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What will the Enterprise Bill mean for SMEs?

Tracy Ewen, managing director of IGF Invoice Finance, has provided Procurious with her comments on the announcement of a new Enterprise Bill in today’s Queen’s Speech.

Enterprise Bill announced in 2015's Queens Speech

“Measures will also be introduced to reduce regulation on small businesses so they can create jobs.”

The purpose of the Bill is to:

  • Cement the UK’s position as the best place in Europe to start and grow a business, by cutting red tape and making it easier for small businesses to resolve disputes quickly and easily.
  • Reward entrepreneurship, generate jobs and higher wages for all, and offer people opportunity at every stage of their lives.

Tracy says: “The announcement in the Queens speech today introducing a new Enterprise Bill – giving additional support to SMEs to settle payment disputes – ought to be welcomed by businesses across the UK. To have this Bill included in the speech should give hope to many struggling businesses that the government is serious about the need to protect SMEs and bring an end to the issue of late payments. 

The current payment terms that many suppliers in the UK are subjected to mean that goods delivered today wouldn’t need to be paid for until long after summer is over; a practice that isn’t sustainable, but it is a reality that, until now, SMEs have had very little power to change. The implementation of a Small Business Conciliation Service should protect SMEs against larger and more powerful entities, and should reduce the number of SMEs that fold due to intense cashflow problems.

Whilst acknowledgment in the Queen’s speech has symbolic importance, businesses have been waiting for support from Government to tackle this issue for a long time, so will be watching the progression of this Bill with care and limited expectation.

In the meantime, there are options available that cover the gap between work completed and money in the bank. It’s therefore important for firms to thoroughly review their options and make use of any free financial advice that their own financial partners and suppliers can offer before pressure from large customers impacts their growth or operations.”

How to Re-Energise Your Procurement Strategy In 100 Days

Steen Karstensen, CPO – Maersk, on re-energising your procurement strategy.

Maersk CPO Steen Karstensen

Steen was speaking at Procurement Leaders World Procurement Congress 15 in London.

At Maersk there is a vision, and that vision is represented by the following mantra: “Every dollar spent is spent professionally”.

Maersk believe that in order to be competitive and stay ahead of your contemporaries you need to constantly reinvent yourself. To that end the conglomerate follows a bi-yearly strategy: every second year it takes a long-term view of the business. Steen says that it’s imperative to keep momentum going – you’re either ahead of the game or dead in the water…

Maersk needed to ask “What would my successor do differently?” So we approached Rick Hughes, Procter & Gamble’s Chief Procurement Officer, to create a ‘CPO 100 day plan’. Rick would assess the organisation and come up with a list of actions.

Rick conducted a study that gathered a 360-degree view from Maersk management figures (CEO, COO, Group Strategy Officer), 30+ procurement staff and key suppliers. He brought with him a fresh, candid and apolitical mindset – he was the sort of person that could leverage insights from his vast experience, and had the appetite to change the business.

Maersk also approached the University of Bath to get a theoretical reading of the procurement strategy.

And what did they learn?

There were definite signs of “big corporate syndrome” – Maersk would need to take some of its own cost medicine. How? It would need to simplify work processes as well as organisation.

With the CAPEX Procurement model, the right structure was in place, but now was the time to deliver results.

In terms of category management there was a requirement to upgrade processes, roles and capabilities. Plus a call for investment of senior resources in SRM.

And finally it was noted that important procurement prerequisites were not properly in order, thus an obvious need to standardise and document all core processes going forward.

Success in all of these areas would only be truly possible with deep business integration. Having both the technical function and procurement community reporting into the same place encourages both alignment and innovation.

The challenges re-energised their strategy process and in-turn generated three main (actionable) take-aways:

1. Take a 360-degree view on the organisation

2. Be open to reveal and discuss weaknesses

3. Be bold on actions – also in previously failed areas.

Why is eSourcing adoption and utilization still so low?

The eSourcing alternative

By Jeff Gilkerson, Manager at The Hackett Group thglogo500

 

You would be hard pressed to find a TV viewer that would argue watching a show in standard definition is better than watching in High Definition. Similarly, it would be difficult to find a procurement executive that would argue a manual (excel/word/email) based sourcing process is better than utilising an eSourcing tool. It’s almost universally accepted that eSourcing is more efficient, improves quality/standardisation, and generates better results. Yet, eSourcing tool utilisation and adoption is still lagging. Approximately 70 per cent of large organisations have eSourcing tools. While at first this may seem encouraging, it begs the question: why do 30 per cent of organisations not have eSourcing tools when the benefits are widely known and accepted, the technology has been around for decades, and the tools can be obtained for a relatively low investment?

The picture gets even worse when you look at the actual adoption and utilisation of eSourcing tools in the 70 per cent of organisations that have them. Many of these organisations have “implemented” eSourcing tools, but what that really means is they have purchased the tools and have them available to use. It does not mean that the tools are embedded in the sourcing process, that the staff is adequately trained to use the tools, or that the tools are frequently and consistently used for sourcing projects.

We recently helped a mid-size manufacturing client in the midst of a procurement centralisation to design and implement an eSourcing program. While eSourcing was new to this organisation, some of their challenges and learnings are just as relevant to more mature organisation trying to understand why eSourcing utilisation and adoption has not reached its full potential.

Most eSourcing tool providers will tell you they are easy and fast to implement (some say it can be done in only a few days). However, true implementation of an eSourcing tool is more than just making sure the technology works.

The limits of adoption and utilisation go beyond the actual tool, and lay in a range of organisational and people issues:

  • Change is difficult: Former president Woodrow Wilson once said, “If you want to make enemies, try to change something.” Even if you know it’s for the best, change is difficult. Think of moving, even if it is to nicer house in a better neighbourhood, the process of packing, moving, and unpacking is difficult and not something most people look forward to. Similarly, moving from a manual sourcing process to an eSourcing process requires change on the part of users.
  • Required change: As mentioned, change is difficult, and transitioning to an eSourcing tool is change. Just like all change it requires effort and work. Users have to re-learn how to do things they have been doing for years, explain to direct reports, suppliers, and internal stakeholders why they are changing, and often times modify the process they have become accustomed to. Additionally, many of the things that make eSourcing tools efficient (e.g. templates, auto-scoring) have to be built or configured. This work is required upfront before users start to realise the benefits that eSourcing tools provide. It’s not just about having the technology, it needs to be embedded into the process and this requires work and change.
  • Lack of process standardisation: eSourcing tools provide a great resource to improve consistency in your sourcing process. However, in order to do this there must be a generally accepted sourcing process that is consistently followed throughout the organisation. In our experience, many organisations don’t actually have a standard sourcing process. Even in organisations that do have a documented sourcing process, it is common to find that the process is infrequently followed or applied inconsistently when it is followed.
  • eSourcing provides more visibility: A robust eSourcing tool and program gives management more visibility into the status, progress, and results of sourcing projects. While this is great in management’s view, users may not see this as a positive.

To address the organisational and people issues, procurement executives can:

  • Standardise the sourcing process: Ensure there is only one sourcing process for the organisation and that it is consistently and broadly followed. Just as teaching a young child two different ways to tie his shoes is certain to lead to confusion and frustration, designing an eSourcing program around an inconsistent sourcing process will inevitably lead to confusion and partial adoption.
  • Ensure proper training: eSourcing tools have become significantly easier to use, but for most users it is still change. A comprehensive training should be three-pronged:
    1. Basic Functionality: A “how to” use the tool. This is typically done as a classroom style training (in person or via webex) and focuses on the technical aspects of how to do things in the tool.
    2. Best Practices: Another classroom-style training that focuses on best practices for eSourcing (e.g. questionnaire design, eAuction design & set up)
    3. Hands on: The final piece of the training should be a hands on training in the form of pilot projects. The pilots reinforce the functional and best practice trainings.

Note: When planning the pilot projects, it is important to select the right projects and users. If the project is too simple it will not provide enough depth for the project team and if the project is too complex it may distract from learning the eSourcing tool. Users selected should also be carefully chosen as the early users of the tool will have a significant impact on overall adoption.

  • Develop comprehensive documentation: Ample documentation will ensure that when users have questions after the initial training and pilot phase they will be able to easily find answers and complete their projects. The documentation should be widely available and focus on both the functional “how to use the tool” as well as the business processes.
  • Track the outcomes: Too often an eSourcing program is rolled out with much fanfare, only to quickly fade into the background. To ensure successful adoption of eSourcing tools, it must be tracked and reported. In addition to tracking and reporting the results (i.e. savings) form eSourcing widely across the company, it’s just as important to continuously track and report to the procurement organisation on the use and adoption of the tool.

Comprehensively addressing these organisational and people issues will significantly improve the utilisation and adoption of your eSourcing tools.

What the hell is an Intrapreneur?

What the hell is an Intrapreneur?

You know that anxiety that sets in when you’re in a meeting and someone mutters a new three-letter acronym (TLA) or buzzword you’ve never heard of before? The rest of the room nods and you start to sweat?

Well, that happened to me at the Big Ideas Summit. The term that did it this time was ‘intrapreneur’. So while the speaker continued on with his speech and the audience continued nodding approvingly, I raced to Google the term intrapreneur.

Branson’s been on it for years

Fortunately, it didn’t take long to find a blog by the venerable Richard Branson discussing the term intrapreneur. The blog was from 2011, which sadly for me, quashed my previous assertion that this term was nothing more than a passing buzzword.

Branson’s blog defined the term intrapreneur as “an employee who is given freedom and financial support to create new products, services and systems, who does not have to follow the company’s usual routines or protocols.” Right I thought, it’s basically an entrepreneur who works within a big company. My phone is put away, anxiety levels drop and I’m able to listen to the speaker again.

The more I’ve looked into the term intrapreneur the more I see that it’s become commonplace in many workplaces.

Most articles I’ve read suggest that the intrapreneur revolution is a response to the start-up culture that is currently challenging more traditional business models. As the image below suggests, business models are changing at an alarming rate and it’s not just the small end of town that are in the crosshairs of these new business models – large firms simply must innovate to stay competitive.

uberquote

Others have forwarded arguments that the fixation on regimented processes and standard operating procedures (that enabled business to grow and succeed through the 90’s and 00’s), are the very factors that will dictate their downfall in the future. Intrapreneurship is an attempt to turn back this tide and bring flexibility and innovation to large organisations that have previously stifled such efforts.

It works for Gen-Y

Not only does intrapreneurship allow organisations to address new business challenges, it seems to fit pretty well with the next generation of talent.

Gen-Y, the Millennials or whatever you want to call them, have been classified, (perhaps unfairly) as restless and keen to make an immediate impact on the organisations they work for.

It is for these reasons that large firms have struggled to attract young talent as the strict processes and internal hierarchy present in these organisations are a turnoff to the new generation.

This point is highlighted in the Deloitte Millennial Survey that was released in January of 2014. The study found that 70 per cent of Millennials see themselves working independently at some point rather than being employed within a traditional organisational structure.

The question is, can intrapreneurship provide employees at large firms with the autonomy and creative space to change the ‘traditional organisational structure’?

The logistics of supplying humanitarian aid in the earthquake-ravaged Nepal

DHL Disaster Response Team extends stay to aid in the aftermath of the devastation that has rocked Nepal.

Aid being delivered in Nepal
Aid being delivered in Nepal

As earthquakes continue to rock the region and wreck lives for thousands, DHL has pledged to extend the deployment of its Disaster Response Team until the end of May.

The group comprises 18 highly-trained volunteers hailing from Singapore, Malaysia, Dubai, Bahrain, India, Hong Kong, Pakistan, Belgium, and UK.

The DRT was deployed less than 48 hours after the first earthquake struck on 25 April. As the country’s only international airport in a landlocked country, the airport is the main gateway for the international aid community to send relief goods into Nepal.

The volunteers – deployed in three waves – are all trained in disaster management to help coordinate relief aid and improve logistics operations at Tribhuvan Kathmandu International Airport. To-date over 2000 tons of relief aid has been distributed to the victims, including: food, shelter, medicines, water, solar lamps, tools for rebuilding, plastic sheeting, and a 35-ton inflatable hospital from Medecin sans Frontieres,

Faced with an increasingly demanding situation and with limited equipment, the volunteers move goods into centralised airside warehouses run by the United Nations World Food Programme for further distribution by international non-governmental organisations (NGOs).

Gagan Mukhia, Country Manager, DHL Express Nepal, commented on the challenges facing the relief effort: “Some of the huge air cargo pallets initially had to be dismantled before we could move them because there just wasn’t the equipment to unload them as a whole. With the latest earthquake on 12 May, we are still able to continue with our DRT operations as we now have the equipment and systems in place to deal with the ongoing relief effort that Nepal will desperately need for many months ahead. Planes can now be unloaded quickly and aid distributed more efficiently to the Nepalese community.”

In addition to the ongoing voluntary work of the Disaster Response Team, DHL’s Aid and Relief commercial service has moved over 100 tonnes of relief goods for organisations like ShelterBox and Norwegian Church Aid. Additionally, bookings for over 90 tonnes have already been received for the coming weeks.

4 challenges procurement faces & how to overcome them

Results from a newly published study shine a light on an assortment of internal challenges facing the procurement function, as well as its changing role as we enter an uncertain future.

4 challenges procurement must overcome

Xchanging has issued the first results from its 2015 Global Procurement Study of more than 800 procurement decision makers. 

These first set of results look at internal challenges and the new role of procurement, covering misaligned KPIs, lack of internal engagement, capacity issues and skills gaps.

Challenge #1: Misaligned KPIs

Despite the now wide ranging responsibilities of procurement decision makers, 47 per cent name ‘cost savings realised’ as their number one KPI. The top four KPIs listed are all cost related. CSR/Sustainability impact, by comparison, is ranked as the least important at just 1 per cent.

Chirag Shah, Executive Director, Xchanging Procurement comments: “These results strongly indicate that there is a problem with the current KPI structure. Procurement teams are responsible for many business critical functions. From risk management to sustainability impact, procurement is engaged in activities that far surpass its cost-cutter legacy. The metrics against which organisations track procurement’s performance do not line up with what procurement actually delivers.”

Challenge #2: Lack of Internal Engagement

63 per cent of procurement decision makers globally identify ‘internal stakeholder engagement’ as a challenge, with 14 per cent claiming it is as an extreme challenge.

Shah explains: “Procurement’s strategic capability isn’t being understood and because of that, it isn’t appropriately valued. Not only is this causing problems for procurement performance, it is also restricting business success; by not engaging with the procurement team and fully understanding what it can deliver as a strategic partner, companies are limiting their potential for growth.”

CPOs clearly feel more internally valued than procurement middle management; 60 per cent of CPOs feel that procurement is a C-level priority in their organisations compared to 37 per cent of procurement middle managers.

Shah makes a number of recommendations based on the findings: “To improve internal engagement, and properly communicate the value of procurement, procurement departments need to consider tactics such as introducing governance boards, using score cards to track deliverables, leveraging analytics and reporting tools to demonstrate results and even re labelling team members with non-cost centric job titles that relate to their roles, for example ‘Risk Manager’ or ‘International Consultant’”. 

Challenge #3: Capacity Issues

According to Xchanging’s numbers – 80 per cent of procurement decision makers identify ‘procurement team time pressures’ as a challenge, and 20 per cent as a major challenge – implying that the majority of procurement departments are facing major capacity issues.

Surprisingly, in comparison, ‘talent shortage’ is considered an operational challenge by far less respondents, with 59 per cent citing it as a challenge and only 12 per cent as a major challenge.

The number citing talent shortage as a concern drops to less than half (40 per cent) when asked if it’s a problem for the industry as a whole.

xchanging

Challenge #4: Skills Gap

The skills considered most important for procurement professionals are ‘relationship management’ (88 per cent consider important, 59 per cent very important) and ‘negotiation skills’ (88 per cent and 58 per cent).

Significantly, these are also the areas where procurement decision makers identify the greatest gaps in skill set provision; around a quarter cite ‘relationship management’ (26 per cent) and ‘negotiation skills’ (23 per cent) as areas with the greatest gap in skill set provision. 23 per cent also name ‘project management’.

Want to read more? The full report can be downloaded here.

You need a plan: managing risk in the supply chain

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Increased complexity in supply chains means increased risk, coupled with unprecedented visibility from social media and a lowered public tolerance for disruption – in other words, a perfect storm. For my last session of ISM2015 day two, I’ve come to find out about what supply chain professionals can do to weather the storm and become their organisations’ risk-management experts.

Hannah Kain speaks earnestly and authoritatively, with a dry sense of humour. She’s the president and CEO of ALOM, a global supply chain services provider that has been operating for almost 20 years primarily in the electronic and technology space. It’s headquartered in the Silicon Valley and works with tech, automotive and medical companies – in short, cutting edge players that use Kain to solve their complex supply-chain challenges. Kain’s here today not just to lay out the challenges involved in operating supply chains in the age of social media, but to give the audience some solid and invaluable advice on minimising risk.

The context

Procurement professionals have to navigate more layers, more partners and more regulations than ever before. They’re dealing with globalisation, compressed timelines and increased customer expectations around speeds, prices and visibility. Corporate boards and the public are no longer just interested in what supply chain professionals are doing, but how we are doing it. The reason behind this is that procurement is moving from the back to the front of organisations. Visibility has changed, expectations have changed, along with the nature of communications and global immediacy. We’re not used to this level of scrutiny, but it isn’t going to go away.

Brand risk factors include social responsibility, cultural sensitivity, cybersecurity (40 per cent of data breaches happen through the supply chain), personal conduct, customer service, ethics, regulatory compliance, sustainability and, of course, quality. It’s important to understand that we’re all stakeholders in our organisations’ brand, from the board of directors through to shareholders, customers, suppliers, the community and employees.

Social reputation

Millennials are very concerned about the social reputation you have as a company. Kain’s blunt observation that “if you have a poor brand reputation, you have a hiring problem”, made me think of the NSA and its recruitment woes after Edward Snowden.

An example of a well-executed risk strategy was Adidas’ enforcement of its workplace safety policy in 2014. The company drove standards aggressively amongst its Asian suppliers, issuing 66 warning letters, dumping 13 suppliers for non-compliance and rejecting 104 new suppliers over safety concerns. No doubt this was a costly and difficult process but the flow-on effect is a greatly improved public perception of Adidas’ social responsibility, and of course a lessened risk of supply chain disruption through accidents in the supply chain.

Ensuring regulatory compliance is now a significant part of a procurement professional’s role. Kain praises some of the laws that have been passed recently in the US, making the point that rather than seeing regulations as a headache, CPOs should embrace them as a well-structured way to minimise risk. The Conflict Minerals law, for example, exists to ensure raw materials are not sourced from the Democratic Republic of Congo, where rebels are using indentured labour and channelling the revenue to fight a brutal war. US public companies are required to trace the origins of their metals all the way back to the smelter level – in practise this means auditing as many as six levels back down the supply chain.

Similarly, if you sell over $100 million of product in California, you have to certify that no child labour has been used in your supply chain – a very high standard to meet. As with Conflict Minerals, it’s a huge but worthwhile task to audit an entire supply chain. The real headaches start, however, when your company has two suppliers of a product to avoid disruption, or even three – this means the size of the auditing task is doubled or even tripled. In consequence, CPOs are now concentrating their supply base, often to a single trusted supplier. These regulations really delve into the “how” rather than the “what” of supply chains and illustrate Kain’s point about unprecedented transparency.

Retouch-ce_HannahKain277-hi

Kain divides risk-management strategies into two categories; preventative and reactive. Both are equally important and I soon learn that risk-management is a lot more complex than I’d thought.

Preventative risk-management strategies

  • Preventative strategies are best for stable industries, public companies and high-profile organisations with good alignment, a culture of planning, strong conceptual corporate supply chain staff and reward planning.
  • Put in place a SCOR (Supply Chain Operations Reference) model: create objectives, KPIs, measures, targets, KRIs, loss tracking initiatives. Assign numeric value to disruptions.
  • FMEA (Failure Mode Effect Analysis) method: identify failure points and causes, predict the potential frequency of failure, assign numerical probability and severity factors resulting in a Risk Priority Number (RPN), document your mitigation strategy and response actions.
  • Manage based on data: establish a dashboard and a supply chain event management system with alerts and pre-alerts on the state of your suppliers.

Reactive risk-management strategies

  • Reactive strategies are best for fast-moving, smaller and innovative companies with a culture of agility, resourcefulness, entrepreneurship. These organisations reward resourceful fire-fighting and focus on minimising disruptions that have occurred.
  • Have a communication plan on social media: the response should come from senior management level. Acknowledge the problem, know the facts, be truthful initiate a solution and define escalation actions.
  • Poor reaction: Lululemon’s reaction to customer complaints on social media about transparent fabric was to blame the issue on customers’ weight, rather than taking responsibility for the quality. The result? A social media storm, sending the stock price tumbling 15 per cent in one day, followed by a two-year recovery process.
  • Good reaction: In response to reports on unsatisfactory working conditions, Apple’s CEO regularly visits Chinese iPhone suppliers to meet with employees, management and government officials.

Kain’s eight tips for putting out fires on social media

  • Prepare for the worst – have a plan
  • Take responsibility
  • Put consumer and work safety first
  • Respond quickly, sincerely and truthfully
  • Be real – personally respond and take it offline if possible
  • Respond privately to personal inquiries
  • Fix mistakes expediently
  • Arguing with social media users is always a bad idea.

Kain concludes with a reminder that your supply chain and brand are intertwined. Risk is always present and disruptions are inevitable – you need to be both proactive and reactive to minimise and deal with events as they happen.

Founded in 1915, the Institute for Supply Management (ISM) is the first and largest supply management association in the world. A not-for-profit association with 47,000+ members and 140+ affiliated organizations around the globe.

ERP or SAAS – Why Have Two?

ERP or SAAS – Why have two?

In an evolving, modern procurement environment, how do you keep up with the pace of new business practices? In recent years we have seen the emergence of Procure To Pay (P2P) and P-Card systems that work in isolation from ERP systems, or as expensive modules as part of an ongoing ERP investment.

General dissatisfaction with P Cards, and expensive, time consuming ERP Modules have led many organisations to look at flexible, less expensive cloud based Procure To Pay solutions (or Software As A Solution – SAAS).

Understanding how SAAS applications can provide flexibility when utilized alongside an ERP system is an ongoing challenge to Procurement and Finance teams – particularly in non trade and intangible procurement categories (such as Marketing). 

Identifying a suitable bolt-on SAAS application is only part of the issue – convincing IT and CFO’s of the considerable savings to be made by taking a step outside of existing platforms to drive savings is difficult given the ongoing investments typical of an ERP system. ‘Can’t our ERP do that?’ is a typical question. And the answer is YES – But at what cost, time and upkeep?

Most SAAS applications are often delivered to a less tech savvy audience and are therefore more user friendly (i.e. less intimidating) and end up with a higher adoption rate – reducing change management timeframes. And the right SAAS solution will drive compliance through convenience, as well as providing internal controls that P-Cards cannot – bringing discipline to purchasing across many departments by enabling rules and the internal control of suppliers.

The ability of modern cloud based P2P applications to work within an organisation’s financial rules, without the need to compile external usage reports (and not endure hefty monthly interest fees) from P-Card suppliers provides a data store that can be used to track, plan and negotiate with suppliers. Any good SAAS Application will enable direct data export into ERP platforms – providing best practice to a procurement team through both compliance and information.

As cloud based P2P’s gain acceptance, Procurement Managers face the challenge of identifying solutions that will sit comfortably alongside their ERP systems, while providing the flexibility and responsiveness that many ERP modules cannot.

How will your organisation respond?

Can social accounting change our supply chains?

Olinga Ta'eed speaking at the Procurious Big Ideas Summit

I’ve said this before, but I think we get the supply chains we deserve.

As consumers we want the cheapest possible clothes, mangos in the middle of winter, low cost technology products and effective cosmetics.

When you couple these consumer preferences with the fact that the major players in our supply chains are ultimately answerable to shareholders whose sole motivation is a dollar return on investment, a level of unscrupulous supply chain behaviour appears inevitable.

We can blame big companies, CEO’s, CPO’s, suppliers or third party contractors all we want, but under the current model, consumers have to take some responsibility for what happens in our supply chains. It’s consumers that drive the competition and at the moment that demand seems to be based around convenience and price over everything else.

Are CSR and profit diametrically opposed?

Reading and writing endless stories on unethical supply chain practices has prompted me to think on these market dynamics a lot and to be completely honest, I struggle to come up with an answer as to how we can integrate social concerns and ethical business practices into a model that is in its very essence, profit driven.

For me, the two seem to be at odds with one another. That’s why I was interested to hear Professor Olinga Ta’eed speak about the importance of social accounting and including social metrics in our company reporting at the Procurious Big Ideas summit two weeks ago.

For a long time I’ve been sceptical about companies’ commitment to CSR and ethical corporate behaviour, they’ve always looked a little fluffy to me. Sure, it looks great on a webpage or in a brochure, but I can’t help but feel the majority (not all) of these initiatives are window dressing for marketing purposes or simply box ticking for the benefit of an audit.

I believe the reason that CSR initiatives have been fluffy for so long is that it is intrinsically difficult to measure something so subjective, so sentimental and we all know that (brace yourself for a painfully over used business mantra) “if you can’t measure it you can’t manage it”.

A shining light?

Olinga and the team at Seratio have set out to address this predicament with the development of a Social Earnings Ratio (S/E). A business metric designed to provide an insight into a firm’s social performance. The S/E metric claims to:

“Harness the full breadth and depth of information in the social impact marketplace to create visualizations that uncover key insights, translate any index or metric into a comprehensive set of measurements generated specifically for you. The S/E metric can be applied to whole organisations, projects and processes across public, private, third and community sectors.”

It is hoped that the S/E metric will be rolled out to one billion businesses by 2020. It has already gained traction in the UK with the Social Value Act 2012 and the Modern Slavery Act 2015.

The Model T Ford

As I mentioned earlier, social reporting is very much in its infancy. Many firms try to report on it, but the lack of a common metric, or group of metrics, has meant there has no been real standard for reporting success in this area. This combined with the vast amounts of time and resources required to carry out these initiatives had lead to an approach of reporting social value that has been piecemeal at best. This is precisely why the S/E metric was designed with the following parameters in mind, price, consistency, comparability, speed and accessibility.

Olinga outlined that the S/E metric can provide a window into a firms social performance in 10 minutes and for a cost of only five pounds.

It may be early days now, Olinga referred to the SER as a model T Ford for measuring social value, but perhaps if can we start to generate solid comparable social metrics, consumers will start taking companies ethical performances more seriously when considering purchases. Achieve this and perhaps it’s possible to envision a more sustainable and just global supply chain.

Electrolux has 6500 people working on Big Ideas today

Big Ideas? How’s this for a Big Idea? On 11 May, thousands of Electrolux employees across the world began a 72-hour innovation-fest designed to develop new ideas for the future of fabric care. 

Electrolux iJam

The initiative, named iJam, is a crowdsourcing event where employees are encouraged to collaborate with one another online to come up innovative product improvement solutions that can be integrated into Electrolux’s business.

The event is facilitated through software platform that connects employees across the globe. The program enables participants to raise ideas, collaborate with one another and to comment on and promote the ideas that are raised.

While all ideas generated are fed into the company’s product development team for consideration, there are also winners! Once the 72 hours is over, a team of product developers will select the 20 best ideas, which along with 10 ideas voted in by participants, will be presented to the company’s management team for consideration. The management team will then select the three ideas it believes have the strongest commercial impact and will commit resourcing to further developing these ideas.

Last year’s iJam project had over 6500 participants, generated over 1500 ideas, 8700 comments were posted and 11,500 votes were cast. As a testament to the success of the initiative, two of the three winning ideas from last year’s iJam are now in mainstream development at Electrolux.

While iJam is reserved for internal employees, the firm runs another initiative, the Electrolux Design Lab, which drives innovation through external crowdsourcing initiatives. The Design Lab encourages design students from across the globe to contribute product ideas and developments to Electrolux.

This cross-functional approach is a great example of how innovation can be implemented even in the largest of organisations.

The ideas that are generated through this initiative have already undergone a significant vetting process. Ideally, a person comes up with an idea that is reviewed by someone from marketing, someone from product design, some from procurement etc. etc. Based on the feedback gained, the ideas are altered, meaning that by the time they reach the management team, each idea has already been exposed to a fair level of criticism and cross-functional thought.

It’s a great idea. I look forward to hearing the results of their work!

Got a Big Idea of your own? We want to hear it (provided it’s less that 60 seconds)! Find out more here.

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