Category Archives: Trending

5 Ways Slack Can Help Build a Better Procurement Function

Charting the stratospheric rise of Slack, and investigating how it can be used to increase collaboration and conversation in procurement.

slack icon macro

For those who don’t know, Slack is an online communication tool, built around both group and a one-to-one chat. But it’s much more than that. Unlike any other system, Slack can talk to pretty much any other tool through the magic of APIs and webhooks.

These integrations make it a mind-numbingly powerful tool, because it becomes a platform for pretty much anything you need, and can be the focal point of many aspects of your business.

It drastically reduces the number of systems you need to consult to get the information you need to do your job. If something is noteworthy, it should be pushed to Slack.

This incredible value has allowed Slack to grow very fast. We don’t have any startup in our surroundings who doesn’t use it. But it is also increasingly used in larger organisations, for example, NASA, Dow Jones and Salesforce. Plus, all the major news outlets talk about it or even use it.

Their progress is staggering. After less than 2 years there are more than 2 millions active users of Slack globally. And it’s only the beginning.

Slack usage

Does Procurement really need it?

Does Procurement need to collaborate or be more nimble? Can it use Slack as part of its digital transformation?

Yes, of course! And here’s why:

1. Collaborate, Collaborate, Collaborate

With your team, your stakeholders and your suppliers. It’s easy to create topical channels and invite people to join them. Even if they are outside of the company.

Imagine: you no longer have to ask IT to create a dedicated section on the intranet, or setup a “secure room” to exchange documents. Slack can host everything from documents to discussions, and it’s available for anyone with access to the channel. It’s the end of information trapped in someone’s mailbox.

That’s how you’ll get smooth collaboration with your stakeholders or your suppliers.

2. Make Life Easier by Knowing What Happens Everywhere

Slack has this incredible ability to integrate easily with pretty much anything.

Twitter, Dropbox, Google Docs, or anything that can respond to a URL, can be integrated with Slack. This means that when something noteworthy happens, you get a notification in Slack and not cluttering your inbox. One more step towards inbox zero!

And a new range of Procurement tools can also be integrated and send notifications to inform you about new purchase orders or new negotiation projects.

Soon, the days of email notifications and logging into 5 different systems to know if something has happened, will be gone.

3. Kill (internal) emails

This is probably the last step towards inbox zero. We have set a rule in our company that basically says, “if there is no recipient outside of the company, then don’t send an email. Use Slack instead”.

You have no idea how much this reduces the number of emails we receive on a daily basis. If the information is meant to be shared with one person only, you can use the direct messages, otherwise, it can be posted in a relevant channel. Easy!

The Per Angusta Team's Slack
The Per Angusta Team’s Slack Channel

4. Towards “Conversational Procurement”?

Recently, there has been a lot of talk about the concept of conversational procurement. In essence, people in your company would no longer visit your e-Procurement tool to buy things, but would instead talk to an automated system that would understand their needs, gather relevant information and run the process of validating and ordering.

Think of it as Procurement meets Siri, or Google Now if you’re an Android person (or Cortana if you’re…oh wait no-one is a Windows Phone person…).

And that’s exactly what bots are in Slack. An interface for the user to interact with a system in a loosely structured way. Of course, this would mean that a system in the background would have to understand your request, but at least the user-facing part is taken care of.

5. Have Some Fun

Besides all the serious things you can do in Slack, there is also the #random channel, which acts as a sort of virtual water cooler,  a place to just relax and post some funny stuff.

Again, the fact that Slack is so easily integrated with a number of services will let you post nice animated gifs everywhere.

So what are you going to do next?

We suggest you register with Slack and create a room (or possibly talk to IT first…). Don’t worry, it’s free, and you will only start paying if you have more than 10 integrations. And if you reach that point, then it probably means that you will be happy to pay for the service.

Just be aware that Procurement and Digital Procurement are already taken!

Successfully Procuring Social Value

If procurement is going to get serious about social value, then it needs to ensure that it is fully integrated into strategic plans.

Social Value

Public spending through procurement practices and contracts can be shaped in a way that benefits both the economy and society – but too often this is not the case.

Since the implementation of the Public Services Social Value Act 2012, not enough has been done by commissioning organisations to ensure they are obtaining maximum social value from contracts.

What is Social Value?

Social value is a way of thinking about how scarce resources are allocated and used. It involves looking beyond the price of a contract, and prompts organisations to consider the collective benefits a contract could deliver.

Implementation shouldn’t be a trade off against cost or quality. It is possible to deliver a triple bottom line through procurement activity. A combination of three factors – social, environmental and financial – should improve the quality of delivery, which in turn will almost always result in an improvement in efficiency.

It’s essential that when commissioning services, organisations are focused on achieving the best value, as opposed to focusing solely on cost. The strategic power of social procurement can be extremely influential, particularly when decisions are aligned to a business strategy which supports an organisation’s wider corporate mission and values.

How can social value be achieved?

There are a number of ways to ensure that social value can be fully integrated as a part of procurement plans. The Public Services Act 2012 asks organisations to only consider it at the point of commissioning. However, to realise maximum benefits, social value should be considered past this point.

Fusion21 delivers procurement services for built assets to over 180 public sector members, and we ensure social value is delivered through our programmes by measuring the performance and delivery on contracts.

To date £56 million of social impact has been delivered, and over 2400 jobs have been created. Last year alone we achieved over £13 million of efficiency savings for our members.

So, at the point of commissioning, how can you ensure considering social value will make a difference? Including it within the award criteria, and assigning weighted sections as part of a supplier’s quality submission during a tender process, is one option.

Fusion21 attribute a proportion of a tender evaluation to social value – resulting in this having a direct impact on the final scoring. This approach ensures that social enterprises, SME’s and socially driven suppliers, stand a better chance of winning work through the procurement process.

It also provides an opportunity for organisations to demonstrate the added value they can deliver on a contract, and enables the commissioner to evaluate this based on project objectives.

Avoid Best Endeavours

Organisations should always avoid a ‘best endeavours’ approach to social value implementation within contracts. Instead, commissioners should stipulate how their objectives will be managed, and consider how performance will be evaluated. One way to do this includes asking successful bidders to produce SMART action plans, listing the outputs they can generate.

Once this is complete, social value performance should be integrated into standard contract management procedures.

Fusion21 also issues Regeneration and Local Economic Benefit Plans to every member who has commissioned a contract through us. These plans contain clear objectives and set targets – in addition to providing analysis and detailed progress reports.

By placing a financial figure on the value generated, our members can see the clear benefits of social value activity.

Finally, if social value can become engrained in a supplier’s contractual obligations, it is easier to ensure that goals will be met. At Fusion21, we put a contract in place between our member and supplier, which states an employment opportunity, must be created for every £500k of contract value.

It’s fair to say that procuring for social value needs to have a higher priority in the public sector – and to retain competitive advantage, suppliers should be considering their approach to delivering this.

Fusion21 is an award winning social enterprise who’ve gained national recognition for collaborative working with suppliers and members. We provide a wide range of procurement services and procurement frameworks for built assets that meet the unique requirements of public sector organisations.

Shark Warning! UK Energy Markets Explained

There are two types of shark – the ones in the water, and the ones that reside in the murky waters of the UK energy markets. It’s time to bring some visibility into these waters.

Sharks in the UK Energy Markets

It is common knowledge that sharks are dangerous. But are they? I have scuba-dived with real sharks, and swum with the sharks of the UK energy markets for many years.

The vast majority of real sharks are harmless and will swim away if approached by an over excited diver. Sharks are curious animals and will slowly and carefully approach divers that are calm and motionless. However, there is no doubt that some sharks are dangerous, but if a diver understands shark behaviour, then any danger is minimised.

Unfortunately the sharks swimming in the UK energy markets are very different beasts. These sharks are uninformed, unpredictable and deliberately target the unwary without mercy.

There are hundreds of these sharks waiting to strike. As procurement professionals, how many calls a day do you receive promising cheaper energy and services that are far superior to any offered by the competition? 

Smoke and Mirrors

A buying group I’m working with has been investigating the potential for purchasing energy for its membership. Their first comment to me was, “We cannot get a straight answer from anyone about anything in the UK energy markets.”

My response was, “Correct! Because most of the people you are dealing with don’t understand the energy markets, and use ‘smoke and mirrors’ to hide their ignorance and substantial profits.”

Many procurement professionals see energy purchasing as a dangerous and mysterious world full of sharks, and for good reason.  If I put my cynical hat on, then is the fear of the unknown driving procurement professionals to outsource the blame by engaging an energy broker?

Clearing the Waters

OK, let’s bring some visibility into this dangerous world and start to understand the feeding habits of the sharks.

Let’s start with the basics. The electricity and gas received at your premises does not change no matter which supplier is billing for its consumption. 

What characteristics does an energy supplier need to meet your procurement objectives?

1.            Hold a supply licence.

2.            Financially stable.

3.            Bill accurately and on time.

To understand if an offer from an energy supplier is a fair price what do you need?

1.            A clear view of the cost to a supplier in providing energy to your premises.

2.            The supplier’s real profit margin. 

This is starting to look simple isn’t it now the ‘smoke and mirrors’ have been removed?

At this stage, all you need is to make sure that the supplier’s terms and conditions allow sufficient flexibility for you to decide when to purchase wholesale energy, without any hidden profit for the supplier.

There is the complication of what is happening in the wholesale energy market, but that will be tackled in a later article. The next article, “Visibility and Feeding Habits of Sharks”, will get into more detail of transparent energy purchasing.

4prime Limited specialises in bringing transparency to energy costs to ensure value for money.  For more detail have a look at our web site www.4prime.co.uk#1PRO or for more information email [email protected]

How Technology Can Drive Supplier Collaboration Goals

Supplier collaboration basically means that your goal is to communicate better, and work more closely, with suppliers for the best possible project execution.

Supplier Collaboration

According to Deloitte’s 2016 Global CPO Survey, one of the main goals for CPOs is to increase supplier collaboration. What is interesting, and slightly uncomfortable, is that the study also found that 60 per cent of CPOs do not have a clear digital strategy. To me, it seems that when you talk about communication and collaboration, technology is the the clear answer.

Collaborating involves many ideas that ultimately result in a partnership that works better together:

  • Communicate better, faster and more effectively.
  • Create a simpler procurement process between partners.
  • Define clear expectations from the beginning.
  • Share performance data for improvement.

Tactical solutions for these are seemingly very easy. But you can tackle these goals one by one, or face them all by considering the digital options you have. Many people believe increasing supplier collaboration can be accomplished by being more available, or just simply sharing more information. It isn’t just what you do, but how you do it.

Connectivity is Everything

There is a very real opportunity with procurement technology to solve your collaboration problems. Technology connects people in a way that was impossible in the past. Continuing to use old methods to communicate will hold you back on your collaboration goals.

Look at it this way. It’s already difficult to communicate internationally, so improve the way you communicate by eliminating the polluted email accounts. New procurement technologies are developing collaborative features such as live chatting.

What will really allow you to collaborate better is being easily accessible to suppliers and being able to connect to quickly. In turn, all your project communication is redirected onto your system rather than being spread thin in between emails, phone calls, and post mail.

Define a Simpler Procurement Process

Rather than saying “work better together”, you should be working towards making your entire procurement process simpler in order to collaborate better.

The complexity of working in procurement is extremely challenging, and even more so as CPOs try to implement new strategies to optimise operations. Organisational skills are very important for procurement professionals, so leveraging technology to help manage the complex processes can be incredibly valuable. You ultimately become a low maintenance customer to your supplier.

Even the smallest tasks, like simplifying document sharing can eliminate frustration. Create a hub for project related documents which can be updated, rather than engaging in the email document attachment dance.

You should think of the idea as redefining the way you do things to eliminate lengthy tasks and replacing them with short ones. Your team and suppliers would appreciate simpler processes, allowing you to both finish routine tasks quickly and reduce lead times.

Establish Clearer Expectations

With many options coming out into the procurement technology market, it is less valuable to try and tackle your challenges one by one. So if your goal is supplier collaboration, you should consider ones that allow you to invite suppliers to be a user.

A workflow management system that gives access to your suppliers can really close the gap. With access, suppliers can see your workflow, their role in the project, and keep track of progress.

Sometimes it is difficult to communicate compliance issues and other important information regarding the partnership and the roles suppliers play in the projects. Using technology to document clear expectations optimizes clarity on both ends. Suppliers understand what is expected of them and you can feel more comfortable knowing that. It opens the door for trust.

Data is Your Friend

Performance data is very simple to gather when automated. Giving constructive criticism should be an important component to your supplier collaboration strategy. Suppliers need to know key areas for improvement so that they are aware of your expectations and given a chance to better their service.

The most accurate and effective way to show performance is to provide data. Collecting scorecards regularly can keep track of trends that can tell you if your SRM is working. Awareness is only going to help your partnership so you need to collaborate to make sure you both are working towards improvement.

There are many options for procurement organisations, but essentially, the type of system you choose to deploy depends on your main goals. It’s time we stop looking for quick fixes and look for opportunities in technology to meet our goals.

If you’re looking to improve your supplier collaboration, Winddle is a collaborative solution for sourcing and procurement that can absolutely help make your goals a reality.

Tackling Technology and Risk: The Blockchain

The rise of digital payment systems has brought the blockchain into the public consciousness. But can blockchain be used to aid supply chain transparency?

Blockchain Technology

Just shy of ten years ago, technological innovation and the supply chain might have been considered strange bedfellows. Now they go hand in hand. But as technology advances at an ever-increasing rate, it makes sense that supply chains the world-over are also becoming increasingly complex as a consequence.

However despite the numerous advantages brought about by this envelope-pushing, we must remain vigilant and alert to the increased risks such new avenues afford us.

Recent years have seen a rise in both the adoption and implementation of digital payment systems and so-called “crypto currencies”. Such innovations in payments have removed the need for traditional, physical currency, as well as the bricks and mortar institutions that process them.

Bitcoin – A New Way to Pay

Bitcoin is but one example that’s fast revolutionising the payment industry. Bitcoin is a digital currency that’s been heralded as both an innovator and disruptor in yearly tech trend reports.

Bitcoin is effectively a peer-to-peer system. Its users can carry out transactions without the need for a middleman, but all activity is recorded and verified by the blockchain. Think of blockchain as a ledger and you’re halfway there.

Bitcoin has given the blockchain an early success with its 15+ million bitcoins already in circulation. But with a limit of 300,000 transactions per day (a ceiling that’s fast-approaching), we have to wonder – is there a future for a digital distributed database format?

It’s worth noting that the blockchain isn’t owned or operated by a singular body – hereby distinguishing it from a conventional ledger system. Instead, each network node stores its own copy of the blockchain, so whenever a transaction is made it is first recorded in one place, before being transmitted to other nodes that make up the database.

The “block” comes from the name given to accepted transactions. The system checks approximately six times per hour for new ledger activity, and to determine if a bitcoin amount has been spent.

Bitcoin & Blockchain

Blockchain – Bigger than Bitcoin?

Putting bitcoin’s reliance on the blockchain aside for a moment, various figures have spoken out about its potential to transform not just payment systems, but improve the delivery of services and assure the supply chain of goods.

Nothing if not an encouraging sign, a report from Mark Walport, the UK Government’s Chief Scientific Advisor, made proposals that the Government itself should explore applications for the burgeoning technology.

Walport said: “Distributed ledger technologies have the potential to help governments to collect taxes, deliver benefits, issue passports, record land registries, assure the supply chain of goods and generally ensure the integrity of government records and services.”

Records ultimately lie at the crux of the blockchain. So a technology that serves as an incorruptible ledger, and one that can trace each and every interaction, could prove extremely valuable in areas where accountability is key.

Gordon Donovan, Procurement & Supply Chain Manager for Metro Trains, has previously been quoted on Procurious suggesting the development of a ‘supplier wiki’ in order to build knowledge of the entire supply chain.

Blockchain technology could indeed be used to increase transparency, but there would be considerable work required in advance of opening this up, thanks in no small part to the highly complex nature of organisational supply chains and the numerous suppliers involved.

Blockchain network

A Chain is Only as Strong as the Weakest Link

If this reliance on blockchain is going to come to pass, more work needs to be done around trust and security – a fact that hasn’t gone unnoticed by bitcoin’s most vocal critics.

With high visibility services like Twitter, the BBC, and both the global networks for Xbox and PlayStation, all being taken offline by distributed denial-of-service (DDoS) attacks, what crippling effect would such activities have on the blockchain?

Moreover it wouldn’t be too much of leap to suggest vulnerabilities could lead to ‘botnets’ taking control of nodes to reveal the identities of the parties involved in transactions.

But is all of this worry warranted? It would certainly seem so if the letter penned by bitcoin’s high priests is anything to by. The open letter informed the community at large of an action plan to reach a consensus on improving bitcoin security.

“We have worked on bitcoin scaling for years while safeguarding the network’s core features of decentralisation, security, and permissionless innovation” – it began.

“We’re committed to ensuring the largest possible number of users benefit from bitcoin, without eroding these fundamental values.”

In order to achieve these aims, 30-plus bitcoin developers organised two workshops (in Montreal and Hong Kong respectively) to try and carve out a scalable path for the cryptocurrency’s future.

If we’re not looking for a repeat of the Silk Road scandal, let’s just hope they came up with a solution…

Is it possible for blockchain and bitcoin technology to transform the future of digital payments and aid supply chain transparency? Let me know your thoughts.

International Women’s Day 2016 – Pledging Parity

As the world gets ready to celebrate International Women’s Day, there is an ominous warning that progress towards gender parity has slowed.

International Women's Day Celebration
Image Courtesy of http://www.happypics99.com/

According to a report produced by the World Economic Forum at Davos earlier this year, gender parity is now unlikely to be achieved until 2133. This represents even slower progress for parity than had been predicted just 12 months previously, with 2095 the estimated timescale.

Pledge for Parity

It is against this backdrop that the official theme for International Women’s Day this year is Pledge for Parity. The concept behind the theme is that every individual has the ability to make a change, whether it is in highlighting imbalances, helping girls and women achieve ambitions, or create more balanced cultures.

Since launching the campaign a little over 2 weeks ago, over 14,000 people have made an individual pledge. However, this is by no means enough. For the target of 2030 to be achieved, both the International Women’s Day organisation, and the UN, are looking for more people to get involved. You can make your pledge here.

Gender Bias in the Workplace

Procurious has written in the past about the major imbalances between the sexes in the workplace. Although more women than men enrolling at university in 97 countries, in just 68 of these countries do women make up the majority of the skilled workforce. Only in 4 do they represent the majority of leaders.

There is an on-going challenge to organisations to get more women involved in traditionally male-led professions, such as engineering. Career stereotypes, discussed heavily during International Women’s Day 2015, persist, made very clear by last year’s #ilooklikeanengineer campaign on social media.

And the situation is worse when it comes to the wage gap too. According to the WEF report, women now earn on average what men were earning 10 years ago, with men still earning twice as much as women. In country leadership, 50 per cent of countries have a female leader, but only 19 per cent of parliamentarians are female.

Onus on Organisations

In the UK, the Institute of Directors’ (IoD) Lady Barbara Judge, the first female chairman of the Institute in its 110-year history, has called on organisations to make changes. Specifically, to support efforts to increase the number of women in executive leadership positions.

Her recommendations include shaking up recruitment practices, and introducing gender-blind applications; creation of part-time and job-sharing executive roles; and introducing mentors and role models to champion women in senior roles.

She also said, “The remarkable success in increasing the number of women on boards in the UK over the past six years shows how enthusiastically businesses have embraced their role as champions of female progression. Now, we must channel this progress into tackling the next item on the agenda – getting more women into senior, executive, decision-making roles. The onus must be on employers to do everything they can to harness their female talent. After all, it is a business’s loss if it fails to make the most of half their workforce.”

However, it is not about introducing quotas, as has been suggested by some. Gender-balanced leadership expert, Dr. Karen Morley, has spoken extensively on this subject, giving recommendations to businesses to achieve their “critical mass“, but also why affirmative action is not the solution.

Make a Difference

Beyond making a pledge, there are a number of ways you can get involved with International Women’s Day celebrations.

  • Events – Throughout the week there are events around the UK, and around the world, focusing on the celebrations. Find out if there is an event near you, and get along to it.
  • Raise Your Voice – If you are a witness to gender imbalance, tell someone about it. Whether it’s discrimination in the workplace, or impingement of rights, only by speaking up and shining a light on this can a difference be made.
  • Social Media – Can’t make it to an event? Make sure to follow all the progress on the 8th on social media. Follow International Women’s Day on Twitter, LinkedIn and Facebook. Share your thoughts by using the hashtag .

And if you need any more persuasion to get involved, look no further than Procurious’ own Tania Seary. Tania is major advocate for equality and has frequently highlighted the females who have influenced her career. You can read her thoughts here and here.

Are Your Suppliers Treating You Like a Cash Cow?

Businesses are at risk of being treated like a cash cow by their suppliers if they are not managing their supplier agreements and contracts with complete visibility.

Cash Cow

This article was written and has been shared with Procurious by Daniel Ball, Director at Wax Digital.

We’ve all done it. Stuck with the same old suppliers year after year, because they’re doing the job and, let’s face it, it’s far less hassle to stay put than to make a change. Whether it’s for banking, car or home insurance, or even utilities, as long as prices haven’t risen too significantly, and you’re getting what you pay for, why go to the effort of changing?

For the consumer, a failure to review supplier agreements means that, at worst, you’re potentially missing out on a more competitive deal (and a complimentary Meerkat). For a business it can have much more serious consequences.

A large organisation will typically have hundreds or even thousands of contracts in place. A lack of management of these contracts can have a huge impact on business performance, bottom-line and risk. So what can organisations do to make sure they’re not milked like the proverbial cash cow?

Lack of Clear Visibility

Auto-renewing ‘evergreen contracts’ are a problem we see frequently, and they cost organisations millions of pounds in wasted budgets or unintentional spend. With no system in place to effectively manage contracts, they can easily get ignored or forgotten about, and without realising it, you’re locked in for another 12 months.

Worst case scenario, a high value contract has auto-renewed just as you sign another with an alternative supplier offering a similar service, or decide that you no longer need this service at all. It’s easy to see how missed renewal dates, contract overlaps, timely supplier reviews or intended supplier terminations can be overlooked.

This can be an inconvenient truth for large organisations whether they have a procurement function or not, left grappling to manage the contracts they have in place without clear visibility of them.

Aside from wasting money, with no control over contract terms, how can you be sure that your contracts are delivering what was originally agreed with the supplier? If you’re not in the habit of reviewing or monitoring your supplier contracts, the service you are receiving may have gradually moved away or deteriorated from what was originally intended.

The supplier may have been providing alternative quality products (substitutes), changed services levels or personnel (in the case of professional services), or altered other factors from the original terms agreed. All of this could potentially reduce the value of the original agreement.

Factoring in Change

It’s also necessary to consider the changes that will undoubtedly have occurred in your business since your contracts were first put in place. Throughout the lifecycle of a contract, it’s highly likely that your business will have changed in some way, whether that’s changes to pricing, or other things which may affect the terms of the original contract, or your organisational needs.

For example, the sum you spend with a supplier may have quadrupled since the start of your contract, putting you in a far stronger buying position. This of course should mean you are in a better position to negotiate discounts or lower rates, but it is difficult to do this without having the facts at your fingertips.

The first step towards managing contracts effectively is to have a clear and in-depth understanding of them. This won’t happen if they’re stuffed in the top drawer of a filing cabinet, or indeed held by each department that owns the supplier relationship.

The last thing any department head wants is to be going into a new budgetary period with a legacy of unwanted supplier costs to justify and accommodate. It’s one thing to have to field tricky conversations with your CFO, but another entirely using up valuable budget on historical services that are no-longer essential to you.

Your suppliers’ contracts themselves hold the answers to many of the key things you need to know in order to effectively manage them. How often do you actually review your suppliers’ contracts? And how do you get the information you need to effectively monitor, manage and measure the value they are delivering to your business?

Avoid Being a Cash Cow

Contract control gives you sight of which contracts are up for renewal in the next few months. If you’re unhappy with that supplier then you have the time to put them on notice, or appraise their performance and renegotiate a better deal. Or if you wish to invite new suppliers to bid for the contract, you have time to factor in this work and consider your options.

Effective contract management is an essential part of the supplier management process. It is only made possible if they are held in a central repository so that they are accessible for all key stakeholders.

Such a repository enables all contracts to be reviewed periodically to determine if changes are needed or even if it should be renewed at all. The growing realisation for this process to be automated has led to the adoption of contract management systems.

These systems deliver a simple and secure way to store contracts which are easy to audit and provide automated alerts and reminders if an agreement is due to expire. A full contract management system within an integrated source to pay process can further streamline the process by automatically adding newly sourced suppliers’ contracts to the repository for future tracking.

So don’t risk becoming a cash cow to your suppliers because contracts were signed and filed away years ago. A structured and more formalised approach to contract management is the key to unlocking operational efficiencies, compliance and savings.

Manage Your Business Logistics like A Pro

How do companies make sure that their business logistics foundation supports all the qualities required to remain competitive in their industry?

Business Logistics

An efficient, responsive, understandable and, above all, dependable supply chain is crucial for business success and ROI in today’s on-demand environment. A company that gets their business logistics wrong, and runs a disorganised and ineffective supply chain, is ultimately going to less profitable than its competitors – no matter the business.

Complexities of Logistics Management

Mediocre resource management usually leads to an inferior final product. Companies need to explain to their customers where their supplies come from, otherwise they risk losing customers’ trust, and even more important, orders.

In addition, competing on price is very difficult if you do not have a strong and practical logistics process. Ineptitudes in supply and delivery chains lead to higher operational expenses and lost productivity.

Nevertheless, managing business logistics is easier said than done. It requires at least a fair amount of knowledge in order to be executed correctly. Therefore, here are a few tips for managing logistics at your company, all of which are worth taking into consideration.

  • Use the Newest Logistics Software

The only way for your company to compete with the opposition is to keep pace with them, or to be one-step ahead of them. New technology is becoming more and more available, and you need to take advantage of it. The market for SCM (Supply Chain Management) software has been growing steadily for the last couple of years.

Although automating the movement of merchandise through a warehouse does require a decent investment, the equipment will pay for itself over time. Moreover, by automating the procedure, you will eliminate human error and speed-up the movement of goods.

  • Maintain Strong Relationships along the Supply Chain

Always remember that your supply chain is only as strong as its weakest link. Make sure that you build and maintain a strong relationship with your vendors and suppliers, so that the goodwill you earn will keep your operation running smoothly for years to come. One bad relationship could potentially ruin your entire supply chain and cause failure.

  • Continual Logistics Monitoring

You could accomplish this by using shipment-monitoring software. This enables you to see what is happening at every step in the process, and take care of all blockages and problems before they affect your customers. Furthermore, monitoring and reviewing each move you make will help control your costs and find the way to deal with weaknesses in your organisation.

  • Utilisation is the Key

Being ready for seasonal changes and demand is second nature in every business. Using innovation and utilisation to plan ahead is the key. If you are managing a warehouse, you should certainly look into the best possible solution for your pallet racking.

Whether it is taking full advantage of every inch of your storage space with improved warehouse management, or using the latest fleet management software to make your mobile enterprise more cost-effective and efficient, you are making better business decisions when you insist on complete utilisation. In addition, making those decisions through better, up-to-date data, are the first step in planning future success. So always think forward.

Make Logistics a Competitive Advantage

Sometimes, your logistics may seem like a burden, but it is also a competitive advantage. By optimising your shipping and storing processes, you can reduce your shipping costs, and make your product as competitive as possible. By improving your logistics management you will have a meaningful impact on the management of your overall supply chain and, eventually, the efficiency of your business as a whole.

The Value Companies See With Sustainability Standards

As societal responsibilities grow, many organisations are turning to sustainability standards in order to demonstrate their supply chain transparency.

sustainability standards

The discussions on Procurious reflect a number of questions procurement professionals face when trying to implement a sustainable procurement policy. Just what is sustainable procurement? Does it cost more to source sustainably? Have I got the time and resources to meet my own or my company’s targets? What value will sustainable sourcing bring to the business?

With the focus extending beyond environmental and sustainability issues to fair and ethical treatment of labourers and producers, the responsibility can be broad.

Increasingly, procurement managers are recommending sustainability standards as a way to ensure independent, transparent assurance of their supply chains. Partnering with a sustainability standard can help companies, which do not have the knowledge or capacity, to manage all aspects of responsible sourcing on their own.

Certification can work as a tool for managing the full range of issues. This is particularly the case for commodities, where environmental and social sustainability can be complex, and where the producer can be many links down the value chain.

Changing Procurement Process

However, making changes to well-established procurement processes is easier said than done. Businesses need to be clear on the value of choosing sustainability standards to meet their sustainable sourcing goals.

ISEAL Alliance interviewed existing users of sustainability standards – retailers, manufacturers, traders and others – on what they saw as the value of working with credible sustainability standards (certification systems), like those that are members of ISEAL.

It became evident that the value of certification was high, but it varied depending on the type of business, the sector, the geography, or other factors.  The interviews also showed that certification was not always valued in the way one might expect.

While market differentiation and increased sales were mentioned by a few companies, the potential value of a visible ‘ecolabel’ was never the primary reason for the partnership.  Instead it was often about supply chain challenges.

Companies revealed the value of sustainability standards to their business in five key areas:

  1. Making complex supply chains more understandable. This included providing better traceability, simplifying what is asked of suppliers by using agreed standards, and generating better relations with producers.
  2. Mitigating risk. Rigorous auditing, transparency of origin, and outsourcing assurance of responsible practices to local experts, helped companies mitigate risks of sourcing from complex supply chains.
  3. Ensuring sustainable supply for the whole industry. Several companies noted that by their investment in certification, they were strengthening the reputation and ensuring a sustainable future for the whole sector.
  4. Meeting consumer expectations. By communicating compliance with sustainability standards, companies said they were increasing consumer awareness of sustainable sourcing and creating market differentiation for their products.
  5. Reflecting a company’s values and heritage. As well as aligning companies’ goals with their values and maintaining trust, certification also provided a way to engage more deeply with employees.

Click here to read interviews with M&S, IKEA, Mars, Woolworths, Wilmar, De Beers, Domtar, Bumble Bee Seafoods and Tetra Pak.

Strengthening Commitment

ISEAL also recently created an online tool for companies to understand what good labels look like.  The site, called Challenge the Label, explores five universal truths of a credible claim or label. It aims to help procurement professionals have deeper conversations with their suppliers and partners, before choosing to develop or use a green claim on or off product.

Many companies also use their own codes of conduct or auditing programmes, and they see these as complementing their use of certification. While those interviewed agreed that the sustainability landscape is changing dramatically, they also said that their company’s commitment to certification will only deepen over time.

The goal for procurement professionals has to be to embed sustainability into everyday business. Using sustainability standards can help to deliver cost savings, address supply chain risks and ensure transparency. Making procurement decisions today in a manner which preserves resources for future generations as well as for future business makes good sense.

Is Procurement Serious About Sustainability?

When price is king, and procurement is often accused of “bullying” suppliers, can we really say procurement is serious about sustainability initiatives?

Procurement Sustainability

This article is by Gerard Chick, Chief Knowledge Officer, Optimum Procurement Group.

As we entered 2016, many of us will have made New Year’s Resolutions. It strikes me that this is as relevant to our professional lives as it is to our personal lives.

Eating or drinking too much is as unsustainable as exercising too little. The above all have outcomes that are bad. We know they are bad, and we also know that to change them is hard.

Last year, the newspapers and other media outlets were teeming with stories about procurement professionals using “bullying” tactics against suppliers, and with claims that big brands were using their power to squeeze suppliers. Inevitably a breakdown of trust (amongst other things) began to emerge, and this clearly needs to be resolved.

We read about farmers protesting against Morrisons’ terms of contracts. We read about Majestic Wine dropping their chief buyer after its pre-tax profits dropped by almost half, and supply chain relationships became tense after it asked suppliers to give them cash towards new warehousing. We also read about Carlsberg facing hostility from its suppliers after it extended its payment terms to 93 days.

Regrettably, such practices are all too common. The tactics used by big business towards suppliers have become a standard feature of today’s marketplace, where price is king and any means of reducing costs seems to be considered valid.

Contemplating Behaviours

And yet procurement frequently claims it is in the van when it comes to issues regarding sustainability. Some supply managers are, but many aren’t. A more sustainable supply chain is needed, but it will only emerge when the breakdown in trust between suppliers and procurement is resolved.

Let’s take a step back. The word frequently used in the media was ‘bullying’, but perhaps if we are to put this right we should contemplate ‘behaviours’. A better word, I feel, and one we can focus on in a more professional manner.

Perhaps these behaviours reflect that many of these people are simply unskilled and, even worse, unaware of it. The difficulty being that it is hard for them to recognise their incompetence, which in turn leads to inflated self-assessments of their skills and abilities.

Bad relationships are not just about negative publicity and brand damage, but also impact on the ambitious sustainability targets many businesses are now setting themselves.

Take climate change. Up to 90 per cent of the greenhouse emissions linked to a company are generated outside its immediate operations, with the lion’s share often occurring in its supply chain.

Collaboration Over Compliance

Moreover, business’ struggle for economic survival must not come at expense just about anything else! Big business characteristically operates in a top-down manner. Supply managers issue suppliers with codes of conduct and environmental targets, and oblige them to comply. The result is an exploitative game between suppliers and auditors sent out to verify farms, factories, working conditions and so forth.

Not only is compliance difficult to achieve, especially beyond the second tier, but it’s only half the story. A more effective solution would be for procurement professionals and suppliers to work together to develop innovative solutions to supply chain issues and to help ensure each others’ sustainability.

It strikes me too, that the smaller, more agile supply organisations (as well as procurement organisations) are more likely to be able to innovate than the behemoths of big business, stuck in their cycle of annularity and the need to satisfy shareholders at all costs.

Tapping Supply Base Creativity

So how can companies looking to become more sustainable tap the creativity of their supply base? The first and most obvious answer is to cut the double-messaging. Corporate procurement teams are frequently blindsided by a ‘cost-out’ mantra. The risk this poses is it frequently supersedes all other agendas and that is simply not sustainable.

The perennial issues of time, cost, quality and service will always feature in procurement decisions, but social and environmental considerations must be factored in as well. Alignment is key. For example, Marks & Spencer prohibits its procurement teams from purchasing any product that can’t meet at least one of the goals of its corporate sustainability plan.

This often leads suppliers to view such demands as a box to tick. To remedy this, suppliers need to be incentivised. New ways of working need time, resources and dedicated attention – all of which are at a premium for small suppliers.

Changing Behaviours

What is needed is a change in behaviours and the development of more trusting relationships. Ideally procurement organisations need to co-invest in the long-term research and development with their key suppliers.

As mentioned above, annularity dominates the mind-set and behaviours of many large companies. They simply focus on the short-term and would rather sit back and wait for proof of concept, than stump up the cash and experiment.

Ultimately, talk of sustainability-focused supply chain innovation will only ever begin to take effect when the breakdown in trust between suppliers and buyers is resolved. That requires a shift from a model based on adversarial brinkmanship, to one of mutual interest and transparency. The more open and honest a corporate customer is about its sustainability challenges, the higher the chance of generating innovative solutions.

Perhaps now is the time for procurement professionals to make a New Year’s resolution.