Procurement profession “relieved” following Scotland no vote

The last seven days have played host to one of the biggest news stories of 2014 – suffice to say Procurious can’t ignore it! Hence we lead with Scotland, but things have been happening further afield too… Read on for all the details:

Supply chain “relieved” by referendum result

  • The people decided the country will remain united and Cameron ensures promises to Scotland will be honoured. Supply chain experts are “relieved”, say result “removes risk to employment” and that it’s “business as usual”.
  • Bernard Molloy, global industrial logistics director at Unipart Group, comments; “No doubt logistics and supply chains would have to be rebalanced if the Scottish Referendum was yes. Costs and return-on-investment on distribution are currently fairly reasonably spread nationally; this would have been a different story if the vote was yes.”
  • Chris Sturman, chief executive of the Food Storage & Distribution Federation, says; “I believe this a good decision for all the inhabitants of the UK. It maintains the economic and logistical whole, removes risk to employment, enables  stable costs and prices for all citizens and removes the instability of change, especially after the uncertainty of the recession.

Read more on SHD Logistics Magazine

Supply Management also carried this article – it includes quotes from John Milne, a procurement consultant at Hampco based in Aberdeen:

  • “There’s a sense of relief and a vindication because much of the media were supporting the hype of the nationalists who were giving an unfeasible argument. It’s a relief for the oil and gas sector too, we know which regime we have to negotiate with now.
  • “For procurement, it has taken the fear factor away – the changes would have cost a lot of money. So procurement will heave a sigh of relief that they won’t have to take on the changes.”

India’s artillery procurement saga

  • There is little doubt that the Indian Army’s artillery is in urgent need of modernization. But delays in procurement are hindering the process.
  • India hasn’t purchased a new system since the Bofors in 1980s. Senior Indian army officials have also raised concerns over shortages of modern artillery systems, which they believe would be a crucial drawback in any future conflict. The Army has been notably lackadaisical when it comes to acquiring these types of guns, with tenders cancelled in 2007, 2009 and 2010.
  • in 2012 the Ministry of Defence cleared a $647 million deal to acquire 145 M777 155-mm 38-caliber howitzers under Washington’s Foreign Military Sales program. In October 2013, however, it was reported that British multinational BAE Systems would be closing the U.S. factory that manufactures the gun, due the “absence of any order or commitment from New Delhi.” If New Delhi wants the guns, it will have to pay to reopen the line, raising the price to as much as $885 million. A recent strengthening of the U.S. dollar makes the deal even more expensive. Washington points out that if India had been able to move more quickly, it could have had the guns at the lower price.

Read more at The Diplomat

Top procurement groups deliver 7x return on investment

  • In a combined initiative to bring common value management visibility and practices to the procurement profession, three organizations – A.T. Kearney, the Institute for Supply Management, and the Chartered Institute of Purchasing & Supply – released the results of the inaugural ROSMASM Performance Check Report “Building the Brand of Procurement and Supply.”
  • The report found that leading procurement teams are delivering significant value to their organizations, but without a credible standard allowing companies to consistently track and score procurement performance, many CFOs question the performance of and benefits delivered by their procurement teams.
  • In an independent survey of CFOs and financial function leaders the study found that only 10 per cent of procurement functions have established recognition with their CFOs regarding how procurement contributes value and that the benefits are real and measureable. The report is distilled from more than 400 completed, qualified, and accepted cumulative benchmarks along with more than 170 submissions focused on 2013 results.

Read more at EBN Online

At McDonald’s, sustainability is job 1, 2 and 3…

  • McDonald’s sustainability efforts focus on verifiable sustainable coffee, fish, fiber, palm oil and beef with “beef being Priority Number One, Two and Three.”
  • Bob Langert, McDonald’s Global Sustainability VP, said their sustainability efforts are based on collaborations within their respective industries.
  • “We want to do this right and to do it right we have to collaborate and get the right measures in place. We are determined to let science lead the way, but we are also determined to start purchasing (beef) in 2016.”

Read more and watch the video interview at The Pig Site

Snapdeal to spend over $100 million on its supply chain in 2014

  • Online marketplace Snapdeal has become one of the largest clients for ecommerce logistics companies in India. The Delhi-based company, unlike rivals Flipkart and Amazon, outsources its entire logistics.
  • Snapdeal’s co-founder and chief operating officer, Rohit Bansal said: “We had earlier mentioned that we would end up spending Rs 450 crore in supply chain this year. But, with the kind of sales happening, we may well end up spending somewhere between $100-125 million (Rs 600-760 crore) in supply chain.”

Read more in The Economic Times

‘Don’t be intimidated by the people you respect’

Marissa Brown features in the next of our Generation Procurement series.

Marissa Brown

A bold approach and hard work has seen Marissa Brown go far in the nine years since she joined the procurement profession.

She showed strong initiative early, applying for a role as a senior contracts manager at BAE Systems after university, knowing it was out of league.

“I wrote a marketing piece on myself as the cover letter. It worked. Although they didn’t offer me the role, they wanted to meet me, and offered me a procurement role, as they were developing a graduate program. I was the first to start six months later. ”

Next, she moved into BAE’s communications division, managing the procurement requirements and relationships with major suppliers.

“There were lots of travel perks, including trips to the UK or US every three months visiting facilities that manufactured satellite communications infrastructure for high priority maritime platforms and ground based networks.”

She’s also worked for Leighton Contractors and Suzlon Energy Australia, and now holds a Market Senior Lead Role at BP, which puts her in charge of retail capital expenditure for BP service stations across Australia.

“It’s different from previous roles because I drive past BP sites every day, knowing I play a significant part in driving change that impacts the look and feel of a site and enhances the customer experience,” Marissa says.

“There’s never a dull moment, and you’re constantly interacting with people from varying industries and professions. I don’t think I could do a job where I just sit in an office every day working in isolation. Procurement gets you interacting with senior leaders, and enables you to drive changes that have fundamental impact on the business, not just to the bottom line, but operational efficiencies and improving the customer experience.”

With a commerce degree under her belt, she set a goal to complete her Masters of Supply Chain Management (gaining honours) before she was 30, which she finished in 2013.

She’s most certainly bold, explaining that when in the same room as speaker and well-respected procurement professional Stephen Rowe at a CIPSA event six years ago, she had to introduce herself. Stephen still mentors her today.

It’s important not to be intimidated by senior leaders that inspire you, she says, urging others never to underestimate the value of a mentor.

“Since meeting Stephen, I’ve made connections with other senior leaders, who have also been informal mentors to me. I can’t put into words how valuable this has been not only from a professional perspective, but more importantly, from a personal development perspective.”

Tania Seary talks Procurious in the media

Over the course of the last few weeks, Procurious founder Tania Seary has been quoted in Australia’s Marketing Magazine. We’ve provided some choice excerpts from the conversation below.

Tania Seary Procurious

In part one of a two-part article she says:

“10 or 12 years ago, procurement used to be in the back room in the brown cardigan, but now they’re very much in the boardroom.”

“Globalisation’s driven a lot of the development, and a lot of it is about brand reputation and risk management.”

The article continues:

Advertising agencies need to “get with the program” and start quantifying the value they produce for businesses, she says with a provocative grin.

Seary has made her career founding a string of successful businesses to develop the procurement industry, including professional development educator The Faculty, recruitment service The Source and, most recently, industry social network, Procurious.

“10 years ago procurement wouldn’t have been seen anywhere near advertising agencies because that was the holy grail; that was the secret herbs and spices. What business leaders have to grapple with is they want to reduce their marketing costs, but where do they do it?”

Read the article in full here.

The second part of the article talks about how procurement can add value to an organization.

It begins: Tania Seary has a bundle of catchphrases she pulls out to explain why marketers should value procurement professionals’ input into their decision-making.

One of these is “Process is liberating” – and she says it convincingly.

Despite marketers such as Chorus Executive’s Christine Khor and DDB’s John Zeigler describing procurement’s systematisation and financial pressures as stifling to creativity, Seary argues that proper processes actually allow creative freedom.

“It’s all very structured and the guidelines are set up very well if procurement’s involved and people know what they’re dealing with.”

Seary is adamant that procurement professionals, “If they’re doing their jobs right”, simply act as value-adding helpers to decision-making, rather than taking away control in the way marketers often perceive.

Tania on why procurement people look at the value of agency relationships in a variety of dimensions other than pure financials:

“There’s no use being a cost reduction guru when your CEO’s looking for growth. You need to be managing costs but you need to be thinking about how you work with suppliers to grow the business with new products, new geographies, whatever. But if your CEO’s like, ‘Right, we’re under pressure here, it’s about reducing costs,’ well everyone should be in sync with what the business strategy is and supporting each other, ideally.”

Don’t forget: You can read the article in full on the marketingmag.com.au website.

How to add additional email addresses to your Procurious account

Signing-up to Procurious to grow your professional network is all well and good, but what happens when you change your contact details, land a new role, or leave a company?

Adding email addresses to Procurious

In all of the above cases you’ll be required to jettison your email address of old, and adopt a new digital moniker. Of course this means that any services, mailing lists, or websites previously accessed using these details will need to be updated with the new address. Websites are increasingly making it harder for users to change such hard-baked particulars – sure you can change your secondary email address, no problem! How about that main email, you know, the one that’s tied to your account? Well slow down there pardner, that’s going nowhere.

An email impasse

Well it seems we have arrived at something of an impasse… Happily this isn’t the case if you’re a Procurious user! You can now associate up to three different email addresses with your Procurious account

The Settings page is your new best friend, here you can add two additional email addresses, and even specify which one you want as your default. Just hit ‘Settings’ from the drop-down menu next to your name.

Enter a new email address in the box provided, and click ‘Add email address’ to confirm the change.

Keep tabs on your inbox, as you’ll need to open an email to confirm the new address.

Choose your primary email address

Your primary (or default) address is the one you’ll use to log into Procurious, and it’ll also be the place where you’ll receive any mail relating to your Procurious account.

If you have more than one email address on file you can specify the one you wish to use as your primary by clicking the ‘Make this address primary’ option.

Don’t worry, additional email addresses won’t be visible to other Procurious members.

What can the Spice Girls teach us about being reasonable?

This is the third article in a fortnightly series from Gordon Donovan in which he ponders ‘is now the time to be reasonable?’

One of the banes of contract is the term “reasonable”. For many of us the first time we have been introduced to this concept is via Carlill v Carbolic smoke ball when one of the judges (Lord Justice Lindley) suggested that:

Another meaning, and the one which I rather prefer, is that the reward is offered to any person who contracts the epidemic or other disease within a reasonable time after having used the smoke ball”

Image: Featureflash Photo Agency / Shutterstock

Springing into the 21st century we have now got contractual terms that says reasonable or best endeavours, but what does this mean. Recently I came across a couple of decisions and pieces which seek to put some further rigour around it.

First is an article in Supply Management that seeks to understand what a “reasonable “notice period for termination is.

This case states that a reasonable period would be subject to 5 key principles namely:

  • each decision must be made on its own facts;
  • what amounts to “reasonable notice” should be ascertained at the time at which the notice is given;
  • consideration should be given to the general circumstances and practices within the relevant trade;
  • any specific circumstances existing at 
the time of the contract should be taken account of;
  • the degree of formality in the relationship is a relevant factor.

Next was a case in Australia that made it to the high court. The case centred on a gas supply agreement. The agreement obliged the sellers to use “reasonable endeavours” to make available a supplemental maximum daily quantity of gas.

The court outlined three observations about reasonable endeavours clauses in general:

  • they are not an absolute and unconditional obligation.
  • the extent of the obligation is conditioned by what is reasonable in the circumstances.
  • some contracts with a reasonable endeavours clause contain their own standard of what is reasonable

Read more about reasonable endeavours here.

In a couple of recent articles a lawyer friend of mine has written about the differences between nest and reasonable endeavours (in Australia there does not appear to be any practical difference between the meanings of these terms).  

And in this article she goes onto discuss a specific case which gives us the following learnings

  • The words “reasonable commercial endeavours” mean that a party is obliged to take steps reasonably available to it to put it in a position to fulfil the obligation
  • If the party does take steps, but is unable to fulfil the intended outcome of the clause, the clause does not require that the party go any further

So what does all this mean?

You need to be specific rather than relying about the criteria of the obligation and how the clause should be followed (describe an example of the steps required maybe?)

Think about how changes in market conditions or the commercial landscape will be dealt with

If you are going to use best or reasonable then don’t use a ‘reasonable endeavours’ clause AND a ‘best endeavours’ clause within the same contract. Pick one set of terminology and stick with it.

Above all, early engagement with the legal team is important to help in managing the risks that come with this.

In other words you have to know what you want, what you really, really want! And while you’re at it, refer to this article in Supply Management…

As ever you can subscribe directly to the sources I have identified here (nothing is my copyright), and if you wanted to discuss please feel free to contact me via Procurious, or follow me on Twitter.

5 more common procurement myths busted

Procurious.com – busting procurement myths since 2014.

We arm you with another handful of myth-busting one-liners to help you educate your workplace.

Myth: Procurement is just a fancy word for what was once known as the purchasing function within a business.

Reality: Procurement operates in a constantly changing environment and continues to evolve to meet business needs. Whilst its basic practice has always been around, procurement’s role and responsibilities and the skills required have significantly developed over time. What was considered purchasing is not the procurement of today, and the same may be said of the procurement of the future..

Myth: Anyone can get a job in procurement.

Reality: Procurement benefits from professionals with diverse backgrounds, and like no other profession is more active in seeking a mix of knowledge and experience. Procurement professionals are a good reflection of the industry sectors and business functions they work in and across. And yet, procurement still has a skillset that is distinct and requires specific training and development focus.

Myth: Most people end up in procurement as a career by accident.

Reality: There’s a new generation of procurement professionals that have actively chosen procurement as their career of choice. This surge will continue.

The shift is a result of businesses realising the potential opportunities for investing in dedicated procurement and procurement becoming more widely known and recognised. Just take a look at the new programs developed specifically for procurement in the education and training sector.

Myth: Procurement people don’t communicate effectively with other levels of the business.

Reality: Procurement people have the tough job of communicating messages and making changes across vertical and horizontal levels of the business. Often it’s the message, reasons and impacts of communication that is difficult.

Myth: A good chief financial officer can do procurement tasks just as well.

Reality: Procurement considers a wide outlook in decision-making and is in a good position to do this objectively. Finance is a highly important factor but must be weighed up against other business needs (such as service, risk and innovation).

Want more? Read the original 5 procurement myths

Procurement and supply chain apprenticeship launches in Scotland

Out of the loop? Join us as we reveal what’s been happening in the world of procurement during the last seven days.

L’Oreal completes five year supply chain transformation

  • The world’s largest manufacturer of beauty products, French company L’Oréal, has been on a five-year plan to completely overhaul its supply chain to cope with new trends in consumer behaviour and new purchasing technologies.
  • The group’s global supply chain employs around 7,000 people serving 130 markets, fulfilling about 16m orders annually. It operates 150 distribution centres globally serving some 40 factories, with around half operated in-house and half by third-party logistics providers.
  • Key to the efficiency improvements was the closer involvement in supply chain executives in the sales forecasting activities that are normally the preserve of sales and marketing teams.

Read more at The Load Star

Procurement and supply chain apprenticeship launches in Scotland 

  • A new apprenticeship to encourage young people into a career in purchasing and supply chain has been launched in Scotland.
  • City of Glasgow College has opened its first “industry academy” for procurement and supply chain, a teaching model that makes sure students’ experiences replicate working environments. The curriculum has been developed, and is updated regularly, with help from procurement professionals, and has the support of CIPS.
  • The college’s new industry academy and the modern apprenticeship in procurement and supply chain will attract young people into an industry that benefits Scotland’s economy and businesses while providing good long-term career prospects.

Read more at Supply Management

IT Sourcing not just an isolated procurement activity

  • While many people talk about IT sourcing as just buying hardware or software, leading commercial companies know that IT sourcing is far more complex than just “buying stuff.”
  • The IT Supply Management process has four closely interconnected dimensions. They are IT Supply Strategy, IT Category Management, IT Relationship Management,  and IT Sourcing Strategy,
  • The commercial sector’s experience in IT sourcing offers a number of lessons learned that the DoD can adapt as it builds an IT sourcing strategy.

Read more at C4ISRNET

Bank Branch Shake-Up To Test Procurement

  • Growing demand among the global population for online and mobile banking means that the traditional bank branch is changing.
  • Bank branches of the future will move away from simple transactional tasks and will act as a platform for upselling to customers. There will be an increase in the use of self-service machines to cut labour costs and time spent on lower-value transactions.
  • Ensuring contracts for fixed-term agreements with suppliers are detailed is vital as additional work will rack up expenditure significantly in an already cost-sensitive project.

Read more at Procurement Leaders

Improving the value procurement delivers can generate €7.6m in revenue

  • A well-managed supplier relationship management programme can save top performing businesses €22.8m in spending and generate €7.6m in revenue per €1bn of annual spend, according to research by The Hackett Group.
  • Established procurement specialist Xoomworks claim to have built an innovative framework called Complete Procurement which helps high turnover organisations in finance, insurance and retail make significant savings through improving returns on current investments in people and technology.
  • The balance between solid mechanics and positive behaviours allow organisations to break through the frustrations often experienced when only the mechanics are in focus, thereby allowing the procurement function to acquire new levels of added value for their organisations.

Read more at Retail Times

Has RFID technology revolutionised logistics?

This video from IBM demonstrates how RFID technology could revolutionise logistics services… But this isn’t from 2014, instead it’s been sitting gathering dust on YouTube since 2006.

So what’s happened in the preceding years? Honestly, not as much as you’d have thought… RFID has faced a number of challenges despite its advantages and usefulness within industry. But not from lobbyists with privacy concerns, conspiracy theorists, or lunatics who believe RFID has something to do with the Mark of the Beast. Instead it is feared that RFID technology has the potential to place significant complications on organisations as it opens them up to external (often invisible) risks.

Sports manufacturer Adidas has just attracted considerable attention by sewing RFID tags into the jerseys of national football teams.

In a statement to Deutsche Welle, Adidas said: “As part of a logistics project we have tested for the first time an RFID label with a virtual number. It is a read-only label without any additional data. The label is not tied to the article number, size or color of the article and we also can’t link it with end customer data. It is of course up to customer of this product to cut out the RFID label along the dashed line and throw it in the trash”.

So just what is RFID anyway?

RFID is short for radio-frequency identification, it transmits data wirelessly through the use of electromagnetic fields. There are many benefits for adopting RFID technology into your products, not to mention its barely-there proportions, and teensy price-tag (in-fact EPCglobal is campaigning for the cost to fall to just 5 cents). When applied it functions as a tracking device (of sorts), allowing the producer to keep tabs if they so wish.

Today you can find RFID tags being commonly used across storage and logistics industries. Retail is also catching-on, so it’s not surprising to learn of Adidas’ dabbling.

The participants at this Canadian yoga event confirmed their attendance at a RFID-fitted kiosk. And the library at Sydney’s University of Technology is looked after by robots – how is this possible you ask? Through RFID of course…

Problem solver by nature? Procurement’s for you

A career in procurement has opened countless doors for Ashish Srivastava.

Ashish Srivastava

The Chicago-based career professional recently transitioned into a new role that puts him in charge of ICT Parts & Service in North America, where he spends his time sourcing and buying technology services and products.

This year, he wants to build and grow a North American-focused IT organisation that’s fully capable of delivering to his business needs.

The new role comes after a decade of industry experience in managing and delivering large and complicated system integration and transformation programs for Fortune 500 clients in financial services, healthcare and automotive sectors.

It’s no wonder he landed such a remarkably complex role. He’s well versed in client relationship management, and can practically develop a strategic roadmap with his eyes shut.

Procurement appeals because he’s a problem solver by nature. He loves his role because of the high levels of ambiguity and the large scope he’s given.

He names integrating the technology platforms of two large US banks after a merger as his greatest professional achievement.

“This was a very long and complicated process of leading multi-platform, geographically distributed technology and process landscape. And 18 months later, everything worked like magic.”

Ashish is an enterprising type. While at Melbourne Business School, he noticed that the career opportunities were geographically limited to Australia. So, he developed a program called Asia Career Track, which sent students interested in a career in Asia on a short trip to meet various potential employers and engage in a productive dialogue with them.

The program was hugely successful, enabling some graduates to land jobs in companies like Apple, Standard Chartered and Louis Vuitton. His program has now been adopted as an ongoing initiative run by the Melbourne Business School.

When he’s not at work, you can find Ashish strumming his guitar, reading a book or listening to topics on world affairs, economics or business trends.

“I’m most comfortable in the company of people who like to discuss a variety of topics over drinks, coffee or dinner.”

Hamish Petrie asks ‘can you plan your career?’

In this first part of a two-part article, Hamish Petrie – former VP of People and Communications for resources giant Alcoa – offers advice to professionals at all stages of their career by encouraging the use of ‘career anchors’.

Hamish currently writes for the Business Times in Melbourne. Read more about his story here.

Career planning discussions start at an early age now during high school years as young people struggle with the question about what they want to do with their lives. This is an impossible struggle as no one can conceive how seemingly minor events will change their lives.

When I first started working as a shift metallurgist in a small tin mine on the west coast of Tasmania, I could never have conceived that 32 years and 20 jobs later, I would be sitting in a corner office on Park Avenue in Manhattan as Vice President of the world’s largest metals company. Life is full of twists and turns and chaos, so how can you prepare yourself to manage your career?

Planning your career by Hamish Petrie

Today, there are some generally accepted models for career planning that can be very helpful in starting the thinking process about your career. Generally, these models have four steps that include knowing yourself and your life priorities, exploring alternatives, deciding on a direction and then acting to implement this plan. The very first step in determining your life priorities is the most important, and it can be the most difficult. Aside from thinking about your personal values and strengths, it really forces you to think about what sort of job design and people interactions suit you the most.

While working at MIT’s Sloan School of Management in the 1970’s, Professor Edgar Schein developed the concept of career anchors, where the anchors represented an amalgam of personal values, talents, and preferences. These anchors shape the decisions that you will make about what is most important to you, in both your career and life.

This model has evolved now to define nine career anchor themes including technical or general management competence, autonomy, security, creativity and lifestyle. When I reflect on my career, I lacked the specific technical competence for any of my last fourteen jobs so it is very obvious that my career anchors were creativity and general management competence. Luckily, my family supported me with the frequent relocations necessary to take on each new career opportunity. The key outcomes of analysing your own career anchor is that you are most likely to be happy and satisfied when you can work in a job which is aligned with your personal anchor.

If you are on the flip side of this process, where you are making decisions about candidates for a job, then it is well worth exploring each candidate’s career anchors. Technical competence is very important in some jobs, like brain surgery, but for many jobs, it is not the most important factor, so taking a risk with a candidate can be very rewarding. Luckily, I had many bosses who were prepared to take a risk with me although I lacked specific knowledge about their job.