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There’s One Key Reason To Buy American In 2017

With the Trump administration’s “Made in America” campaign in full swing, attention has turned to the Pentagon’s global supply chain. The reasons to Buy American might be a little more compelling than you expected….

In 1933 Franklin D. Roosevelt signed into law the 1933 Buy American Act which required the Pentagon to purchase US-manufactured products for anything over a $3,500 threshold. The military supply chain looked very different to today’s, over 80 years later.

The law required that the U.S. military’s entire supply chain be sourced domestically, from the textiles that go into uniforms to the raw materials that are used to create tanks and other weaponry. Roosevelt’s intention was clear: firstly, the law was a patriotic one, with the ‘buy American’ message resonating as strongly in the 1930s as it does among voters today. More importantly, the Act was designed to ensure a strong manufacturing base, critical to the country’s recovery from the Great Depression.

Roosevelt said in 1940: “Guns, planes, ships and many other things have to be built in the factories and the arsenals of America. They have to be produced by workers and managers and engineers with the aid of machines which, in turn, have to be built by hundreds of thousands of workers throughout the land.”

Is Buy American realistic in 2017?

While the 1933 law is ostensibly still in effect, the military supply chain draws heavily on foreign materials and components. In 2013, for example, nearly $20 billion (6.4 per cent of all U.S. military spending) went to overseas entities. This is achieved through the use of exemptions or waivers, which guarantee flexibility and security of supply.

After the White House published a “Buy American” executive order in April, the Office of Management and Budget provided new guidance to federal agencies on enforcing the existing laws, limiting exemptions and maximising the procurement of U.S. products. The Pentagon’s acquisitions office has reportedly instructed its contractors to put in place a training program on how to comply with the 1933 law.

However, there are also a number of materials that simply can’t be found or manufactured domestically, such as the rare earth element needed for flame-resistant rayon fibres used in uniforms (sourced solely from Austria), night vision goggles (91 per cent of which are from China), or lithium ion batteries, semiconductors, microchips and even missile propellant.

Is cybersecurity a reason to Buy American?

Two of the reasons for the 1933 Buy American Act – building patriotism and manufacturing jobs – still remain valid and are a key focus on Trump’s administration, but in today’s world of hi-tech military hardware, there’s a third, critical factor – cybersecurity.

Commentators are alarmed by the presence of Chinese-made microchips in America’s most advanced fighter jets, while components from other foreign entities can be found in American communication satellites, unmanned drones, bomb disposal robots and other gear. Futurist and author Peter Singer, predicted that these microchips could be used to “blow American fighter jets from the sky” if the two countries were ever to go to war.

While very little can be done about the rare-earth materials and metals found only outside of the U.S., it remains to be seen whether the Made in America push will lead to supply chains for vital components including microchips and semiconductors re-shored to the U.S.

In other news this week…

Supply Chain Management software market booming

  • Analyst firm Gartner has announced that the supply chain management (SCM) software market will reach $13 billion by the end of this year, up 11% from 2016.
  • Gartner has also predicted the market will exceed $19 billion by 2021.
  • Growth is being driven by a demand for agility, as vendors move to cloud-first or could-only deployment models, while end-users are becoming more comfortable about cloud security and recognise the benefits of software-as-a-service solutions.

Read more on MH&L news 

When does an SME need a procurement function?

  • New research from Wax Digital has found that having a procurement function is just as vital for SMEs as it is for large corporates.
  • The UK-based survey found that 75% of respondents said procurement was needed once a company reaches a £50M turnover, 77% claim to need procurement by the time it has 100 supplier contracts, and 72% said that procurement was necessary once 500 invoices per month were being processed.
  • Rising costs was the most common reason for introducing procurement, followed closely by inefficient processes and increasing business risk.

For more information visit www.waxdigital.com

Elon Musk’s Hyperloop hits the news again

  • Tech entrepreneur Elon Musk made headlines on Friday when he announced via Twitter that he had “verbal approval” to build a hyperloop – an ultra-high-speed underground transport system – linking New York and Washington DC.
  • If it goes ahead, passengers and cargo would be packed into pods and shot through a system of giant vacuum tubes on magnetic cushions, cutting the current travel time from nearly three hours (high speed train) to 29 minutes for the 355km journey.
  • Musk has also been in conversation with Chicago and Los Angeles officials about hyperloops.

Read more at Financial Review

 

24 Series 9: India Plants 66 Million Trees

The following events occur in real time: India takes on the monumental challenge of planting 66 million trees in just 24 hours. And they didn’t even need Jack Bauer’s help…

The world reeled when, last month, President Trump made the decision to withdraw from the Paris Agreement. Many regarded this as the most devastating decision of his presidency so far and he has faced critisicm for his short-termism, isolationism and rejection of science.

Todd Stern, writing for The Atlantic shortly before Trump made the announcment expressed the concern of many that “the Paris regime cannot work in the long run if the world’s indispensable power has left the table.”

“The Trump administration is about to throw down the gauntlet.” He continued. “If it does, we’ll need to take up the challenge.”

If this week’s evidence is anything to go by…the challenge is very much accepted!

There are 66 million new trees in India…

An astonishing 1.5 million volunteers pledged to “Make India Green Again” as they planted 66 million trees in less than 24 hours.

Volunteers of all ages assembled along the Narmada River in Madhya Pradesh, Central India,  to plant 20 varieties of tree as part of a new Guiness World Record attempt. India holds the previous world record for planting 49.3 million trees in 24 hours last year in Uttar Pradesh. This year, they’ve gone several steps (16.7 million trees!) further and done it in just 12 hours.

India has  promised to increase forest coverage to 95 million hectares by 2030 as part of it’s role in the Paris Agreement. The Indian governement has forecasted a spend of $6.2 billion for creating new forests.

Madhya Pradesh’s government spearheaded this particualr campaign and were understandably thrilled with its success.

Shivraj Singh Chouhan, state chief minister for the region, tweeted after the event: “Thank people of Jabalpur for making tree plantation a huge success. You are not only saving Narmada, but also [the] planet.”

“We cannot be too selfish. We have to spare something for upcoming generations,” he continued.

Is planting with drones the future of sustainability?

Australia’s answer to deforestation is a little more technical than the enlisting of 1.5 million volunteers!

Dr. Susan Graham, an Australian engineer, is developing a drone that could eventually result in the planting of an additional 1 bilion trees per year, and there’s no time to waste! NASA predicts that if current deforestation levels proceed, the world’s rainforests may be completely in as little as 100 years.

The world has lost nearly half its forests for agriculture, development or resource extraction. An estimated 18 million acres are lost each year and deforestation and forest degradation are responsible for 17 per cent of all carbon emissions. The value of the benefits that standing forests provide is immense.

The planet loses 15 billion trees every year so “although we plant about 9 billion trees every year, that leaves a net loss of 6 billion trees,” Dr Graham said. “The rate of replanting is just too slow.”

The drones that Dr Graham is developing could not only plant at ten times the rate of hand planting and at 20 per cent of the cost; they can also access, and plant, in previously inacessible areas , such as mountainsides or steep hills.

The drone technology is currently being tested around the world so watch this space!

What are your views on sustainability and deforestation? What can, and should,  organisations be doing to help? Let us know in the comments section below. 

In other procurement news this week….

Japan & EU Trade Deal Snubs Trump

  • Japan took on the mantle of the global rules-based trading system, as it sidestepped a failing trade agreement with the United States to forge a historic new pact with the European Union
  • The trade deal that will cover nearly 30 percent of the global economy, 10 percent of the world’s population and 40 percent of global trade
  • The deal would lower trade barriers for a sweeping array of products, including pork, wine, cheese and automobiles. The pact would be a heavy blow to American producers of these goods/

Read more on The Washington Post

How Will Northern Ireland’s ££ Be Spent?

  • Northern Ireland is set to receive an extra £1bn over the next two years as part of a deal with the Democratic Unionist Party (DUP) to keep Theresa May’s minority government in power
  • Arlene Foster, leader of the DUP, said the deal would boost the economy and allow investment in new infrastructure, health and education
  • There are around 1.8m people in Northern Island and the headline deal equates to an extra £550 per head

Read more on Supply Management

Amazon’s latest venture is wine!

  • Amazon’s continuing quest to make and sell everything in the world has led to it branching out into a new area: overseeing the production of a new range of wines
  • Unusually for Amazon, this new brand isn’t aimed at undercutting the competition with bargain-basement prices, as with its Amazon Basics line
  • Amazon Wine’s Nick Loeffler added: “We’re thrilled to connect wineries, like King Estate, with millions of customers and give them an innovative format to launch new brands”

Read more on The Guardian 

China’s TIP Demotion: Productive ot Provocative?

2017’s Trafficking in Persons report highlights China as one of the worst global offenders of human trafficking. How does this impact your supply chain decisions? 

The U.S.  government revealed details of its annual Trafficking in Persons (TIP) report last week. The report is the government’s principal diplomatic tool to engage foreign governments on human trafficking.  Rex W. Tillerson, Secretary of State said this year’s report “highlights the successes achieved and the remaining challenges before us on this important global issue.”

The U.S department of state assigns each country to one of three tiers (Tier 1 being the best and Tier 3, the worst) based on their government’s efforts to acknowledge, combat and prosecute instances of human trafficking. Countries must consistently demonstrate improvement in these areas to maintain the highest ranking and avoid demotion.

Myanmar, for example, was one of the countries to be upgraded to Tier 2, following its efforts to reduce child recruitment for the military.

But the most controversial decision this year was China’s demotion to Tier 3, where it will join the likes of Iran, North Korea, Russia and Venezuela.

“China was downgraded to Tier 3 status in this year’s report in part because it has not taken serious steps to end its own complicity in trafficking, including forced laborers from North Korea that are located in China,” Tillerson said as he presented the report.

The demotion marks the first time that  the Trump administration has publicly criticised Beijing’s human rights record, and it prompted an unsurpringly frosty response from the Chinese, “The government’s determination in fighting human trafficking is unwavering and outcomes are there for all to see,” spokesman Lu Kang said. “China firmly opposes the US’ irresponsible remarks on other countries’ fight against human trafficking, based on its domestic laws.”

How Will This Impact China And Global Supply Chains?

There are a number of things to consider if your global supply chain extends to China or other countries ranked in Tier 3.

  • The U.S may consider imposing sanctions that limit access to US and international aid. Congressman Chris Smith said  “Hopefully, the new tier ranking coupled with robust diplomacy—including the imposition of sanctions authorised under Tier 3—will lead to systemic reforms that will save women and children’s lives and ensure that Chinese exports are not made with slave labor.”  Whilst such sanctions have often been waived in the past, it would come as no surprise if Trump decided to break with tradition. Indeed, given his vocal criticism of Chinese trade, he will be under some pressure to impose consequences.  It has been reported this week that Trump is considering trade actions against Beijing including tariffs on steel imports.
  • Suppliers operating in newly placed tier 3 countries will, appropriately, be under increased preasure to audit their supply chains. If you’re sourcing in China, it’s entirely plausible that you’re complicit in trafficking or forced labour.  With supply chains facing extra scruntiny, it would be prudent for organisations sourcing in China to have accurate information at their fingertips. Make sure you know who you are sourcing from, what’s going on behind the scenes of your product and make detailed lists of every farm, vessel or facility to which you are connected.
  • China’s demotion might prompt organisations to stop sourcing in China altogether. Will  “Made in China” labels deter consumers who want to avoid supporting slave labour and traffcking? Changing suppliers, particularly when it’s to a new country,  is time-consuming and expensive. This will be the greatest concern for procurement and supply chain pros.

You can download the TIP Report in full here

What do you think about China’s demotion in this year’s Trafficking in Persons Report? Productive or provocative? Should President Trump impose sanctions on China? Let us know what you think in the comments below. 

In other procurement news this week….

Will Supermarkets Go Uber On Us?

  • Britain’s major supermarkets are testing ‘peak time’ pricing allowing grocers to raise or cut items based on demand
  • Tesco, Morrisons and Mark & Spencer are running trials of electronic labels which allow them to change prices at the click of a button
  • Retail experts say this could spell the end of fixed prices for consumer goods and services within five years, to be replaced by an Uber-style pricing revolution
  • Morrisons said its trial was in the “early stages” and it had not yet decided whether to roll it out across the country

Read more on International Business Times.

Apple Is Moving Its Supply Chain Towards Green Energy

  • Two years ago, Apple embarked on an ambitious plan to help its biggest suppliers switch to clean power sources. As of early June, the tech giant has managed to get eight partners on board
  • According to the tech giant’s latest update on its progress toward environmental goals, integrated circuit packaging maker Ibiden will be the first partner in Japan to power its Apple-related operations completely with renewable energy
  • Apple’s $1.5 billion green bond issued in February 2016 is still the largest issued by any U.S. technology company

Read more on Green Biz.

AI that can read minds 

  • CMU scientists have been working on is a system that can apparently read complex thoughts based on brain scans, possibly even interpreting complete sentences
  • Using a smart algorithm, the team could discern what was being thought about at any given time — and even the order of a particular sentence
  • After training the algorithm on 239 of the 240 sentences and their corresponding brain scans, the researchers were able to predict the final sentence based only on the brain data

Read more on Digital Trends 

 

A Whole (Foods) New World For Amazon

Whole Foods: it’s fresh, it’s organic and it comes with a hefty charge. So where on earth does Amazon fit in? Procurious investigates…

Last week, to the public’s surprise and the retail world’s horror, Amazon announced that it was buying organic supermarket chain, Whole Foods. For the meagre (in Amazon terms) sum of U.S.$13.7bn the retailer will take ownership of the United States’ first certified organic grocer.

It’s a bold and unexpected move given that Amazon is well known for its cheap price points, which have traditionally  undermined brick and mortar stores. Whole Foods, by contrast, is a reasonably exclusive and fairly expensive, organic retailer.

Jeff Bezos, Amazon founder and CEO said “Millions of people love Whole Foods Market because they offer the best natural and organic foods, and they make it fun to eat healthy,” said Jeff Bezos, Amazon founder and CEO. Whole Foods Market has been satisfying, delighting and nourishing customers for nearly four decades – they’re doing an amazing job and we want that to continue.”

The annoncement has sparked much discussion and speculation ; What are Amazon’s intentions? How will other supermarkets be impacted? Will Amazon reinvent Whole Food’s supply chain?

John Mackey, Whole Foods Market co-founder and CEO believes “This partnership presents an opportunity to maximize value for Whole Foods Market’s shareholders, while at the same time extending our mission and bringing the highest quality, experience, convenience and innovation to our customers.”

What does this deal mean for other retailers?

Whole Foods is most prevalent in the U.S. with 431 supermarkets. Unsurpsingly, rival retailers were dealt a hefty blow following the announcement.. Walmart’s shares fell 4.7 per cent, Target’s fell 5.1 per cent Costco’s fell 7.2 per cent and Kroger’s  by 9.2 per cent.

The impact was even felt in the UK, despite there being only nine stores as Tesco and Sainsbury’s by some 4-5% on Friday.

Raanan Cohenn, CEO of last-mile delivery software provider Bringg asserts that “Amazon has become a leading player in the grocery industry overnight. It’s crunch time for the industry.”

“In one word, it means pressure” he continues. “Profit margins are traditionally razor-thin for grocery chains and Amazon will have a greater ability to squeeze margins throughout the supply chain even further.

Latest news implies that Walmart could enter into a bidding war; it’s certainly true that the biggest competitors will do their utmost to make this deal as tricky as possible for Amazon. Given that Whole Foods stock is trading significanlty more per share than Amazon’s $42 offer, a counter bid is entirely conceivable.

The Supply Chain challenge for Amazon

“The challenge for online grocers is that freshness and variety are hard to combine — if they sell one type of tomato, their stock will turn over fast and be very fresh. If they offer 20 types, the choice is wider but the tomatoes will sit in warehouses longer. The supply chain for groceries is trickier and costlier than for non-perishables”says , writing for the Financial Times.

It might be the cost-effective reigning champ of online efficiency but fresh, organic produce is a whole new ball game, and not one that Amazon has been good at winning in the past.

Jason Busch and Pierre Mitchell, Spend Matters, speculated that “Acquiring Whole Foods is perhaps proof that Amazon is willing to buy its way into managing adjacent supply chains in which it has struggled or not focused on yet. It also could provide a fascinating localized test-bed for Amazon Go bridging the consumer and B2B divide.”

If, bidding war allowing, the offer is accepted, Amazon is in a favourable postion to redfine the retail market. They’ll be able to sell fresh groceries online and give customers the option to collect  their deliveries from Whole Foods stores, which would  become instant fulfillment centres. Perhaps Amazon’s ultimate aim will be making same day delivery for groceries the norm.

And, as ZDNet pointed out, “Whole Foods’ roughly 30 million (typically affluent) customers are also likely to be Amazon Prime customers already, which further strengthens the connective tissue between the two brands.”

What do you think about Amazon’s purchase of Whole Foods? How will retail supply chains be affected? Let us know in the comments below. 

IBM Announces Blockchain Truck-Tracking

  • A partnership has been announced between IBM and AOS, a Colombian provider of logistics solutions, which finds the two firms developing a new blockchain and Internet of Things (IoT) solution for the logistics business
  • IBM Blockchain and IBM Watson will be able to track the provenance and status of trucks and their goods using RFID tags that contain the vehicles’ data
  • The solution integrates with IBM’s Watson IoT system to check in on factors like weather and temperature, which can impact the journey and the estimated delivery time

Read more on Coin Desk 

AI to spot Slavery Site From Satellite Images

  • Online volunteers are helping to track slavery from space. A new crowdsourcing project aims to identify South Asian brick kilns – frequently the site of forced labour – in satellite images
  • Nearly 70 per cent of the estimated 5 million brick kiln workers in South Asia are thought to be working there under force, often to pay off debts
  • So far, over 9000 potential slavery sites have been identified by volunteers taking part in the project. The volunteers are presented with a series of satellite images taken from Google Earth and they have to click on the parts of images that contain brick kilns

Read more on New Scientist

Norway Bans Palm Oil Procurement

  • The Norwegian Parliament has voted to introduce a ban on the procurement of palm oil and palm oil products for use as biofuels
  • Rainforest Coalition Norway, which had been lobbying for the ban, welcomed the move. It said: “Palm oil-based biofuel is a bad choice for the climate and drives rainforest destruction”
  • The organisation believes this is the first time a country has banned all use of palm oil biofuel by public bodies

Read more on Supply Management

IBM & SAP Ariba Join Forces To Transform Procurement

Procurement today needs to be about insights and intelligence. Will a new SAP Ariba and IBM collaboration be the function’s force for good?

Last week, tech giants IBM and SAP Ariba made the announcement that they would be joining forces to transform the future of procurement.

Together, the two will launch a hub for delivering cognitive procurement solutions to redefine the source-to-settle process. Additionally, the companies will launch a Cognitive Procurement hub to further the development of intelligent procurement solutions and services.

SAP Leonardo, IBM Watson and SAP Ariba will be used  to pool together intelligence from procurement data and predictive insights from unstructured information.

Procurement, according to IBM, is about to get smarter, faster and more efficient.

“Today marks a major milestone for procurement,” said Alex Atzberger, President, SAP Ariba. “With the deep horizontal integration capabilities native within SAP Ariba’s mature platform and the innovative capabilities of SAP Leonardo and IBM Watson delivered by the industry’s most experienced and trusted providers, companies can realise an even more intelligent source-to-settle process for managing all categories of spend that creates value across the entire business.”

What does the future hold for IBM & SAP Ariba?

IBM Watson represents a new era in computing called cognitive computing, where systems understand the world in a way more similar to humans: through senses, learning, and experience. Watson solutions are currently being built, used and deployed in more than 45 countries and across 20 different industries.

On the SAP Ariba Network, buyers and suppliers from more than 2.5 million companies and 190 countries can discover new opportunities, collaborate on transactions and grow their relationships.

By partnering, SAP Ariba and IBM will use their data insights to increase procurement efficiency and intelligence, as well as improving spend visibility.

“We’ve built a cognitive procurement platform trained specifically to understand procurement transactions and unstructured data such as weather, non-standard part numbers in contracts and complex pricing structures,” said Jesus Mantas, General Manager, Cognitive Process Transformation, IBM Global Business Services. “By combining the power of IBM Watson on the IBM Cloud with SAP Ariba, we are leaping existing procurement benchmarks and delivering unprecedented value to our joint clients.”

Watch below to hear Jesus Mantas and Alex Atzberger discuss the partnership in more detail:

What’s the media saying?

IBM Emptoris customers are sure to be questioning what this announcement means for them.  Part of the deal includes IBM gradually retiring Emptoris products over a multiyear timeline and encouraging its customers to migrate to SAP Ariba.

As Jason Busch points out on Spend Matters “it is clear that the partnership provides significant time for current IBM Emptoris customers to fully evaluate all of their options, including the potential to transition to SAP Ariba or to select other providers.”

An IBM spokesperson, speaking to The Register,  commented that “we are encouraging Emptoris clients to transition to SAP Ariba. We will work closely with them providing support and transition services. Clients can continue to use Emptoris.”

Duncan Jones, Vice President, Principal Analyst at Forrester Research questioned the details of the announcement.  He wrote, “the press release does not say when the collaboration will deliver anything that customers can actually implement.  SAP has a long history of premature announcements and releases, so I’ll wait to see actual software being used by real customers before I get excited about this initiative.”

What do you think about SAP Ariba and IBMs’ partnership?  Is it something to be excited about or are you, like Duncan Jones, a little skeptical? Let us know in the comments below. 

In other procurement news this week…

The Future Belongs to AI

  • 19-year-old world champion Ke Jie upon commented that the “future belongs to AI” after losing a game of ‘Go’ to Google’s AlphaGo robot
  • Go is an incredibly complex Chinese board game whose conquering by computers is seen as kind of a holy grail, and was not expected to be possible for another decade
  • The AlphaGo robot “learned” by speeding through the equivalent of playing 80 years straight to develop its technique and strategy
  • A robot that can learn from experience to handle new situations can tackle any problem a human could

Read more at The Hustle 

Slavery Referrals On The Up

  • Kroll’s analysis of National Crime Agency data found there were 1,575 referrals for labour exploitation in 2016
  • 70 per cent of these (1,107) were adults and 30 per cent (468) were minors
  • Kroll said the increased numbers cast a spotlight on an issue that is of increasing concern to businesses, particularly in sectors such as retail and manufacturing
  • Under the Modern Slavery Act 2015 businesses with an annual turnover of £36m or more must make public the steps they are taking to ensure modern slavery is not taking place in their business or supply chain

Read more on Supply Management 

Amazon to Open First Store in New York

  • Last week Amazon officially opened its first brick-and-mortar store in New York City – its seventh in the US
  • The physical location uses millions of Amazon customer ratings and reviews as its guide to providing customers with a unique shopping experience
  • The shop houses 3000 books organised into categories that you wouldn’t find at your typical bookstore such as  “Books with More Than 10,000 Reviews on Amazon.com”
  • Amazon Books is planning to open five more locations soon, including stores in New Jersey and another in New York City.

Read more on UK Business Insider

Trailblazing CPO Commercialises Procurement

Broadspectrum CPO Crowned Asia-Pacific’s CPO of The Year

Flipping the old perception of Procurement as a back-room entity on its head, Broadspectrum CPO Kevin McCafferty has been recognised for introducing a value-based approach to procurement and dramatically transforming the function into a customer-oriented, bottom-line focused team.

McCafferty’s achievements in consistently achieving both financial and operational objectives were celebrated at last night’s CPO Forum Gala awards, hosted by leading procurement consultancy The Faculty.

Overseeing a procurement spend of $1.8 billion, Executive General Manager, Procurement Australia and New Zealand, Kevin McCafferty won the 2017 CPO of the Year award, after significantly increasing spend under management and delivering over $50 million EDITDA benefits, against an initial target of $30 million.

Broadspectrum CFO Vince Nicoletti, said: “Since joining two years ago, Kevin has made a significant difference to the procurement function within Broadspectrum. His strong transformational change leadership has seen the area move to a more strategic function within the business, which is now delivering bottom-line results and benefits.

“Most importantly, he has up-skilled and lifted capability across his team and enforced process discipline by implementing appropriate technology and system solutions.

“Kevin and team have also driven commercialisation of procurement and supply chain services into Broadspectrum’s contracts with clients.”

60 Seconds With Kevin McCafferty

Procurious managed to steal 60 seconds with CPO of the Year Winner, Kevin McCafferty, who discussed the number one skill for CPOs of the future.

CPO of Year Winner, Kevin McCafferty : “The key to our success is being recognised at the highest levels of the organisation as a team that creates shareholder value.

“What I discovered when I first started this role was that the approach to procurement was very inward-facing, while the rest of the organisation was focused primarily on the customer. This difference in our focus represented a lack of alignment, so my priority has been to change the thinking across the three teams under Procurement’s umbrella.”

The CPO of the Year award highlights the importance of the CPO role in organisations by recognising a remarkable commercial leader who is making a demonstrable difference to business results, having regard to the circumstances of different industries, budgets and the diversity of procurement team size and experience.

The Faculty’s Founding Chairman, Tania Seary, said: “This significant change projects undertaken by our new CPO of the Year, Kevin McCafferty, highlights how modern procurement teams are driving business innovation by putting the end-customer and shareholder value first.”

“By enabling procurement leaders to drive cultural change internally, Broadspectrum has achieved both bottom-line company benefits, as well as delivering true business and commercial partnering, in a remarkably short period of time.”

About The CPO of the Year Award

The CPO of the Year Award is a flagship initiative of The Faculty, created in 2012 to recognise and celebrate the achievements of procurement professionals across Asia Pacific.

For the past 5 years the Award has celebrated someone who has been assessed as an outstanding leader, a prominent contributor to their business and the broader profession, leading delivery of high ROI, and exceeding performance expectations. The Award is a measure of executive presence, commercial insight, people leadership abilities, innovation, professional advocacy, technical ability and integrity.

The 2017 Judging Panel comprised Ms Sharyn Scriven, Group Manager, Metering Dynamics; Michelle Loader, Chief Executive Officer, Chandler Macleod Group and Matt Perfect, Founder Impact Spender. The meeting was chaired by Tony Megally, General Manager, The Source.

For more information on CPO of the Year click here.

About The Faculty

The Faculty is Asia Pacific’s leading procurement advocates, highlighting the integral role procurement has to play in protecting margins, brand and growth for over thirteen years. Through consulting, professional development and creating knowledge networks for CPOs to share best practice learnings, The Faculty helps business to accelerate and optimise their procurement investment.

For more information on The Faculty click here.

Procurement Pay Gap Shock

The gender pay gap in procurement and supply management has INCREASED, according to US and UK survey results released this week. Have you sponsored your own internal gender salary gap analysis?

Ever considered how procurement salaries measure up with the rest of the working world?

Are you suspicious that your  procurement colleagues might be getting a better deal than you?

If you’re a woman working within procurement and supply chain, have you ever wondered how glaring the pay gap is within your industry or organisation?

This week, ISM’s Twelfth Annual Salary Survey in the US and the CIPS/Hays Salary Survey in the UK have shed some light on all of the above. Whilst there’s clearly still a very long way to go in terms of the  gender pay gap (predicted to take another 170 years to close), things are otherwise looking pretty comfortable for the procurement and supply chain profession….

ISM Salary Survey Results

Now would be a great time to convince your boss you deserve that pay rise, because the Institute for Supply Management’s (ISM) Twelfth Annual Salary Survey has been released. The results are based on data from 3808 supply management professionals who were surveyed throughout February and March 2017 to determine these average salaries:

Average Salary: $115,440

Median Salary: $90,000

Average for Men: $126, 710

Average for Women $96,990

In the US, a person working in professional, management or related occupations earns an average of $63,076 annually, which means these results are pretty good news for the supply management profession.

The figures show a 5 per cent increase in average compensation since 2015. Men’s salaries have risen by 8.2 per cent and women’s by 3 per cent.

The super bad news is that procurement appears to be taking a step backwards with regards to equal pay. In 2015 women earned 24 per cent less than men, compared with 31 per cent this year.

Download a summary of the report here.

UK Pay Gaps Revealed

It’s not just ISM’s figures proving to be disappointing in terms of gender equality.

As of last month, UK organisations employing more than 250 people are obliged to publish their gender pay gap figures.

Virgin Money disclosed that men who work at the bank earn, on average, 36 per cent more than women, asset manager, Schroders, reported a  31 per cent gap and Utility SSE a 24 per cent gap.

Some are against the new legislation arguing that the numbers don’t give a full picture and place all the blame in the hands of the employers. Others are in favour of the full disclosure and think it will spur organisations and governments to crack down harder on gender inequality.

McKinsey’s Global Institute report found that $12 trillion could be added to the Global GDP by 2025 by advancing women’s equality, which is as good a reason as any to close the gap, pronto!

UK Procurement Salaries Outstrip Average

The CIPS/Hays Salary Guide and Insights 2017 has surveyed over 4,000 procurement employers and employees to learn everything from key trends in salaries to challenges faced by employers and the top benefits desired by procurement professionals at all levels of seniority.

Whilst the average annual UK pay increase is 2.2 per cent, procurement professionals in the UK are receiving an average of 5.3 per cent more! Jacki Buist, writing on Supply Management, believes the results show a “continuing enthusiasm for the profession in all regions.”

Unpredictably,  the cause for concern falls once again in the region of gender disparity. Overall, the pay gap is reducing but at the advanced professional level, men receive an average  of £82,000, compared with a woman’s £65,700.

Registrations are open for the CIPS/Hays Procurement Salary Guide and Insights 2017 Webinar, which takes place on Thursday, 11 May 2017 13:00 GMT.

Are you surprised by the figures released in these two surveys? How do you think the UK’s new legalisation will impact the fight for equal pay? Let us know in the comments below.

In other  news this week….

Google Customers Subject to Phishing Attack

  • Google customers have been targeted with a scam that gave hackers access to the contents of emails, contact lists and online documents of victims
  • On opening a given link, Google’s login and permissions page asked users to grant the fake Docs app the ability to “read, send, delete and manage your email”
  • Google has now shut down the attack but have asked customers who received such an email to flag it to them.
  • Victims have been advised to change the passwords to their online accounts

Read more on The Telegraph

Amazon to Expand in the UK

  • Amazon is adding 400 staff to a new research and development centre focused on machine learning, in a move that reinforces the retail group’s long-term investment in the UK
  • The lab will develop  the voice-activated Echo speaker and Prime Air drones
  • By the end of this year, Amazon plans to add another 5,000 British employees to its payroll, open a new 600,000 sq ft headquarters in central London, and operate three new fulfilment centres around the country

Read more on the Financial Times

The future of Blockchain

  • Put simply,  blockchains take out the middle man (banks) and make the transfer of funds more streamlined and safe
  • The United Nations (UN) used one particular blockchain, Ethereum, to distribute funds from the World Food Program (WFP) in a pilot program earlier this year. The experiment successfully, distributed aid to 100 people in Pakistan
  • The system will now be used in Jordan to distribute funds to more than 10,000 people. It’s expected to help support 500,000 recipients by 2018

Read more on Futurism 

Tender Of The Year? Bidding Opens For US-Mexican Border Wall

Tuesday 4th April marks the deadline for companies to submit papers detailing their proposals to build the Trump Administration’s “big, beautiful, powerful” Mexican border wall. But will the massive construction project ever win the funding it needs?

US Customs and Border Protection has issued two 130-page RFPs, offering a glimpse into the Trump Administration’s vision for the 2,000km barrier designed to stop illegal immigration and cut off drug-smuggling routes. More than 1,100 kilometres of the border has already been fenced, but the existing walls are nowhere near as imposing as those detailed in the RFPs.

The RFPs indicate a massive construction project, with specifications including:

  • A 9-meter-high reinforced concrete barrier, extending 2 meters underground to prevent tunnelling.
  • A similar barrier made from durable, see-through material.
  • The wall must be “cost-effective to build and repair”.
  • The barrier must be “physically imposing” and capable of resisting almost any attack by “sledgehammer, car jack, pickaxe, chisel, battery-operated impact tools, battery-operated cutting tools [or] oxy/acetylene torch for a minimum of one hour.”
  • At the same time, the wall must be “aesthetically pleasing”, reflecting Trump’s campaign promise of a “beautiful wall”. Reports note that this requirement only applies to the North-facing side of the wall.
  • Features to prevent anyone from scaling the barrier or attaching grappling hooks to its summit.
  • Incorporation of electronically controlled gates for vehicles and pedestrians.

Customs and Border Protection intends to award multiple contracts based on responses to its request statement. The selection process begins with an initial elimination round, after which the contestants will submit more detailed technical proposals. After a second round of eliminations, finalists will gather in San Diego, California to construct a small-scale “mock-up” of their wall design. Sledgehammer-wielding government representatives will then “test and evaluate the anti-destruct characteristics” of the designs before awarding contracts.

What will the wall cost?

During his presidential campaign, Trump estimated that construction would cost $12 billion, citing his personal involvement as a factor in driving costs down. Republican House Speaker Paul Ryan has estimated $15 billion, while a US Department of Homeland Security internal report indicated the wall would cost as much as $21.6 billion and take over three years to build. A preliminary version of the president’s budget for fiscal 2018, beginning in October, includes $2.6 billion for the first phase of construction.

While the RFPs appear to require a highly-visible and physically imposing barrier, some companies have proposed hi-tech solutions to border security that could provide a 90% saving to the government. Examples include having two chain-link fences with a “no man’s land” in between and intrusion detection systems in place. Other invisible or “virtual” wall proposals would use AI software to analyse satellite and surveillance imagery and alert border guards to area where activity is detected.

An alternative idea for a physical barrier put forward by a Florida architecture firm is to use shipping containers as the building blocks for the wall. This could be a cost-effective and sustainable solution, particularly as the U.S. has a surplus of shipping containers due to the slowdown in global commerce.

Will the Mexican border wall ever be funded?

While Donald Trump famously promised his voters that “Mexico will pay” for the border wall, the Mexican Government has repeatedly stated that it would not do so. The Trump administration is yet to reveal how it would compel Mexico to pay. The budget request for $2.6 billion to begin construction was seized upon last week by Graco Ramirez, the leader of Mexico’s national governors’ association, who claimed this proves that U.S. taxpayers will foot the entire bill.

The proposal is likely to face fierce opposition in Congress, where Democrats and fiscally-conservative Republicans are expected to block expenditure on this scale, particularly if estimates blow out to $21.6 billion.

Who will build it?

Ironically, although Trump may be unable to make Mexico pay for the wall, he could end up paying Mexican businesses to do the work. A report by Quartz found that “of the roughly 700 firms that have expressed interest in building prototypes for the wall, about 10% are Hispanic-owned” or based in Mexico. However, the Mexican government has warned Mexican businesses that it would “not be in their best interests” to participate in the construction of the wall, while the Catholic archdiocese of Mexico issued an opinion that participating would be “immoral” and those involved “should be considered traitors to the homeland”. The considerable political pressure notably caused Mexico’s largest cement firm, Cemex, to announce that it would not be providing quotes for the vast amount of cement the project would require.

As far as U.S. construction firms go, few of the large, multinational corporations that would actually have the capacity to carry out the $21 billion project have indicated interest, presumably due to public opposition to the wall and the difficult path through Congress to funding it. Meanwhile, state representatives and lawmakers are putting in place boycott measures such as California’s “Resist the Wall Act”, essentially a divestment campaign to ensure no Californian money goes towards building the wall.

In other news procurement news this week…

Shocking lack of digital transformation strategies in procurement organisations

  • The Hackett Group’s 2017 Procurement Key Issues research has discovered that nearly 85% of procurement organisations believe digital transformation will fundamentally change the way they deliver services over the next 3-5 years.
  • Despite this, only 32% currently have a formal digital strategy in place, and only 25% have the resources and competencies in place to meet the digital transformation challenge.
  • The research gathered data from executives across 180+ large companies globally, with an annual revenue of $1 billion or greater. Areas expected to grow most dramatically are the use of cloud-based applications, advanced analytics, cognitive computing and robotic process automation.

U.S. Treasury Secretary Steven Mnuchin says robot job displacement “50 to 100” years away

  • In an interview with Axios last week, Mnuchin said the concern about artificial intelligence taking over human jobs is “not even on our radar screen”. When pressed, Mnuchin estimated that concern might be warranted in “50 to 100 more years”.
  • This estimate is significantly out of touch with machine learning experts, who are increasingly vocal about the imminent “national emergency” that will see up to 50% of jobs at risk due to advances in automation.
  • Mnuchin’s apparent disinterest in the AI jobs crisis could be due to an inability to “think the unthinkable” – a phenomenon introduced by Professor Nik Gowing at Procurious’ Big Ideas Summit. It may also reflect Mnuchin’s falling into line with politicised assertions that foreign workers and cheap pay, rather than automation, are responsible for job losses in former factory towns over the past decade.

Read more at Business Insider.

U.K.’s Crown Commercial Service slammed by Public Accounts Committee

  • The U.K.’s Crown Commercial Service (CSS) was set up in 2014 to centralise all purchasing, eliminate duplicate and act as a single entity for central government procurement. It replaced the Government Procurement Service and was expected to manage £13 billion spend across 17 departments.
  • However, a recent report by the Public Accounts Committee (PAC) found that the CCS has only managed £2.5 billion spend across 7 departments, with PAC Chair Meg Hillier calling the results “a dismal showing that calls into questions exactly how willing government departments are to accept the authority of the Cabinet Office in this area”.
  • A CCS spokesperson has responded to the report, saying: “”With an experienced senior leadership team now in place, we are confident in our ability to deliver even greater value for the taxpayer moving forwards through the centralised procurement of common goods and services.”

Read more at Computer Weekly.

NEC to build world-first information platform for Global Pandemic Supply Chain

When a disease outbreak hits, even the slightest inefficiency in supply chains can lead to a catastrophic loss of human life. A joint initiative of The United Nations World Food Programme and NEC Corporation will greatly improve the supply chain response to the next pandemic. 

The 2013-2016 West Africa Ebola outbreak began in countries of Guinea, Liberia, and Sierra Leone, with smaller outbreaks occurring in Nigeria, Mali and Senegal. Imported cases led to infections being reported in the UK, Spain, Sardinia and U.S. before the outbreak was declared in June 2016. By this point, the World Health Organisation reported a total of 28,616 cases and 11,310 deaths.

According to the UN World Food Programme (WFP), the need for a streamlined and coordinated supply chain response was highlighted through the many challenges encountered during the West Africa Ebola outbreak. They included:

  • Severe warehousing and distributing capacity constraints
  • Limited visibility of the overall supply and demand of critical items
  • Access constraints caused by border closures
  • A lack of public-private sector coordination resulting in duplicate efforts and an inefficient response

Protective clothing (pictured above) is an example of a critical item that must get through to healthcare workers in outbreak areas. A full set of protective clothing includes a suit, goggles, a mask, sock, boots and an apron. Healthcare workers change garments frequently, discarding gear that has barely been used to minimise exposure to the virus. By October of 2014, Ebola suit makers including DuPont and Kimberly-Clark had tripled production to try to cope with demand as health workers used an average of seven suits per bed, per day. The World Health Organisation estimated that three million protective suits were needed over the course of the outbreak. Tragically, healthcare workers represented nearly 10 percent of cases and fatalities due to ebola.

New supply chain platform will save lives when the next pandemic comes

Supply chain logistics are a critical part of any emergency intervention. Inadequate logistics can lead to critical delays, cost lives and waste precious resources. NEC’s announcement of a new information platform, which will be part of the Global Pandemic Supply Chain Network, is expected to improve response times, find cost efficiencies and aid in continuous improvement.

The technology has been described as a “logistics visualization system that will enable end-to-end tracking of pandemic response items” – such as protective clothing – within a country facing an outbreak, helping to ensure quick and appropriate delivery of supplies to people in need. Other key functions of the system include reporting, analysis of supply chain inefficiencies, data integration with existing logistics systems and in-country warehouse management.

“It is widely recognised that the global health architecture could be reinforced with an improved supply chain platform to enable better preparation and faster response time for pandemics”, said a spokesperson for the Japanese Government, which committed US$1 million to the development of the new technology.

 Public/private collaboration driving results

Perhaps the most encouraging aspect of this announcement is the demonstration of how effective public and private collaboration can be in solving enormous challenges such as a global pandemic response. Aside from the key collaboration between the WFP and NEC Corporation, a framework for future pandemic response has been developed through an “unprecedented” level of cooperation between public organisations including the UN, WHO, UNICEF, the World Bank; and private sector companies including Johnson & Johnson, UPS Foundation, Becton, Dickinson & Co., and NEC.

 In other procurement news this week…

 White House trade advisor reaffirms administration’s trade goals

  • The U.S. is seeking more reciprocal trade arrangements with key countries to boost growth, reduce the trade deficit and reclaim American production capacity, according to Peter Navarro, director of the White House National Trade Council.
  • Speaking in Washington last week, Navarro singled out nations that have contributed to the current deficit problem, including Ireland, Vietnam, China, South Korea, Taiwan and Switzerland.
  • According to Navarro, the U.S. plan to reduce the trade deficit “is not based on higher tariffs, but rather getting our partners to lower theirs.”

Watch Navarro’s speech here.

Canadian federal procurement processes flagged for an overhaul

  • Addressing an event hosted by the Information Technology Association of Canada last week, Canada’s Public Services and Procurement Minister Judy Foote stressed the need for an overhaul of federal procurement processes to improve accessibility for SMEs.
  • At present, unreasonably complex processes and requirements are resulting in 8000-page responses to RFPs, which small businesses simply do not have the resources to undertake.
  • Ms Foote said that government procurement processes “have the ability to shift markets … (and) launch businesses.”

Read more at Ottawa Business Journal

 

The Flaw At The Heart Of Trump’s America First policy

5.6 million U.S. manufacturing jobs didn’t move to China and Mexico – they simply disappeared with the march of technology. And that’s the flaw in America First! 

Trump’s stunning election win has been linked to his successful portrayal as both a friend of Corporate America and a champion of the working class. His business-friendly policies include large-scale deregulation, slashing tax rates and a huge infrastructure spend, which (in theory) are designed to boost jobs through trickle-down economics.

But the support of Corporate America isn’t enough to remain in power. In order to retain the presidency for another four years after the 2020 election, Trump will have to deliver on the key promise that won the support of the disillusioned working class – bringing industry home and reviving jobs in America’s once-thriving industrial rust belt.

However, there’s a miscalculation at the heart of the rhetoric around bringing jobs back from overseas factories.

Robots, not overseas workers, have taken 85% of manufacturing jobs

A recent study from the Centre for Business and Economic Research at Ball State University found that:

  • Employment in the manufacturing sector fell by 5.6 million between 2000 and 2010.
  • Productivity growth (automation) accounted for more than 85% of jobs lost in manufacturing in this period.
  • Only 13% of the overall job loss resulted from trade (including Chinese imports).
  • Meanwhile, U.S. manufacturing output has risen steadily, growing 17.6% between 2006 and 2013.

Simply put, American factories – and factories worldwide – are producing more goods with fewer people. Automation is rendering millions of low-skilled jobs redundant, yet Trump’s key policy aim to “bring back jobs” seems to be mistakenly focused on increasing trade protectionism.

Protectionism could backfire by further accelerating automation

ABC’s business editor Ian Verrender writes that even if Trump “slaps massive import duties on Chinese goods and forces his country to start producing everything at home via the magic of ‘America First’”, it risks leading to a domino effect where business will be forced to find efficiencies in order to survive.

  1. The loss of access to low-cost labour would drive up the cost of consumer goods, meaning Americans would find themselves unable to afford the goods to which they’ve become accustomed.
  2. This lack of affordability would spark demands for wage rises.
  3. Firms would respond by pushing even further into automation, using robotics and AI to cut costs.

Verrender comments: “Where once corporations scoured the globe for low-cost labour, and duly shifted their operations, they [would] now seek ways to eliminate labour altogether, particularly in manufacturing.”

Accelerating automation is inevitable

The loss of jobs to robots is only expected to broaden and accelerate. A report from two Oxford researchers found that an incredible 45% of U.S. jobs, across all sectors and professionals, are vulnerable to being automated within the next 20 years.

For example, self-driving technology alone could lead to the unemployment of 1,000,000 truck drivers in the U.S., along with approximately 160,000 Uber drivers, 230,000 taxi drivers and over 600,000 bus drivers.

Some of the big names to comment on the coming social disruption include Stephen Hawking, who wrote last year: “The automation of factories has already decimated jobs in traditional manufacturing, and the rise of artificial intelligence is likely to extend this job destruction deep into the middle classes, with only the most caring, creative or supervisory roles remaining.”

In February, Elon Musk asked the audience at the World Government Summit in Dubai: “What to do about mass unemployment? This is going to be a massive social challenge. There will be fewer and fewer jobs that a robot cannot do better [than a human]. These are not things that I wish will happen. These are simply things that I think probably will happen.”

Bill Gates commented: “You cross the threshold of job-replacement of certain activities all at once. Warehouse work, driving, room clean-up – there’s quite a few things that are meaningful job categories that, certainly in the next 20 years, [will go away].”

What’s the answer?

Marc Benioff, chief executive of Salesforce.com, warned the World Economic Forum in Davos of the “digital refugees” that would be created by AI. “This is the moment … when we have the highest level of anxiety because we can see advances in AI that are beyond what we had expected,” he said. “It’s happening at a rate and a capability that we are worrying about how it will impact the everyman, the broad range of workers around the world . . . There is no clear path forward”.

One hopeful sign is that a public discourse on the disruptive effects of automation has begun. Thought-leaders have already put forward some solutions, although they may seem politically unpalatable at present. Elon Musk recommends that the U.S. adopts a universal basic income (such as that being trialled in Finland) to keep the economy going and guarantee a standard of living for the millions of workers expected to be displaced by automation. Bill Gates has suggested taxing robotic workers to recapture some of the money displaced workers would have paid as income tax. Education, too, will need to transform to equip future generations with the skills needed to find work in a highly-automated future.

Although Trump appears to be currently focused on the wrong job-stealing “villain” (China), there is hope that leaders will listen to the likes of Bill Gates and Elon Musk and start planning ahead for the social upheaval of what has been dubbed the fourth industrial revolution.

In other news this week:

France passes “duty of vigilance” supply chain law

  • Last week, France passed a law that pushes for accountability for multinational companies sourcing from global supply chains.
  • The “duty of vigilance” law requires companies to establish safeguards designed to ensure that labour rights and other human rights are respected in the production sites they source from.
  • The law requires large companies based in France to create a document that sets out their procedures for evaluating suppliers and mitigate human rights abuses. Violating the “duty of vigilance” law can lead to a penalty of up to €10 million.

Read more at Supply Chain Dive

Trump seeks historic increase in military spending

  • President Trump’s first budget seeks to boost military spending by $US54 billion. The US currently spends about $US584 billion annually on defence.
  • If passed by Congress, the 9% increase will be funded by cuts to non-defence spending, including environmental programs, diplomacy and foreign aid.
  • Last year, the rest of the world combined spent a total of $US317 billion on defence. The highest-spending countries under the US were China ($US146 billion), Saudi Arabia ($US82 billion), Russia ($US66 billion) and the UK ($US56 billion).

Read more at ABC News