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IT Spend – Do You Know Who’s Calling The Shots?

Do you know who’s responsible for your organisation’s IT spend?

Spiceworks - IT decision makers report

As you well know, Procurious is the home of the procurement and supply chain functions on the Internet. We’re not alone in the world of niche social networks however. Spiceworks is a vertical social media site for IT professionals. It functions in much the same way as a Procurious does. A repository for knowledge sharing, a place to get questions answered and somewhere to connect with the global IT community.

Spiceworks recently released a report that we believe the Procurious audience will find interesting. The report is pitched at those marketing to IT decision makers and details who has the final say on IT purchasing decisions at different sized organisations. Perhaps naïvely, there is no reference procurement’s role in the IT purchasing cycle, but its findings (listed below) are none the less interesting.

Home office market

1-10 Employees.

Generally in organisations of this size, either office managers or company owners themselves make IT purchasing decisions. Purchasing processes tend to be unsophisticated or non-existent. Purchasing tends to take place at retail stores and is based on driving events like a new employee starting or current equipment breaking down.

The ’S’ in SMB (Small to medium businesses)

10-250 employees.

Organisations of this size will tend to have at least one IT generalist that is responsible for making IT sourcing decisions. These organisations don’t posses the bulk buying power of larger companies and hence, are very careful with their IT budgets. Decision making power likely still lies with non-IT management, but close attention is paid to the advice provided by IT staff members.

The ‘M’ in SMB

250-500 employees.

As companies grow in size, so too does the complexity of their IT requirements. Firms of this size will generally have a small but highly skilled IT team, led by an IT director (or equivalent). Purchasing power will tend to reside with the head of the IT function. These companies are purchasing IT products and services on a regular basis and are generally looking to establish close, ongoing relationships with suppliers. The relationships these firms have with their suppliers tend to be collaborative, with the IT team often asking suppliers for information and advice on IT investments.

The Large SMB

501 – 1000 employees.

The sheer size of these organisations requires a well structured IT team. It is not uncommon for IT functions in businesses of this size to run to 20 people. Generally, a sound hierarchy of responsibly and purchasing authority has been established. The team will often be led by an IT director or VP that is viewed as a senior executive within the business. This IT director, will still likely maintain a hands-on role in delivering IT solutions within the business.

The Enterprise Market

Over 1000 employees.

Enter the CIO. Throughout the report, Spiceworks touches on the fact that many marketers target the CIO as the key to unlocking IT spend. At the smaller firms, this isn’t exactly true as many wont even have a position of CIO. However, at the enterprise level the CIO is well and truly present.

A good CIO will have strong relationships with the supply market, both with his current suppliers and the external market. He will understand what is current in the IT space and will have final say on any major IT purchases. He should not be the only point of contact for IT marketers however. IT decisions in these large organisations are often made by staff a few rungs down the IT corporate ladder.

What are your thoughts about this split? In your experience, is this where the decision making power lies within IT departments? And the big question, where does procurement fit in to all of this?

Amazon Prime Now Will Shake-Up Logistics Strategies

Amazon Prime Now will force retailers to reassess existing delivery strategies.

Amazon Prime Now will change the logistics industry

The success of Amazon’s new one-hour delivery service will depend on a number of factors, notably product availability, as well as the customer’s willingness to pay inflated delivery prices to secure a product and have it in their hands within 60 minutes. However, if it proves popular, it will up-the-ante on fellow retailers and put pressure on competitors to reassess their existing delivery strategies. The warning comes from Jon Gibson, Head of Logistics at global supply chain consultancy Crimson & Co, in comments supplied to Procurious.

Jon believes the key to the service, will be the retailers ability to balance additional delivery costs alongside speed of service. Critical to this will be the need to forge new relationships with unconventional partners, which can ultimately deliver the products to the consumer faster, more conveniently and at an affordable price.

Following success in the US, Amazon has recently announced that it would be launching Amazon Prime Now, a one-hour delivery service for UK Prime subscribers in designated London postcodes. If successful, further rollout will follow across the country. The launch is expected to raise the stakes amongst other online retailers keen to grab market share from bricks and mortar competitors.

Jon states that in order to compete with the new service retailers will be forced to rethink current delivery strategies. Over the last year the growth in click & collect services has seen many consumers favour convenience over speed. The move by Amazon could buck this trend and it will be the job of the retailers to react accordingly:

Speaking to Procurious Jon commented: “Historically, delivery strategies have always been a challenge for retailers. The proliferation of tablets and smartphone devices puts the emphasis very much on speed of service giving consumers instant visibility over a far wider range. Visibility of the range has driven a desire for quick access. Reacting quickly and efficiently has always been difficult for retailers, either because they are often serving the online market from retail outlets, which puts pressures on stock, or the massive peaks in online demand surges that have recently been driven by events such as Black Friday being too great for traditional transport methods to cover.  

“The emergence last year of click & collect changed that, (although, Black Friday was still a challenge many retailers failed to cope with effectively), with greater emphasis on convenience for the consumer. They can choose a destination point close to their home or work and collect their item at their leisure, often a lot quicker then if they had arranged a home delivery. This is both more convenient and cost effective for the retailer, as it leads to consolidation of delivery and fewer occasions when a delivery cannot be completed because the intended recipient is not available. Amazon’s launch of a new one-hour delivery service, however, could flip that trend.”

He continues: “For a consumer, the opportunity to buy a product online and have it in your hands within an hour is hugely appealing. The biggest barriers for uptake of this service will be the associated costs. Products will be delivered by Amazon Logistics, its own delivery business, from an east London warehouse, at a premium delivery price. Savvy retailers should therefore look at how they can compete with this.

“Key will be addressing relationships with existing suppliers as well as forming new ones with unconventional partners. Local transport businesses such as taxi firms, and even fast food delivery services could all potentially be used to maximise speed of service for the consumer at a price which is competitive against other retailers. The pressure will very much be on the retailer to ensure this is carried out effectively – those that don’t are at risk of being left behind by their more progressive competitors.”

Sourcemap Is Mapping The Supply Chains Of The World

Where does stuff really come from? Sourcemap has the answers...

Sourcemap is mapping the world's supply chains

Remember the first time someone tried to explain the supply chain to you? You were likely at university or perhaps it was in your first job. The whiteboard markers came out and a rudimentary picture that included farmers, factories, trucks and shops all joined up with lines and arrows were drawn.

Well, such supply chain drawings have come a long way. I was reminded of this yesterday when talking to a colleague about Sourcemap, a website I stumbled across years ago, but appears to have developed a great deal since I last checked in.

In short Sourcemap is a supply chain visualisation tool that, according to the company, allows you to map your end-to-end supply chain automatically from your purchasing data. Linking raw materials all the way through to end customers.

Not only does Sourcemap allow firms to produce a visualisation of their supply chain, it also enables supply chain analysis (such as the carbon foot print) at each supply chain node. Below is a video that summaries what Sourcemap aims to achieve.

Supply Chain Mapping for Everyone from Sourcemap on Vimeo.

In its free edition the company details the supply chain journey of some of our most frequently bought products like BIC pens, Starbucks coffee and Colgate toothpaste. It maps both the upstream and downstream activities in the supply chain as well as the complexities present along the way. The tool allows you to zoom in and out on a world map to either gain a broader or more granular perspective on a particular supply chain.

From a quick look at the site, Sourcemap appears to be a brilliant tool for summarising a supply chain while concurrently providing insights into risk profiles and supply chain performance. It would make a great icebreaker when trying to get buy-in with senior management around what exactly is happening within your supply chain.

Images are one of our most basic and effective communication methods. Children learn to draw before they write. As the saying goes, ‘a picture is worth a thousand words’ and I for one, would much rather use a fully automated, interactive picture than read a thousand words about the make up and intricacies of a supply chain, I’m sure your boss will feel the same way.

Top Ten Global Supply Chain Risks Infographic

Riskmethods have published an infographic that illustrates the Top 10 Global Risks to Supply Chains.

The infographic breaks the risks down into two categories, assessing both the likelihood and impact.

According to data obtained from the Global Risks Perception Survey 2014 at the World Economic Forum, four of the risks cross into the two categories. The risks shown below are deemed to be the ten most dangerous.

Ten Global Risks in Terms of Likelihood

Top ten global supply chain risks infographic
These ten risks are the most relevant supply chain risks globally in terms of likelihood on a scale of 1 to 10 (where 10 is the most likely one).

 

 

 

 

 

 

 

Ten Global Risks in Terms of Impact

Ten Global Risks in Terms of Impact

Four of the risks are featured in both charts. Namely: water crises, interstate conflicts, failure of climate-change adaption and unemployment.

Riskmethods also looked at information supplied by Allianz Global Corporate & Speciality – here 58 per cent of people polled considered natural catastrophes the top risk when it came to supply chain disruptions.

Your shameful email sending habits have been revealed in a new survey

An independent study into email user habits has revealed that a worrying number of professionals find it hard to drag themselves away from work email.

Email sending habits revealed in new survey

A new study has found that work-related email is disrupting everything from holidays to funerals as employees struggle to cope with volume and culture of ‘always-on’ working.

GFI Software (the masterminds behind the study) wanted to gauge how employees interact with email and the main obstacles to effective workplace email use.

Of those surveyed, some 47 per cent admit to checking work email at least once a day in their personal time, up six per cent, while 33 per cent admit checking multiple times a day or in real-time through pre-work mornings, evenings, weekends and days off. Furthermore, 43 per cent regularly check their work email after 11pm at night.

Key findings from the survey include:

• Monitoring of work email outside of work hours is inescapable, with 73 per cent of those surveyed regularly checking their work email at weekends.
• A further 58 per cent admit to checking work email while on holiday.
• Almost one quarter (24 per cent) feel compelled to reply to work emails within 15 minutes of receipt.
• In total, 72 per cent of respondents reply to work emails in under one hour, while just under three per cent take more than a week to reply.
• Down five per cent from 2014, the survey found that 23 per cent of workers surveyed use their work email account for personal activities. The drop suggests increased concern over company monitoring of workplace email and Internet use.
• Nearly 29 per cent of work email users surveyed do nothing to organise their email, including archiving, leaving all incoming mail in their Inbox.
• Just under 18 per cent have had an argument at home due to them checking work email during family time.

“Setting and maintaining realistic boundaries between work and personal life is important to health, happiness and productivity. This balance is becoming harder than ever to accomplish due to the growth of tablets, smartphones, and now smart watches and in-car communications – all of which keep people wired into work even after they go home of an evening,” said Sergio Galindo, general manager of GFI Software.

The survey revealed a substantial level of work leaking into personal and family occasions. For example:

• Almost five per cent have checked email during a wedding
• Nearly three per cent have gone through work email while attending an event at their child’s school
• More than one per cent have actively checked email while either they or their partner was in labour
• … and just under one per cent have checked email during a funeral

The research was also conducted among the same survey sample in the US, with broadly similar results. Differences of note did include a higher proportion of users preferring instant messaging (eight per cent), a higher proportion of email checking during funerals (three per cent) and during child birth (four per cent), while fewer (12 per cent) have argued at home over checking work email out of hours.

Tuna supplier calls for improved supply chain visibility

Ecuadorian tuna supplier, Marbelize, and Frequentz form strategic global partnership to ensure supply chain transparency.

Calls for improved transparency in the tuna supply chain

Marbelize, one of the world’s largest tuna suppliers, has entered an exclusive partnership with Frequentz Inc., a global leader and champion of end-to-end visibility, in a strategic move that proactively addresses the coming IUU Task Force seafood traceability action plan.

Marbelize will leverage Frequentz’s robust track and trace technology to build consumer trust and combat the effects of illegal, unreported and unregulated fishing. This sets a seafood industry precedent, as this is the first time a third party has provided a fully integrated supply chain visibility solution from source to retailer.

Andres Cuka, chief operating officer of Marbelize said: “The industry is adapting to the ever-changing demands of consumers while also remaining true to social responsibility and sustainability objectives.”

“We strive to remain an innovative leader within our industry, while delivering value added products to consumers. Kindness to our people and the environment is the foundation upon which our company was built, so for us being as transparent as possible is a very important component to our success. Frequentz’s product tracking software provides us with that transparency and will be essential in pushing the seafood industry forward.”

Frankie Terzoli, vice president for global sales with Frequentz added: “By adding a traceability system to their operation, Marbelize will once again be a pioneer in the industry. They not only claim that their catch is sustainable, but can prove it to be true.”

LEGO announces billion Krone Sustainable Materials Centre

LEGO announces billion Krone Sustainable Materials Centre

LEGO, the world’s largest toymaker, has announced it will open a new Sustainable Materials Centre as part of the company’s commitment to sourcing more environmentally friendly materials for its packaging and products.

The group’s CEO announced that the commitment of one billion Danish Krone (roughly $150 million USD) marked a significant step in the company’s long-term aspiration of using only sustainable materials in its production by 2030.

The huge cash investment will fund the development of a new Sustainable Materials Centre at the company’s headquarters in Billund, Denmark as well as outposts at various locations across the globe. The company has suggested that its search for more sustainable bricks will directly employ over 100 new specialists.

The LEGO Group owner Kjeld Kirk Kristiansen made the following comment on the announcement:

“Our mission is to inspire and develop the builders of tomorrow. We believe that our main contribution to this is through the creative play experiences we provide to children. The investment announced is a testament to our continued ambition to leave a positive impact on the planet, which future generations will inherit. It is certainly in line with the mission of the LEGO Group and in line with the motto of my grandfather and founder of the LEGO Group, Ole Kirk Kristiansen: Only the best is good enough”.

LEGO's popularity around the world

The LEGO group initially stated its interest in searching for more sustainable product alternatives back in 2012 (the year the 2030 sustainability commitment was made). Since then, the group has conducted research and testing into how it might make its vast production (in 2014 more than 60 billion LEGO bits were manufactured) more sustainable. The new Sustainable Materials Centre is a direct outcome of these steps.

It is expected that LEGO will need to continue to partner with other organisations in order to achieve its lofty ambitions. The group signed a Climate Savers partnership with the WWF in 2013 and has outlined it will continue to look to leverage partners to make its productions methods more sustainable.

Jørgen Vig Knudstorp, CEO and President of the LEGO Group, said:

“What we announce today is a long-term investment and a dedication to ensuring the continued research and development of new materials that will enable us to continue to deliver great, high quality creative play experiences in the future, while caring for the environment and future generations. It is a daunting and exciting challenge.”

How To Spot Supplier Risk During On-Site Evaluations

Visiting your suppliers in person provides a great opportunity to identify potentially risky behaviour. In this article, we explore what you should look for to ensure you’re working with safe, knowledgeable, and reliable suppliers.

Factory Whole View fm 3R

Thanks to Spendrix for granting Procurious permission to republish this article. This article is the second in a series on how to identify various types of supplier risk. 

In our last post, we discussed how to spot risky behaviour when communicating with suppliers. The second article in our series on identifying supplier risk explores what to look for during on-site evaluations.

While on-site evaluations aren’t required, visiting your suppliers can help you build better relationships and improve communication. Furthermore, visiting your suppliers on-site allows you to evaluate them for risky behaviours that could potentially affect your company.

Here are some things to look for the next time you visit a supplier on-site:

Training Capabilities

When you vet your suppliers, you make sure they are qualified to do the job at hand, right? A part of this vetting process includes ensuring your supplier’s employees are proficient. Therefore, when you arrive on-site, it’s definitely important to check out your supplier’s training capabilities.

Top suppliers will have dedicated classroom space, a well thought-out training course, and experienced instructors. When you’re on-site, simply ask to review their training course to get an idea of how well it is preparing your supplier’s employees to work with your company. Does the training cover how to properly work with any equipment employees may have to use, how to properly secure and transport goods, how to check and maintain equipment to ensure it’s working properly, or what to do in the case of emergency?

Employees should understand how equipment looks, feels, and sounds when operating properly in order to act quickly if the machine becomes unsafe. Remember, your supplier is only as safe as its employees.

If your supplier can not answer simple questions about their training program or it seems their course lacks substance, you may need to ask yourself if that supplier is the best fit for your company. Overall, your suppliers represent less risk to your business the better their employees are trained.

Properly Stored & Inspected Equipment

Another crucial risk factor to look for during on-site evaluations is how your suppliers store their equipment, spare parts and securement tools. The way that a supplier stores excess equipment can tell you a lot about their attention to detail and the value that they place on having their equipment be in excellent condition.

While on-site with a transportation vendor, have a look at their inspection areas. Inspection areas should be well lit, and have spare chains and straps to replace defective securement.  It’s important that your suppliers are taking all measures to minimise violations and damage when transporting cargo.

In addition to securing cargo, also evaluate how well your supplier’s equipment is being maintained. Are tractors and trailers assessed for potential damage, parked in an organised and safe location, and repair areas kept clean? How promptly are mechanical issues taken care of? Are spare parts well organised and in safe locations for the mechanics to access them?

When visiting a manufacturing supplier, look how they treat their equipment as well. Is all the necessary Personal Protective Equipment available, clean, organised, and stored properly? Also, check their records to see if equipment is being professionally maintained and inspected on a regular basis.

Suppliers that do not properly maintain their equipment can put your company at serious risk. Poorly maintained equipment is one of largest safety concerns when working with suppliers. If your supplier neglects their equipment, this directly impacts your business.

Visual Inspections of Equipment

In addition to how your supplier stores their equipment, do they keep it up to date and safe? When performing an on-site evaluation, take an opportunity to perform your own assessment of your supplier’s equipment for physical damage.  Identify things that could lead to supplier error, and thus, put your business at risk.

When evaluating transportation vendors, check tires for adequate tread and proper inflation. Inspect trailers for any internal or external damages. Also make sure securement equipment is functioning properly. If on-site with a manufacturing supplier, examine equipment for exposed wires, burning smells, abnormal movements, or odd noises. Also, verify that the proper machine guarding equipment is being used.

Ensuring your supplier properly maintains their equipment can help to reduce the potential for errors. Therefore, it is crucial while on-site to inspect your supplier’s equipment, and in turn, protect your business.

Proper Compliance

A final way to minimise risk when performing an on-site evaluation of your supplier is by inspecting how they handle compliance. Does your supplier maintain organised and up to date logbooks? Do they have a detailed understanding of hours of service regulations, and work to avoid violations? Also, have they had any recent drug or alcohol violations? Or even worse, are there any drugs or alcohol on-site?

In addition, are there proper accident prevention signs in visible, high traffic areas? Is there easily accessible first-aid medical equipment in case of an emergency? The first-aid kit should be tailored to your supplier’s specific work environment and associated risks. It can also be necessary to have employees trained in first-aid, CPR, or responsible for certain emergencies.

By evaluating your suppliers for compliance issues, you are communicating your company’s values. You also can spot risky behaviours before they dramatically impact your company.

Overall, on-site evaluations allow you to get a closer look at your supplier’s day-to-day practices, and determine if they are the best fit for your company. If your suppliers do not have an effective training program, properly store or maintain their equipment, or follow proper compliance protocol, it may be time to look elsewhere for your business’s needs.

Ben is a business development professional currently working with Spendrix. He enjoys the challenge of helping a young company grow. Ben is passionate about risk analysis, business administration, and technology issues affecting the transportation and logistics industry.

3 Tips to Get Your Procurement Function Fit for Purpose

When making a purchase, consumer law states that the goods you buy must be fit for purpose..

This blog has been developed and published for Procurious by Proxima.

In short, this means that any goods that you purchase must be able to perform the tasks or functions that they were designed to be able to complete. But, in the wider sense, fit for purpose is also a term used to describe anything (including a business function) that is able to deliver its objectives and provide a satisfactory level of service.

Is your procurement team fit for purpose?

So what constitutes a satisfactory level of service when it comes to procurement? Is a procurement team that focuses solely on squeezing suppliers on price, continually driving bigger and bigger savings (but alienating its suppliers in the process) a satisfactory function? We think not.

Don’t get me wrong – there is no denying that a good procurement team is one that is able to meet savings targets, but a great one, well that’s slightly more complex. A great procurement team is one that recognises the importance and impact of its supply base on its own corporation’s operations. One that collaborates with its suppliers, coaching, motivating and incentivising them all towards the goal of creating a fully engaged supplier base aligned with, and able to contribute towards, the organisation’s wider corporate aims.

By this definition then, there are an alarming number of procurement functions even within some of the world’s biggest organisations that are not fit for purpose.

And with an average of 70% of a businesses’ revenues spent on suppliers, that’s a significant amount of spend that is likely not being used to the best of its ability.

Making the change

Clearly then, ensuring that your procurement team is fit for purpose, can have a dramatic impact, not just on the way that your suppliers view your organisation, but on profitability.

Below are 3 simple tips to ensure your procurement function is fit for purpose:

  1. Upskill your procurement team: With two-thirds of CPOs still citing lack of resource as one of their key challenges, it’s no surprise that the trend towards upskilling is an increasingly popular one. As a recent panel of industry experts discussed, the procurement team of the future will be one that encompasses a diverse set of people from various backgrounds, with a large and varied skill set.
  2. Communicate value upwards: Procurement professionals are no stranger to the often negative perceptions associated with the function. Overcoming this perception problem starts with communicating its true value. Sharing various achievements (outside of savings metrics) in the form of supplier-led innovations or mitigated risks with the wider business will help shift perceptions of procurement away from that of the “savings guys” toward that of a key business function capable of contributing to the corporation’s wider aims and objectives.
  3. Become a strategic partner to the wider business: A recent piece of research by The Hackett Group highlighted that “elevating the role of procurement to a trusted advisor within the business” was the key issue for procurement in 2015. How can this be achieved? Communication is key. Take the time to approach business leaders throughout the organization and learn about their challenges and strategies. By taking the time to listen to other business functions and understand what they need from procurement, you encourage the perception of procurement as a strategic partner.

So, in short, ensuring that your procurement team is fit for purpose is a complex, but achievable task. By taking into account these suggestions for expanding current capabilities, communicating achievements and aligning with the wider corporate agenda, you can elevate your procurement team beyond its conventional role – creating a function that is not just fit for purpose, but one that excels.

What steps are you taking to get your procurement function fit for purpose? Are you building the procurement team of the future or concentrating on changing negative perceptions of the function?

Proxima is a procurement specialist, offering a different approach to in-house sourcing, through close collaboration with clients across a number of industries including manufacturing, retail, financial services, engineering, FMCG, professional services and the public sector.

Airlines to seek legal advice on supplier competition

Airlines to seek legal advice on supplier competition

Willie Walsh, the head of International Consolidated Airlines Group (a parent company of British Airways) announced at the International Air Transport Association’s (IATA) annual meeting earlier this month, that airlines are actively seeking legal advice on the competitive nature of the industry’s supply market.

Two suppliers, Boeing and Airbus, dominate the aircraft production market and it is thought that this duopoly situation has led to airlines paying excessive prices for vital parts.

The airline industry has argued that the pricing disparity can be easily spelt out by comparing the profit margins of these businesses. The IATA reports that airline profits are around 4 per cent. These profit figures are significantly lower than those of the aircraft makers, who regularly report double-digit profit margins.

Mr Walsh said, “If we don’t challenge the restrictive practices that exist, we will be held captive, and costs as we’ve seen before will rise well in excess anything that is justified.”

Walsh outlined further concerns around industry developments that have seen manufacturers produce aircraft that can only accommodate one particular make of engine. In the past it was possible to use different engines in an aircraft, which brought an element of competition into the market. Walsh said the changes were a “a development that we don’t like to see.”

It is not clear whether the investigation will result in legal action; Walsh himself has stated that such measures may not in fact be warranted. He did claim however, that airlines feel they are “not getting a fair deal” from the aircraft manufacturers.