Category Archives: Procurement News

Executive Recruiter: 4 Must-Have Attributes For Aspiring CPOs

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

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

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

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

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

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

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

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

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

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

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

What are you most excited about seeing at ISM2017?

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

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

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

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

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

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

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

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

Desperation: Somali Piracy Back On The Rise

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

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

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

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

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

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

What drives people to risk piracy?

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

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

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

In other news this week:

Uber to unveil flying taxi service by 2020

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

Read more at Smartcompany.com.au

 ISO 20400 launched to support sustainable procurement

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

Access ISO 20400 here.

One Skill To Rule Them All

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

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

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

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

Communication is king

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

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

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

Know your data

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The Duty of Care Law

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

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

Developing A Diligence Plan

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

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

This article was first published on the EcoVadis Blog

Procurement Is Everywhere But It Wears Hundreds Of Disguises

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

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

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

The many disguises of procurement

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

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

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

What challenges do mid-sized companies face?

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

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

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

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

What are your media consumption habits?

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

Gender Diversity: Would You Leave $12 Trillion On The Table?

Anne Tesch is one of those professionals who has facts and figures at her fingertips to back up every point she makes. As she tells Procurious, it’s vital that supply managers have the facts in their possession when pursuing a goal as important as increasing gender diversity.

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Why should gender diversity be high on every company’s agenda?  

Where should I start? There’s a vast amount of global research and evidence on the importance of women’s economic empowerment and the benefits of hiring women-owned businesses. To list a few key studies:

  • McKinsey’s Global Institute report found that $12 trillion could be added to the Global GDP by 2025 by advancing women’s equality. Economies most impacted (with GDP gains) would be India (16%), Latin America (14%), China (12%), and Sub-Saharan African (12%);
  • Another McKinsey survey found that 34% of companies said working with women-owned suppliers had increased their profits;
  • Women perform 66% of the world’s work, produce 50% of the food, but earn only 10% of the income, and own very little of the world’s private property;
  • There are approximately 187 million women entrepreneurs worldwide who own between 32% and 39% of all businesses in the formal economy;
  • Women dominate the global marketplace by controlling more than $20 trillion in consumer spending that will rise to $30 trillion in the next decade; and
  • According to research conducted by WEConnect International, women-owned businesses globally earn less than 1% of the money spent on products and services by large corporations and governments.

What are your recommendations for supply managers looking to increase their engagement with women-owned businesses?

1. Know your numbers

Firstly, it’s important to know the percentage of women-owned businesses in your supply arrangements.  Why not do some research and ask suppliers if they are “women-owned” which, by definition, means that they are at least 51% owned, managed and controlled by one or more women. Furthermore, why not consider tracking tier 2 spend, as smart companies will often increase spend with women-owned businesses to win large contracts.

 2. Spread the word

Convince others in your team that working with women-owned suppliers is good for business. A recent McKinsey survey indicated that working with women-owned suppliers increases profits, while the Hackett Group’s research last September shows 99% of diverse suppliers meet buyers’ expectations, with nearly 25% exceeding expectations.

Though improvement to the bottom line is always important, incorporating women-owned businesses in your supply chain also provides an opportunity to grow your customer base, attract and retain talent, and enhance your branding – all while increasing profits and reducing costs.

 3. Network, network, network

Accessing networks of women-owned businesses, even just to participate in RFPs, is a critical success factor but one of the more difficult parts of starting and managing a supplier diversity program.  Engaging with third parties that specialise in connecting buyers with diverse suppliers, such as WEConnect International, can assist this process. Our organisation certifies women-owned businesses through a rigorous, globally accepted process, and provides access to these organisations through our eNetwork.

What are the proven benefits of having more women in your supply chain?

Women influence the vast majority of purchasing decisions globally, but they are significantly underrepresented in global value chains. Even though more than one third of private businesses are owned and controlled by women, on average, women earn only 1 percent of large corporate and government spend globally. Benefits of having more women in your supply chain include:

  • Mirroring your diverse customer and employee base – it’s important to reflect the communities around the globe where you operate, not only with staffing, but also with your supplier base;
  • Supporting your corporate clients – more corporates are growing their tier 2 inclusive sourcing programs and requesting reporting from their prime suppliers;
  • Supporting business growth in new markets;
  • Accessing innovation and securing competitive advantage from new SMEs offering more creative options;
  • Reducing costs through competitive bidding;
  • Accessing local networks and knowledge; and
  • Enhancing the company brand and community engagement by promoting success stories about working with women-owned businesses.

Anne Tesch and other leaders in the profession will be speaking at Quest’s Women in Procurement 2017 event in Melbourne on 26-27 April. Visit Quest Events to download a brochure and find out more.

WEConnect International is a global network that connects women-owned businesses to qualified buyers around the world.

You Could Be In For A Nasty Shock This Easter

What’s “shrinkflation”? It’s the practice of selling a smaller product at the same price, and it’s increasingly common in the chocolate industry. Procurious looks at three big stories about Chocolate supply management that have hit the news in the past week. 

Regulation impacts complexity, complexity impacts costs, and costs impact the size of your chocolate bar.

Shrinkflation: Why Brexit means Cadbury chocolate bars will get smaller

It might be time to panic-buy your favourite Cadbury chocolate bars in bulk, because Cadbury UK’s parent company (Mondelez International) has warned that Brexit could lead to higher prices, or shrinkflation.

What’s shrinkflation? It’s the practice of selling smaller products for the same price. Mondelez has done this before, when its new-look Toblerone was revealed to have wider gaps between its iconic chocolate triangles, reducing the weight from 400g to 360g but selling at the same price. A pack of six Cadbury Creme Eggs – an Easter favourite – was also reduced to five eggs with only a slight decrease in the recommended retail price, from £3.05 to £2.85. The company has pointed to rising commodity costs, the falling value of the pound and an increase in cocoa prices, while Brexit is expected to make it increasingly costly to do business with other countries in the future.

Mondelez’s UK boss Glenn Caton told The Guardian that his organisation is watching the Brexit negotiations closely. “First of all [the Government] needs to make sure we have a stable and thriving U.K. economy,” Caton said. “If the economy is growing, all businesses benefit from that. Secondly, ensuring there is no new, more complex regulation and that there is free movement of goods and minimal barriers to trade. Regulation impacts complexity, complexity impacts costs, as do trade barriers and tariffs.”

Mondelez has invested more than £200m in Cadbury UK, including £75m on modernising manufacturing at Bournville in Birmingham, the home of the 193-year-old Cadbury brand. Bournville is also home to the global R&D team, which has grown from 25 to 250 people since Mondelez took over in July 2013.

Mars reinvests US$70 million in US supply chain while president warns of protectionism

Mars is re-shoring its manufacturing operation in a move that will mean over 95% of its chocolate products sold in the US are made domestically.

The investment of $70 million will add approximately 250 new jobs to production sites across the US, including a Mars Food factory in Greenville Missouri which will receive a $31 million injection. Last year, Mars poured US$52 million into its chocolate factory in Ontario, Canada.

The announcement was made on the same day that Mars Good President, Fiona Dawson, told the American Chambers of Commerce to the EU that protectionist trends worldwide are “threatening to undermine global trade and make the world less connected”.

“The absence of hard borders with all their attendant tariff, customs and non-tariff barriers allows for an integrated supply chain, which helps to keep costs down. The return of those barriers would create higher costs, threatening that supply chain and the jobs that come with it.

“If Britain ends up trading with the EU on the basis of WTO rules, ‘Most Favoured Nation’ rates would come into force. In the area of confectionery that alone would mean tariffs of around 30%.” 

Prince Charles seeks to halt chocolate-industry deforestation

HRM Prince Charles, a keen environmentalist, convened a meeting with global cocoa and chocolate companies to target deforestation in the cocoa supply chain. Delegates from twelve major companies, including Hershey, Mars and Nestle, met with senior government representatives from two of the world’s leading cocoa-producing countries, Cote d’Ivoire and Ghana.

In his speech to the attendees, Prince Charles noted that aside from environmental damage, “The most powerful direct reason for action is that deforestation threatens to undermine the very resilience of the cocoa sector itself, and with it the livelihoods of the millions of smallholders who depend on it, due to the increased climate variability that follows forest loss.”

The meeting resulted in a Collective Statement of Intent to end deforestation and forest degradation in the cocoa supply chain.

That’s more than enough about chocolate. In other procurement news this week…

UK Grocery Chain Waitrose introduces trucks powered by rotten food

  • Waitrose has partnered with bio-fuel company CNG Fuels to place an order for 10 flatbed trucks that will be powered entirely by rotten food.
  • The fuel will be sourced from unsold food at supermarkets across the UK. Globally, an estimated one-third of all food, or 1.3 billion metric tons of produce – goes to waste every year.
  • The new biomethane trucks have an average range of nearly 500 miles, with the biofuel to cost 40% less than diesel fuel. The biomethane emits 70% less carbon dioxide than diesel.

Read more on Konbini.

Boeing’s VP Supply Chain nominated for US Deputy Secretary of Defence

  • The White House has nominated Boeing’s Patrick Shanahan as Deputy Secretary of Defence, with a view to tap Shanahan’s knowledge of the business side of military aircraft procurement.
  • In December, Trump rattled Boeing management with a Tweet complaining about the high cost of replacing the presidential plane (Air Force One) and threatening to cancel the program. Since then, the relationship between the White House and Boeing appears to have improved.
  • Under new ethics rules, Shanahan will be required to recuse himself from any Boeing-related procurement contract decision for the next two years.

Read more on Seattle Times.

Tender Of The Year? Bidding Opens For US-Mexican Border Wall

Tuesday 4th April marks the deadline for companies to submit papers detailing their proposals to build the Trump Administration’s “big, beautiful, powerful” Mexican border wall. But will the massive construction project ever win the funding it needs?

US Customs and Border Protection has issued two 130-page RFPs, offering a glimpse into the Trump Administration’s vision for the 2,000km barrier designed to stop illegal immigration and cut off drug-smuggling routes. More than 1,100 kilometres of the border has already been fenced, but the existing walls are nowhere near as imposing as those detailed in the RFPs.

The RFPs indicate a massive construction project, with specifications including:

  • A 9-meter-high reinforced concrete barrier, extending 2 meters underground to prevent tunnelling.
  • A similar barrier made from durable, see-through material.
  • The wall must be “cost-effective to build and repair”.
  • The barrier must be “physically imposing” and capable of resisting almost any attack by “sledgehammer, car jack, pickaxe, chisel, battery-operated impact tools, battery-operated cutting tools [or] oxy/acetylene torch for a minimum of one hour.”
  • At the same time, the wall must be “aesthetically pleasing”, reflecting Trump’s campaign promise of a “beautiful wall”. Reports note that this requirement only applies to the North-facing side of the wall.
  • Features to prevent anyone from scaling the barrier or attaching grappling hooks to its summit.
  • Incorporation of electronically controlled gates for vehicles and pedestrians.

Customs and Border Protection intends to award multiple contracts based on responses to its request statement. The selection process begins with an initial elimination round, after which the contestants will submit more detailed technical proposals. After a second round of eliminations, finalists will gather in San Diego, California to construct a small-scale “mock-up” of their wall design. Sledgehammer-wielding government representatives will then “test and evaluate the anti-destruct characteristics” of the designs before awarding contracts.

What will the wall cost?

During his presidential campaign, Trump estimated that construction would cost $12 billion, citing his personal involvement as a factor in driving costs down. Republican House Speaker Paul Ryan has estimated $15 billion, while a US Department of Homeland Security internal report indicated the wall would cost as much as $21.6 billion and take over three years to build. A preliminary version of the president’s budget for fiscal 2018, beginning in October, includes $2.6 billion for the first phase of construction.

While the RFPs appear to require a highly-visible and physically imposing barrier, some companies have proposed hi-tech solutions to border security that could provide a 90% saving to the government. Examples include having two chain-link fences with a “no man’s land” in between and intrusion detection systems in place. Other invisible or “virtual” wall proposals would use AI software to analyse satellite and surveillance imagery and alert border guards to area where activity is detected.

An alternative idea for a physical barrier put forward by a Florida architecture firm is to use shipping containers as the building blocks for the wall. This could be a cost-effective and sustainable solution, particularly as the U.S. has a surplus of shipping containers due to the slowdown in global commerce.

Will the Mexican border wall ever be funded?

While Donald Trump famously promised his voters that “Mexico will pay” for the border wall, the Mexican Government has repeatedly stated that it would not do so. The Trump administration is yet to reveal how it would compel Mexico to pay. The budget request for $2.6 billion to begin construction was seized upon last week by Graco Ramirez, the leader of Mexico’s national governors’ association, who claimed this proves that U.S. taxpayers will foot the entire bill.

The proposal is likely to face fierce opposition in Congress, where Democrats and fiscally-conservative Republicans are expected to block expenditure on this scale, particularly if estimates blow out to $21.6 billion.

Who will build it?

Ironically, although Trump may be unable to make Mexico pay for the wall, he could end up paying Mexican businesses to do the work. A report by Quartz found that “of the roughly 700 firms that have expressed interest in building prototypes for the wall, about 10% are Hispanic-owned” or based in Mexico. However, the Mexican government has warned Mexican businesses that it would “not be in their best interests” to participate in the construction of the wall, while the Catholic archdiocese of Mexico issued an opinion that participating would be “immoral” and those involved “should be considered traitors to the homeland”. The considerable political pressure notably caused Mexico’s largest cement firm, Cemex, to announce that it would not be providing quotes for the vast amount of cement the project would require.

As far as U.S. construction firms go, few of the large, multinational corporations that would actually have the capacity to carry out the $21 billion project have indicated interest, presumably due to public opposition to the wall and the difficult path through Congress to funding it. Meanwhile, state representatives and lawmakers are putting in place boycott measures such as California’s “Resist the Wall Act”, essentially a divestment campaign to ensure no Californian money goes towards building the wall.

In other news procurement news this week…

Shocking lack of digital transformation strategies in procurement organisations

  • The Hackett Group’s 2017 Procurement Key Issues research has discovered that nearly 85% of procurement organisations believe digital transformation will fundamentally change the way they deliver services over the next 3-5 years.
  • Despite this, only 32% currently have a formal digital strategy in place, and only 25% have the resources and competencies in place to meet the digital transformation challenge.
  • The research gathered data from executives across 180+ large companies globally, with an annual revenue of $1 billion or greater. Areas expected to grow most dramatically are the use of cloud-based applications, advanced analytics, cognitive computing and robotic process automation.

U.S. Treasury Secretary Steven Mnuchin says robot job displacement “50 to 100” years away

  • In an interview with Axios last week, Mnuchin said the concern about artificial intelligence taking over human jobs is “not even on our radar screen”. When pressed, Mnuchin estimated that concern might be warranted in “50 to 100 more years”.
  • This estimate is significantly out of touch with machine learning experts, who are increasingly vocal about the imminent “national emergency” that will see up to 50% of jobs at risk due to advances in automation.
  • Mnuchin’s apparent disinterest in the AI jobs crisis could be due to an inability to “think the unthinkable” – a phenomenon introduced by Professor Nik Gowing at Procurious’ Big Ideas Summit. It may also reflect Mnuchin’s falling into line with politicised assertions that foreign workers and cheap pay, rather than automation, are responsible for job losses in former factory towns over the past decade.

Read more at Business Insider.

U.K.’s Crown Commercial Service slammed by Public Accounts Committee

  • The U.K.’s Crown Commercial Service (CSS) was set up in 2014 to centralise all purchasing, eliminate duplicate and act as a single entity for central government procurement. It replaced the Government Procurement Service and was expected to manage £13 billion spend across 17 departments.
  • However, a recent report by the Public Accounts Committee (PAC) found that the CCS has only managed £2.5 billion spend across 7 departments, with PAC Chair Meg Hillier calling the results “a dismal showing that calls into questions exactly how willing government departments are to accept the authority of the Cabinet Office in this area”.
  • A CCS spokesperson has responded to the report, saying: “”With an experienced senior leadership team now in place, we are confident in our ability to deliver even greater value for the taxpayer moving forwards through the centralised procurement of common goods and services.”

Read more at Computer Weekly.

What’s The Catch-22 In Procurement Technology?

From here to eternity: what does the future of procurement technology  look like? Download Wax Digital’s Procurement 2020 report here

Procurement technology has undergone a long road of change that has consequently altered procurement functions, processes and the very nature of the business itself. But while we spend much of the time understanding how technology is governing what we do today, it’s how technology is shaping the procurement role in the future that should be our focus.

There is a widespread belief that procurement ‘intelligence’ could significantly change the goalposts for the profession, and go beyond informing and processing data, to predicting, learning and deciding.

Procurement technology’s Catch 22

With analytics and intelligence comes a dilemma. Do you outline the questions you need to answer before you perform analysis, or use the data to work out the answers to ‘what you didn’t know, you didn’t know’? It’s a catch 22 scenario.

Thanks to big data and artificial intelligence (AI), this dilemma is becoming easier to manage. A procurement system using intelligence exhibited by machines can learn from users’ mouse clicks, purchases, and line of information to make its own choices, rather than requiring approval from users.

That doesn’t necessarily mean that procurement skills and knowledge will become any less sought-after. But those in demand are likely to change, perhaps even for the better, if cognitive technologies allow experts to think, consult and use their human skills more wisely.

Our panel’s three key intelligence priorities were:

  1. Anticipating supply and demand decisions

    The power of big data enables procurement systems to foresee the needs of the business, such as anticipating demand based on historical spending or seasonal demands. And the data that systems are based on will only expand as new internal and external dimensions are added to the mix, such as social media and newsfeeds, assessing demand more accurately. Intelligent systems may then begin to question human decisions, such as the validity and need for supplier orders and assessing the risk and ongoing performance of suppliers. Supercomputer IBM Watson’s ability to answer questions shows AI’s and sophisticated analytical software’s ability to surpass a human’s ability to answer high-functioning questions, and to work as an instructor to human processes.

  1. Uber-personalisation

    From marketing to IT, departments across the organisation use purchasing systems, meaning that there are different roles and backgrounds to accommodate. Through machine learning, procurement could lead the way in uber-personalisation, in which its systems are integrated with others such as ERP and CRM to determine and define each users’ preferences and needs.

  1. Intelligent supply relationships

With the introduction of AI comes a potential new landscape of supplier management, as eTendering, eSourcing and contract management have the potential to become more automated. This could see systems monitoring supplier behaviours and performance based on buyer feedback, or keeping a close check on adherence to contract terms; and possibly even interpreting eAuction behaviours and leading negotiations to make sourcing decisions on the procurement professional’s behalf. 

Even with vast use of intelligence, the procurement department will still require human involvement. While intelligence can be used to purchase everyday office products such as paper, strategic projects like building a new office will require procurement’s involvement in business planning and meetings, meaning that procurement professionals should strengthen their strategic skills in this area to ensure that they’re indispensable. But a new type of ‘colleague’, which is highly efficient and has extreme attention to detail, could well be on the way. Combining intelligence with vital people skills is how you can make procurement a strong and effective force in the business.

Learn more in Wax Digital’s Procurement 2020 report, a set of future gazing in-depth interviews with global senior procurement professionals and experts.  Integration of procurement technology in the wider business was the first topic. 

WikiLeaks Reveals CIA Interference in iPhone Supply Chain

WikiLeaks has released new information on CIA programs aimed at monitoring Apple device owners. Has the CIA redirected iPhone shipments to its own facilities to infect them with spyware?

aradaphotography/Shutterstock.com

For many readers of the latest data dump from the controversial website WikiLeaks, two surprising facts stood out:

  1. The CIA has been hacking iPhones, Macbooks and other Apple products for a decade
  2. To install the malware, the CIA requires physical access to “factory fresh” machines. WikiLeaks suggests this is done through redirecting Apple’s supply chain through their own facilities

What has the CIA been up to?

According to the documents, CIA’s Embedded Development Branch (EDB) implants malware called NightSkies 1.2, a “beacon/loader/implant tool” that apparently allows the CIA to “gain persistence” (spy) on the device. Notably, this program has been in use since 2008. WikiLeaks also describes a project called “Sonic Screwdriver”, which allows spies to remotely hack a Mac computer from a USB accessory plugged into the machine. The release also contains details of other malware products with striking names such as “DarkSeaSkies”, “DarkMatter”, “SeaPea”, “Triton”, “Dark Mallet” and “DerStake”.

Listen to WikiLeaks’ Julian Assange’s commentary on the CIA’s malware specifically developed for Apple products:

How is the malware installed?

According to the CIA documents, NightSkies 1.2 is physically installed by a CIA operative on “factory fresh iPhones”, or handsets that users haven’t yet interacted with.

The two key words here are “physically” and “factory fresh”. The malware cannot be installed remotely, which means the CIA agent needs to get their hands on their target’s phone to install the program. This brings to mind a Hollywood-style manoeuvre where the operative would somehow pickpocket the target, install the malware with a USB, and return it to the unsuspecting iPhone owner who will never realise they’re being tracked.

However, as the iPhone needs to be “factory fresh”, WikiLeaks believes it’s possible the CIA has redirected iPhone shipments to install the tool. The organisation wrote:

“While CIA assets are sometimes used to physically infect systems in the custody of a target, it is likely that many CIA physical access attacks have infected the targeted organization’s supply chain including by interdicting mail orders and other shipments (opening, infecting, and resending) leaving the United States or otherwise”.

This raises two questions, neither of which are answered in the WikiLeaks documents:

  • Is the CIA infecting Apple products en-masse, or are they only intercepting, infecting and re-sending specific phones that have been ordered via mail by persons of interest?
  • Does the CIA visit the factory floors of Apple’s suppliers to install the malware?

Has Apple responded?

Yes. Apple has released a statement pointing out that nearly 80 per cent of the vulnerabilities exploited by the CIA have already been fixed with security patches (years ago in some cases) and added that it “will continue work to rapidly address any identified vulnerabilities.”

In its statement, Apple did not directly condemn the CIA for interfering with its products, choosing instead to distance itself from WikiLeaks:

“We have not negotiated with WikiLeaks for any information. We have given them instructions to submit any information they wish through our normal process under our standard terms. Thus far, we have not received any information from them that isn’t in the public domain. We are tireless defenders of our users’ security and privacy, but we do not condone theft or coordinate with those that threaten to harm our users.”

In other news procurement news this week…

London Mourns Victims of Westminster Attack 

  • Thousands of Londoners gathered in central London to honour the victims of Tuesday’s terrorist attack
  • On the 22 March, Khalid Masood drove into pedestrians on Westminster Bridge before crashing his rented four-wheel drive into a fence outside parliament
  • He attacked two police officers as he tried to enter the building, fatally stabbing Keith Palmer before he was shot. Five people, including the attacker, died, and at least 50 people have been injured.
  • On Thursday evening, a candlelit vigil was held in Trafalgar Square. In what was a moving tribute to those affected, the Mayor of London, Sadiq Khan, addressed the crowd to much applause and a minute of silence was observed.

Read more on BBC

Avian Influenza resurfaces in Asia

  • An outbreak of H7N9 avian flu that has been described as the worst in seven years is dramatically impacting the poultry industry across China, Japan and South Korea.
  • The outbreak has been linked to over 140 human deaths in China in January and February, along with enormous stock culls including 30 million chickens in South Korea alone.
  • Chinese poultry imports are expected to grow by 10%.

Read more on the Wall Street Journal.

Starbucks announces aggressive expansion plans

  • Starbucks will open 12,000 new cafes globally by 2021, including 3,00 new stores in the U.S.
  • The new stores will require a workforce of 240,000, with the company planning to hire 25,000 military veterans and military spouses.
  • Starbucks has also announced it would hire 10,000 refugees in response to Donald Trump’s executive order calling for an immigration ban.

Read more on MarketWatch.