Procurious favourite posts from 2014

Well that was the year that was… and we’ve had quite the journey!

Despite our young age we’ve already secured a place in the final of the UK Blog Awards 2015 #UKBA15.  None of this would’ve been possible without sterling efforts from our guest bloggers, including: Gordon Donovan, John Viner-Smith, Helen Mackenzie, Elaine Porteous and more.

Procurious has been shortlisted in #UKBA15

We also thank our 3000+ members, wherever you are spending Christmas (we know you hail from 70+ countries worldwide…) and invite you to look back at some of the most popular posts published on Procurious during 2014.

What can the Spice Girls teach us about being reasonable? – Gordon Donovan

5 common procurement myths busted – Procurious HQ

Sourcing things differently: the world of alternative storefronts – Matt Farrington Smith

How Better Together is putting the excitement back into public procurement – Helen Mackenzie

Why your business card is a piece of crap – Matt Farrington Smith

How to successfully negotiate with an Italian – Sergio Giordano

Are the golden children of procurement? Tania Seary

Negotiation is no game but here’s how to win at it anyway – John Viner Smith

Procurement crisis? Social media can save the day! Procurious HQ

24 of the most influential people in procurement – Matt Farrington Smith

Your job role might be obsolete by 2020 – Elaine Porteous

5 must have attributes of a Procurement superstar – Procurious HQ

Why anchoring matters in negotiation – John Viner Smith

Black Friday/Cyber Monday: the real effect on supply chains – Procurious HQ

Social network faux pas – Matt Farrington Smith

If you want to join our impressive pool of contributors send your ideas and pitches to our Content & Community Editor – Matt Farrington Smith.

Santa’s supply chain: the challenge to build a new logistics solution

Operation Santa Claus: the results from 2014’s Unbelievable Challenge are in!

The Unbelievable Challenge is an open architectural design competition open to young architects and designers to find the best idea for a logistics centre for Santa Claus.

The competition was organized jointly by Ruukki Construction, the City of Oulu, Helsinki Design Week and the architecture and design office Snøhetta.

The competition sought unique, innovative ideas and solutions for a logistics centre for Santa Claus, who was the competition’s imaginary investor. It was his wish to find from among the competition entries a functioning centre to meet his growing logistics needs and increase the attraction of the area.

Evaluation criteria included energy efficiency, sustainable, values, usability, architectural values, suitability to the given surroundings and an ability to enhance the attractiveness of the area.

The competition attracted a total of 243 entries from 59 different countries (that’s almost as far-reaching as Procurious!)

And why is a new logistics solution so important? Well as per Morgan McKinley hypothesis “with today’s global population clocking in at 7.125 billion people, we can estimate that there are approximately 2.375 billion children currently at present receiving age. Given that the Christian population of the world works out at 32 per cent, that’s approximately 760,000,000 children.”

Christmas logistics

The winning project was titled “Nothing is impossible”, from an idea by Alexandru Oprita, Romania and Laurentiu Constantin.

The judges’ commented: “It is feasible and innovative but not futuristic. It is also well thought through – from land use all the way to detailing.

The entry presents an idea of making the most visible façade and the front of the building a magical element that could both integrate the building into its surroundings, and highlight whatever aspects of the building or its functions are desired.”

They continued: “The idea could be realised without sacrificing any of the practical or economic aspects of the logistics centre. It provides understandable solutions for energy efficiency and attempts to introduce a lot of good thinking about how to utilise this within the building. It also has a good understanding of the local situation. The entry seeks to embrace and enhance the function of the building as a hub for new technology in addition to the logistics centre – it connects well with Oulu as a city.”

Here’s a couple of the runner-up entries:

Santa's supply chain

 

Santa's logistics

Think you could do better? Put your thinking cap on, and keep an eye on unbelievablechallenge.com for a chance to enter next year.

Get your Christmas logistics fix with this Euro Truck Simulator

Father Christmas is looking for logistic professionals who want to help out with Santa’s substantial delivery backlog. 

Despite what fable tells us, Father Christmas/Santa/St. Nick is secretly a long-haul truck driver. The reindeer and sleigh are just a cover… sshh let’s keep this between us eh?

Now you can make like Santa and get in on the logistics game from the comfort of your own home with Euro Truck Simulator 2.

The wildly popular truck simulator has just been gifted a sizeable update in time for Christmas – the Polar Express 2014 event adds a selection of icy new truck designs to proceedings, unlockable through completion of a festive-themed challenge. The challenge? Ferrying the  pallet of ‘Christmas Gifts’ across Europe (or more specifically, the distance between the game developer’s offices and The North Pole).

Procurement – New Year, New Image

It’s very nearly time to wrap up for Christmas at Procurious HQ, but not before we’ve had our say on some of the key stories over the past week.

jjbsportsIf you haven’t thought of a procurement-related New Year’s resolution for 2015, why not join Procurious in aiming to change, improve and lift up the brand and image of procurement.

The function’s image has taken a bit of a battering in recent weeks, with a glut of stories on the treatment of suppliers, ethically questionable procurement practices and convictions for fraud and bribery in both supplier relationships (JJB Sports, UK) and tenders (US Defence Contracts).

Procurement has both the ability and responsibility to ensure that these practices are stamped out. Procurement professionals hold a unique position in the organisation of being able to influence spend, but also control the ethics and governance of the purchasing process.

So how do we do this? First, check out recent articles including detecting fraud in your organisation and the importance of Supplier Relationship Management. Then invite your network to get involved with Procurious and we can collectively get working on our aims in 2015.

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

Fraud – https://www.procurious.com/blog/in-the-press/how-to-detect-fraud-in-your-organisation

Oh, and just to lighten the mood, keep an eye out this week for an article on the best and slickest supply chain in the world. Who else but Saint Nick himself…

GST reduces complexity, improves supply chain

  • With GST Bill being tabled in the Parliament, companies operating in supply chain business stand to benefit, says Vineet Agarwal, MD of Transport Corporation of India .
  • But GST will have no direct impact on a company like his, which is a services company, since it is essentially a consumption tax and will have an impact on manufacturing.
  • However, the introduction of GST will lead to some reduction in expenditure, he adds. He expects the supply chain business to grow at around 20 per cent in FY15. He also has a positive outlook for FY16.
  • Going ahead, Agarwal sees a revival in the auto sector. Transport Corporation of India derives nearly 70 per cent business from it. When compared to FY13 and FY14 he sees significant improvement in business.

Read more and watch a video at Money Control

Procter & Gamble reports big moves in 16th Annual Sustainability Report

  • The Procter & Gamble Co. (P&G) is serious about environmental stewardship, as its 16th annual sustainability report reveals.
  • The multinational consumer goods company met several environmental goals ahead of schedule: P&G met its waste reduction goal for 2020 six years early and its pulp certification goal a year early.
  • P&G only disposed of 0.40 per cent of input materials as manufacturing waste to landfill across its facilities. That means 99.6 per cent of all input materials are either recycled, reused or used for energy conversion. The 2020 goal called for less than 0.50 per cent.
  • In April, the company announced steps it would take beyond Roundtable on Sustainable Palm Oil (RSPO)certification to ensure it does not contribute to deforestation. The steps include developing a traceable supply chain, no development of  high conservation value (HCV) areas and high carbon stock (HCS) forests, no development of peat lands, no burning to clear land for new development or replanting and complying with P&G’s Sustainability Guidelines for External Business Partners.

Read more at Triple Pundit

St Helens surgical gloves supplier in position to supply the whole NHS

  • A Merseyside supplier of surgical gloves has won a place on two NHS procurement frameworks – meaning it can now supply its products to NHS trusts across the UK.
  • St Helens-based Leanvation was established one year ago by former healthcare executives Dr Jonathan Day and Tony Downes, with backing from the North West Fund for Venture Capital. They have developed a range of surgical gloves that aims to reduce the risk of allergies and hand fatigue.
  • Under EU rules, NHS Trusts are limited in the value of products they can purchase from any one supplier without going through an official tender procedure. Securing a place on the NHS Shared Business Service Framework and the Health Trust Europe Framework allows Leanvation to overcome this barrier.
  • The company will be launching four new products in early 2015 and is about to start work on a new range of surgical gloves designed to further improve infection prevention, thanks to its success in winning a five-figure research grant. Dr Day, Leanvation’s managing director, said: ”This is a major step forward for Leanvation, effectively giving us a licence to supply the NHS in volume and compete alongside the traditional multinational surgical glove brands.

Read more at Liverpool Echo

Canadian defence procurement – everything old again is new again

  • The Conservative government last week released its Value Proposition Guide that is supposed to provide direction for firms who will be preparing bids for future defence procurements. Those procurements will be governed by the government’s new Defence Procurement Strategy.
  • “The Value Proposition Guide is a new tool for fostering investment in the Canadian defence industry,” the news release from Industry Canada noted. “The guide will ensure that the Government of Canada’s Defence Procurement Strategy will result in the creation of high-skilled jobs and economic growth across the Canadian economy.”
  • It seems that everything old again is new again. I was writing articles in the mid to late 1980s about the efforts of the Mulroney government to shore up the defence industrial base. Such benefits linked to defence contracts are called offsets in the U.S. and other nations. The Canadian offset program continued throughout the Kim Campbell and Chretien governments and into the Paul Martin government.
  • The linking of work for Canadian firms to the awarding of contracts to foreign companies was, however, eased under the Harper government. After much concern was raised by the domestic aerospace and defence industry that they were getting little work of value even as the Harper government spent billions of tax dollars buying new military equipment, the Conservatives came up with its “value propositions” program.

Read more on Ottawa Citizen

How do your products define your purchasing behaviour?

Jacques Adriaansen, ‎co-founder of Every Angle, explains the importance of tailoring your purchasing strategy to get the best possible results.

The phrase ‘horses for courses’ is one that’s well worn, but it’s nonetheless particularly applicable for those looking to develop a robust purchasing strategy.

Let’s be clear about this – getting your purchasing strategy right is an important part of the operational processes undertaken by any organisation, and yet it seems to be one that many devote an insufficient amount of time to. Too many organisations seem content to fall back on a ”one size fits all” approach, leading to them paying over the odds and having insufficient supplies in place when they are most needed as a result.

So what’s the answer?

The truth is that when people think of purchasing, they often think of hard, tense negotiation and bartering as an integral part of the process. It’s a huge misconception, and one that can lead to significant problems further down the line. The key thing to remember is that it can be just as important to tailor your approach in purchasing as it is in other walks of life. For example, just as it wouldn’t be appropriate to turn up to a gala dinner event dressed in a t-shirt, shorts and sandals, you wouldn’t necessarily think of entering a period of intense negotiation with a supplier over the price of a pack of staples!

Clearly, there’s little risk in not getting staples or nuts and bolts in on time

Broadly speaking, there are four different types of product to consider when identifying a purchasing strategy. Each of these product types requires different behaviours when it comes to the procurement process, based on balancing cost against risk. Firstly, you have products that are easily available and which a great deal of money is spent, due to large volumes and/or high purchase prices. A good example of this might be standard sheet metal, which can be bought at various suppliers. Because this product type has such a relatively high cost associated to it, it puts those in charge of purchasing decisions in a strong position to negotiate. The fact that they are so easy to obtain means that there is very little risk involved in doing so, which means that these products will always be heavily negotiated as part of the purchasing process.

Secondly, there are products, like the staples mentioned earlier or standard nuts and bolts, which are cheap and easy to obtain. Clearly, there’s little risk in not getting staples or nuts and bolts in on time, but the cost is so low that it would be a waste of time to negotiate it. Thirdly, are high impact products, like very specific engines used by machine builders or upper quality lithography lenses for computer chips production. High impact products are only available from a select few suppliers, but which, if you do not have the products available, could significantly harm your ability to perform as a business. In this case, both the cost and associated risks involved are high, which means that the balance of power lies with the supplier. What’s needed, as a result, is a more collaborative, considered approach to purchasing, with limited negotiation and a focus on ensuring that the product is available for you to use when you need it.

Finally, there are very niche products that, although cheap, can only be supplied by one or two experts. A part for an important piece of machinery that helps your factory to operate is a good example of this. These products need to be ‘buffered’. What this means is that it helps to ensure that there is always a supply in stock, as the consequences of, say, your factory having to close because you have to wait for a new part to arrive don’t bear thinking about!

Because this product is so important, and relatively inexpensive, you once again see very little in the way of negotiation. I once had a customer that couldn’t ship a very expensive machine, because purchasing decision makers had blocked one specific part that was needed for it to work. The reason: the supplier of that specific part had increased the sales price of his product by 50 per cent, without contacting them! The new price of the material was a mere US$ 7.50!

These four different product types, and the costs and risks associated with them have to be factored into any purchasing decision. It’s a model that is well known in purchasing circles, and which was first devised by Peter Kraljic, who suggested that a purchasing strategy can only be effective if each of these elements is closely examined. Although Kraljic’s model was originally conceived by Kraljic for purchasing, it can also be successfully applied to managing logistical and production processes (consider determining production series volumes, for instance).

However, although the model acts as a good guideline for decision-making in operational processes, it’s important to remember that there are no hard and fast rules. Before making any decision, you will also need to consider all other necessary information, such as the anticipated sales, prices and other factors that could influence it.

So how do you make the best choices as to the right purchasing approach for you? Perhaps the best way to achieve this is by first asking yourself what you want to achieve, and then considering how you want to achieve it. Clearly, some products will always be in high demand, while others will be in lower demand, but require a different level of negotiation. The important thing is to modify and adapt your purchasing behaviour in line with your desired outcome. By selecting the right horse for the right course, you can guarantee that your purchasing strategy is successful – and improve your business performance as a result!

Where next for the automation revolution?

This is a guest post by Sandeep Kumar, Vice President at ITC Infotech and Head of the Business Consulting Group.

The increasing automation of the supply chain has become a major talking point in recent years as technology continues to play a pivotal role in the way operations are run.

Jenson/Shutterstock.com

The buzz is easy to understand – automation enables businesses to address the need to scale their operations without having to add to their workforce, with a more streamlined, flexible and efficient operation that drastically reduces errors.

Although it continues to dominate headlines today, the supply chain technology revolution actually started in the early 1980s with the advent of powerful computing models in MRP and MRP II. This later evolved into the next generation supply chain software that helped bring in advanced planning and optimisation capabilities as well as strong functional automation of warehouses and factories. The equation has been shifting ever  since then, with newer technology becoming more affordable, the cost benefits of tool driven automation became extremely attractive and application of smart tools came to be realised as a critical competitive advantage.

Many geo-political events and technology breakthroughs have contributed to this trend. The oil crisis of the 70’s triggered multiple innovations in cost reduction and efficiency, and the opening up of China and the Far East in the 80s made the making and selling of products across different continents not only possible, but cost effective. The end of the Cold-War and increase in globalisation led to rampant consumerism in the 90s – driving product proliferation, miniaturisation and reduction of life cycles, digitisation of information exchange , and increasingly stringent statutory requirements for safety and ethical practices.

The forces of globalisation have continued to drive newer themes which dominate the agenda today, such as the globalised supply chain, cost and profitability improvement, value chain integration, integrated planning and optimisation, global supply chain analytics and more. Technology has helped shape business evolution at each step.

In essence, what we see today is the supply chain being more and more digitalised and therefore more intelligent. By setting up a centralised supply chain analytics centre, for instance, businesses can benefit from processes like demand forecasting, replenishment planning, inventory analytics and sales and operations planning support in a shared services model. In this way, they can extend the benefits of standardised processes and analytics across multiple business divisions without having to increase human resources.

The impact of growing automation in supply chains has been widespread across industries. Among those most affected by transformation in supply chains are high tech OEMs and consumer electronics OEMs. These are largely sectors where cost efficiencies are paramount and technology adaptation is helping to lower the cost of product operations, and this demand has made them the pioneers in adopting new advanced capabilities that disrupt the supply chain models.

In these sectors, functions such as designing, sourcing and distribution have gone through transformational change. Companies like Cisco, for example, operate a business model that uses technology as a powerful integrator of supply chains. The automotive, aerospace and industrial manufacturing industries have also undergone similar transformation.

This evolution does not come without challenges.

In addition, the CPG, fashion apparel and retail industries are good examples of how global supply chain models bring together raw materials and ingredients from across the world, before products are manufactured and then distributed to global markets. Wal-Mart’s Retail Link, for instance is a great case of how a retailer manages its huge supplier base through a supply chain Information portal.

This evolution does not come without challenges. In this case, the challenge lies primarily in staying ahead of the curve. Early adopters of supply chain risk management like Cisco and Ericsson, for example, have been pushed into investing in such capabilities based on environmental factors putting their supply chains at risk. Wal-Mart and Lego are other examples where supply chain sustainability and codes of conduct are being put in place as a consequence of management not being live to bad supplier practices.

Another concern has been the decreasing relevance of human labour in the face of growing automation. Although, it is clear that this transformation does impact manual work content by changing the way certain tasks are performed, arguing that it subsequently leads to the removal of people from supply chains would be quite an overstatement.

Sandeep KumarWhat however needs to be reinstated is that despite the rapid technological developments, humans have always and will continue to be the drivers of these processes. Even though specific roles will keep changing, supply chains will continue to depend on technology-savvy people. Supply chain technology is moving human tasks from more repetitive data entry and crunching tasks to more intelligent supply chain decision making, enabled by smart data and technology support.

This is an interesting time for supply chains as a series of innovations and technological shifts such as mobility and the rise of digital commerce will drive further change in the coming years. Supply chain risk management, sustainability, global integrated planning capabilities, and the use of instrumented intelligence are becoming key areas of interest that will help increase in-process visibility and enable the quicker business turn around on key operations. Fast-paced change in this area means there is plenty of space for players to claim the “pioneer status”. Businesses that want to succeed and reap the benefits of supply chain automation need to be forward-looking and brave enough to take the extra step ahead of their competitors.

How to manage your email notifications

Here at Procurious we like to keep you informed, that’s why alongside network invites (and website notifications) you’ll also receive a selection of email newsletters designed to help you get the most from the site.

Sign up to the Procurious newsletter

You’ll already receive the weekly ‘Best of the blog’ newsletter. Here we highlight three of our biggest articles from the past week – great if you took a few days off Procurious and you need to catch-up.

Remember, you receive all our newsletters by default – there’s no action required on your part. If you don’t think you’re getting them, try looking in your junk folder. Add us to your address book to ensure safe delivery next time.

Hey Procurious member – you’ve got new mail!

Eagle-eyed members might have noticed a new addition to the newsletter family.

Our news, views and commentary mail provides members with the latest happenings on Procurious – every week we’ll lead with our take on a topical issue in the news. Elsewhere you’ll find a recap of the top discussions, details of upcoming events, something from the blog, and suggestions for members to add to your network.

How to manage your email notifications

We hope you enjoy receiving and divulging our weekly Procurious newsletters. But if you want to limit the amount of mail you see from us it’s easy to update your email preferences.

How? Locate a Procurious newsletter in your inbox and scroll to the very bottom of the mail. Here you’ll find links to ‘Unsubscribe’, ‘Manage your email notifications’, or ‘Forward to a friend’.

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Obviously we’d love you to keep receiving stuff from us, but if you’re finding yourself buried under a deluge of email then we’ll understand (begrudgingly).

Driving home for Christmas: the best road warrior tech

A selection of nifty gadgets, accessories and app for those on the go this festive period.

Whether you’re melting in the Australian winter heat, navigating through dark icy highways, or winging it back to your family in business class – there’s something here for all types of traveller.

Best protective case for your smartphone/tablet

After a military-grade cocoon for your precious smartphone/tablet? Look no further than Griffin’s Survivor range of protective shells.

The All-Terrain model offers an impressive four layers of protection to safeguard against drops, knocks, scrapes, as well as all manner of environmental threats.

And if you’re worried about fumbling for your phone in your oversized gloves, the chunky design of the shell will ensure it remains in place. Scratch-resistant polycarbonate looks after your screen, while a fingerprint scanner beefs up your security detail and prevents unauthorised access.

Give your phone an extra life by ordering yours for £30. The All-Terrain variant is available for a wide selection of different handsets and iPads – check yours before setting your heart on it.

G-Form XTREME case

Alternatively: The XTREME range from G-Form offer seriously beefy protection for all forms of smartphone and small-factor tablets.

All G-Form products offer Reactive Protection Technology with a rigid outer polycarbonate shell and an inner shock-absorbing TPE insert.

Prices start at around the £20 mark.

Roberts Travel Pad review

Roberts Travel Pad

Need something to keep you entertained on the road? Roberts punchy portable speaker will ensure the music never stops.

Although it’s compact enough for travel, its chunky frame (185mm w x 80 h x 25 d) and satisfying weight (336g) means you won’t be carrying it around in your trouser pocket.

It outputs via Bluetooth, so you can stream from your tablet, mobile or PC for a full 12 hours. Charging is achieved via a micro USB charging socket.

Place it on a wooden tabletop and the Travel Pad sounds commanding. It offers a deep and robust sound. Plus the non-slip base will protect it from any unfortunate accidents.

There’s also a dedicated button to answer calls from your mobile – the inbuilt microphone providing you with a convenient hands free solution.

It’s available now from around £80.

Bluesmart connected suitcase

The best luggage solution for the tech savvy

We’re not sure whether the Bluesmart really is the would’s first ‘connected’ suitcase but it certainly stands out in the identikit world of traveller’s baggage.

It’s pretty smart too – proximity sensors will lock it if it travels too far from your sight, and should you ever get separated (or rerouted through the airline system) you can track your bag’s location using a partner app. Want to know if your over your weight allowance? The built-in scale serves as a handy extra.

The drawback? You’ll have to wait until Aug 2015 for the first Bluesmart units to roll off the production line. Register your interest at bluesmart.com, and get ready to put down your $280.

Portable Pebble Charger and Speaker

Best power bank for portable electronics

You never want to find yourself caught short… Out of power that is.

The Pebble Aria is not just another portable charger, oh no, – it offers much more. It’s cylindrical design packs in (and admittedly tiny) speaker too, and the 3500mAh capacity will replenish your devices on up to two different occasions.

If you’re after some aural escape then you can always take advantage of the inbuilt 2W amplifier to soundtrack your ride.

Available from Firebox.com for £39.99.

MIPOW Power Cube 7800 Portable Charger

An alternative choice might be the MIPOW Power Cube 7800 Portable Charger

The Power Cube has a capacity of 7800mAh, with a maximum 2.4A output. That’s more than enough juice to bring your mobile phones or tablet back from the brink several times over, and is good for 500 discharge/recharge cycles.

What’s more it supports the charging of two devices at the same time, making the 5-7 hour recharging time that little bit sweeter.

UPP hydrogen fuel cell

Got a bit more cash to splash? The innovative Upp hydrogen fuel cell not only gives you a truckload of extra power but access to an innovative app to control all aspects of your battery usage.

The Upp battery solution works by connecting the Upp fuel cell to a replaceable Upp fuel cartridge. Empty fuel cartridges can be refuelled or exchanged at various points across your city.

The Upp app is free to all Upp users. Look under its hood and you’ll discover a wealth of fuel cell statistics and interactive charging data.

Upp is currently only available in the UK through Apple retail stores. Head to beupp.com for the latest developments. £149.

Jabra Stealth Bluetooth

Best gadget for communicating on the go

Harking back to the days when it looked like everyone was talking to themselves… the Jabra Stealth takes aim at the dwindling Bluetooth headset market with the ultimate accessory for the travel weary.

The stealthy headset has been blessed with something Jabra calls microPOWER technology – more or less a fancy way to say it benefits from extended talk time, achieving 6 hours in total. Jabra products have also become adept at blocking troublesome background noise – the headset’s Noise Blackout dual microphone works well, plus its light frame means it sits comfortably (even after long periods).

It can be picked up for £69 at various online outlets.

Three key insights on the importance of SRM

Apple and General Motors are two massively successful American enterprises with rich yet starkly contrasting histories.

Founded in 1976, Apple has exceeded a market capitalisation of $700B and has ascended to become the most valuable company in the world.  After leading global vehicle sales for 77 consecutive years in 2007, GM filed for bankruptcy in 2009 and recently slipped to the position of the world’s third largest automaker.

Razvan Ionut Dragomirescu/Shutterstock.com

Both organisations wield a significant amount of influence in their industries.  Each of them are making news headlines for their supplier relationship management (SRM) practices.

Here are three key insights that we can garner from these two extremely high-profile cases. 

  1. SRM cultures are built top-down

Apple CEO Tim Cook succeeded Steve Jobs in 2011 from his role of COO, which included oversight of the Global Procurement organisation.  Industry accounts portray Cook as master negotiator who knows how to develop and drive supplier relationships based on long-term potential and risk.

For example, Cook disagreed with Steve Jobs in 2011 when Jobs insisted on suing Samsung, who is both a major supplier and competitor to Apple.  Shrewd but sensible, Cook saw the big picture and the importance of the Samsung relationship to the iPhone business.

In the GTAT case, Apple’s approach is a bit curious given how it aggressively structured the deal in the face of what in hindsight was major supplier risk.  One perspective is that it was effective negotiation that protected their interests and secured exclusive rights to sapphire technology.  Another view is that the contract does not reflect the tone of a strategic co-investment arrangement for a scarce technology and billions of iPhone 6 revenue at stake.

Whether you agree or not with Apple’s approach to GTAT, there is little doubt that the SRM culture that Cook has built is a competitive advantage for Apple.  Apple’s sustained business growth and its constant flux of product innovation could not have been achieved otherwise.

Delphi was a division of GM until 1999, when GM spun them off and the relationship has been heavily strained since.  The facts coming out of the ignition switch case paint a fairly dismal picture of GM SRM’s tactics.  Top execs have admitted that suppliers “don’t really believe” in GM resulting in a competitive disadvantage.  GM has been ranked by its suppliers over the years as the worst automaker to deal with, according to an annual survey.

Dealing with the aftermath of a long-standing adversarial SRM culture, CEO Mary Barra proclaimed that building supplier relationships is among her top priorities.  Barra has just appointed a new CPO, a former Delphi executive aptly enough, who will be faced with the challenge of driving a transformation of SRM practices from top to bottom.

These stories remind us how critical it is for CPO’s to embed a SRM culture with the overarching long-term business strategy.  Despite the GTAT setback, Apple has a SRM culture that has fuelled its business growth.  GM’s exec have been unable to build an effective SRM culture, which has resulted in a decline in business performance and major reputational damage.

  1. Effective SRM practices consider external stakeholders

The crux of the GTAT-Apple deal was that Apple would loan the supplier $578m to build and operate furnaces at an Apple-owned facility in Mesa, Arizona.  This was to be a huge win for not only the local community there, but also a lift to Apple’s efforts to demonstrate that they could create jobs in the USA.

When the deal imploded, Apple closed the site resulting in over 600 jobs lost to the local community.  Apple has renewed its commitment to the town by setting plans to re-purpose the former GTAT facility.

GM has a wide array of constituents and stakeholders to answer to regarding its dealings with Delphi.  The Attorney General of Arizona has filed a $3B lawsuit for the families of victims of the faulty ignition switches.  Surely, there are more to come.

Building an SRM plan is primarily focused on delivering solutions that meet customer needs, but it does not end there.  Procurement managers must be keenly aware of risks to the external stakeholder environment, which should be carefully identified with business partners such as Legal, HR, Public Relations and others.

  1. Demand for strong procurement executives will rise 

Procurement practitioners have reason to be encouraged by the visibility that these stories bring to the function.  The public scrutiny that Apple and GM are facing with their SRM practices exemplify how strong procurement leadership can make a profound impact on the success of large multinational enterprises.

Top execs will be looking for CPO’s that can build and sustain a culture in which the value potential of effectively managed supplier relationships can be fully realised.  The mission of the progressive CPO will include transforming procurement into an organisation of forward-thinking, relationship-savvy business strategists that have deep understanding of the external environment.

Finally, properly incentivising the new procurement organisation to live the values of its SRM culture will be paramount.  CPO’s will be focused on expanding traditional procurement metrics to include broader KPI’s in the areas of product innovation, market share and customer satisfaction.

IBM quizzes procurement role models in leading 2014 study

Procurious comments on the week’s top headlines

The IBM Institute of Business Value (IBV) 2014 Chief Procurement Officer (CPO) Study examines the “journey to value” for procurement organisations. The survey covers more than 1,000 CPOs and senior procurement executives at global companies across 41 countries and details the specific procurement strategies that drive positive business results and bottom-line impact.

The study took a closer look at “procurement role models,” the 100+ companies that achieved the most impressive revenue and profit performance relative to their industry peers. The results were then mapped to identify common attributes that separated the role models from the rest of the pack.

These high-performing procurement organisations:

  • Focus on improving enterprise success, not just procurement performance.
  • Engage with stakeholders to understand and anticipate their needs and values.
  • Embrace progressive procurement practices and technologies to drive results.

Download the full report here.

At a time where Procurement sometimes struggle to communicate the value that they bring to an organisation, and many departments are not afforded a seat at the executive table, this study gives some excellent pointers to CPOs and senior procurement professionals as to how they can catch up with leading organisations.

The procurement role models provide a blueprint for high performance – take a wider view of the whole organisation and how procurement fits into that, understand the stakeholder map and make sure that you engage both internally and externally, and be a first mover or early adopter with technologies that will assist with management, risk and efficiency.

Here at Procurious, we expect 2015 to be a pivotal year for procurement departments being recognised for adding value to organisations. The ever-increasing use of technology and social media will help to support this, while research like IBM’s will continue to provide a benchmark we should all be looking to reach.

Even as IBM’s report emphasised the requirement for engaging stakeholders, other news highlighted that procurement departments often forget that suppliers are stakeholders too. Reports of ‘bullying’ in supply chains and treatment of suppliers by Premier Foods show both a lack of trust and long-term vision.

Costs can certainly be cut in the short-term by squeezing suppliers, but real value can only be realised by building relationships and engaging with suppliers early on. We all have the responsibility to ensure organisations conduct business responsibly and it’s perhaps time for procurement to step up and put their foot down. Having research to point to should help back up our point!

One in five firms face supply chain bullying, says FSB

  • Almost a fifth of companies face unfair supply chain practices, including “pay-to-stay”, according to the Federation of Small Businesses (FSB). The FSB said it had found “alarming evidence of supply chain bullying” in a survey of about 2,500 of its members.
  • It found that 5 per cent of businesses had been asked to make a payment by a customer or face being taken off a supplier list.In a “pay-to-stay” arrangement, a company demands that suppliers pay a fee to continue doing business with the firm. In the last week Premier Foods backtracked on its controversial “pay-to-stay” policy.
  • “When the public think of their favourite brands, they are unlikely to connect them with the sort of immoral payment practices which are becoming all too common across an increasing number of industries,” said FSB national chairman John Allan. “However, it is clear that whenever these examples come to light, the public shares the same sense of moral outrage as the small firms that have to put up with them on a daily basis.”
  • Further “sharp practices” included retrospective discounts, where firms seek to apply discounts to outstanding money owed to a suppler, late payment and discounts for paying on time, FSB said. The Department for Business, Innovation and Skills (BIS) said: “This behaviour is unacceptable and we want it to stop.”

Read more on BBC News

Taiwan supply chain claims Apple Watch production will begin in January

  • A supply chain leak out of Taiwan is claiming that Apple and Quanta have solved yield issues that will allow Apple Watch production to ramp up starting in January. United Daily News reported (via MacRumorsthat the first wave of Apple Watches will number in the 3-5 million mark, with 24 million scheduled for all of calendar 2015.
  • The report indicates that Apple would be in a position to ship Apple Watch earlier than competing rumors and analyst reports have indicated—perhaps towards the end of the first quarter. Analyst Brian Blair from Rosenblatt Securities issued a report in October claiming that Apple had to push back release of the Apple Watch due to problems in the supply chain.
  • UDN also claimed that Quanta has increased its Apple Watch-related workforce from 3,000 employees to 10,000. The company is reportedly aiming to have between 30,000 and 40,000 people working on the device when full-scale production begins.
  • Apple has said only that Apple Watch will ship in “early 2015.” Angela Ahrendts, Senior Vice President of Retail and Online Sales for Apple, intimated in a note to her retail employees that Apple Watch would ship “in the spring.” Spring officially begins on March 20th and lasts until June.

Read more on Mac Observer

Seahorse Club celebrates excellence in freight transport journalism

  • The Seahorse Club held its Annual Awards and Christmas Party, in association with Associated British Ports (ABP) in London on 9 December. Professionals from the freight transport sector, as well as those from the forwarding and logistics fraternity were all represented.
  • International Editor of the Year (sponsored by PSA International) was awarded to Paul Avery, editor of World Cargo News.
  • The Geodis Wilson sponsored Supply Chain Journalist of the Year was Gavin van Marle of The Loadstar for his consistently relevant piece on e-Returns, a challenge of growing proportions across numerous retail supply chains.
  • Bob Jaques of Seatrade Global was named Seahorse Club Journalist of the Year for a range of articles on diverse subjects including over-capacity in the supply chain, and safety at sea following a spate of high-profile maritime casualties.

To view the full list of winners head along to All About Shipping

Belgium national strike causing major transport disruption

  • Belgian trade unions have called a national strike to voice their discontent over government plans to implement austerity measures and hike the pension age.
  • The strike, which commenced at midnight on 14 December and will continue through to midnight on 15 December, has been called by national unions to protest against new measures being taken by the Belgian Federal Government.
  • ISS Antwerp has reported that the unions represented in the National Joint Committee for the Port of Antwerp have called upon their members to participate. Severe disturbance to services in the Port of Antwerp, such as shortages of gangs and possible closure of the locks, are therefore anticipated. All Belgian ports are likely to be similarly affected, as will the Belgian railway and Belgian Customs.

Read more on Supply Chain Digital