present a track record of accomplishments to managers in order to properly leverage qualifications.

For more on routes to MCIPS, go to the CIPS website: http://www.cips.org/en-GB/membership/What-is-MCIPS/Routes-to-Membership/

For distance learning opportunities, check out the recommendation from the community of Canban: www.canban.org

What is going on with the Swiss franc?

In a move that has hurt skiers, chocolate lovers and international investment banks alike, the Swiss National Bank (SNB) decided on January 15th to unpeg the country’s currency, the franc, from the euro.

Update – Since the time of writing the Swiss National Bank has signalled it will target a new exchange rate band, to find out more click here 

The repercussions of this decision have reverberated across the globe. Despite The Wall Street Journal reporting that J.P Morgan (an investment bank) stands to make up to $300 million USD as a result of the decision, the news for most financial agencies has been overwhelmingly bad.

Citigroup, suggested its losses will be in realms of $150 million USD and exchange agencies from New Zealand to New York City have hinted that troubled times and closures lay ahead after the unexpected currency shuffle.

Even English football has been impacted, with the jersey sponsor of West Ham United, Alpari UK (a foreign exchange dealer), filing for insolvency.

Currency changes and international finance have never been subjects I’ve been comfortably able to wrap my head around. So I have tried to tackle the unpegging of the franc from an entirely pragmatic point of view. What happened? Why did it happen? And what is the impact on procurement professionals?

Why was it pegged in the first place?

The Swiss government has traditionally been seen as a sound custodian of financial affairs, its stable government and balanced economy has seen business and investors flood the country with foreign cash. While this sounds like good news, the tide of foreign money drove up the value of the franc, which had a severe impact on the country’s significant export sector. Essentially, Swiss goods became expensive, too expensive.

In 2011, as European consumers remained dormant in wake of the credit crunch, the Swiss National Bank made a perhaps short-sighted decision to peg the value of the franc to that of euro, thus making Swiss goods more affordable across the continent.

Why did they unpeg it?

A number of different theories have been banded about as to why the bank elected to unpeg the franc – some of the more popular are listed below:

  • The SNB held fears that the consistent devaluation of the euro (in recent months and years) would be detrimental to the Swiss economy. This uncertainty is supported by political instability in some of the Euro zones more debt-laden countries.
  • The SNB was pre-empting the European Central Bank’s decision to introduce another quantitative easing program and decided that the printing of money required to carry out this program would further weaken the euro.
  • The SNB was responding to public concerns that the enormous $480 billion USD of foreign currency the bank now holds (as a result of its euro pegging) could lead to higher inflation levels, or even hyper-inflation.

Potentially, the bank simply wanted to unmake a poor decision it made in 2011. As the Economist magazine suggests, “When central banks manipulate exchange rates, it almost always ends in tears”.

What should procurement teams do? 

Whether the euro pegging was a good idea or a bad idea is now irrelevant, what we are left with is a situation where the Swiss franc is worth significantly more than it was two weeks ago. The valuation of the franc is likely to fluctuate further in the coming weeks, but experts are predicting it will remain high against the euro and other currencies.

Below are some points procurement teams should consider addressing when determining how this currency shift will impact their operations:

  1. Understand the exposure of your supply base to the Swiss franc. If you have got strategic suppliers based in Switzerland, their products and services have just got significantly more expensive, perhaps its time to look for substitutes.
  2. Understand your company’s internal exposure to the Swiss franc. The secure economy and friendly tax rates in Switzerland encouraged many international businesses to set up their European operations in the country. As a way to reduce their exposure to the now expensive franc, these businesses (as well as many native Swiss firms) may now be looking to ‘internally restructure’ as our friends in HR like to say.
  3. Prepare for a more competitive outsourcing environment. Swiss companies (and international firms with a Swiss presence) could try to minimise the impact of the strengthening franc by leveraging lower cost destinations and start outsourcing more work.

How is the changing value of franc impacting you? Fill us in on your concerns in the comments below.

Super Bowl XLIX: did it pay off for the advertisers?

Feeling a bit tired this morning? You might be one of the estimated 4 million Brits who watched the Super Bowl last night? Don’t worry, no spoilers here for those who have recorded it!

If you did watch the game, or have been following the coverage over the last week, you will have heard almost as many stories about the adverts as you have about the game itself.

The NFL’s marquee event boasts an estimated 112 million viewers worldwide and, with breaks in play every few minutes and an extended half-time interval (complete, this year, with Katy Perry), the 30-60 second advertising slots are like gold dust.

What’s the big deal?

The size of the audience, profile of the game and the advertising tradition are just part of the attraction for big companies. Several studies have proven that 50 per cent of the Super Bowl audience tunes in just to watch the adverts.

Big names this year included Budweiser, Victoria’s Secret, Doritos and many more. From a marketing point of view, there isn’t another event anywhere in the world that gives companies an opportunity to get their brand into the public consciousness in the same way.

Conversations about adverts start weeks before the Super Bowl when the advertising line up is announced, and can last for weeks or months after, particularly if you nail the advert. Check out which adverts have gone down this year here.

Facts and Figures

  • $359 million – the estimated value of all the advertising for the Super Bowl this year.
  • $4.5 million – the cost for a 30-second advertisement at any time during the game. Divide it down and that’s an eye-watering $150,000 per second!
  • $42,000 – what the cost was during the first Super Bowl in 1967. Costs are increasing year on year at a massive rate.

And these costs are only for purchasing the slot from the network. Companies have to factor in creating the advert, with some going really overboard.

Does it pay off?

That’s the $4.5m question and the answer might be yes. In the coming weeks, the best adverts will be featured and shown in full on TV shows, blogged about, discussed and re-watched on YouTube. The PR value generated from this can quadruple the media cost for the advert.

In 2014, a survey of 37,440 U.S. consumers by the tech firm BrandAds found that the average Super Bowl ad increased viewers’ likelihood of buying the product by 6.6 per cent. Larger brands like Hyundai and Budweiser saw increases of 39.5 per cent and 37.8 per cent respectively.

Other companies have seen similar sales increases. Audi, with advertising slots during the Super Bowl since 2006, have doubled their market share, while Skechers (26 per cent) and Chrysler (54 per cent) have seen big increases in sales.

Worth the risk?

It’s still debatable even with figures like those above. There’s no guarantee that your advert will be a success and no guarantee you’ll see similar sales bumps.

But, even with that in mind, would you want to be the one name that wasn’t at the biggest party of the year?

The Super Bowl in Numbers

  • $10 million – the cost of the half-time show, paid for by the NFL. Artists aren’t paid but can expect considerable sales on the back of an appearance.
  • $58,780,000 – the sum total of the basic salaries of the highest paid players for the New England Patriots and Seattle Seahawks
  • $8 billion – the total gambled on the game (worth noting that in most states gambling is illegal)
  • 325 million gallons – the volume of beer drunk during the game
  • 1.23 billion – the number of chicken wings that were eaten in the US yesterday

Read on for more of the biggest stories commanding headlines right now:

Qatar Airways acquires $1.7 billion stake in IAG

  • As part of efforts to enhance operations and strengthen existing commercial ties initiated through codeshare agreements with IAG as well as its membership of the oneworld alliance, Qatar Airways has acquired a 9.99 per cent stake in IAG.
  • Non-EU shareholders of IAG including Qatar Airways are subject to an overall cap on non-EU ownership as a result of the requirement for EU airlines to be majority owned by EU shareholders. Qatar Airways may consider increasing its stake further over time although this is not currently intended to exceed 9.99 per cent.
  • Akbar Al Baker, Group Chief Executive of Qatar Airways, said: “IAG represents an excellent opportunity to further develop our Westwards strategy. Having joined the oneworld alliance, it makes sense for us to work more closely together in the near term and we look forward to forging a long-term relationship.”

Read more at Supply Chain Digital

Ex-Zomato CMO’s Yumist raises $1 million from Orios to deliver food efficiently

  • Yumist, a food delivery startup that started operations in Gurgaon in October 2014 has raised it’s first round of funding from Orios Venture PartnersYumist was founded by Alok Jain, a technology entrepreneur and ex-CMO at Zomato along with Abhimanyu Maheshwari, a seasoned F&B entrepreneur. to provide easy access to tasty and homely daily-meals.
  • A combination of food, logistics and tech, Yumist owns the entire delivery supply chain. It allows customers to place orders in a few seconds through it’s Android app and the meal is delivered hot in under 30 minutes.
  • The investment will be used by Yumist to grow it’s team, expand geographically and build it’s production, technology and delivery infrastructure.

Read more at YourStory

Walmart and Target move forward joint supply chain initiative

  • Walmart, Target and NGO Forum for the Future (FFTF) have set up three working groups to take forward actions agreed at last year’s beauty and personal care product sustainability summit. The groups will focus on aspects of chemicals in products, says Michelle Harvey of the Environmental Defense Fund, co-chair of two of them.
  • During the summit in September, priority chemicals and transparency emerged as one of the main issues to work on, according to an FFTF report. Delegates identified five areas for action. These included:
    • Making disclosure easier and more consistent, building trusted relationships along the supply chain and facilitating a willingness to share information.
    • Reaching alignment on the process of prioritising chemicals.
    • How to facilitate more research and development into alternative chemicals.
    • Exploring what stakeholders can do to contribute toward the industry’s sustainability efforts.
    • Engaging and educating consumers on the science behind priority chemicals in a way that is meaningful and accessible.

Read more at Chemical Watch

DWC unveils plans for aerospace supply chain facilities

  • Dubai World Central’s (DWC) Aviation District has announced the development of new aerospace supply chain facilities as part of its efforts in shaping a comprehensive ecosystem dedicated to the aviation industry.
  • Located at the DWC Aviation District – a 6.7 square kilometre master planned district adjacent to Al Maktoum International Airport – the development will include three facilities spread across an area of 45,000 square metres.
  • Estimated to cost $32.6m (AED 120 million), the project will feature a multi-purpose building for tenants that are a part of the aerospace supply chain and is scheduled for completion in Q1 2016.
  • Tahnoon Saif, vice president, Aviation District, commented: “This project marks the latest milestone in our journey to create value-added infrastructure for players across the aerospace supply chain spectrum.

Read more at Arabian Supply Chain

Supply chain finance schemes: a worrying new trend?

Diageo under fire for increasing payment terms

The Forum of Private Business (FPB) has this week launched a scathing attack on beverage giant Diageo over its plans to extend supplier payment terms from 60 to 90 days in its UK business.

Diageo let suppliers know, via a formal letter, that the payment terms changes would come into effect as of February 1st 2015. The firm announced that the new terms make up part of a “different procurement process” the company plans to implement for future tenders.

Diageo justified the move by stating:

“Diageo continually looks for ways to enable us to invest in the growth of our great brands. This activity supports the long term sustainability of our business and yours.”

Speaking on Diageo’s move to extend payment terms, Phil Orford, the chief executive of The FPB said: 

“We are very concerned, but sadly unsurprised, to learn that Diageo is yet again extending its payment terms, a practice that is hugely damaging for small businesses.”

Countering criticisms that lengthening payment terms will be highly detrimental to small and medium size enterprises in the company’s supply chain; Diageo announced that it would offer supply chain finance programs to any businesses adversely impacted by the new terms.

Supply chain finance programs allow suppliers to access money they are owed more quickly by leveraging the favourable credit lines of larger buying organisation.

In response to this move Mr Orford claimed:

“The practice of big businesses using a supply chain finance scheme in order to extend payment terms and protect their own cash flow is a worrying trend that is spreading across sectors and industries.”

The FPB is now working with the Institute of Credit Management and Department of Business Innovation and Skills to have Diageo’s status as a signatory to the Prompt Payment Code revoked.

The WEF 2015 – where, why and what happened?

“Social media has created a historical shift from the historically powerful to the historically powerless. Now everyone has a voice.”

Sheryl Sandberg, COO and Member of the Board, Facebook at the WEF, Davos, 2015

The World Economic Forum

Unless you have been deliberately avoiding the news over the past week, you’ll be aware that The World Economic Forum has just taken place in Davos.

What is it?

According to the founder, Professor Klaus Schwab, the Forum is “a platform for collaborative thinking and searching for solutions, not for making decisions”.

What this means is that business leaders, thought leaders and politicians, as well as some celebrities, gather together to share ideas with the intention of bettering the world.

Does it work?

The jury is still out for many people. A lot of people look upon the event as a who’s who, rich-list party in the Swiss mountains, others that there isn’t enough tangible output from an event able to gather together a group of individuals with sizeable clout.

However, if these leaders leave Davos with fresh ideas on how to solve the major issues in the world, then, for the rest, the Forum will have fulfilled its purpose.

What were the major topics this year?

Key topics on the table this year included the falling price of oil, the Greek election, a growth agenda for Africa, how technology is changing our lives and what the future holds for Iraq. Check out www.weforum.org for the full programme.

Is there anything we take away?

From a Procurement point of view, we know that there were discussions around procurement efficiency on the agenda (as part of wider topics), as well as the business role in environmental sustainability. We should hear some details coming out over the next few weeks.

As we also reported on Procurious, the WEF raised the issue of cyber security. It certainly got people talking about what they needed to be doing and even came close to a consensus on an idea for a global body that sets cyber-security standards.

Otherwise, we would encourage you to check out some of the video content on the WEF website. For one thing, we’ll probably never have the chance to see Pharrell Williams on stage with Al Gore again!

Read on for more of the biggest stories commanding headlines right now:

DHL Express launches helicopter delivery service

  • DHL has launched a helicopter delivery service in the UK that promises next day delivery on packages from New York, Boston and Chicago. The new service, a first for the UK, will ferry up to 300kg of packages between London’s Heathrow Airport and major London business district Canary Wharf.
  • Fully operational from February, it follows similar operations launched in New York and Los Angeles.
  • “This new service from DHL Express offers even greater speed and reliability to our customers,” John Pearson, chief executive of DHL Express Europe said. “For the financial and professional services sector in particular, time really is money, so we are always looking for innovative, more efficient ways to move our customers’ shipments.”

Read more at Arabian Supply Chain

FSB tackles supply chain bullying at Whitehall

  • The Federation of Small Businesses (FSB) has hosted a cross-party group of MPs to identify possible solutions to the deterioration of payment practises in the UK.
  • Recent research by the FSB revealed that almost one in five small businesses had been subject to some form of poor payment tactics recently.
  • FSB national policy chairman Mike Cherry said: “It is simply unacceptable for any company to exploit its market position to enforce unfair and unreasonable payment terms. The money outstanding in late payments is in the billions and has consistently grown larger and larger. We need greater leadership from all parties competing to be in the next government to toughen up the prompt payment code and improve the UK’s payment culture.”

Read more at PRW.com

China smartphone supply chains estimate demand to pick up in March

  • China smartphone supply chain makers estimate they will begin shipments for new devices following the Lunar New Year period as local handset vendors remain concerned over clearing out inventories through the early part of first-quarter 2015.
  • Smartphone shipments were lower-than-expected in the China market during the second half of 2014, which many makers attribute to lagging 4G development and a lack of smartphone subsidies from local telecom providers in China. This led to a pile up in inventory, which vendors are now trying to tackle throughout the 2015 Lunar New Year period when sales are expected to get a boost.
  • Supply chain makers are optimistic, however, that shipments will pick up by March, and estimate that most handset replacement demand from consumers in China during 2015 will be for handsets sized 5-inch and above. Shipments will further pick up going into the second quarter, the makers noted.
  • Many supply chain makers believe that China handset vendors’ shipments will increase 17 per cent in 2015 as the vendors tackle low-priced solutions in emerging markets. Global smartphone shipments in 2015 meanwhile are estimated to grow 12 per cent to around 1.3 billion.

Read more at Digitimes

Top 10 supply chain CEOs of 2015

Supply Chain Digital has published a list of its top 10 supply chain CEOs for the year ahead.

[In ascending order] it named Nills S Andersen of Maersk, Dr Frank Appel of Deutsche Post DHL, and Frederick W. Smith of Fedex in its top 3.

To see the full list (along with selected career highlights from those included) head over to http://www.supplychaindigital.com/top10/3800/TOP-10-SUPPLY-CHAIN-CEOs-2015

How Tesco uses the cloud to work with its suppliers

  • Tesco is using online trading partner community solutions to embrace and extend its Oracle ERP and procure-to-pay systems and has significantly increased automation levels in their B2B e-commerce network during the last twelve months.
  • As a result Tesco has reduced the time to set up and approve new suppliers by 66 per cent.
  • With the help of GXS, Tesco has tackled the challenges that have, in the past, prevented some of its trading partners from adopting EDI. Tesco has significantly increased automation levels in their B2B e-commerce network during the last twelve months.

View the full findings of this case study at Supply Chain 24/7

 

Does procurement have a role to play in cyber security?

In the past few months alone there has been a significant number of cyber attacks on high profile targets including Sony Pictures, celebrities’ phones and personal computers, and, just recently, an attack on the US Military Command’s Twitter account.

Now, as the World Economic Forum labels emerging technologies as one of the major global risks for 2015 in light of these attacks, we consider what procurement can do to aid organisational efforts in cyber security.

How big a worry is this?

If the WEF is highlighting it as a major global risk, then it’s certainly something to be taking seriously. Emerging technologies will allow hackers and cyber terrorists to carry out attacks that are more sophisticated and harder to stop. Additionally, there is a reported increasing skills shortage in cyber security personnel, expected to peak in 2017.

However, it’s not all bad news. The high-profile attacks have helped increase the focus on this subject. As a result, the UK Government has issued advice and information to organisations to help them be cyber-safe, as well as signing up to a second US-UK Cyber Security Innovation Summit. There are also now cyber governance health checks and a Cyber Essentials Scheme available to help organisations.

Procurement’s Role

A representative from the organisation that compiled the WEF report, Marsh & McLennan Companies, was quoted as saying “As a company you are not protected [against cyber attacks] unless your supply chain is protected.”

So what can Procurement do to help? Individually, you can do everything you would do to protect your personal accounts and computers:

  • Report all phishing and suspicious e-mails
  • Don’t click on links in e-mails unless you are sure of the source
  • Be wary of unsolicited e-mails asking for information

There are other steps that you can take as part of an organisation to assist with the overall security

  • Ensure your knowledge is up to date by attending conferences
  • Work with suppliers to put security plans in place
  • Make security plans part of your evaluations
  • Take responsibility in your team for checking and ensuring compliance
  • Investigate the Cyber Essentials Scheme

By making this part of day-to-day activities, procurement can do its bit to make organisations more secure.

Biggest Global Challenges in 2015https://www.procurious.com/blog/trending/what-are-the-biggest-global-challenges-in-2015

Cyber Security Boosthttps://www.business-cloud.com/articles/news/cyber-security-boost-uk-firms

Cyber Essentials Scheme (UK)https://www.gov.uk/government/publications/procurement-policy-note-0914-cyber-essentials-scheme-certification

Read on for more of the biggest stories commanding headlines right now:

Supply Chain woes help doom Target in Canada

  • Minneapolis-based Target Corp. said Thursday it was shuttering its 133 stores in Canada, laying off 17,000 workers and placing its Canadian operation under bankruptcy protection.
  • “While this is a difficult decision, we believe it is the right one for Target,” Brian Cornell, Target chairman and chief executive officer said in a press release. “We had great expectations for Canada but our early missteps proved too difficult to overcome.”
  • New York Times article Friday said that supply chain problems helped doom Target’s operations in Canada. “Differences in suppliers and other factors meant that Canadians found Target’s Canadian stores to be more expensive than they anticipated, and a poorly executed distribution network meant that shelves were often missing basic products,” according to the Times.

Read more on CFO

Troubled McDonald’s Japan to put CFO in charge of supply chain 

  • McDonald’s Japan Holdings Co is putting its chief financial officer in charge of its supply chain, according to an internal email seen by Reuters.
  • The move comes after foreign objects were found in customers’ food, the latest trouble for a fast-food chain hit by sliding sales and a shortage of french fries.
  • Andrew Brough, senior vice president and chief financial officer, will take over the company’s Supply Management Division from Feb. 1, the Friday email from CEO Sarah Casanova said. The email does not say who was previously responsible for the supply chain.
  • Hidehito Hishinuma, senior vice president and chief support officer, has in recent days appeared at news conferences to discuss the company’s procurement, in one case apologizing for the objects, including a tooth and plastic, getting into food.

Read more at Business Insider

Yusen Logistics expands Sydney operations

  • Yusen Logistics Australia has announced that it will open its sixth Sydney warehousing facility this month. The site is at Greystanes in Western Sydney and is ideally located for all major arterial routes.
  • The new warehouse, which is dedicated to a major US retailer, consists of 12,500 square metres and will comprise 18,500 pallet locations. Operations will commence immediately.
  • Yusen Logistics’ Managing Director for Australia, Ian Pemberton said: “This additional facility continues the expansion of our portfolio in line with our three year growth strategy, and demonstrates our commitment to increase the range of international clients to whom we provide supply chain solutions. The capital investment is in excess of $2 million Australian dollars and the facility will employ an additional 25 Yusen staff.”
  • Yusen Logistics Australia is a leading provider of supply chain and transport solutions with over 26 years of service in Australia and revenues of over $125 million Australian dollars in 2014. The business has 12 offices throughout Australia with 420 people covering international freight forwarding, in-house customs clearance and contract logistics (warehousing and distribution) services.

Read more at Supply Chain Digital

Jailed Military procurement official blackmailed

  • Former Greek secretary general for military procurement Yiannis Sbokos is being blackmailed by a fellow convict, revealed a Greek police case file. Sbokos has been in prison for the last two years, since his conviction for money laundering.
  • According to the case file, Sbokos is being blackmailed by a convict (Yiannis Sk.) who found out that the former Greek government official had 10 million euros in cash. Yiannis Sk. allegedly received this information from Akis Tsochatzopoulos, fellow convict and former Greek Defense Minister.
  • Yiannis Sk. allegedly threatened Sbokos, requesting part of the money. However, when the former official refused, his fellow convict attempted to bomb his house in Athens.
  • Sbokos and Tsochatzopoulos were imprisoned after it was revealed that they had received multiple bribes for arms deals during their time at the Ministry. Furthermore, it was revealed yesterday that Tsochatzopoulos had ordered a bombing attack against Sbokos.

Read more at Greek Reporter

Thailand drafts public procurement law following UNDP review

  • The Thai government is drawing up legislation to manage the risk of corruption in public procurement, following the UN Development Programme’s ‘integrity risk assessment’ of the country’s public purchasing system.
  • The assessment found evidence of “weak integrity in public contracts” and a concentration of improvements in public services in Bangkok and the central region, leaving “significant deficiencies” in other parts of the country.
  • Risks to integrity in Thailand’s non-regulated public procurement process are “rife” because of the large amounts of money at stake and the interface between the government and private sector, which is characterised by a high volume of transactions.
  • The assessment was conducted as part of the ‘Mitigating Risks to Integrity in Public Procurement project’, established by UNDP Thailand with key stakeholders in the Thai Government, including the Offices of Public Sector Development Commission and Public Procurement Management Department and the State Enterprise Policy Office.

Read more on Supply Management