The robots are coming… and they’re bringing Christmas presents!
In its latest bid to boost productivity and expedite delivery, Internet retailer Amazon is deploying a robot army – yep, just in time for Christmas.
Various sources are reporting that squat, orange, robots have entered several of its U.S. warehouses. The addition of these wheeled droids will save workers having to traipse the factory floor and scour long aisles chockful of Amazon goodies (sometimes up to 20 miles a day).
The addition of the robots is expected to bring in an impressive productivity boost – making picking and scanning 300+ items an hour a reality (compared to 100 previously).
Amazon founder Jeff Bezos told investors earlier this year that in total the company hoped to move 10,000 robots onto the factory floor. Such a move was only made possible after Amazon bought Kiva Systems’ material handling solution in 2012.
Procurement, one of the key parts of business process, is often downplayed. Businesses try to box it off concluding it is more important to speed things up, bypassing some best practice behaviours with the perception of saving time and money.
Procurement then springs out of its box just when you least expect it: to act as an honest broker to challenge business decisions and choices.
So here’s how I applied my top ten Procurement best practices when directing security procurement for the London 2012 Olympics:
See procurement as a key business function
Developing stakeholder engagement across the business is critical. Building these relationships ensures that spend is under Procurement’s influence will deliver optimal results. Within LOCOG stakeholder engagement was complex with LOCOG executives, Civil servants, Government ministers and security experts all demanding consultation.
Be a leader in your profession
Adopt a visible style both within your business and also explore new opportunities in your profession. When I sat on my profession’s board of management with responsibility for education I identified similarities between my business role and my non-exec role in the institute to make Procurement a relevant business function. Someone recently referred to me as a character of the profession. I am not sure if this was complimentary but it means I get visibility.
Articulate a clear vision
With clear objectives that link to the business your agreed objectives should then be driven by you and include:
high savings delivery per buyer;
high compliance with your process;
full coverage in all areas of spend; and
improved new benefits each year.
In many businesses, procurement staff are the reluctant heroes. At LOCOG procurement’s activities and achievements were published and acknowledged. Among other things, this included commercial cost savings and protecting the Olympics from risk.
Broaden your expertise
Build your business knowledge, your soft skills and behaviours as well as your Procurement expertise. This broader capability helps business engagement, and is crucial for procurement staff to advance beyond their core expertise in order to make them more commercially aware. Without my wide range of skills I would not have been as effective in LOCOG.
Always achieve your key results
Procurement had a clear set of London 2012 Objectives including the diversity of the supply base as this delivered the Olympic values.
Procurement needs strong role models and ambassadors. Life can be challenging especially working in the Olympics spotlight so you want people to trust and support you to get the job done in the challenging time scales. Just be careful not to over-promise as non-delivery will quickly loose that hard earned trust.
Stay calm and don’t overreact
Procurement faces many challenges and frustrations. The familiar comment at the Olympics was its unprecedented meaning it had never been done before immediately causing panic and a victim mind set. So just stop and count to 10 and respond with facts rather than emotion.
Never miss your opportunity
At The Olympics I was constantly asked to present in front of boards and senior stakeholders. Just don’t forget you want senior management to know about procurement and see that as an opportunity to sell procurements value. During my time at the Olympics I encountered experts in their own specialism who wont know about Procurement so you should always be passionate about what we can do.
Don’t ignore the power of networking
My time at the Olympics opened up many doors for networking opportunities but justbe selective about the events you attend. It is worth remembering that however strong your policies and process are, new opinions and practices can often provide inspiration!
In-keeping with the theme we want you to share examples of influential writing that has stuck with you. Perhaps a writer that has bowled you over with their insights, or a piece you feel will benefit others.
Nominate using the comments section below, listing your reasons (and a URL). We’ll collate the best into a future feature on Procurious.
Opportunity Knocks and being the best are the themes of the day. For me this brings images of 1970’s and 80s TV shows from the UK and remembering that dedication is what you need….
So to start our coverage of being the best, AQPC have conducted some research into what does “Best” look Like in procurement?
They have analyzed data from its Open Standards Benchmarking in procurement to determine how the top 10% of organizations compare to the rest in 4 core areas:
The results indicate that there is a significant difference between top-performing procurement functions and others. You can read the full report is here.
KPMG is telling us that opportunity is knocking for procurement and that a single-minded focus on reducing input costs is not enough. Procurement leaders need to focus less on driving down suppliers’ prices and more on driving up value from end-to-end across the business.
From a procurement priority perspective according to their research:
58% want to improve performance
42% align more closely with business functions
40% improve governance
39% drive costs out of indirect spend
36% improve supplier management with tier 1 organisations
35% change the operating model of procurement
29% drive costs out of direct spend
In terms of metrics used to measure procurement value added the results may not surprise.
Cost savings and management is still the most used followed by compliance and costs of running procurement function.
The inaugural ROSMA Performance Check report findings were developed through the survey responses of hundreds of companies. The headlines are:
Top-quartile performers are reporting hard financial results in excess of seven times their costs and investment base in procurement, providing a strong basis for reinvestment and recognition. These leading procurement functions generate about $1.6 million in financial benefits per procurement employee each year.
Middle-tier performers are accretive, typically generating four to five times the investment and cost of their supply management assets, including people and technology, but they have not improved their productivity since tracking began in 2011. Bottom quartile teams are dilutive, with financial benefits that do not cover the cost of and investment in their organizations.
In previous articles I have talked about the importance of culture in both the supplier selction and and ongoing management aspects of procurement. This article talks about the importance of creating the best match of culturual fit for you as an employee. The example from WestJet is quite touching and serves to remind us that the cultural fit of employee and employer is crucial after all Culture is the heartbeat of a company.
To round things off I hereby present the following key takeaways:
Preserving company culture takes A LOT of hard work. It’s not easy. And it’s not always fun.
All of it amounts to nothing and it’s only a matter of time before it comes crashing down if the beat that drives your company isn’t strong and distinct enough to be felt by your people.
I think this can be applied to supplier relationships and ensuring that the effort that goes into selecting the right one to start with is maintained by the team throughout the relationship.
How efficient is your procurement process? The BBC saved £1.1 billion during the last business year… That and more in our weekly news blast:
Procurement contributes to annual savings of £1.1 billion at BBC
“Savvy” procurement saved the BBC more than £70 million on goods and services this year, a report into the broadcaster’s efficiency has stated. Total category spend of £655 million across 11,500 vendors in 2013/2014 is managed via framework agreements or managed services, and competitive pricing led to savings across the function, according to Driving Efficiency at the BBC.
In one example, a competitive tender that resulted in Siemens becoming the single technology provider to the BBC, led to annual savings of £37 million. Additional savings via volume reductions through the adoption of strict policies and targets, and price negotiation with Atos (which acquired Siemens’ SIS division) have totalled £13 million over the 10-year contract. Two major contracts re-procured in 2013 and 2014 for facilities management and domestic radio transmission are also saving the corporation £20 million a year.
Since the start of the current 10-year BBC Charter in 2004, annual savings have grown to £1.1 billion. The report forecasts these will rise to £1.5 billion by 2016/17.
Next recruits Polish workers after ‘failing to hire enough British people’
Next, the high street retailer run by multimillionaire Tory donor Lord Wolfson, is bussing in hundreds of Polish people to work in its Yorkshire warehouse after claiming to have failed to hire enough British people. The company, which made profits of £695m last year, admitted that it began recruiting Poles for minimum-wage seasonal warehouse jobs 5-10 days before advertising the roles in the UK.
Next said it was not preferentially hiring Polish people, but had started the recruitment drive in Poland first because it needed more time to bring people over from the continent. The company has hired about 500 British and 240 Polish people for a total of 840 warehouse roles required over the Christmas shopping and January sales period. The spokesman said the jobs were advertised on Next’s website, in jobcentres and on UK recruitment websites. Next is still actively recruiting in the UK and Poland for 100 more staff.
The Yorkshire and Humber region has the second-highest unemployment rate in the country, after the north-east, with 7.2% of people out of work compared with the national average of 6.1%.
Next and its Polish recruitment agency have arranged a fleet of buses to drive the 240 Polish recruits 1,180 miles from Warsaw directly to its warehouse in South Elmsall, West Yorkshire. The first of the buses began arriving last month, with up to seven coaches travelling in convey according to the Daily Mirror, which first reported the Polish recruitment drive.
Cardinal Health, the giant US group, has taken the top spot in Gartner’s Top 25 Healthcare Supply Chains for the fourth year in a row – despite having to absorb the loss of more than $20 billion worth business from Walgreens. Gartner said Cardinal continued to have the widest breadth of any company in healthcare. “It is a manufacturer, wholesaler, distributor, retail pharmacy and a connector at many points in between.”
Mayo Foundation was second. Gartner said it was a model of consistency, combining the balance of high quality of healthcare scores and solid bond rating with top echelon peer and analyst scores. Mayo continues to demonstrate leadership in the healthcare value chain by retaining and developing top talent.
Intermountain Healthcare stepped up a place to third. “Intermountain represents one of the closest things to a literal ‘City on a Hill’ in the world of healthcare providers through its $40 million investment in its supply chain centre,” said Gartner. GlaxoSmithKline came in at number 23.
How 3D printing is set to shake up manufacturing supply chains
3D printing has come a long way in an extremely short span of time. Initially built by Charles Hull in the 1980s as a tool for making basic polymer objects, today, the technology has spurred remarkable efforts in several manufacturing sectors; from building intricate aircraft and race car components, to human organs and prostheses.
Now, the wider business world is beginning to understand the potential of 3D printing for cost-effective, efficient and environmentally-friendly manufacturing. It is little wonder that analyst firm, Canalys see the global market for 3D printers reaching $16.2bn (£10.3bn) by 2018. With increasing adoption, the technology will revolutionise manufacturing as well as the supply chain and logistics processes which surround it.
Though manufacturing in certain locations can be low-cost, managing a global logistics network isn’t; especially given the transportation costs involved. 3D printing can reduce these costs by enabling businesses to station local manufacturing centres closer to strategic markets, reducing the length of the supply chain and helping towards a reduced carbon footprint.
Regional manufacturing centres can also tackle inventory concerns, especially for the industrial spare parts and consumer sectors selling highly-customised products. 3D printing technology will enable manufacturers to easily produce goods to order, helping save money and minimise waste.
The Chartered Institute Of Procurement & Supply for the Middle East and North Africa region (CIPS MENA) is considering establishing a sub committee and a mentoring pool for UAE women working in procurement.
A demand for both was identified at an Abu Dhabi event held in October entitled ‘The Impact of Women in Procurement’, which was attended by about 70 procurement professional from diverse industries with most participants being female UAE nationals.
Rebecca Fox, general Manager of CIPS MENA, said: “This event has shown that there is a healthy appetite amongst women for the procurement profession to be conducted according to the highest international standards in organisations of all kinds and in all sectors.
“Women in this region are eager to nurture and develop this discipline, and we can play an instrumental part in advising and supporting them across various industries. “Since we started providing service and training to organisations and professionals across the Middle East, we have seen strong levels of commitment from women to creating sustainable supply chains, and to the creation of further employment opportunities.”
Hardly had the dust settled from Babcock’s selection as the winning bidder to acquire the British state-owned armored vehicle repair company Defence Support Group (DSG) when a newspaper report emerged claiming the firm is in line to secure a major deal with the Ministry of Defence to transform the purchase, storage and transportation of commodities.
Babcock and its partner, DHL, in a team known as Defence Integrated Supply Chain Solution, has been in a head-to-head competition against US company Leidos with Kuehne & Nagel and others acting as subcontractors to win the Logistic Commodities and Services (Transformation) (LCS(T) program. An in-house MoD team has also been bidding.
An announcement on a winner for the LCS(T) program had originally been planned for November. That slipped to December and recently an MoD spokesman said a final decision naming the winner had been pushed back to 2015. But now a report in the Independent newspaper here Nov. 28 said that Babcock had beaten Leidos to the deal.
The MoD denied a decision had been made and said it was sticking to its new timeline for an announcement in 2015.
Arms procurement policy will be in country’s interests: Parrikar
Defence minister Manohar Parrikar on Sunday said that his arms procurement policy would be in the interests of the country.
“India’s interest would be primary in arms purchase,” Parrikar said, adding that after taking into account India’s interests other things can be considered in arms purchase. Parrikar was replying to media questions on the demand put forward by Rajya Sabha MP Sitaram Yechury that India should stop purchasing arms from Israel. “I do not know exactly what Yechury said, therefore I will not comment. But my arms procurement will be in the interest of this country,” Parrikar said.
My advice to the defence minister is that in the interests of India and world stop financing Israel and its attack on Palestinians. Buying arms from Israel means giving profits to Israel which are being used to kill Palestinians, Yechury said. “Parrikar’s patriotism would be tested as defence minister, let’s see what he does,” added Yechury.
An innovative pairing of government and tech are working together to protect human rights abroad.
The UK government has published its first ever cyber security guidance that provides advice on how to manage export risks, thus leading the way in ethical business export practices.
‘Assessing Cyber Security Export Risks’ is the first tech sector guidance of its kind in the world. It provides cyber security companies of all sizes with actionable advice, to help identify and manage the risks of exporting their products and services. It gives detailed background information and a framework to help companies develop their due diligence processes, manage human rights risks and identify national security risks. This reduces the likelihood of a buyer being able to use their technology to help perpetrate human rights abuses. It also reduces the likelihood of reputational damage to British companies.
Sounds a bit too UK-orientated. Why should I be interested in this?
On the face of it the guidance is catering for a suitably British audience, but let’s not downplay the importance of this publication. Guidance of this kind is truly a watershed moment – hopefully providing impetus, inspiration, and paving the way for similar initiatives.
Cyber security capabilities are used around the world to strengthen the integrity of critical national infrastructures, prevent the theft of corporate and personal data, and tackle fraud. Their export presents the UK with a significant economic opportunity. HM Government has recognised this and is working with industry through the Cyber Growth Partnership to help companies realise this growth, with the aim of increasing UK cyber security exports to £2bn by 2016.
Most often cyber security capabilities are used only to defend networks or disrupt criminal activity. However, some cyber products and services can enable surveillance and espionage or disrupt, deny and degrade online services. If used inappropriately, they may pose a risk to human rights, to UK national security and to the reputation and legal standing of the exporter.
Ruth Davis, Head of Cyber, Justice and Emergency Services, techUK said: “The advice in this document is designed to help companies reduce reputational risk and to have confidence in the deals they make. We believe that ethical business practice is key; human rights and a vibrant British cyber sector are two sides of the same coin.”
The Guidance sets out a risk assessment process that helps companies to:
Look at the capabilities of the product or service they want to export and how it could be used by purchasers.
Examine the places where they are exporting to including their political and legal frameworks, the state’s respect for human rights and potentially vulnerable people.
Assess who the end purchaser of the product is and how they intend to use it.
Evaluate potential business partners and re-sellers.
It also provides advice on how to mitigate and build risk management clauses into the contract.
Dibble Clark, Cyber Lead at 3SDL, a Malvern Cluster cyber security company commented: “Recent events have put the human rights responsibilities of cyber export companies in the spotlight and there is particular scrutiny on our sector, both from governments and NGOs. The responsibility to respect human rights is something no company can ignore, whether large or small.
Rt. Hon Baroness Anelay, Minister of State for Foreign and Commonwealth Affairssaid: “This groundbreaking guidance will help cyber security businesses manage human rights risk by adopting effective due diligence policies and enable them to respect human rights wherever they operate.”
Telstra man James Chalupa has taken deliberate steps to look more closely at his personal brand and what it means to him.
Taking his own brand more seriously has not only helped him network with a bunch of hugely influential industry colleagues, he’s also shared and picked up useful new snippets of information that has helped him tackle his role, too.
The Senior Vendor Management Specialist for the country’s major telco agrees that procurement professionals need to consciously consider how their own brand affects their ability to tackle their role.
“When I first started down this path, I started taking LinkedIn more seriously, extending my network as I met someone I wanted to stay connected with. I’m always trying to finesse information on LinkedIn and make sure it’s up to date and accurate. It’s just a really great tool for people to learn more about what I’ve done and what I’m working on now,” James says.
He’s also paid for higher LinkedIn subscriptions from time to time to further build his network.
James also makes sure he’s across relevant industry news and articles and is an active part of the broader procurement profession, fronting up to networking functions and industry events whenever possible, including The Faculty roundtable events.
“I’ll head along to breakfast events, where I’ll be rubbing shoulders with other procurement professionals from major brands. It’s extremely valuable to be at those events, because you’ll always meet someone interesting or learn something new.”
And while attending industry events isn’t specifically part of his job, he thoroughly enjoys the prospect of sharing thoughts and experiences with his industry colleagues.
“I’m a bit of an extrovert, so I really enjoy these sorts of opportunities. For me, personal branding is about being an active part of the broader profession. It’s about connecting with people and sharing your experiences of procurement. People I meet will share information about what they’re working on, and I’ll talk a little about what I’m working on too, within reason,” he says.
“When some of us get together and start to talk about what’s holding us back when it comes to technology, for example, and we’re all contributing to that conversation, you can get a very effective outcome pretty quickly. Someone will always know something that you didn’t know about a certain area.”
Taking a considered approach to personal branding has been hugely beneficial not only to his ability to connect with others, but his ability to do his job, James says. A recent conversation with a procurement professional working for a global FMCG brand about global sourcing initiatives revealed a new approach that fitted well with what Telstra was already working on, which prompted the company to look into more closely.
They say this is the most wonderful time of the year – but the growing transatlantic popularity of this sales phenomenon won’t just put strain on cash registers… The frenzied (sometimes violent) stampede of bargain hunters will undoubtedly place strain on supply chains and logistics networks too.
According to Visa, £360,000 is expected to be spent every minute on Black Friday (28th November) – with a further £281 million forecast to be spent on the busiest day for online shopping; Cyber Monday.
Black Friday has long been established as a traditional sales bonanza in the US, and is predicted to see $2.48 billion spent online this year, up by 28 per cent. Meanwhile the more recent eCommerce follow up Cyber Monday is expected to increase by 15 per cent to $2.6 billion, and Thanksgiving Day itself has been predicted to see online sales of $1.35 billion, up 27 per cent.
Global IT services company IT Infotech have shared with us its thoughts on why retailers, logistics and delivery firms should be prepared for extra pressure through Black Friday to Cyber Monday.
The American tradition has been an increasingly popular import in the UK, with leading retailers including Amazon, Argos and John Lewis offering sales both online and in-store.
“UK retailers are already bracing their logistics operations to handle the Christmas rush, which can see as much as 70 per cent of yearly sales volumes achieved in the last two weeks of December”, says Venkata V, who works with some of the top retailers around the globe.
“However, with the US expecting one of the biggest sales periods in history this Thanksgiving, the UK should be prepared to see a spike in demand and more strain on their logistics. Even retailers not offering specific Black Friday discounts themselves can expect more demand as shoppers are inspired to hunt for Christmas bargains.”
The rapid escalation in demand created by sales events like Black Friday can be extremely lucrative, but also cause havoc on unprepared supply chains, as demonstrated by China’s recent “Single’s Day” event. The country’s biggest sales event saw the e-commerce leader Alibaba rake in sales of over £9 billion, but the day has previously slowed down delivery times from two days to over a week.
Saravana Kumar who heads Supply Chain consulting in ITC Infotech says: “Marketing, production and logistics teams should work closely together to make sure their operation can handle increased demand on the 28th of November, especially as they are likely to already be stretched by the Christmas period. Flexible retailers have a strong opportunity to capitalise on the sales event by reacting to demand and adjusting their pricing strategy on the fly, increasing and lowering prices as needed”.
“The increased complexity of omni-channel retail has made the supply chain more challenging, also presents an opportunity for well-prepared operations. Capacity should be available to quickly move stock for the most popular products around to meet increased demand online or in particular stores.”
Further comment is offered from Paul Doble, chief sales and marketing officer at DX, a leading independent mail, parcels and logistics end-to-end network operator:
“Throughout the busy Christmas trading season retailers must try to forecast as accurately as possible the volumes that will need to be sent, and then communicate these expectations to their logistics partners, who will take up a huge percentage of this volume. The alternative is the situation many retailers have faced in previous years, where through a combination of inaccurate planning, poor communication and unanticipated weather conditions, demand outstrips capacity and leaves retailers unable to meet their promises to online shoppers.”
Doble continues: “It’s a problem that is often exacerbated when retailers try to maximise the online shopping window, pushing back their Christmas order deadlines and thereby drastically increasing the risk of delayed deliveries when bad weather and other factors disrupt the supply chain.”
Doble concludes with a thought-provoking double-header: “Ultimately, when Christmas presents fail to arrive, it will be the retailer that bears the brunt of disgruntled Customers and negative publicity. As such, retailers need to be asking themselves the question: just how robust are my Christmas delivery plans?”
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Many of the job roles we know today will be obsolete in 2020.
If you are a meter reader, a telemarketer or a computer operator, your days are surely numbered. Fortunately, the need for procurement management skills will not decline, but the requirements will definitely change. Employers will be looking for those with new skills such as understanding the triple bottom line. Will you be ready?
Understanding the sustainability agenda
Job descriptions for chief procurement officers (CPOs) and senior managers in 2020 will include responsibility for sustainability strategies. These leaders will need to define the value that sustainable procurement brings to a business as well as being able to implement the best tools and leading practices.
What is Sustainable Procurement?
The Chartered Institute of Procurement and Supply (CIPS) says that it isn’t simply about being “green”, it’s about:
Socially and ethically responsible purchasing
Minimising environmental impact through the supply chain
Delivering economically sound solutions
Sustainable Procurement will aim to achieve a balance between the three pillars: people, planet and profit. Your challenge will be to address them all without affecting costs and damaging supplier relationships.
What role should procurement play?
We have to:
reduce costs through saving water and energy,
promote the re-use of products and recycle,
minimise packaging and transportation
And most of all, we must question why we need the product or service at all. We need to be aware of be aware of environmental factors like emissions to air, land and water, climate change, biodiversity, natural resource use and water scarcity.
Where will the jobs be?
Many large international organizations such as Unilever, MacDonalds, Sodexo, Mattel and Alstom already have policies in place. L’Oréal is a leader in this field. These types of companies may become employers of choice for those people keen to follow a career in this new area.
Global not-for-profit organizations such as the United Nations and Oxfam are leaders in the public sector where it is taking hold faster than in the private sector.
Jobs that exclusively focus on sustainable procurement are rare, for the moment, but they are coming. Within a few years, more organizations will have a dedicate person designing and managing their sustainability agenda. A recent job advertisement for a dedicated sustainability procurement manager promised the successful applicant both an influence on strategy and a remuneration package in excess of £50 000, plus benefits.
In the retail environment and fast-moving-consumer-goods (FMCG) sector, consumers’ preference for healthy and fair-trade products and services will force companies to rethink their agendas. Reputational risk and brand damage are real threats to global businesses.
What skills will you need?
Stakeholder management skills and the ability to develop good relationships at all levels, both internally and externally will be vital. Other requirements will be those common to any senior procurement job, e.g. influencing and persuasion skills and problem solving.
People with solid experience in managing categories such as facilities management and essential services will be in demand. Right now, most of us are too busy doing our day jobs to worry about some of these critical issues. Read widely, take some time to absorb the discussions and keep up-to-date with developments.
Could you become a specialist in sustainable procurement?