Tag Archives: procurement news

Will Procurement Have a Fight to Stay Relevant in the Future?

Is procurement facing an uphill struggle to stay relevant? Could strategy and technology hold the key to both destruction and survival?

Procurious is at ProcureCon Europe this week. Stay up to date with what’s happening on Procurious, and by following us on Twitter.

It’s the end of Day 1 at ProcureCon Europe, and the Procurious team are looking forward to winding down with the best Berlin has to offer. First, though, we’re reflecting on what we heard from the speakers and delegates at the conference.

Procurement’s Burning Platforms

After fortifying ourselves with the great coffee on offer, Procurious stepped into the conference hall to listen to David Noble’s ‘State of the Profession‘ address. The CIPS CEO was positive about the situation procurement currently finds itself in, but had words of warning for the future.

One particular quote stuck in our minds as we considered the question of how procurement could remain relevant:

“If we don’t show our true value, our profession will cease to exist in its current form.”

Noble outlined what he termed as procurement’s “Burning Platforms” – those factors the global profession needs to be aware of now, and in the next few years.

First, the spectre of supply chain risk. Global risk is at its highest level (a peak of 80.8 in CIPS’ Risk Index in Q2 this year) since 2013.

Second was ethical supply. Linked heavily to supply chain risk, it appears that procurement is still struggling with transparency and ethics. Only 57 per cent of buyers have visibility of their Tier 1 and Tier 2 suppliers, and the percentage drops to single figures when it gets to Tier 3 and beyond.

The final burning platform was professional relevance, and how procurement could embed strategies to remain relevant. Noble touched on the ‘gig economy‘. This area is a double-edged sword, giving procurement the opportunity to train those not in the profession, but also challenges in maintaining the profession’s reputation.

Innovation & Frank Assessments

Automation and technology was a topic covered by a number of keynotes (more on that in the near future). However, it’s worth touching on a couple of areas of innovation, particularly in the area of stakeholder engagement.

JJ van der Meer, Partner at PA Consulting, outlined some of the activities that procurement can do to bring stakeholders on board. He and his team have coined a new word, “entreprocurement”, as a way of describing this innovation. While a bit unusual, it’s a term that’s likely to stick in the procurement world, we’re sure!

Innovation, and the drive to do better and better, was also the focus of Kristian Saksida’s keynote. Saksida, CPO at Solvay, offered a refreshingly honest assessment of his team’s transformation journey.

He was open to admitting the mistakes they had made while striving for more, but it was clear he wanted the room to have the benefit of this knowledge to avoid the same pitfalls.

Saksida’s background in Finance helped put an interesting spin on his material. However, he made some key points about the need for procurement to be speaking the same language as the business.

For two functions which have often had a troubled relationship, Saksida’s keynote gave a sense of positivity for the future at Solvay.

Sport and Procurement – A Creative Mix

Lastly we stopped in on Celia Sanchez San Juan’s interactive case study on optimising business partnering. Having seen Sanchez San Juan in a panel earlier, it offered a chance to dig deeper into Adidas’ fledgeling procurement team.

You may not see how sport is relevant to business partnering, but the link was far from tenuous. Adidas look at sport as having the power to change lives, and approach their procurement in the same way.

Sanchez San Juan offered Adidas’ maxim, “The Guiding Principle is Helping to Make a Difference, in the Game and in the World”, by way of explaining how the company puts its people at the heart of its change in procurement.

The journey to becoming a strategic business partner drew on the ideas of insights, impact, and innovation. Moving procurement from ‘Support’ to ‘Creator’ drives greater collaboration, and ultimately delivers greater value for the customer. In the world of sport and procurement, it was all about playing on the same team.

Isn’t that a good thought to finish the day with!

Raising the Curtain on the Future of IT Procurement

Few categories receive the same attention as IT procurement. So how can professionals demonstrate the value they deliver to organisations?

IT procurement is the most important spend category for most large businesses today. As a result, the category is under pressure to demonstrate its ability deliver cost savings against a backdrop of financial pressure and restricted budgets.

In just a few weeks, Procurement pros from all over Europe will gather in Amsterdam to discuss the future of their industry at ProcureCon IT Europe.

Progressive procurement leaders know that it’s not just about saving on the bottom line, it’s about adding value to the business too. It’s a subject which is bound to be top of the list of priorities in Amsterdam.

We asked 100 IT Procurement executives from some of the world’s largest organisations what they are doing to innovate, inspire and add value as part of our research for ProcureCon IT.

Creating a Best-in-Class IT Procurement Function

Procurement is becoming a more integrated part of many organisations, and IT Procurement increasingly has the skills required to deliver value to its stakeholders and make a significant impact on this important category of spend.

But what are the best-in-class procurement pros focussing on now to improve their effectiveness?

procurecon-it-blog

Our research highlights a focus on tightening up the relationship with suppliers. Nearly 60 per cent of our research participants named contract management as their number one focus. Procurement teams seek to optimise all contract-related costs, and provide both clarity and transparency for both parties.

Other priorities speak directly to the supplier relationship. More than half of respondents named vendor innovation as a key area of focus, and a similar amount highlighted supplier rationalisation.

Clearly, IT Procurement is on the hunt for the innovative solutions which will create a competitive advantage for their business. It’s not all about quantity though. It’s about slimming your roster down and making sure that every supplier is pulling its weight.

Thriving in the Future IT Procurement Landscape

What does some of this innovation look like? There is no doubt that the digital innovation which has turned the world upside down in the last ten years is also changing procurement too.

Cloud technology is an important area of growth for our respondents – more than half of our respondents are already heavily invested in these solutions. Some of the latest innovations in this area use app-based user interfaces and cloud-based analytical platforms to provide real-time access to information about who is spending what and when (and that’s just the beginning).

Even better, these systems generate an incredible amount of data with which to hone your operations further.

Data on this scale has the power to enhance planning, delivery and reporting on opportunities for cost savings, value creation, and a host of other things. Trend analysis can uncover patterns which will predict both future opportunities and future threats.

As a result, learning how to harness the information you already have inside your business is now of critical importance for those seeking to thrive in this new economic reality.

The Solutions Zone

ProcureCon IT is all about finding practical solutions to the challenges which IT procurement pros face on a daily basis. It’s the only truly peer-led conference of its kind in Europe!

Not only will you meet hundreds of people who are successfully taking their IT procurement operations successfully to the next level, but it’s also a superb opportunity to meet with some of the most innovative solution providers in the market place today.

To get industry-leading insight on the issues mentioned here, as well as lots more, join us on the 5th and 6th of December at the Mövenpick Hotel Amsterdam for ProcureCon IT.

Take a look at the full event agenda here.

Why The Future of Logistics is Dynamic – And Huge!

The market value of the logistics industry is on the rise. But in order to maximise this value, organisations need more dynamic strategies.

Logistics has not been immune to the global changes and shake-ups during 2016. However, in spite of this volatility, the importance, and size, of the Logistics industry has continued to grow. In the era of on-demand everything, organisations need to ensure logistics strategies are able to keep up with customer requirements.

As with any other market or industry, the changes being seen bring risk and reward in equal measure. New technology, new entrants into the market, and demand can boost the agile, and bring down the inflexible. As we have seen in the shipping industry, there’s no guarantees to be had from size and longevity if you can’t meet demand.

And with the global Logistics and Transportation Industry expected to reach a market value of $15.5 trillion in the next decade, the rewards for staying on track are obvious.

Growing Global Value

The estimated increasing value was highlighted in a new study from Transparency Market Research, released last week. The current market value of the industry is estimated at $8.1 trillion, with an estimated 54.6 billion tonnes of goods handled in 2015.

From their research TMR expect this value to nearly double in the next 8 years, to $15.5 trillion, with global logistics companies handling over 90 billion tonnes of goods.

What is key to note is that the industry is not dominated by one or more major player. This makes for an attractive proposition for new players to get a slice of the pie. Currently, the big four companies – Deutsche Post DHL, Ceva Logistics, UPS, and FedEx – control less than 15 per cent of the market.

New entrants tend to enter the market with newer technologies, use of data analytics, or, for companies like Deliveroo, solve the problem of, and meet customer demand for, the so-called “last mile” logistics.

Some retailers are even choosing to move their logistics back in house thanks to new strategies available to them (more on that shortly!). There is also increasing collaboration, with larger organisations working more closely with smaller, newer companies, whose service complements their own.

Apart from being a great way of sharing best practice, it also serves as a lesson to other industries, procurement included.

Disruption on the Way

One thought that seems to be pertinent for the logistics industry is, “If you’re not disrupting, then you are being disrupted”. Companies need to be adapting to changing markets, or they face obsolescence.

PwC recently published “Shifting Patterns: The Future of the Logistics Industry“, outlining just this issue. They see four main areas for disruption in logistics: customer expectations; technology; new entrants; redefining collaboration.

The whitepaper covers what a possible future in the Logistics industry will look like. They share interesting trends across each possible future. However, one key takeaway is the Logistics could be in line for an Uber-type disruption in the near future.

Could Dynamic Strategies Be the Key?

It’s getting to that time of year again. In a little over 3 weeks it’s Thanksgiving, with Black Friday and Cyber Monday following hot on its heels. And although you might not want to think about it, Christmas is peeping over the horizon.

All of this isn’t news for the supply chain and logistics organisations (or at least, we would hope not). However, with increasing, yet still uncertain, demand at this time of year, many are looking to different strategies for their warehousing.

Dynamic, on-demand warehousing is proving to be a viable alternative for many organisations, particularly those retailers looking to change their logistics strategies.

Dynamic solutions can be particularly helping for e-commerce, as it allows companies to quickly adapt to changing demand and costs. With the growth of e-commerce, consumer wants are changing. At the top of that list is fast delivery, something that traditional warehousing solutions can hinder.

At times of peak demand, like the holiday season, organisations can increase their capacity and their coverage across a region, without a major capital outlay.

The dynamic warehousing strategy also pays dividends for warehouse owners. They can offer capacity to a number of companies at once, and are less likely to end up with spare, or unused space, which costs them money.

2016 hasn’t been the best year for Logistics and Supply Chain, but with more flexible and dynamic strategies in place, the coming 12 months, and beyond, could see a significantly more rosy picture.

Have you used dynamic warehousing for your business? How does it work from a procurement point of view? Share your story below.

e-Commerce has reminded us about our Christmas shopping. While we do that, you can look at the latest headlines in the procurement world…

Impact of Hanjin Bankruptcy Not as Severe as Feared

  • ISM has released a ‘Report on Business Special Question’, asking its panel of U.S. supply management professionals if they have been impacted by the Hanjin bankruptcy.
  • Results reveal that while Hanjin’s situation has caused some impact in the U.S., disruption was not as wide-spread as expected.
  • 51.9 per cent reported “no impacts”, 29.7 per cent reported “small, but not material” impacts.
  • 13.4 per cent have said they have experienced a “material, but management impact”, while only 0.8 per cent reported a “large material impact”. 4.2 per cent said they were unsure if they have been impacted or not.

Read more at ISM

Paris Climate Agreement Comes into Force

  • The Paris Agreement came into force on Friday 4th November, formally replacing the Kyoto Protocol.
  • The agreement aims to hold the global average temperature increase to “well below” 2 degrees Celsius above pre-industrial levels.
  • According to Sydney barrister Noel Hutley it is “conceivable that directors who fail to consider climate change risks now could be found liable for breaching their duty of care and diligence in the future.”
  • As of the 3rd of November 2016, 97 of the 193 parties who signed in Paris have ratified the agreement.

Read more at the Australian Financial Review

Philippines Government Looking for Alternative Firearms Supplier

  • The Philippines Government is looking for alternative suppliers of firearms after the U.S. blocked the sale of 26,000 weapons.
  • The U.S. State Department halted the sale due to concerns about human rights violations carried out as part of Duterte’s “war on drugs”, which has seen more than 2,300 people killed by police and vigilantes.
  • Ironically, Philippine Government procurement laws disqualify local gun makers from selling weapons at this scale domestically.
  • However, both Russia and China have offered to sell arms to the Philippines in the US’ stead.

Read more at ABC

IBM Trials Blockchain for Dispute Resolution

  • IBM has announced that it will be using blockchain technology to help resolve supply chain disputes.
  • A number of companies in finance are looking at permissioned ledgers connecting companies that know and (within limits) trust each other.
  • The blockchain could allow companies to transact, resolve disputes and settle more efficiently than current practices.
  • During IBM’s testing of the concept, it reduced resolution time, and markedly improved customer satisfaction.

Read more at Forbes

Procurement Innovation Personas Revealed: Which Are You?

Are you an ‘innovation visionary’? Or one of the other innovation ‘personas’ in procurement? Well now you can find out!

procurement innovation personas

By Daniel Ball, Director, Wax Digital.

Recent research Wax Digital has conducted has revealed that 80 per cent of procurement professionals are seeking to challenge the status quo.

However, for many their use of innovation is evolving. Fewer than one in five are seen as ‘innovation visionaries’, and many others are taking different paths.

The research shows that procurement professionals value innovation, with most working towards becoming more innovative in their role in a bid to drive the business.

Procurement Innovation Personas

However, what it also shows is that there are four distinct ‘personas’ that define how procurement professionals are driven by innovation and change.

The four different personas defining procurement innovation are:

  • High-level Visionaries

18 per cent are committed to the use of technology and using data insights to influence business innovation.

Very much about the bigger picture, they use their procurement expertise to influence top level innovation and growth, rather than being personally and practically hands on in driving that change.

  • Enlightened Activists

At 36 per cent, the most common of the ‘personas’ and the most likely to be directly driving innovation.

This group is successfully driving change and delivering business value through high technology adoption. They are focused on solving real business issues rather than departmental processes. They don’t stand still and are always on the lookout for what’s next.

  • Early Strategists

30 per cent are still sowing the early seeds of procurement innovation but realise that they have many opportunities ahead of them. Innovation is a priority, but they have some way to go before they fully embrace it.

  • Pragmatic Professionals

This final 20 per cent are less innovation focused, but still open to using it practically, to improve procurement processes. Their primary focus is on savings to the bottom line and following clear business mandates.

Seeking Value in Innovation

It’s really positive that these findings show almost all procurement professionals seeing value in innovation and involvement in it. Whether this is through changing the way they do things, or, as is increasingly the case, influencing how the business as a whole should adapt too.

While early innovators tend to be dealing with more fundamental changes, such as implementing technology for the first time, they have the biggest ambitions for innovation in the near future.

At the more experienced end of the spectrum we see a mix of procurement working hands on to drive business innovation, and senior procurement advisors consulting on the business big questions around future change.

What’s interesting is that these findings ring true with what we see working with procurement teams on a day-to-day basis. The function is shedding its stuffy and administrative reputation. It is investing in technology that integrates the whole sourcing and purchasing process, delivering valuable insight, and enabling them to be bolder in showing the business what it’s capable of.

Procurement’s path to innovation is not perfect however. There are tell-tale signs that its innovativeness could be hampered and restricted by its inherent aversion to risk.

To become real innovators, procurement professionals must foster the right business relationships, nurture the correct set of new skills and seek to break ground in their approach to technology.

If you’d like to find out which persona you are and how you can best apply innovation in your role we have created a simple quiz – What type of procurement innovator are you?

The personas are based on research conducted by MORAR Consulting with 100 senior UK procurement executives commissioned by Wax Digital.

Have Commodity Prices Finally Bottomed Out?

Rising commodity prices have the experts talking about a bull market. But what do buyers need to keep an eye on in the coming 12 months?

You can find and download the ‘MetalMiner’s Annual Metals Outlook Report – 2017‘ here.

MetalMiner has called it – commodity prices in the U.S. have finally bottomed after five years of a bear market. So far, we’re witnessing an uptrend, but the publication’s founder and executive editor Lisa Reisman says industrial metal buyers should continue to take a cautious approach.

“Although markets remain bullish,” she says, “rising interest rates would likely lift the U.S. dollar and depress commodity prices. In addition, Chinese demand remains tepid and a slow-down in China would also lead to lower commodity prices.”

Big 3 Commodity Price Influencers

MetalMiner’s Annual Metals Outlook Report is essential reading for metal buyers. The report speaks authoritatively about the state of the commodities market, the industrial metals market and key price drivers before diving into a detailed analysis of aluminium, copper, nickel, lead, zinc, tin, HRC, CRC HDG and plate price movements.

The big three price-influencing factors that commodity buyers must continue to keep an eye on are, as you would expect:

  1. Metals production;
  2. Demand from China; and
  3. The U.S. Dollar.

According to MetalMiner’s analysis, after commodity prices fell sharply in 2014 and 2015, producers responded by shutting down lines and curtailing capacity. These actions have helped markets maintain better supply/demand balance this year.

December 2015 saw China unleash a renewed government stimulus in the form of credit expansion and infrastructure building, which has – for now – improved demand, particularly for industrial metals.

Finally, a weakening U.S. dollar this year has had a bullish effect on commodities. Between them, these three factors have lifted metal prices across the board, with some rising more aggressively than others.

Trends in Metals

According to Reisman, the price movement in zinc and nickel took many analysts by surprise in 2016.

“We have often said that metals move in trends. In other words, if the entire industrial metal sector languished in bear mode, it might prove difficult for, say, one metal to make substantial price gains. In 2016, tin along with steel led the price rally back in March and April, respectively.

“And though we knew steel prices had support from the import blocks due to anti-dumping trade cases, we were surprised at how quickly some of the other base metals supported the bullish trend – particularly zinc, followed by nickel.”

Bull or Bear – Have a Plan

To cut to the heart of the matter, Procurious asked Reisman which metals she would recommend buying organisations keep a close watch on as we move into 2017.

“From a rising price perspective, the more bullish metals – tin, nickel, lead and zinc – deserve a close watch. In addition, many buying organisations purchase steel on longer-term forward buys.

“We would wait patiently before committing large volumes, to see when steel prices find a bottom (steel prices have been sliding since early August) and then make purchasing decisions once we see where prices will go.”

There are plenty other sage pieces of advice to be found in the report. One such nugget is that while forecasting the future of commodity prices is an impossible task for purchasing organisations, it’s not as important as knowing what to do when prices move.

Have a plan in place to hedge or buy forward in a bull market, while ensuring you stay as informed as possible.

MetalMiner is North America’s largest metals information site, providing global perspectives on the issues, trends and trade policies that impact organisations that source and trade metals. MetalMiner provides clients with custom advisory related to industrial metal prices, forecasts and benchmarks.

Download the ‘Annual Metals Outlook Report for 2017′ here.

Scan, Print, Wear – Does The Future of Fashion Lie in 3D?

3D Printing is disrupting yet another industry – fashion. But this time, the big companies are ahead of the game.

From parts for fighter jets, to prosthetic arms and legs, and concept cars, 3D Printing is being used to manufacture a huge variety of items. And with its use on the rise, it’s putting pressure on organisations to reassess their manufacturing and supply chains.

The latest industry to come into the sights of the 3D Printing revolution is one that might surprise you – fashion. It’s not strictly a new phenomenon (it’s been over a year since these items first appeared), but it’s worth noting for a couple of important reasons.

Firstly, unlike in other industries, the well-known clothing manufacturers are at the forefront of the efforts. Secondly, the consideration of what this might mean for the fashion industry in terms of manufacturing and intellectual property.

Introducing Liquid Factory

Last week, Reebok announced the introduction of ‘Liquid Factory‘, a brand new manufacturing process using the concept of 3D drawing. Using a liquid created especially for them, Reebok can literally draw a shoe, without the need to use a mould at any point.

Not only does this drastically reduce the speed of manufacture, but it also allows Reebok to innovate more freely in the design of their footwear. According to Bill McInnes, Head of Future at Reebok, it’s the first jump forward in footwear manufacturing in over 30 years.

“One of the most exciting things about Liquid Factory is the speed. We can create and customise the design of shoes in real time, because we’re not using moulds – we’re simply programming a machine,” said McInnis. “Liquid Factory is not just a new way of making things, it’s a new speed of making things.”

Innovation doesn’t come cheap, for the consumer at least. A pair of the new ‘Liquid Speed’ trainers will set you back $189.50, though McInnes points out they more advanced than other trainers.

Setting the Fashion Trends

Reebok aren’t alone in using new methods to creating footwear.

Adidas rewarded its sponsored athletes who won medals at Rio 2016 with a new 3D printed running shoe. Under Armour created a new trainer with a 3D printed sole, and sold out the entire line (at $300 a pair) after Michael Phelps wore them at the Olympics Opening Ceremony.

Under Armour have stated that the 3D printing process allows them to create a highly customised shoe based on individuals’ vital statistics. And printing, rather than moulding, allows for “mass customisation” without huge increases in price.

And it’s not just trainers that are going through the 3D printer. Bikinis, dresses, and even the costumes for HBO’s latest masterpiece, Westworld, have been 3D printed. 3D printing is also being used to manufacture so-called “smart fabrics“, essentially wearable technology in clothing.

IP, Counterfeits & Consumers

However, while 3D printing holds many positives for the fashion industry, there are concerns too. Consumers are unlikely to see changes to their shopping habits in the very near future. But it’s how shopping will evolve that plays a major role in the fashion industry’s evolution.

Consumers may in the future be able to pay to download files of clothes to print themselves at home. 3D body scans could make tailored clothing much cheaper and more accessible.

But the over-riding concern for designers and retailers is what would happen to the IP. And how could they cope with the likely influx of counterfeit goods. The industry already deals with countless fakes, but access to CAD files and cheaper 3D printers could see the issue increase exponentially.

Fortunately, the fashion industry has time on its side in this respect. Affordable 3D printers capable of this are still very rare. And if organisations choose to invest time and resources into protecting their IP now, it could save them considerable trouble in the future.

Will 3D Printing change the way we buy clothes? Could it also see an end to sweatshop labour in fast fashion? Share your views below.

While we’ve been searching for a cheap 3D printer, we’ve also been on the look-out for the top headlines this week.

Uber Drivers in Landmark Case Win

  • Uber drivers in the UK have won an employment tribunal case, which ruled they were workers, rather than self-employed.
  • The decision means that drivers will be entitled to holiday pay, rest breaks and the national minimum wage.
  • Uber, who argued that its drivers were self-employed contractors, has already said it will appeal.
  • Should the verdict stand, it could impact tens of thousands of workers in a similar situation.

Read more on The BBC

Tesla Posts First Profit in Three Years

  • Electric car maker Tesla has posted a surprise profit this quarter after selling more vehicles than expected.
  • The company’s revenue rose 145 per cent to $2.3 billion in the quarter, while vehicle sales doubled to 24,821.
  • Tesla’s stock rose 5 per cent in response to the news.
  • The news may mean Tesla is able to meet its bold target of selling between 80,000 and 90,000 electric vehicles this year.

Read more at The Wall Street Journal

Currency Related Price Increases Continue

  • Microsoft has become the latest company to increase its prices as it adjusted its charges to account for currency fluctuations.
  • The rise comes less than two weeks after Unilever’s public spat with Tesco over requested price increases.
  • Microsoft stated that the increases were as a result of assessing their product prices, and creating alignment across the European region.
  • Apple have also announced price rises on their hardware in the UK, some by more than £500.

Read more at Supply Management

Modern Slavery Allegations in Fashion Supply Chains

  • A BBC investigation has revealed modern slavery and child labour in the supply chains of major global companies.
  • The supply chains of Marks & Spencer and ASOS were found to have poor working conditions in Turkish factories.
  • War of Want also alleged similar findings in the supply chain of Japanese retailer, Uniqlo.
  • The company’s Chinese suppliers have been found to enforce excessive overtime, and dangerous conditions, on their workers.

Read more on Supply Chain Dive

Rising Oil Price Shows Green Shoots of Commodity Recovery

As oil prices hit their highest level for 15 months, there is hope that this signals a recovery for other commodity prices too.

Africa Studio/Shutterstock.com

On Wednesday last week, global oil prices reached their highest levels for 15 months. The US Energy Information Administration reported that domestic crude oil supplies had dropped by 5.2 million barrels in the week ending October the 14th.

The oil price was further spurred on by an announcement from Saudi Arabia regarding future oil production. The announcement confirmed that non-OPEC producers have shown willingness to join efforts to limit global crude output.

The reduction of the ‘glut’ in oil supplies helped to buoy global markets, and sparked discussion on the recovery of other commodities. So is a reduction in supply going to lead to a global commodity recovery? Or is it too premature to say?

Green Shoots of Recovery

Talk of the recovery was lead by the Chief Executive of the world’s largest mining company, BHP Billiton. In the company’s first quarter production report, Andrew Mackenzie, stated that, “Fundamentals suggest both oil and gas markets will improve over the next 12 to 18 months.”

This viewed echoed earlier positive quotes from another resource giant, Rio Tinto, regarding the oil and gas markets. Increasing demand from China is anticipated to drive commodity prices up from the last quarter this year, and through 2017.

Also benefitting from production decreases from China itself are commodities such as iron ore, whose price has risen 35 per cent this year. Metallurgical coal prices have tripled in the same period for the same reason. Prices of zinc too are at their highest level since the middle of the year, as production is decreased.

The recovery comes after five consecutive years of falling prices, mainly due to falling demand from China. At one point during last week the commodity market stood on the edge of being a “bull” market for the first time since 2011.

The strength of positivity behind the commodity market also lead to better performance for US markets. This is welcome news for many companies after a particularly volatile year.

Rises Expected to Continue

The recovery doesn’t appear to be a short-term thing either. The price of a barrel of oil is expected to rise to around $55 during 2016. Beyond that, it’s estimated that the price will continue to rise, reaching $70 during 2017.

Rising prices are good news for other industries which have struggled in 2016. Maritime shipping has seen an overall loss of around $5 billion this year, with Hanjin being a high-profile example of the industry’s woes.

However, if rising prices are combined with increasing volumes, the shipping and transportation industries could see a recovery too. As more shippers move forward with scrapping large numbers of ships, it’s hoped that an increase in demand could help drive more profits next year.

However, there is also the feeling that the only way that the maritime industry will fully get back on its feet is through M&A. There have been large moves in this area this year, but not enough to combat the prolonged over-capacity seen in the industry.

Consumer Goods Could Suffer

However, the rising prices aren’t good news for everyone. As we saw in last week’s news, as commodities and raw material prices rise, so does the cost of manufacturing goods. Unilever’s proposed price rises that were rejected by retailers came partly as a result of this.

Palm oil, crude oil, and aluminium are all contributing to rising costs for consumer goods. Allied with fluctuating consumer demand, even at a time of year where sales would be expected to be high, it means difficult times ahead for manufacturers.

And although the likes of Unilever, P&G, and Reckitt Benckiser have seen increased revenues recently, this has been attributed more to increasing prices, rather than an improvement in demand.

As ever, what is good news for one group, inevitably turns out to be worse news for others.

Do you think oil prices are a sign of economic recovery? Or could prices going too high actually lead to decreasing spend as goods become more expensive? Let us know below.

While we tracked the rising price of our seasonal shopping, we were on the lookout for the week’s big headlines…

Another South Korean Shipper Facing Bankruptcy

  • STX Offshore & Shipbuilding Co., South Korea’s fourth largest shipbuilder, has applied for bankruptcy protection in the USA.
  • The move is designed to stop creditors seizing US-based assets while the company searches for a buyer.
  • One creditor is New York-listed Teekay Tankers Ltd., who won a $32 million arbitration award last year for non-delivery of four oil tankers.
  • Although STX has received billions of dollars to keep it afloat, the issues in the industry have hindered any recovery.

Read more at the Wall Street Journal

How does the NHS Spend its Money?

  • Ever wondered how the NHS spends its money? Think there’s a lot of waste?
  • The BBC has launched a series of articles aimed at answering the public’s questions about the NHS.
  • Though spending is being cut across the service, it remains the most cost-effective health system in the world.
  • However, this counter-balanced by outcomes being at lower levels to other countries who actively spend more on healthcare.

Read more and Get Involved on the BBC

Facebook launches “Workplace”

  • Facebook has launched a business collaboration tool, said to be ad-free and not connected to users’ regular Facebook accounts.
  • Businesses can sign up as an organisation for a small fee per user that drops as more users sign on.
  • The tool offers group chat, video calls, live video and a news feed, with relevance algorithms just like regular Facebook.
  • Though many collaboration platforms already exist, Facebook is hoping to build on the familiarity of their public platform for user experience.

Read more at Facebook

Strike Puts Jim Beam Distilleries Under Pressure

  • Over 200 workers at Jim Beam distilleries in Clermont and Boston are striking over staffing shortages and long hours
  • The shortages come as the distilleries struggle to keep up with growing bourbon demand.
  • Bourbon is a $3 billion industry in Kentucky, providing an estimated 15,400 jobs and providing 95 per cent of the world’s bourbon supply.
  • Negotiations are expected to resume this week between striking workers and Beam Suntory, owner of the Jim Beam brand.

Read more at the Chicago Tribune

Love It or Hate It – The Importance of Supply Chain Stability

A disagreement relating to rising supply chain costs has highlighted the importance of supply chain stability.

Ian Law/Shutterstock.com

Early on Thursday morning, the top news headlines weren’t about conflict or celebrity scandal, but the future of a famous British staple. Maligned and loved in equal measure, Marmite was the topic on everyone’s lips.

The sudden interest in the salty, yeast-based spread came about due to a very public spat between Tesco and Unilever over rising product costs.

According to reports, Unilever had requested that Tesco, and other UK retailers, raise the price of their products in store by 10 per cent. However, when Tesco refused to pass on this cost to customers, Unilever stopped supplying certain goods to the retailer.

Tesco responded to this by halting online sales of Unilever products. This sparked concerns of a prolonged shortage of goods on supermarket shelves.

However, by Thursday evening, the situation was resolved and the stand-off ended. It’s expected that Unilever goods will return to the Tesco website in the next few days.

It’s understood that Unilever gave some ground in negotiations, leading to an agreement between the companies. Asda has also publicly commented that it successfully negotiated with Unilever on the price increase.

Rising Supply Chain Costs

Unilever’s reason for the requested price increase was the continuing fall in the value of the pound. This has in turn led to higher import costs for goods into the UK.

While many of its products, including Marmite, are manufactured in the UK, Unilever imports products and raw materials from its base in the Netherlands.

Since the Brexit vote in June, the pound has fallen in value by over 17 per cent. As the pound dropped to its lowest level since June 23rd on Tuesday, it was reported that some airport Bureau du Change had been offering exchange rates of less than one Euro per pound.

Graeme Pitkethly, Unilever’s Chief Financial Officer, was quoted on Thursday morning as saying the price increases were part of “normal business“. But, while the price increases may be a normal part of business, experts have warned that this may just be the beginning.

As the UK’s exit from the EU comes closer, it’s expected that consumers will see rising prices for many products. As the UK imports more than 60 per cent of what it consumes, the FMCG industry will be one of the hardest hit.

Items such as bread, milk, bananas and wine are expected to increase as manufacturers and retailers stop being able to carry the increasing import costs. A rise of between 8 and 10 per cent is expected on clothing, while petrol will rise an estimated 4 or 5 pence per litre in the UK before the end of the month.

Importance of Stability

At a time when margins are being squeezed, the importance of supply chain stability is huge.

A survey published by the UK Food and Drink Federation (FDF) showed that 63 per cent of manufacturers are suffering from decreased profit margins. As well as this, 76 per cent a seeing higher ingredient costs too.

With 96 per cent of the UK’s food and drink businesses small or medium-sized, larger organisations need to be aware of the impacts of margins throughout their supply chains.

Some organisations will try to put increasing costs back on to manufacturers, without taking into account the long-term impacts. Any further supply chain disruption on top of what is happening already could potentially drive prices higher again.

While prices rises for consumers are probably inevitable, increasing supply chain efficiencies and demand forecasting can help to limit the damage.

Helen Dickinson, Chief Executive of the British Retailers Consortium, said: “Retailers are firmly on the side of consumers in negotiating with suppliers and improving efficiencies in the supply chain to control the inflationary pressure that is building through the devaluation of the pound.

“However, years of falling shop prices and higher costs have left limited scope for retailers to continue absorbing this pressure. Everyone in the supply chain will need to play their part in maintaining low prices for consumers.”

By building a greater understanding of the costs through the supply chain, retailers and manufacturers can try to overcome a lack of stability collaboratively.

Do you work in procurement in retail or FMCG? What are your experiences of the recent price rises? Let us know below.

Away from the worries of empty shelves, we’ve stocked up on the week’s big procurement and supply chain headlines.

GM in Court Over Price Bargains

  • A court in Massachusetts will heard a case last Friday, brought against GM by a now bankrupt supplier.
  • Clark-Cutler-McDermott, alleges GM knowingly led the company into a bad faith deal, and encouraged them to take on more debt.
  • GM have requested the case be dismissed, arguing CCM is trying to pass the blame for poor management.
  • The case will help to shed more light on the highly-criticised bargaining practices allegedly happening in GM’s supply chain.

Read more at Supply Chain Dive

Samsung Galaxy Note 7 US Recall Begins

  • Samsung have begun the process of recalling a further 1.9 million Galaxy Note 7 devices, bringing the total to nearly 3 million since the beginning of September.
  • A fault in the Note 7’s battery has led to it overheating, with users experiencing smoking, sparking, or on-fire devices.
  • The recall is expected to cost Samsung an estimated $2.3 billion.
  • The company has seen $21 billion wiped off its market value since Tuesday last week.

Read more at The Guardian

MPs Call for End to Antibiotic “Overuse”

  • A group of MPs has called for the curtailing of the “systematic overuse” of antibiotics in supermarket meat supply chains.
  • Conservative MP Zac Goldsmith tabled a motion calling on UK supermarkets to adopt policies prohibiting routine mass-medication of livestock because of the emergence of antibiotic resistant bugs.
  • The motion has so far received the support of 21 MPs from across the parties.
  • Goldsmith tabled the EDM after a report found resistant E. coli in supermarket pig and poultry meat.

Read more at Supply Management

Amazon Fined by FAA Again

  • The FAA has proposed a fine of $78,000 for Amazon for breaching regulations on shipping of hazardous materials.
  • It’s the online giant’s fourth fine in as many months, with more likely to come from the UK.
  • The latest fine relates to the shipment of an ethanol-based hair tonic, without the correct documentation for flammable goods.
  • The issues highlight the hurdles Amazon faces in scaling up its own logistics and transport operations.

Read more at the Wall Street Journal

Big Ideas Summit 2016: Big Idea #18 – Integrated Procurement Operations

Could integrated procurement operations help break down silos and instil good practices? Isn’t it time to find out?

At the Big Ideas Summit 2016, we challenged our thought leaders to share their Big Ideas for the future of procurement.

From ideas that have the potential to change the very nature of the procurement profession, to ones that got the assembled minds thinking about the profession’s impact outside of the organisation, the response we received was amazing.

Success is Integrated Procurement

Anna del Mar, Director at Future Purchasing, believes that procurement doesn’t need to be separate to the rest of the business. She believes the function can be integrated into the business, instilling the culture of good procurement across the organisation.

Anna goes on to say that by up-skilling everyone in the business to be great procurement people, it will help to increase collaboration in the business. This can also take away the silo mentality, and allow procurement to act as a guide along the way.

Catch up with all the delegates’ Big Ideas from the 2016 Summit at the Procurious Learning Hub.

Want to find out more about Big Ideas 2016? And maybe what we have planned for 2017? You can visit our dedicated website!

Integrate Your Learning & Career

If you enjoyed Anna’s Big Idea and you want to read more from her, then you’re in luck! Anna shared her wealth of experience in procurement, and gave her 5 top tips to stand out from the crowd.

You can hear all our podcasts, and read all our great content by enlisting here. You can catch up on topics from becoming a CPO, to taking your conscience to work, and many more.

If you like this (and you haven’t done so already) join Procurious for free today. Get connected with over 17,500 like-minded procurement professionals from across the world.

Communication Queen – Not Your Typical Procurement Pro

There’s a step change coming in the procurement technology and software industry. And communication and relationships will be the central pillars of it, says this Millennial.

There is step-change coming in procurement, and the change is going to be keenly felt in the procurement technology and software industry. But for this change to take effect, it needs support on both sides of the aisle – buyer and supplier.

Simona Pop, Head of Partnerships & Global Communication at InstaSupply, is not your typical procurement professional.

She’s one of a new breed of professionals involved in procurement and supply chain, who believes change is on the horizon, and that it can’t come soon enough.

A tattooed Millennial, with a stake (both monetary and emotional) in the company she works for, Simona presents a refreshing view on buyer and supplier relationship management, and believes in creating emotional connections with clients.

Not only that, but she also walks the walk when it comes to leveraging social media in business.

Procurious caught up with Simona, and chatted to her about her career, her approach to social media, and why she believes we shouldn’t have to leave the real-time efficiencies of our personal lives at the office door.

Tell us a bit about yourself – how did you get to where you are today? 

It has to be said, my career trajectory isn’t what you might call straightforward. I got out of school thinking I was going to be in advertising. Then I moved to the UK and started working with Brakes, the food supplier, in a sales role. I then went 180 from that path and started working in events.

Finally, I started working with InstaSupply as Head of Partnerships and Communication. One thing lead to another really, and in the end, it makes a lot of sense.

I love communication and building relationships. That’s what makes the world go round, as far as I’m concerned. My communications background is ultimately the driving force behind my take on business.

You’ve recently won your place at Virgin Disruptors – congratulations!

Yes, I am very excited about it. It was all about presenting my vision on what industry needs disrupting and how I would do it. I went straight to the core and illustrated how ALL business needs disrupting.

You can see my video below. It’s all about changing procurement and finance. They are the engine of each and every business so they need to be as well oiled as possible.

What role did social media play in the award?

As with every bit of communication I put out there, this was also a social affair. I got to chatting with Virgin via Twitter and found out about this opportunity. As everything in social media moved pretty fast, I only had a couple of days to script and create the video in order to stick to deadlines. I then uploaded it on YouTube and shared it via Twitter again.

I am a true believer in the power of social and its ability to not only bring us information in real time but also challenge us to become more creative and innovative. It’s why I am so happy to be part of the Virgin Disruptors community as a technology company.

So many procurement technology implementations fail – why do you think this is?

It comes down to how people interact with the technology and the company providing that technology. Is there a match there in terms of values? Or is it more about ticking a box and signing a three year contract so you don’t have to worry about it?

So many businesses will go for old technology just because someone else in their industry has used it before. Even if it’s not a great fit for them and their staff, they will implement it anyway just to tick that “tech” box and consider it done.

More often than not, businesses pay the price tag of an Aston Martin, and end up using it like a second hand Ford.

The fact that back office operations, procurement and finance technology involve so many different roles and levels of seniority, makes it paramount that the interface and functionality appeals to all age groups.

There shouldn’t be a difference between the way we interact with brands in our personal lives, and brands that we see at work.

What are the key changes you think need to be made? Can we make procurement/B2B software more like B2C counterparts?

The way I see it, every business relationship is a partnership – it’s not a case of sell and move on. As a tech supplier, you are going to be working closely with your client, as they will interact with your product every single day.

You want to allow them to work smarter, be more efficient and ultimately make their lives easier. You need to provide top notch tech, but also real time support. There’s no place for a helpline that keeps people on hold for hours, or an email they get a response to in three months. That would be unacceptable in B2C nowadays!

There needs to be a shake-up. We need to remove the jargon, the boring pages of bland text, the hieroglyphic appendices, and the contracts that tie you into five years, whether you like it or not.

Software providers want partners, not prisoners. We are here to simplify buyer-supplier relationships, and make life easier for everyone involved in running a business, regardless of role and seniority. Ultimately we want to support them in growing their business, and having a better quality of work.

After all, why should we leave all the efficiencies of B2C, our personal life, at the door, when we get to work?