State of Flux Technologies introduces SRM technology brand

Reinforcing their focus on supplier management software, State of Flux Technologies launches a new name and brand – Statess.

State of Flux Technologies launches its new name and brand – Statess!

Following a year of increased growth and investment on their supplier management platform, State of Flux Technologies celebrated the launch of its new name and brand Statess (pronounced State-ess) with clients, procurement leaders and industry experts last week.

Preserving the strong relationship and heritage, Statess will continue to work closely with the State of Flux team to deliver market leading supplier relationship management (SRM) solutions.

“Our global SRM research has shown that companies who invest in SRM technology deliver incremental post-contract benefits. Now is the perfect time for Statess to help companies deliver these benefits.” Alan Day, State of Flux Chairman and Founder

Led by CEO Lance Younger, Statess has seen an increase in the number of clients over the past year, including Centrica, IAG, Friends Life and Ladbrokes. They’ve grown the team and continued to innovate, adding great new functionality in supplier innovation management, performance management, risk management and sustainability/corporate social responsibility (CSR). Statess also has an expanded partner ecosystem, including 15 best-in-class providers, from spend analysis to sourcing, P2P, and sustainability/CSR.

“Being presented the Gartner Cool Vendor 2012 award recognised our pioneering supplier management platform, and since then with our clients and team we have continued to move forward solving supplier management challenges and empowering teams across the enterprise. We created the first supplier innovation module in 2013, and 2014 was another fantastic year with more product innovation and great customer experiences. Our new brand and strong partner ecosystem reinforce our passion and focus on supplier management software.” Lance Younger, Statess CEO

In 2014, supplier management continued to surge as a critical approach for companies to deliver differentiation and for procurement to co-create the agenda with the business. In 2015, ambition remains key, and leaders will be defined by execution – intelligently simple execution. Statess is on a mission to make SRM easy for all and they believe they can continue to do this for all their clients.

Check out the Statess website and social media channels to learn more.

Closed for business: US West Coast ports shutdown amid dispute

Supply chains across America are facing up to six months’ disruption after 29 ports on the US West Coast, including the two busiest ports in the country, were partially shutdown over the weekend.

An on-going dispute between the Pacific Maritime Authority (PMA) and the International Longshore and Warehouse Union (ILWU) over contracts and working conditions, has led to major delays in the loading and unloading of cargo.

The disruption reached its peak on Sunday morning, with approximately 34 container ships anchored along the Californian coast waiting for access to the ports of Los Angeles and Long Beach.

Labour Dispute

The PMA and ILWU have been locked in contract negotiations since the end of June last year, when the previous contract ended.

Unfortunately, relations between the two parties have soured, with the PMA accusing the ILWU of a deliberate slow-down of work in recent months, something that the ILWU has attributed to changes in practices by the shipping companies. With neither side willing to back down, negotiations have stalled.

In response to the slow-down, the PMA took the decision to suspend port operations for six weekend and holiday days in February, stating that they were unwilling to pay the high overtime rates for weekends and holidays when productivity was so low.

With conservative estimates placing the cost to the US economy at $2 billion per day, President Obama has sent Labour Secretary, Tom Perez, to get negotiations back on track and a deal in place.

Supply Chain Pressures

However, even if a deal is agreed soon, it could take anywhere between two and six months for port activities to return to normal levels. This would then lead to a far greater impact on supply chains already experiencing severe delays to deliveries of a wide range of goods, including agricultural produce, car parts and clothing.

Exports of fresh produce to Asia have been heavily impacted, with many US suppliers now looking to domestic markets for sales as other customers cancel orders. There are also concerns that many retailers will be unable to stock spring clothing lines, leading to lower incomes over March and April.

In the car industry, both Nissan and Toyota have been forced to airfreight parts for US manufacturing operations due to the disruptions. Honda has also confirmed a slow-down in US production due to shortages of parts normally shipped from Asia to the West Coast.

Lack of contingency

There are concerns that many of the companies affected don’t have the necessary contingency plans in place to mitigate the risks of the disruptions. It is felt that many were unprepared for the dispute to last as long as it has and that it has left companies exposed to the delays.

Although some companies like Nissan and Toyota have been able to take steps to mitigate the disruption by using other transportation methods, others have not been able to act in the same way, compounding the delays in the supply chain.

One high-profile victim of the dispute is McDonalds. As Procurious reported earlier this year, the disruption at the coastal ports lead to shortages in produce exports and rationing of fries in Japan. This was a contributing factor to the company’s first full-year loss in the region in 11 years.

For more on this story, follow these links:

http://www.supplychaindigital.com/supplychainmanagement/3831/What-happens-if-the-US-ports-keep-closing

http://www.usatoday.com/story/money/cars/2015/02/14/asian-automakers-parts-cars-port-strike/23380041/

http://www.ft.com/cms/s/0/2be1ed0a-b23a-11e4-80af-00144feab7de.html#axzz3Ru37cVTq

Read on for the other procurement and supply chain stories making the headlines.

Heathrow Airport procurement director offered exec committee place if he ‘reshaped’ function

  • Ian Ballentine, procurement director at Heathrow Airport, was offered a seat on the executive committee if he could “reshape” the function within a year of joining the firm.
  • Ballentine joined the firm in November 2012, and in late 2013 he joined the committee. He said: “I took the job here because the previous chief exec said: ‘I need someone to come on board and really reshape procurement for what I think it can become in an organisation, and if within a year you can demonstrate you can do that then I will give you a place on the board’.”
  • Ballentine started out in charge of procurement for the operations division of Heathrow, but following his success his role was widened to include the remaining IT and construction divisions in a new merged function. His work revolved around changing perceptions of procurement as being “bureaucratic”, “slowing things down and not adding value” to “really demonstrating the savings off the bottom line”.

Read more at Supply Management 

Food chain is an easy target for criminals, says safety chief Alan Reilly

  • Food fraud is still seen as an easy target for criminals and the authorities are not organised enough to tackle the criminals, the outgoing Food Safety Authority of Ireland(FSAI) chief executive Alan Reilly has said.

  • Prof Reilly said food companies must have a threat assessment procedure in place to identify where the food supply chain could be vulnerable to fraud.

  • “The longer that food chain, the more things that could go wrong and the more opportunities for criminals to get in and do things like food substitution and animal species substitution, to bulk out products, to dilute down high-value products like olive oil and so on,” he said.

  • “The food chain is still seen as an easy target for criminals. There is big money to be made in food fraud and at the present moment I don’t think we are organised enough to tackle some of the criminals out there. It does need co-operation across all the agencies of the State, gardaí, customers and the food regulators have to work together to tackle the problem.”

Read more at The Irish Times

BT’s ‘near-monopoly’ on rollout of rural broadband sparks concerns

  • Plans to put a publicly-funded £45.5million superfast broadband contract on to the open market were abandoned after BT refused to bid and left only two potential bidders, a leading member of the project team has revealed.
  • Commissioning group Connecting Devon and Somerset had said last year it would launch a tender process which would take coverage up to 95 per cent of all properties.
  • A previous £94 million contract with BT only promised that 90 per cent of businesses and residents across the two counties would see data transfer speeds increased by 2016.

Read more at Western Morning News

Church charity to research FTSE 100 supply chain slavery links 

  • A church-based charity is to lead research aimed at uncovering potential links between human trafficking and the supply chains of FTSE 100 companies.
  • The study by Us, with the help of Finance Against Trafficking, Ecumenical Council for Corporate Responsibility (ECCR), and Rathbone Greenbank Investments, is motivated by concerns the companies may inadvertently become involved in human trafficking through links with suppliers around the world.
  • Rachel Parry, global relations director for Us, said: “We want to see FTSE 100 companies better informed to help them ensure there is as little risk as possible that their supply chain is somehow touched by the traffickers’ trade.”

Read more at Supply Management 

Supermarkets should encourage small suppliers, not bully them

  • The news that the grocery industry watchdog is investigating Tesco over its alleged mistreatment of suppliers is unlikely to have shocked many. Supermarkets aren’t renowned for treating their suppliers well – particularly those small businesses that don’t have the muscle to put up a fight against unfair contracts and late payments. And as margins shrink in the groceries sector, the supply chain represents an obvious target. The insolvency specialist Begbies Traynor reckons as many as 100 food and drink manufacturers could go bust this year because of the supermarket price war.
  • The irony is that all the evidence suggests consumers are looking for more choice in their supermarket shopping – not ever more brands of washing powder or baked beans, but new products and new product categories. The supermarkets need more innovative smaller suppliers offering artisanal products, not fewer, yet their behaviour is driving firms out of business.
  • Research sponsored by the online grocer Ocado underlines the point. Its poll of shoppers, conducted by YouGov, found that 38 per cent actively seek out small label products when they’re in the supermarket and that 51 per cent rely on their supermarket to introduce them to new products. A third said they were more likely to shop in a supermarket they believe is supportive of smaller businesses.

Read more at The Independent

Kimberly-Clark names SVP global supply chain

  • Kimberly-Clark Corporation has appointed Sandra MacQuillan, 48, to the newly created position of SVP, Global Supply Chain. MacQuillan joins K-C from Mars Inc., where she served as Global Vice President, Supply Chain for Global Petcare. She will be joining K-C in the second quarter.
  • With her appointment, MacQuillan will have global responsibilities for procurement, transportation, continuous improvement, sustainability, and quality, safety and regulatory operations. Labor relations and workforce issues across product supply will also be coordinated at a global level. She will also lead the company’s Global Supply Chain Council, which will be comprised of supply chain leaders from across the globe, and will build the next generation of supply chain capability at the company. She will report to Thomas J. Falk, chairman and CEO, and become a member of K-C’s global senior leadership team.

Read more at Consumer Goods Technology

The CIPS Risk Index Explained

Following on from our review of the Purchasing Managers Index (or PMI) last week, Procurious continues its look into procurement performance indicators. This week we are focusing on the CIPS Risk Index. 

CIPS Risk Index

The CIPS Risk Index is a tool developed by CIPS and powered by Dun and Bradstreet (D&B). It has been designed to give procurement and supply chain professionals a country-by-country understanding of the risks that exist within their supply chain.

The index is generated through a number of unique assessments that are undertaken by D&B’s economics team and provides an individual country-based score for 132 countries. CIPS suggests that these country-based scores can be aggregated to indicate overall supply chain risk.

For procurement professionals that want to understand the details behind the high level risks pointed out by risk index, CIPS provides monthly Country RiskLine reports and more detailed quarterly Country Insight reports. These reports provide a more in-depth look into the political, economic and social risks present in countries and how these impact purchasing activities.

When calculating the index, D&B takes into account the following categories:

  • Short-term economic outlook.
  • Long-term potential
  • Market potential
  • FX risk
  • Transfer risk
  • Business environment quality
  • Business continuity
  • Insecurity/civil disorder risk
  • Expropriation/nationalisation risk.

To find out more about the CIPS Risk Index click here.

What’s procurement like in your part of the world? – South Africa (Elaine Porteous)

Procurious showed you its map of the world last week, marked with where all our members come from, and asked what procurement was like in your part of the world.

Following on from looking at Scotland, Italy and the USA, Elaine Porteous tells us what procurement is like in her home country – South Africa.

Elaine is a freelance consultant, published writer and editor of business articles for various on-line and print media, specialising in Supply Chain, Procurement, Logistics and Career Management.

She has previously shared her knowledge on a number of these topics in guest blogs for Procurious.

Read her full story here.

How do you think procurement differs in South Africa, as opposed to elsewhere in the world?

I think we have a unique situation and a lot of challenges. Firstly, we have an historical situation that is being addressed partly through Broad Based Black Economic Empowerment (BBBEE). The aim is to redress some of the imbalances of the past and broaden the base of suppliers through preferential procurement and sourcing locally for defined commodities.

Skills are scarce, particularly in the public sector where there is a lack of capacity and inadequate planning and budgeting. We are struggling with managing conflict of interest, limiting fraud and tackling corruption. The good news is that there are government initiatives afoot to improve risk management and make substantial improvements to their processes. Our Government CPO is implementing an e-tender portal shortly to tighten up tender processes.

Procurement in the private sector is alive and well; there are many organisations that are developing their staff and applying best practice, not only in the multi-nationals.

Do you know how many other procurement professionals are in South Africa?

I would estimate more than 10,000. CIPS has 2295 members in South Africa and more than 16,000 members across Sub-Saharan Africa.

How did you get started in procurement?

Like most people, by accident! I was cruising along as an HR business partner in a big multinational when the HR Director was tasked with launching a procurement function.  He nominated me to come along for the ride and the rest is history.

What do you see in procurement’s future in South Africa and how can social media play a role?

The procurement function is growing in stature and slowly getting more traction and visibility in organisations.

There is a very active community of procurement people, from both the public and private sectors, who engage extensively on LinkedIn.  Also, there is a small band of enthusiastic specialist recruiters that ply their trade there and on Twitter.

We have an on-line marketplace that is hosting a Procurement Africa e-Conference, in association with CIPS, shortly.  This may be a first for Africa. Many procurement professionals are avid networkers and attend the various conferences and events in the procurement field.

Why did you join Procurious?

It was refreshing to find a platform for us to interact on a wide range of subjects without having to belong to a formal organisation or have to put up with lots of advertising and sales pitches.

What are you hoping to get out of the network?

I like to keep up with global trends in supply chain and to hear other’s opinions on the topics of the day in the procurement field.

I’m really interested in helping young procurement people advance their careers and advising them on what the options are and importantly, how to get there.

How are you going to get your peers involved?

I see Procurious going from strength to strength.  I will use my networks to introduce others to this great resource.

More on the South African CPO Tender portal here.

Read more of Elaine’s writing for Procurious by following these links:

https://www.procurious.com/blog/life-style/your-job-role-might-be-obsolete-by-2020-will-you-be-sustainable

https://www.procurious.com/blog/life-style/influencing-skills-can-be-learnt-start-now

https://www.procurious.com/blog/life-style/should-you-ever-rehire-an-ex-employee

5 factors to consider when deciding on a supplier

What are the top 5 factors you consider when deciding to partner with a supplier?

Hi there! For an up-to-date article on this topic, please go to: https://www.procurious.com/procurement-news/critical-factors-when-selecting-your-suppliers


The second part of the discussion wrap this month looks at the factors that are considered when deciding on supplier partnerships. The top five factors were (in no particular order):

  • Cultural Fit – including values
  • Cost – covering price, Total Cost of Opportunity (TCO)
  • Value – value for money and value generation opportunities
  • Experience in the market and current references
  • Flexibility
  • Response to change – in orders and products
  • Quality – covering product and service quality and quality history

Okay, we know that’s seven but it was hard to split a couple of the more popular ones!

Other factors suggested by the community included trust and professionalism, strategic and process alignment and technical ability.

The final factors are worth investigating in more detail. It’s critical to have executive level buy-in from both sides otherwise it can cause the relationship to stall. Supplier innovation should also be considered, particularly in line with any cost-cutting or process streamlining efforts by the supplier, as this may in turn lead to value creation for the purchasing organisation.

Finally, it was recommended that buyers should be aware of the breakdown in business percentage on both sides. You neither want to represent a high percentage of the supplier’s business, nor do you want to rely on the supplier too heavily.

For more on this theme, check out the following articles:

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

Take a ‘joined-up’ approach to logistics – https://www.procurious.com/blog/in-the-press/in-logistics-take-the-joined-up-approach

Considering the Right Outsource Partner – http://www.fronetics.com/7-things-consider-choosing-right-outsource-partner/

7 ways to inject love back into your supplier relationship

As part of a Valentine’s Day special, our founder, Tania Seary (who has a long-standing love affair with all things procurement), is exploring ways that procurement professionals can ensure everyone they touch can “feel the love”. So far we’ve covered community and stakeholders…. now to focus our attentions on our favourite audience of all – our suppliers.

Given that Valentine’s Day is only hours away (and I’m encouraging procurement professionals around the world to make sure everyone they touch “feels the love”), I thought you might like some tips to inject the love back into your supplier relationships.

In supplier relationships, as with romantic relationships, there unfortunately comes a time when the romance fades away…

While the relationship with your beloved strategic supplier may have grown stronger (and more co-dependent each year spent contracted to each other), the romance, the sparkle, the mojo, that desire to impress, often dissipates into a very boring business-as-usual patter.

As leading best-practice procurement practitioners, we all know this is a bad thing – because theoretically we need to be continually improving the value delivered from our strategic suppliers. And unfortunately when the sparkle starts to disappear, or one partner starts to feel neglected, then the cracks start to appear. The bond may break and you are in the law courts with your separation clauses under the microscope. On the other hand, a healthy supplier relationship is productive – it drives out costs, inefficiencies and spawns love children in the form of innovation.

Let’s face it; maintaining a strong working relationship (whatever the setting) requires effort. As we say at Procurious, you have to give to receive.

While researching (well, let’s face it, Googling) this topic, I stumbled across a very practical set of advice from one Ms Monika Mundell: 7 ways to inject romance back into your relationship.

I realised that there were some amazingly scary parallels for we procurement folk. So, I’ve reworked Ms Mundell’s 7 tips to provide you with some shine to put sparkle back into those all-important strategic supply relationships.

  • Eye gazing: Even though I’m obviously a true-believer in social media, I am also a true-believer in the good old face-to-face meeting and telephone call to build understanding relationships. Too much gets lost in translation when we are emailing, texting and tweeting. If we are to keep the relationship alive, we must meet with our strategic suppliers regularly to ensure we fully understand the status and nuances of the relationship.
  • Book a romantic surprise getaway: OK… not really appropriate – but think about it… When was the last time you and your supplier got your leadership teams together to think of ways of both getting more value out of the relationship? You could have a “staycation” and have a one or two-day conference in your offices, or book a mutually convenient off-site location to help facilitate bonding at all levels. A getaway could really identify some fresh ways to invigorate the relationship and add more bottom line value for your shareholders.
  • Touch your partner more often: OK, now you’ll be thinking I’ve really crossed the line here… but think about it. How many touch points do you have with your supplier, and are you using all the different communication mediums available to connect with them at all the appropriate levels in their organization?
  • Write a love letter: Seriously, when was the last time you wrote an email, a letter, a card, showing appreciation for something your supplier did for you? In a day and age where people are running around crazily ticking items off their to do list, a considered, well-penned note means a lot more than it ever did. Take some time out – formally thank your supplier – and I am sure you will feel the love reciprocated in some way or form into the future.
  • Surprise your partner with a romantic dinner: I was really touched when a long-term client and his wife took me to a five star restaurant last year – and paid on their personal credit card. As my clients know, I am very dedicated to them all and I was really touched that this couple took time out of their busy diary and budget to treat me to a special meal. Think about it…
  • Spend more time together: According to Ms Mundell, a common cause for drudgery in a relationship is the fact that we disconnect. All of the points above provide you with opportunities to spend more time with your suppliers. But remember, it doesn’t always have to be elaborate, or premeditated, just spending simple time together on-site, on the job, in the warehouse or with your joint customers is all very important time invested in building that all-important relationship.
  • See a counsellor – OK there’s a reason why this is obviously my last point – because it’s kind of a last resort if all else is failing. At my procurement management consultancy, The Faculty, we’ve often considered developing a “strategic alliance counselling” service… not unlike a marriage counsellor! When thinking about how to re-ignite the spark in your supplier relationship, don’t underestimate the value of getting a third party involved to take an objective view of how your partnership is performing. While you probably won’t need to recline on the chaise lounge, a healthy review could offer some fresh insights into how both sides of the partnership could potentially change their behaviours for the greater good.

Are you making sure your suppliers “feel the love”?

Sustainable and Social Procurement – Are We Doing Enough?

Even though sustainable and social procurement are currently high-profile topics, it’s been hard to get people excited about them. This is down in part to a lack of consensus on what they are and what people should be doing on a day-to-day basis.

The question is how can we, as procurement professionals, change this?

What are Sustainable and Social Procurement?

A good place to start is a brief definition of both. It’s tricky as there isn’t really a consensus, but these are the most common ones.

Sustainable Procurement – The process for meeting the needs of the current generation for goods, services, utilities and works while considering the overall impact on the environment and wider society.

Social Procurement – A strategic approach to the delivery of organisational objectives while delivering social benefit.

The Current Situation

Increasing numbers of organisations have implemented codes of conduct, ethics and sustainability policies and spend targets for social enterprises. Initiatives such carbon neutral operations and ethical sourcing provide good examples of organisations considering the impact of their operations on the environment and wider society.

And consumers have begun to expect this. Around 88 per cent of consumers would choose to buy a product with a social or environmental benefit in a like-for-like comparison, while 90 per cent of Americans say they are more likely to trust and remain loyal to brands backing social causes.

However, recent high-profile examples, such Rana Plaza in Bangladesh and the UK horse-meat scandal, highlight the importance of companies ensuring that these standards are upheld throughout the supply chain.

So what is holding organisations back?

A lack of understanding is one of the key reasons for organisational inaction. Other common reasons inaction include:

  • Increased cost
  • Resistance to change
  • Lack of management support
  • Increased time to undertake sourcing activities
  • Inability to find ‘social enterprises’ or lack of response from them

And the reality is?

The reality is that all these reasons are surmountable. This is where Procurement must step up and take the lead.

As Procurement touches all parts of the organisation, it can help to ensure that the key decision makers are involved from the outset, helping with both executive buy-in and resistance to change.

Working with external stakeholders can provide both innovation and new ideas, ultimately lowering the Total Cost of Ownership for ‘green’ products. Once the processes are seen as part and parcel of sourcing activities, the time cost is lowered too.

Finally, companies can engage with organisations such as Social Enterprise UK and Social Traders (Australia), who can assist procurement departments in getting involved with social enterprises.

The Future

Experts have identified trends in sustainable supply chains for the coming year, including:

  • Better resource management – focus on codes of conduct, chains of custody and supply chain reporting and evaluation
  • Innovative bio-based materials – less use of primary resources and increased use and development of renewable materials
  • Eco-efficient operations – organisations finding a better balance between economics and the environment

Social media will play a key role too. 64 per cent of millennials use social media to address companies about social and environmental issues, and 36 per cent of consumers say they mainly share content to promote the causes they care about.

What can I do?

  • As a consumer, try to buy brands linked to sustainable or social activities
  • When comparing two like-for-like products, choose the ‘green’ option if you can
  • Integrate sustainability and social procurement into your procurement processes
  • Make a case for your company working with social enterprises and having spend targets for them
  • Ensure all the suppliers in your supply chain are signed up to your code of conduct
  • Leverage social media to highlight your success and set a benchmark for other procurement teams to achieve.

Reading and Reference

Loyalty and Trust for Social Causes: http://instamun.org/90-of-americans-more-likely-to-trust-brands-that-back-social-causes/

Social or Environmental Benefit: http://www.conecomm.com/stuff/contentmgr/files/0/e3d2eec1e15e858867a5c2b1a22c4cfb/files/2013_cone_comm_social_impact_study.pdf

Social media habits: http://www.conecomm.com/csr-and-millennials

Are we going to run out of chocolate?

Jaeplayboy/Shutterstock.com

Last week I warned that the increases in value of the Swiss franc could spell troubled times for chocolate lovers. Unfortunately, this week I have more troubling news about our favourite sweet treat…

In its 2015 report, the Earth Security Group (a company that provides intelligence on managing global resource risks) points out that we are headed for global shortages in cocoa (the key ingredient in chocolate) as soon as 2020.

Where is the chocolate going?

A number of factors are thought to be contributing to the dwindling supply of cocoa. These include; increased demand from emerging markets (Indonesia’s chocolate consumption is growing at 20 per cent a year) and fears around what might happen if Ebola crossed the border from neighbouring Liberia and Guinea into the Ivory Coast. The Ivory Coast is the world’s largest producer of Cacao – boasting 38.7 per cent of global production.

However from a procurement perspective – it is the fact that cocoa farmers are shifting their efforts to other crops that I find the most interesting.

In order to understand the reasons why cocoa growers are shifting production to palm oil and rubber, we need to look at the intriguing nature of the cocoa supply market.

An agricultural oddity

The cocoa growing industry is an anomaly of sorts in modern agriculture – in that it is still dominated by small landholders rather than corporate enterprises. These small landowners produce over 85 per cent of the world’s cocoa supply.

The highly fragmented supply market for cocoa means that farmers hold little bargaining power when it comes to negotiating with the large buyers like Nestle and Barry Callebaut*.

As a result of this buyer dominated market, the price of cocoa halved between 2009 and 2011. In 2012 the Ivorian government introduced a fixed pricing scheme designed to keep its cocoa industry intact and prices started to recover.

Combine falling prices with the fact that cocoa growers are very poorly remunerated for their efforts, and the motivations for shifting production begins to become apparent.

Makechocolatefair.org suggests most cocoa farmers earn less than $1.25 USD a day, meaning they living in ‘absolute poverty’ as defined by the UN. The paltry sum they receive from large buying organisations means cocoa farmers have a high propensity to shift production to more profitable crops. It just might be what pulls them out of poverty.

Furthermore, farmers in these communities remain largely unconnected to the global information sources and the outside world. This is resulting in two worrying occurrences. The first is that sustainable farming practices and infrastructure have not been implemented in cocoa farming regions causing widespread land degradation. The second is that these small holders have no concept about the increases in the global demand for their product and the implications it could have for the price they charge.

“You can’t sustain a booming chocolate industry worth billions while the producers are living in poverty” – Alejandro Litovsky founder and chief executive Earth Security Group.

Cocoa is an old mans game

The combination of tough customers, poverty, low prices and changing climatic patterns is severely hampering the motivation of young farmers to move into producing cocoa. It is estimated that the area of world’s surface dedicated to cocoa plantations has decreased by 40 per cent in the past four decades.

Perhaps more concerning is that the Fairtrade organisation estimates the average age of a cocoa farmer is 50! If that’s not a telling sign for the future of the industry, tell me what is.

The Earth Security Group report highlights the challenge that chocolate producers face, and the need to change the dynamics of this supply market. Companies should look to spread the benefits of what is a lucrative industry downstream and back into the supply chain. Failure to do so will mean facing the future supply crisis, knowing that they hold at least some of the responsibility for the shortages.

* Never heard of Barry Callebaut? That’s where Cadburys, Hershey’s, Ben and Jerry’s and Magnum get their cocoa. The company purchases about 40 per cent of cocoa available to the open market.

Meeting of minds in pharmaceutical purchasing

The Beyond Group AG (“TBG”) will be launching its 2015 Productivity-in-Pharma Think Tank, building on the success of their 2014 gathering of minds of senior procurement leaders in the industry.

nikkytok/Shutterstock.com

Kicking off in Frankfurt Germany on April 21, three separate day-long sessions (concluding in September) will help frame the discussion of what is the future of Procurement within the Pharma industry over the next several years.

Drawing together a select group of procurement professionals representing 15 of the world’s leading Pharma companies, TBG and its partners (EY [Ernst & Young], Korn Ferry, UBS, and others) will deeply explore the issue of “Transforming the Procurement organization to become a recognised productivity engine”.

The 2015 series promises to be the most intensive, content-packed, and insightful of this groundbreaking series.

Contrasting with the traditional conference environment, TBG’s Think Tank gatherings offer ‘learning collaboration’ through in-depth & insightful exchanges among industry peers, academics, thought leaders and practitioners. These intensive sessions build upon experience, expertise, and research in a closed-door environment where executives can really get into the detail of their challenges and aspirations. From this gathering of minds, TBG publishes key findings, generates new research and creates a close community of leaders who explore the biggest opportunities to develop Procurement’s role.

Conceived by Giles Breault and Sammy Rashed, principals and co-founders of The Beyond Group AG, the Think Tanks have quickly evolved into a new model where “content is king” and outcomes are published and presented to the wider procurement community. Some of the feedback gathered from previous participants include:

“The Productivity Think Tank concept is a great opportunity bringing together a focused group of international peers around a relevant topic. Half-way between a symposium and structured meetings with peers, the Think Tank combines the benefits of both worlds with deep analysis, strong networking, useful outcomes, and applicable takeaways”

“It’s a mix of academic expertise, real world experience and cross-industry best practices which allows us to collectively create solutions that fundamentally change the way we look at procurement and value its contribution”.

This year’s European series is limited to a maximum of 15 member companies. It will be followed a new series for the North American region this fall and expanding to the Asia market in 2016.

For more info please contact us at [email protected] or visit our website at www.beyondgrp.com.

Hey! Procurement – make your customers “feel the love”!

Important lessons from Gustave H and the Grand Budapest Hotel

A quick office survey revealed that no matter how much the boss likes it, ‘The Grand Budapest Hotel’ is not exactly everyone’s idea of a great movie.

However, the adventures of Gustave H; a legendary concierge at a famous hotel from the fictional Republic of Zubrowka between the first and second World Wars – provides a lot of great (quirky, yes) insights into what constitutes exceptional customer service.

In the procurement world we often refer to those we serve to please as ‘stakeholders’… but let’s face it, they are our customers and all the old-fashioned principles such as “the customer is always right” apply.

Of course we want to do more than serve – we want to become a trusted advisor. But time and time again, ‘stakeholder engagement’ and the ‘soft skills’ re-appear as the number one skill that CPOs need their team to develop, in order to achieve that ‘trusted advisor’ status.

So in the spirit of ‘sharing the love’ this Valentine’s Day, here are some of my customer service learnings from working with clients, customers, stakeholders and alike during the last two and a half decades.

5 ways for procurement to make sure communities “feel the love”

Know your RFQs from your Ps and Qs

Nothing sells like credibility.  If you are going to put yourself forward as an advisor, you need to know about both about the professional service you are offering (procurement) and your customer’s business.  Knowing neither or only one or the other, is not going to build enough confidence for your customer to engage with you.  You need to ensure you have adequate procurement skills, as well as understand the business you are in to make the grade.

Make sure you get through to the second round

The analogy here to a boxing match is not accidental.  I have had some very tough first meetings with my customers. Let’s face it, not everyone always wants procurement’s ‘help’. A large part of our profession’s heritage has been about convincing our stakeholders about the value we can deliver.

From my chilly desk in Pittsburgh over a decade ago, I can still clearly remember being yelled at down the phone from my business unit customers in Iowa and Texas.  One CPO screamed, “If you want my team to spend their precious time on some corporate scorekeeping folly, then get your a** down here on a plane and explain it.”

Gustave H provided a light bulb moment for me about these aggressive experiences:

“Rudeness is merely an expression of fear. People fear they won’t get what they want. The most dreadful and unattractive person only needs to be loved, and they will open up like a flower.”

I can’t say that any of my customers have ever “opened up like a flower”, but they have definitely mellowed from their initial opposition.  Once you prove you can deliver, they’re putty in your hands.  But you have to be resilient and work through this initial push back – get them to the point where they really start to engage and invest in you as a professional who can help them on their journey.

Know what they want; know what they don’t want

When my best practice procurement company, The Faculty, is helping procurement teams to become more customer-focused, we talk about the five false assumptions about customers:

  1. Customers know exactly what they need
  2. Customers will tell you what they need without being asked
  3. If you ask, customers will tell you everything they need
  4. If customers tell you everything they need, you will understand completely
  5. Just because you know what your customer needs, doesn’t mean you’ll be able to convince others in your team

Procurious blogger, Jordan Early, shared with me some really interesting research from Deloitte’s Ajit Kambil, who researched how new finance chiefs often undertake listening tours to understand what their key stakeholders want.

He observed that what stakeholders say they want “may not express their entire universe of so-called wants”. For example in our world, a business-unit leader may say he needs better information and support from procurement. But his true want may be “to be really listened to” by the procurement organization; or he may want procurement to “help support the personal initiatives he believes will advance his career.”

Kambil also suggested that knowing what key stakeholders do not want is as important as knowing what they want. When I was working in procurement within a large organisation, I used to present three potential contract award scenarios before we kicked off a sourcing project. This quickly revealed how the customer would react to different award decisions and helped bring on the conversation about what they didn’t want early on in the process.  It saved a few (but not all) tears at the end of the project.

Knowing what customers truly do or do not want begins by asking questions. However, it is often difficult for stakeholders to clearly articulate what they do and do not want. This is where you really need to call on all your business experience (and hopefully your supportive boss and/or mentor) to help you truly understand your customers’ needs.

Oh, and then you need to deliver. That’s the easy part… right?

5 ways for procurement to make sure communities “feel the love”

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