Tag Archives: big ideas 2018

6 Top Tips From 6 Procurement Influencers

We interviewed some of procurement’s most influential leaders to hear their advice for the global procurement community. Here are there 6 top tips…

Are we running out of humans who can get the procurement job done?

Is the future office-free?

Should every procurement team have a Chief Data Officer?

How do you sell yourself, your team and the profession to the stakeholders that really matter?

Can procurement teams make themselves indispensable?

These are some of the questions that we addressed at last week’s Big Ideas Summit in London, where we brought together the top procurement minds to connect, collaborate and innovate.

Couldn’t join us on the day? Not a problem! We’ve documented all of the highlights for our digital delegates and pulled together this list of 6 top tips for procurement pros from some of the function’s most influential leaders.

1.Become an essential partner to the business – Bob Murphy CPO, IBM

IBM’s CPO, Bob Murphy, believes that while procurement leaders “need to be able to use technology to get the insights and knowledge, their focus should be on developing their emotional intelligence (EQ) rather than their IQ, and their ability to talk to clients in a consultative manner. Listening is critical – When we’re talking, we’re not learning.”

“Project management, empathy, innovative thinking and an agile mind-set are also critical skills at IBM.

“You hear a lot of people talk about procurement leaders becoming “trusted advisors” to their businesses, but I think we need to take it to the next level and become ‘essential partners.’

“We should enhance everything that we touch.”

Read more from Bob Murphy in this article.

2. Procure with Purpose – James Marland Vice President, SAP Ariba

James Marland, Vice President – SAP Ariba argued that it is an exciting time to be part of procurement an professionals should seize this opportunity. Procurement professionals are often told that they’re the ones who save the money, deal with suppliers and cut purchase orders.

But now procurement can have a new agenda; bringing to the table initiatives that achieve crucial social goals such as eradicating slave labour, improving sustainability and creating an inclusive and diverse workforce.

Take that opportunity and procure with purpose!

Read more from James Marland in this article. 

3.  Engineer Serendipity –  Greg Lindsay, Urbanist and Futurist

Greg Lindsay, Futurist, Urbanist, Journalist and Author, is a firm believer in the fact that innovation is fundamentally social. Indeed, case study after case study has demonstrated that the best ideas are more likely to arise from a casual chat around the water fountain than in any scheduled meeting.

They are the result of serendipity – a chance encounter at the right time by the right people, regardless of their rank, affiliation, and department or whether they even work for the same company.

The most innovative companies in the world are busy engineering serendipity and harnessing social networks and new ways of working designed to cultivate the discovery of new ideas. And that’s exactly what procurement should be doing!

Read more from Greg Lindsay in this article. 

4. Take More Risks – Professional Poker Player Caspar Berry

Professional poker player Caspar Berry believes “People are broadly hard wired to be risk-averse. It keeps them alive. Its kept our species alive for however many thousands of years.”

“What we call risk aversion is essentially a desire to succeed in the short term. And a desire to succeed is another way of describing a fear or aversion to loss and risk.

“I don’t judge anyone negatively for not being able to push the latitude and risk level but it’s important to engage in a conversation in order to try.

“Its our own results we’re sabotaging, sometimes inadvertently, if we don’t!”

Read more from Caspar Berry in this article. 

5. Gather data and do something with it- Chris Sawchuk, Principal The Hackett Group

Top procurement teams achieve their superior performance because they have higher-caliber people who apply their skills to effectively harness digital technologies and capabilities.

Chris Sawchuk, Principal The Hackett Group discussed the need for procurement professionals to develop two fundamental skills:

  1. Procurement has to get better at gathering and creating big data in order to provide meaningful insights for the business and go beyond the data that we have access to today.
  2. Procurement needs to improve their advanced analytics capabilities, to be able to look at data and draw out the opportunities it offers.

The future of procurement is not about the way we execute processes. It’s really about the insights and intelligence we provide to our organisations to give them an advantage.

Read more from The Hackett Group in this article.

6.  Prepare for the worst – Nick Ford, Co-Founder Odesma

Nick Ford, Co-founder – Odesma discussed how procurement professionals can help turn Brexit into an opportunity for their organisation.

It’s an uncertain time for procurement professionals; who must consider how the function will be impacted by an increase in the cost of imported goods, freedom of movement (or lack thereof!) and a potentially depleted talent pool.

As businesses prepare, the role for procurement teams is increasing dramatically and it’s a real opportunity to put procurement at the front and centre of organisations. We just need to prepare!

Read more from Nick Ford in this article. 

Want to explore more content and video footage from Big Ideas London 2018. Sign up here (it’s free) to register as a digital delegate and gain access. 

A Little Less Hesitation, A Little More Risk Taking

As human beings, we are naturally petrified of risk and uncertainty. But our lives are little more certain than a game of poker – and we’d do well to embrace that! 

Caspar Berry, professional poker player extraordinaire,  knows exactly what it means to take risks. But he admits that it can be a scary business.

“People are broadly hard wired to be risk-averse and that’s not a bad thing per se. It keeps them alive. Its kept our species alive for however many thousands of years.”

“What we call risk aversion is essentially a desire to succeed in the short term. And a desire to succeed is another way of describing a fear or aversion to loss and risk.

“It’s a legacy of a period when we were, like almost every other animal, driven by only short term goals; eating, sleeping and procreation. It’s only a problem when we couple this with a desire to achieve long term goals like sales figures.  In this scenario our desire to succeed in the short term, to close every sale we try and make for example, conflicts with this long term goal and it becomes a problem.”

Life is like a game of poker…

Caspar was first introduced to Poker by a friend when on a holiday to Las Vegas in the summer of 1999.  “With my background in – and love for – economics, I got it immediately. Poker is just a game of resource allocation on a terrain of uncertainty which, when you think about it, at a fundamental level is all that we ever do in business and life every day!”

And that’s Caspar’s philosophy in a nutshell. He equates the uncertainty of our everyday, working lives to  game of poker to explain our inherent risk aversion whilst encouraging us to challenge that natural instinct to flee from risk. “I try to show in my work how and why the world is more uncertain than we like to think a lot of the time and why we create that illusion – in order to be able to get through the average day.

“We need certainty and we need the illusion of control in order to be able to function. we shouldn’t be too hard on ourselves… it’s in our genes!”

The benefits of risk

If it’s in our genes why on earth fight it? Is there any real benefit to injecting a little extra uncertainty if it pains us so very much to do so?

Apparently, yes! According to Caspar studies show that the more we acknowledge and embrace uncertainty the better our judgement and decision-making apparatus.

“There’s not a lot we can do about most uncertainty: manage risk where we can; mitigate it where possible. But the economics of risk and reward say that resource allocation is most efficient where we can embrace uncertainty, think probabilistically and stop looking for the outcome most likely to succeed.

“By riding the volatility to some extent we can get better ROI as a result.

“Certainty is nice but efficiency and the bottom line is what is important. Take a long term view, accept greater ‘negative’ outcomes’ and ‘negative metrics’ and focus on the metrics that matter.”

Does Caspar believe we should take more risks in our working lives?

“We should. But it’s easy to say. In order to be able to do so we need to be aligned both with our own expectations and those of our organisations.

It’s no good one person saying they’re going to accept greater volatility for greater long term returns: the person who judges them whether it’s themselves a colleague or boss, also needs to be on the same journey. I don’t judge anyone negatively for not being able to push the latitude and risk level but it’s important to engage in a conversation in order to try.

“Its our own results we’re sabotaging, sometimes inadvertently, if we don’t!”

Caspar Berry is speaking at Big Ideas Summit London today. Register as a digital delegate to hear more from him and follow the day’s action live. 

What Is IBM’s CPO Looking For In New Hires?

IBM’s CPO, Bob Murphy, talks soft skills, AI and what he’s looking for in his leadership team at IBM…

This Article was written by IBM’s CPO, Bob Murphy.

Procurement professionals should be excited about Artificial Intelligence and robotic automation.

We’re looking to these technologies to handle the repetitive tasks, the more mundane pieces of work, so that humans are freed up for higher value activities.

Cognitive technologies will also act as advisors enabling procurement professionals with the insights to quickly adapt to changing market conditions.

I learned a long time ago that the key to success is having a great team. And there is a very human element to procurement. There will always be a need for people to handle the relationship management side of the function, with both suppliers and stakeholders and make the strategic decisions.

The acceptance and the excitement around cognitive have grown at IBM as we have educated our employees on the major opportunity that it represents and developed them in preparation for the digital age.

The importance of soft skills in the digital age

As we continue down the digitisation path in the Procurement industry, with more of our transactional functions being automated, there is a greater need for our procurement professionals to increase their soft skills.

When we think of the soft skills necessary for future success in the procurement industry, we focus on building closer stakeholder and supplier relationships. Broadening our communications skills, including active listening is a key enabler to both visibility to value proposition, but also in understanding our stakeholder requirements from their point of view.

Another critical element is having better agility skills; think flexibility, adaptability and speed.

Our requesters who run the IBM business have tremendous demands that can be fluid based upon the market environment. Our procurement professionals need to be able to react in-kind and continue to provide the IBM corporation with the best value and innovation from our suppliers.

Digital credentials have a curriculum of eLearning and experiential training for our procurement professionals to follow as they build their soft skill profile within the procurement context.

Key skills for IBM’s leadership team

In potential members of our leadership team, there are two crucial skills, that we look for.

1) Digital literacy 

Leaders who want to thrive in the procurement profession need to develop an understanding of:

  • Data analytics –we can gather data but how do you use that data to gain insights?
  • Robotic processes – how can you automate tactical processes so human capital is used to the greatest effect?
  • Cognitive computing – understanding how to digitise a process end-to-end so it is interconnected and insightful.

2) Relationship building

While leaders need to be able to use technology to get the insights and knowledge, their focus should be on developing their emotional intelligence (EQ) rather than their IQ, and their ability to talk to clients in a consultative manner. Listening is critical – When we’re talking, we’re not learning.

Project management, empathy, innovative thinking and an agile mind-set are also critical skills at IBM.

You hear a lot of people talk about procurement leaders becoming “trusted advisors” to their businesses, but I think we need to take it to the next level and become “essential partners.”

We should enhance everything that we touch.

This Article was written by IBM’s CPO, Bob Murphy.

Bob Murphy will be speaking at Big Ideas Summit London 26th April 2018. Register as a digital delegate to hear more from him and follow the day’s action live. 

Could The 21st Century Wilberforce Please Stand Up?

The world is in dire need of a 21st century William Wilberforce to realign the corporate moral compass on this increasingly pressing issue of modern-day slavery

In the early 1800s, the politician and social reformer William Wilberforce famously spearheaded the movement to abolish slavery. His campaign was long and hard-fought, beginning in 1787 with the Committee for the Abolition of the Slave Trade and culminating in 1833 when the House of Commons passed the Slavery Abolition Act.

Wilberforce, by this stage, was in poor health and died just three days after seeing his life’s work pay off. But he had achieved what he set out to – slavery was effectively wiped out across most of the British Empire.

Modern Slavery Today

There are more than 30 million forced labourers around the world today.

Now, nearly 200 years later, I can imagine Wilberforce turning in his grave at the prevalence of modern slavery in today’s supply chains and the thought of all he worked for being undone.

According to the International Labour Organisation, there are more than 30 million forced labourers around the, with recent high-profile cases uncovered in almost every industry – from indentured servitude in commercial fishing near New Zealand to child labourers in the cocoa and coffee industries in Latin America and Africa.

Closely analysing suppliers and, perhaps even more importantly – where businesses tend to source their components or raw materials, can reveal alarming and eye-opening results.

A construction company, for example, might discover it is using iron from China, where the industry is poorly regulated and there is a high probability of forced labour.

A search for women’s shirts in Malaysia could reveal cotton sourced from Mali, another potentially problematic region in terms of labour practices.

As with so many areas of modern life, it feels like we’re forgetting the lessons we should have learned from history – to the point that we’re in dire need of a 21st century Wilberforce to realign the corporate moral compass on this increasingly pressing issue.

Procurement pros should take center stage on tackling modern slavery

Procurement has a crucial role to play in the fight against modern slavery. These issues allow procurement to move away from the “back office” and take centre stage.

Previously mundane tasks such as supplier screening actually turn out to be critical in helping a company stamp out the scourge of poor labour practices, indentured workforce and poor working conditions, whether in Bangladesh or the UK – where recently arrived immigrants are working for less than a minimum wage.

More than a third of UK businesses are still failing to combat modern slavery, according to the latest CIPS survey.

The EU recorded the largest increase in slavery of any region worldwide (according to research by British analytics firm Verisk Maplecroft) with 20 of its 28 states reporting higher levels of slavery than they did in 2016.

There is clearly still more work to be done.

Who should step forward and become the new William Wilberforce?

Another Parliamentarian?

A leader with deep religious beliefs?

NGOs?

Pressure groups who can organise boycotts?

Brand attacks might ignite fleeting moments of righteous social media outrage, but society needs to dig a lot deeper to effect lasting change. You can boycott your local shop but that won’t impact a large buyer of steel or soybeans.

You have to persuade companies that it’s not just the right thing to do but that it’s also better business.

My view is the CPOs of the largest companies are best placed to start solving this problem. Collectively, the Global 2000 spend $12 trillion on goods and services annually so by tying their purchases to purposes, these companies can ensure they provide fair labour practices across their supply chain.

Now is the time for a coalition of well-intentioned and influential businesses to come together and become a modern-day Wilberforce that can stamp slavery out for good.

SAP Ariba’s James Marland will be speaking at Big Ideas Summit on 26th April 2018. To find out more information and register to attend in person or as a digital delegate visit our dedicated site. 

Conference Season Is Upon Us!

Turn on the auto-reply, pack your suitcase and strap yourselves in – it’s #procurement conference season.

Why are so many great conferences packed into the same few weeks of the year? Yes, the weather is usually reliable, but having successive (or even overlapping) conferences forces procurement pros to pick and choose carefully. And your conference budget isn’t the only issue here – simply finding the time to step out of the office for more than one multi-day event (plus travel) can be very challenging.

Let’s have a look at some of the big events in your region.

EUROPE

SAP Ariba Live

Amsterdam, 23-25 April

SAP Ariba’s biggest event in Europe will be packed with interactive presentations and workshops, and offers the chance to meet some of the real thought-leaders and technical wizards from SAP Ariba itself (not just salespeople!). The agenda reflects SAP Ariba’s ongoing theme for the year, Procure with Purpose.

Procurious will be there! Don’t miss the Diversity and Leadership panel session featuring Procurious Founder Tania Seary talking about how procurement professionals can leverage our uniquely human qualities in the world of Industry 4.0, and the critical importance of supplier diversity for the future of procurement.

Related articles on #ProcurewithPurpose:

How Your Network Can Turbocharge Procurement – SAP Ariba President Barry Padgett

Exploding the 4 Social Enterprise Myths

Supplier Diversity? I Don’t Have Time For That!

… and be sure to sign up for our upcoming #ProcurewithPurpose webinar on Modern Slavery.

 

Procurious Big Ideas Summit

London, 26 April

You didn’t think we would forget to mention our very own flagship event? The Big Ideas Summit is an innovative, digitally led event with a small audience of 50 or so procurement influencers in the room, and hundreds of Digital Delegates interacting online. So, while you might not get a chance to attend in person, be sure to click the link above and register as a Digital Delegate to receive a treasure-trove of content and videos from the Summit.

Speakers include legendary IBM CPO Bob Murphy, ISM CEO Tom Derry, risk-taking and decision-making expert Caspar Berry, futurist and business-builder Sophie Hackford, futurist and urbanist Greg Lindsay, security expert Justin Crump and a whole host of procurement gurus from some of the biggest brands in the profession.

Related articles on #BigIdeas2018:

How to Prepare For Post-Brexit Procurement In The Dark

Why Diligence Is Due

6 Critical Skills You Need If You Want To Succeed In A Digital World

IBM CPO: You’re Finished If You Think You’ve Finished!

How to Turn Your Procurement Team into a Cracking Intelligence-Gathering Organisation

4 Ways to Engineer Serendipity in Your Workplace

Don’t forget to register! https://www.procurious.com/big-ideas-summit-digital-delegates

 

ASIA-PACIFIC

The 11th Annual Asia-Pacific CPO Forum

Melbourne, 1-2 May

The Faculty CPO Forum attracts the top CPOs from all across the region, but funnily enough, this event isn’t all that focused on procurement. Instead, the agenda is packed with big-picture thinking, with futurists, experts on disruption, sports stars, diplomacy and trade experts, and others all contributing to a thought-leadership extravaganza that has delighted delegates for over 10 years now. Includes the announcement of the 2018 Asia-Pacific CPO of the Year.

Procurious will be there! Be sure to keep an eye on the Twitter hashtag #CPOForum18 for blog articles and a running update from the 2-day event.

Related articles on #CPOForum18:

4 Things Supply Managers Need To Know About China’s Belt And Road

Leadership Under Fire

4 Things CFOs Really Want From Procurement

 

USA

ISM2018

Nashville, 6-9 May

If you haven’t been to ISM’s massive annual conference before, we can’t stress enough how BIG this event is. With an action-packed agenda featuring no less than 100 educational sessions to choose from, it’s vital that attendees arrive in Nashville with a plan.

Don’t miss out on seeing Huffington Post founder Arianna Huffington on stage, along with two giants of the U.S. Intelligence Community, General Keith Alexander and John Brennan. Keynotes aside, ISM2018 offers fascinating Signature Sessions, Learning Tracks, an Emerging Professionals Experience (featuring the inspirational 30 Under 30 Supply Chain Stars), and more.

Articles related to #ISM2018:

Navigating the World’s Largest Procurement Conference

30 Under 30 Stars Prove This Enduring Stigma Is Disappearing From the Profession

 

Other major events on the procurement conference calendar:

ProcureCon Indirect

Copenhagen, 16-18 April

REV2018 Jaggaer Conference

Las Vegas, 24-26 April

Featuring a keynote from Stephen J. Dubner, award-winner co-author of Freakonomics.

 Coupa Inspire

San Francisco, 6-9 May

Interestingly, Coupa Inspire is going head-to-head with ISM2018 this year with their event being held on 6-9 May in San Francisco. It’s another big one, with 100+ sessions and 8 keynotes including the Terminator himself, Arnold Schwarzenegger!

Ivalua Now

New York, 17-18 May

Know of any other major conferences (in April or May) that should be added to this list? Let us know in the comments! You might also want to check out Spend Matters’ conference recommendations.

6 Critical Skills You Need If You Want To Succeed In A Digital World

How should procurement professionals adapt in order to survive in a digital world? The digitally enabled workforce needs to nail six key skills…

This is a unique time for procurement organisations.

Never before have companies been able to derive more competitive advantage from superior procurement capability. The function’s role is shifting from a sourcing gatekeeper to a provider of insight and decision support, made possible by improved access to digital technologies, data and advanced analytics.

Investments in automation have helped make these organisations more efficient, allowing them to redirect headcount from compliance and operations-focused processes to higher-value activities such as sourcing and supply base strategy.

But this is only the part of the story.

World-class groups achieve their superior performance because they have higher-caliber people who apply their skills to effectively harness digital technologies and capabilities.

The Digitally Enabled Workforce Requires Six Key Skills

Effective procurement teams focus on people development from multiple points of view. Softer skills like relationship management and business acumen are important for managing customer relationships, while technical skills are necessary for analysing data and developing strategic insights.

The following skills are fundamental to the operations of procurement organisations in the digital era.

1. Business acumen

As economic volatility increases, category managers need to sit side by side with their stakeholders to make business decisions that impact the supply base.

It is crucial to understand complex business needs and be able to identify ways for procurement to address them using new technologies. Business acumen is fundamental to elevating procurement’s role as a trusted advisor.

2. Relationship management

Evolving the value of procurement requires working cross-functionally with a variety of stakeholders, from senior budget owners to line managers, as well as being a customer of choice and partnering with valuable suppliers. Procurement should have multiple communication channels open with business partners and customers to fully understand their needs.

3. Supply risk management expertise

In a market of increased risk and volatility, risk management capabilities are more valuable to the enterprise. For procurement, this no longer means simply reacting to events – now the focus is on predicting and avoiding risk using internal and external tools.

4. Strategic mindset

Understanding the broader market and aligning procurement’s vision with that of the business is fundamental to navigating change and extracting value from the supply base.

5. Data analysis and reporting

Big data will change the way procurement organisations use information. Those able to sort through the data and draw the right conclusions have the potential to add value to the organiSation. The tools are available today, but it will take years for widespread adoption, making analytics a prime vehicle for competitive advantage for early adopters.

6. Savings and financial analysis

Tying savings and value benefits to financial statements documents the business value contributed by the procurement organisation and drives profitability. Identifying direct procurement impact on the budget can be elusive but critical.

Digital Technologies Are Changing the Way Organisations Hire and Retain Talent

Access to new technology makes it possible to hire more effectively. By analysing demographics, job experience, recruiting data (like quality of resume) and environmental data, organisations can increase the effectiveness of new hires.

Even the culture of procurement groups is changing now that hiring standards have risen. Social media has provided new channels for knowledge and learning. Learning on demand is a common service delivered to employees, allowing access to training modules or experts from their preferred devices.

Joining networks of colleagues and outside communities to tap into knowledge and solutions to problems is common with tools like LinkedIn.

Strategic Implications

It is getting harder to find and retain people with transformation change experience and the ability to think strategically.

Unfortunately, procurement’s hiring practices, training and skills have not kept pace.

To compete, they must not let themselves be limited by organisational or geographical borders. By hiring globally, procurement deepens the potential talent pool and opens the door to new ways of thinking.

Next-generation procurement organisations are “borderless,” allowing for the free flow of ideas and talent regardless of geography. Leadership is distributed based on supply and customer priorities, not headquarter location.

The model that procurement must work toward is one that is capable of expanding, contracting and adapting rapidly as situations change, just like modern-day supply chains.

This article was written by The Hackett Group’s Laura Gibbons Research Director, Procurement Executive Advisory Program and Amy Fong Associate Principal, Procurement Advisory Program, and Program Leader, Purchase-toPay Advisory Program. 

The Hackett Group’s Chris Sawchuk will be speaking at Big Ideas Summit in London later this month. To find out more information and register to attend in person or as a digital delegate visit our dedicated site. 

How Your Network Can Turbocharge Procurement

Networks have the power to transform procurement teams and turbocharge the businesses they link together. So how do you get the best value from your network?

Since you’re here reading Procurious, I can already tell you appreciate the value of networks.

And you’ve probably realised that the wider your network of professional connections, the greater its value to you.

This network effect, where the benefit of a product or service increases as more people use it, has fuelled the growth of leading Internet companies for decades.

In procurement as elsewhere, networks enable participants to reach across the world, think big, and magnify their impact.

Meanwhile, as networks embrace cloud-based technologies, they allow buyers and suppliers to think even bigger — and to make an exponentially greater impact on the buyers, sellers, and ultimately customers who rely on them.

As innovations like artificial intelligence, machine learning, the Internet of Things, and blockchain reshape entire industries; networks are becoming not only faster but actually smarter at drawing meaningful insights from sprawling troves of seemingly unrelated data.

Envisioning the world as it could be…

In the process, these advances are helping procurement professionals to envision the world not just as it is, but as it could be — including their own role in it. When cloud-based applications take on many of the function’s day-to-day tactical activities, they free up procurement professionals to focus on strategic priorities such as strengthening supply chain resilience, safeguarding the brand from third-party risk, and cultivating new sources of innovation.

As a result of this digital transformation, procurement is evolving from its traditional role of generating cost-savings to fostering collaboration and, ultimately, driving much of the strategic value that fuels growth.

What does it mean to a business — to all its trading partners and other stakeholders — when, for the first time, cognitive insights allow it to get ahead of problems before they occur?

The implications extend well beyond operational risk. Consider the reputational risk associated with forced labour upstream in one’s supply chain. A network instills confidence across the value chain when it offers visibility not only into inventories, cycle time, and turnover ratios but also into the criteria that gauge whether a trading partner’s brand values align with one’s own.

Does a supplier have, for example, the governance structures in place necessary to root out forced labour, human trafficking, and inhumane working conditions? Customers and investors alike demand transparency into all these factors, and networks provide a comprehensive, real-time glimpse to simplify compliance. The result is peace of mind when advances in machine learning provide buyers and suppliers with options instead of data so that they can create ethical, sustainable supply chains, all while extending their competitive advantage.

At its best, technology enhances our business relationships, our personal ones, and the quality of all our lives. Yet, as anyone who’s ever experienced a hard-drive crash can attest, technology can sometimes serve at cross-purposes to this goal.

The same holds true for the software industry. The world’s most powerful networks can evaluate immense amounts of information, but unless they’re designed with the customer in mind they may as well possess the processing power of an abacus.

Procurement professionals have every right to expect that the network they rely on be intuitive, reliable, and — above all — consistent in delivering on their promises.

Does yours?

Demand it!

SAP Ariba’s James Marland, Vice President, will be speaking at Big Ideas Summit in London later this month. To find out more information and register to attend in person or as a digital delegate visit our dedicated site. 

This article was originally published on LinkedIn. 

How To Prepare For Post-Brexit Procurement In The Dark

Procurement pros know the worst and best case Brexit scenario… But how do we prepare when faced with such a lack of concrete insight? 

The Brexit process has been a triumph in politics over practicality.

We may know roughly what the government wants to achieve politically, but the practical solutions for achieving those goals and the real-world impacts these solutions may entail are still unclear.

Despite this lack of concrete insight, it is often falling upon procurement departments to scope and prepare remedies for the uncertain future.

International Supply Chains

UK supply chains are inherently international, with much of what we export made up of things we import, so any changes to the regulatory environment has the potential to cause disruption as supply chains adjust.

It is not yet clear just how much Britain’s regulatory environment will continue to be aligned with the EU post-Brexit, as the two main possibilities – something like Norway with continued single market membership, or something like a Canada-style free trade agreement – offer distinct paths.

In one we commit to maintaining alignment with the EU, but in the other we choose to break free from the EU framework in order to open ourselves up to trade deals with the likes of America, where the regulatory environment is significantly different.

The two options do not exist on a spectrum, rather being distinct sets of tools that we can use to forge our future trading relationships.

The Invisible Border

The government’s commitment to maintaining an invisible border between Ireland and Northern Ireland however, has somewhat tied the government’s hands in this regard, as it essentially makes full alignment the default option.

The government still seems intent on diverging eventually, but having put forward no reasonable suggestions as to how these two objectives can be reconciled, businesses are finding themselves having to plan for the hardest kind of Brexit. Modelling the impacts of WTO rules is possible, and whilst doing so is only indicative of the worst-case scenario, it is a useful exercise in highlighting the key risk areas where contingency planning should be concentrated.

What can international businesses do?

For international businesses, the first port of call is to establish a fresh emphasis on supply chain relationships and risk management.

Many businesses will need to evaluate the possibility of finding new suppliers in order to build a level of flexibility in their supply chains that can help mitigate any disruption. Both UK and EU businesses will be looking into the possibility of switching to domestic suppliers and attempting to beat down prices if the costs of international trade increase.

If Britain does indeed exit both the single market and the customs union, as per the government’s stated intentions, it is very likely that procurement departments will need to face up to changes in contract terms, tariffs, and new non-tariff barriers such as rules of origin alongside potential changes in the identity of suppliers themselves.

This means addressing the chance of increased time and hassle getting goods across borders, as well as potential changes in local regulations if new suppliers are located outside of the EU.

When will these changes happen?

Uncertainty around when these changes may ultimately come into play, and how much of an advanced warning businesses will be given is another major issue.

At the moment it is looking likely that changes will be minimal until at least 2020, but beyond this we can expect to once again enter the realm of politics trumping actual progress.

The reality is that in the absence of reliable information, many firms may continue to take a wait-and-see approach in the hope that disruption is minimal, and currently we don’t know enough about the future to reveal the most appropriate course of action. If one thing is clear, it is that Brexit has put the role of procurement within British businesses under the limelight.

Nick Ford will be speaking at Big Ideas Summit in London next month. To find out more information and register to attend in person or as a digital delegate visit our dedicated site. 

Why Diligence is Due

Ethical sourcing makes good business sense. Plus… it’s the law! Nick Ford explores how to exercise due diligence.

Pioneering U.S. academic fundraiser James W. Frick once cautioned prospective donors: “Don’t tell me where your priorities are. Show me where you spend your money and I’ll tell you what they are.”

For procurement professionals, how they source products and services and where they spend their budgets is not only commercially expedient, but also framed by strict international regulations. The risks contingent on neglecting – or wilfully evading – such rules have profound effects on an organisation’s reputation and, ultimately, it’s bottom line.

Due diligence is about managing risks in the supply chain responsibly; it does not ask companies to guarantee 100 per cent ‘ethical’ supply chains. Tracing the origin of a product, part or service is only one part of this.

The OECD Guidelines

Essentially, the overarching ethical sourcing and procurement principles are set out in the Organisation for Economic Cooperation and Development (OECD) Guidelines for Multinational Enterprises. According to Emily Norton, Campaigner at Global Witness, these are the most comprehensive set of government-backed recommendations on responsible business conduct and ethical sourcing in existence today.

The guidelines are far-reaching recommendations by governments to multinational enterprises operating in or from adhering countries. Currently, 48 countries adhere to the guidelines, including most in the E.U. They provide voluntary principles and standards for responsible business conduct in areas such as employment and industrial relations, human rights, environment, information disclosure, combating bribery, consumer interests, science and technology, competition, and taxation.

The OECD rules are buttressed by the UN Guiding Principles for Business and Human Rights, endorsed unanimously in 2011. They make it clear that companies have a responsibility to make sure their activities do not fund harm and abuses. In many sectors, risk-based due diligence, as recommended by the UNGPs has emerged as a practical and effective way for companies to meet this responsibility.

EU Regulations

Spurred on by these ethical sourcing frameworks, a new EU regulation came into force in June 2017, the first of its kind to adopt a truly global scope. It requires EU-based importers of tin, tantalum, tungsten and gold (ores and metals) to meet the OECD standard when sourcing minerals from any conflict-affected or high-risk area globally. Technology firms who import tin, tantalum, tungsten or gold in their metal forms into the EU, e.g. for manufacturing purposes, will be covered by the new EU law.

Unfortunately, the EU has chosen to ignore a whole category of companies bringing minerals into the EU. This includes firms who buy and sell products containing these minerals, who are outside scope of the regulation. The EU trusts them to self-regulate.

In Asia, Chinese industry guidelines were launched in 2015 for Chinese companies operating abroad, which are also based on the OECD guidelines and are global in scope.

US Regulations

Meanwhile in the US, Section 1502 of the Dodd Frank Wall Street Reform and Consumer Protection Act requires companies listed with the Securities and Exchange Commission (SEC) to carry out checks on their supply chains where they believe their products contain tin, tantalum, tungsten and gold sourced from the Democratic Republic of Congo and its neighbours. Companies in the aerospace, electronics, medical devices, jewellery and clothing, among other, sectors are subject to this law.

Procurement executives at industry behemoths IBM and Walmart are currently experimenting with blockchain and radio-frequency identification (RFID) tags to clarify the provenance and passage of their products.

The Modern Slavery Act

Here in the UK, the Modern Slavery Act mandates that firms generating over £36m or more a year must produce slavery statements approved by their boards. A quarter of the FTSE 100 are currently non-compliant, forcing anti-slavery commissioner Kevin Hyland to contact them to address slavery in their supply chains. It is estimated that 16 million enslaved people are working for companies around the world.

Whether or not companies are caught by laws and regulations, all firms should be living up to the international OECD standard. This means checking whether their supply chains globally may contribute to conflict finance, human rights abuses or corruption around the world. They should be transparent about what they are doing.

Nick Ford will be speaking at Big Ideas Summit in London next month. To find out more information and register to attend in person or as a digital delegate visit our dedicated site.