Tag Archives: procurement news

Not Worth The Money – Will Entrepreneurs Avoid Business in Britain?

The Great British Pound is in trouble again this week and it’s making budding entrepreneurs think twice about their business plans.

Talk of a Hard-Brexit Sparks Global Concern

The pound plummeted to a 31-year low last week sparking global concern. The crash followed Prime Minister Theresa May’s announcement on Sunday 2nd October, which revealed a firm timeline for triggering Article 50 and the beginning of Brexit. Extra fuel was added to the, already well-stoked, fire when the media reported that she would opt for a complete break from Europe- a “hard brexit”. Reports  already suggest that a “hard brexit” could result in a loss of 70,000 jobs and cost £10bn in tax receipts.

With the pound sitting at $1.27 against the US dollar, chancellor Philip Hammond scuttled to New York with the hope of reassuring America’s biggest banks about the consequences of Brexit. He will try to convince the Wall Street powerbrokers that London will maintain its position as the world’s leading financial centre once the break from the EU is complete.

The pound is also falling against the euro this week, hitting a five-year low and continuing to escalate concerns.

Weak Pound Triggers Rise in UK Services Sector Prices

The dropping value of the pound is already affecting the UK services sector as input prices rose to a three and a half year high in September 2016.

David Noble, group CEO, CIPS, said: “Firms raised their prices in response, to counteract increased costs for fuel, food and elevated wage bills and as the weaker pound had an effect.”

Companies demonstrated their concerns at the ongoing uncertainty over Brexit implications through their reluctance to forge ahead with confidence.

“It’s clear that the pace of expansion has cooled since the first half of the year, reflecting widespread concern about the potential future impact of Brexit”, David commented.

Is Brexit Scaring Off Entrepreneurs?

The aftermath of Britain’s Brexit referendum back in June 2016 saw a strong display of optimism from many entrepreneurs. Indeed, a survey conducted by the Financial Times confirmed that the majority of founders and investors had confidence in London retaining its status as Europe’s biggest center for start-ups. But, is there a change in the wind?

Diana Paredes, CEO & Co-founder at Suade Labs and passionate entrepreneur spoke with Business Insider last week about the effects Brexit will have on entrepreneurship.

She questions why anyone would opt to start a business in the UK given the current economic climate. Operating in London adds a premium in terms of housing and talent and people often see the many business opportunities on offer as a justifiable compromise for quality of life. However, with the future so uncertain, is it worth the risk and sacrifice?

Existing organisations might also be keen to relocate their bases to elsewhere in Europe where it is cheaper to operate, less isolated and they can continue to be regarded as a European company and not simply a British one. 

If you’re an entrepreneur, what are your thoughts? Is the dropping value of the pound enough to make you run a mile from UK business? Let us know in the comments below.

Find out what else has been happening in the world of procurement and supply this week…

Samsung in Trouble Again

  • It’s been a month since Samsung recalled its new flagship phone, the Galaxy Note 7, following several cases of it exploding and injuring customers.
  • The company have been issuing replacement devices to customers who bought Galaxy Note 7 phones.
  • However, a Samsung recently started smoking uncontrollably on a flight before takeoff, forcing the cabin crew to evacuate the plane. This could lead to a second recall and a disastrous outcome for Samsung.
  • Google announced its Pixel smartphone this week and could be well placed to steal a whole host of disappointed Samsung’s customers.

Read More at Business Insider

Uber’s Self-Driving Cars

  • Uber’s self-driving car pilot program may want to fasten its seat belts after the bumpy beginning it has reportedly gotten off to.
  • The cars have reportedly gotten into accidents and ignored traffic signs during testing in Pittsburgh, Pennsylvania.
  • Whilst it is still very early days for self-driving cars, it’s believed that they are, ultimately, inevitable given the overall, enticing end-game which should see the cars combatting road deaths.

Read more at Tech Radar

Supply Chain Leaders Pressured to Embrace Climate Change

  • Business for Social Responsibility (BSR) meets next month in New York with the current cri de Coeur being “bold climate action”.
  • Analysts have observed that multinationals must raise their ambitions by investing in climate finance, transition to renewable energy, and find more innovative was of ensuring resilient supply chains.
  • As well as encouraging change in organisational culture to embrace clean energy and other climate solutions, BSR insist that supply chain managers join Corporate Social Responsibility (CSR) managers in becoming .intrapreneurs.
  • Supply chain managers can – and must – play a major leadership role in addressing the alarming consequences of aberrant global weather conditions.

Read more at Supply Chain 24/7

Drones Tested for Emergency Cell Service

  • Verizon Communications is testing the deployment of large-scale drones to provide mobile connectivity in emergency situations when the land-based cellular network has been damaged.
  • The drone which is being flown by American Aerospace Technologies, is nothing like the small, quad copter devices flown by amateurs at home. With a 17-foot wingspan, Verizon’s drone more resembles the types of unmanned aircraft used in the military.
  • Data gathered in Thursday’s trial will be shared with the FAA in order to help craft future rules regarding drones, Verizon said.

Read more at Fortune

Global Trade Growth Slowdown a Wake-up Call for Nations

Global trade growth has slipped to its slowest rate since the 2009 financial crisis, sparking concerns for jobs and economic growth.

The World Trade Organisation has released figures showing that global growth has fallen to 1.7 per cent in 2016. This is well below the forecast 2.8 per cent growth in GDP outlined by the WTO at the beginning of the year.

It’s expected global GDP growth will remain around 2.2 per cent for 2016, which would represent the lowest figure since the financial crisis in 2009.

The slowdown in growth has been driven by a sharp decline in merchandise trade volumes. These fell in Quarter 1, and then didn’t rebound as expected to the middle of the year.

On top of this, the WTO has also revised its 2017 forecasts downwards, from 3.6 per cent, to between 1.8 and 3.1 per cent.

Decelerating Global Trade & Growth

Falling global trade and growth is also in part due to slow growth and performance in major world economies, such as China and Brazil.

North American growth, the strongest in the world in 2014-15, has also slowed. A reduction on imports into the USA has been partly to blame for this.

The volatility in the global economy, as well as a backdrop of increasing uncertainty, has been a major consideration for many countries in their trade.

Disagreements over global trade partnerships, such as the Trans-Pacific Partnership, have not helped the situation. Both US Presidential candidates oppose the agreement, and have stated they will end US involvement in it after November’s election.

The WTO have also warned that uncertainty around the UK’s ongoing relationship with the EU following June’s Brexit vote may lead to even slower growth in coming years.

Protectionism Hurting Growth

After an extensive period of global trade growth through globalisation, many countries are now looking to pull both manufacturing and supply chains back within their borders.

A separate report by the International Monetary Fund (IMF) highlighted the role of protectionism in the slowdown. While tariffs on trade are regulated by the WTO, other measures, such as reducing quotas and increasing subsidies for in-country manufacturing, can be used to reduce exports.

This then has a knock-on effect on global trade volumes, and can inhibit development of global supply chains.

Roberto Azevedo, the WTO’s director-general, said, “The dramatic slowing of trade growth is serious and should serve as a wake-up call. It is particularly concerning in the context of growing anti-globalisation sentiment. We need to make sure that this does not translate into misguided policies that could make the situation much worse.”

Job and Economic Growth Risk

The global slowdown in trade has also raised concerns about job creation, and general health of the world economy. Both economic growth and job creation have long been linked to open trade.

Efforts to re-shore manufacturing and supply chains have an impact on global employment. Though it must be said that many organisation are seeing economic benefits from bringing manufacturing back in-house. These benefits are passed on to the both the local and national economies in turn.

However, for many developing countries and smaller companies, the slowdown in trade will hit harder. Roberto Azevedo called on countries to “heed the lessons of history“, and re-commit to open trading to boost economic growth.

Though some positive signs have been seen in the past month or so, the uncertainty remains. The US Presidential Election could fundamentally change the way one of the world’s largest economies interacts with the rest of the world.

And with other major economies not showing signs of quick recovery, it remains to be seen when or if the global slowdown will be arrested.

What are you seeing in relation to global trade in procurement? Is your supply chain suffering from the slowdown? Let us know below.

We’ve taken time out from getting you fit with Career Boot Camp to check out the top headlines this week. 

Activists Block Palm Oil Operations

  • Greenpeace activists are blockading operations of IOI, one of the world’s biggest producers and traders of palm oil.
  • A group of ten people, including two Indonesian farmers affected by forest fires related to palm oil operations, are blocking access to IOI’s refinery in Rotterdam.
  • The Greenpeace ship Esperanza is also preventing palm oil from being unloaded from incoming tankers.
  • Greenpeace is demanding that IOI commits to a sustainable palm oil supply chain before they lift the blockade.

Read more at Maritime Executive

US Craft Beer Brewers Outpace Supply Chain

  • US hops farmers are struggling to fulfil orders for a rapidly growing number of craft breweries,
  • The industry has doubled in size over the past five years, as consumers look to smaller companies for their beer.
  • Farmland devoted to varieties of hops has increased by 65 per cent in the same period. However, the number of small customers makes it difficult for farmers to keep up with demand.
  • As a result, production has slowed for the first time after several years of rapid growth.  

Read more at the Wall Street Journal

Inquiry Launched Into UK Defence Procurement

  • An inquiry into the UK’s military acquisition and procurement policy has been launched by the House of Commons Defence Committee.
  • The review was prompted by a report published last year by think-tank Civitas that argued for an overhaul of the MOD’s acquisition process.
  • The committee’s inquiry will look into whether emerging acquisition systems are offering value for money.
  • It will also look at the implication of Brexit will have on the UK’s defence industry.

Read more at Supply Management

Silicon Valley Alive to Truck Potential

  • Silicon Valley tech organisations are looking more closely at why trucks have jumped ahead of cars in driverless technology.
  • Software companies are also looking at the technologies that could be used in passenger cars in future.
  • Uber demonstrated its interest in lorries when it announced the acquisition of Otto, a start-up focused on self-driving technology for trucks.
  • It has been argued that such technology is used on commercial vehicles first, as there is potential for faster ROI.

Read more on The Financial Times

Is the Age of the Tech Unicorn at an End?

Once, every tech start-up wanted to be a unicorn? But could the age of the unicorn be at an end? And what will replace them?

Marben/Shutterstock.com

For the past few years, much of the talk for new technology start-ups has been about achieving the moniker of a ‘unicorn’. Many have tried, plenty have failed, but there are as many that have succeeded.

However, as many people warned, the constant rise of the ‘unicorn’ was always going to come to an end. And even some of the big name unicorns from the past few years have lost this particular title.

So, is the age of the unicorn at an end? And what is coming next to take their place?

Rise of the Unicorn

For those of you still unfamiliar with the term, a unicorn is a technology start-up company, which reaches a valuation of over $1 billion. The companies are characterised by rapid growth, and are generally privately funded, either through VC, or other routes.

The issue with unicorns, one that investors were aware of from the start, is that they are not profitable. Well, at least to begin with. Most unicorns aim to prove concept, and grow market share, before making any money.

Valuations tend to be based on future projections of worth, which is why truly defining a unicorn is tricky. Currently, the Wall Street Journal lists 155 unicorn firms, Fortune 174, and VentureBeat 229.

There are plenty of recognisable names on these lists. Uber, Airbnb, SpaceX and Dropbox, to name but a few. Many of these companies also appear on lists of organisations still considered to be disrupting their respective industries.

It’s probably easier to argue that companies like Facebook and SpaceX, unicorns of the past, have surpassed that title by being profitable in their own right. And profitability, after all, is surely the key.

Pop! Is that a Bubble Bursting?

When we first visited the topic of unicorn organisations a little under a year ago, we did highlight vulnerabilities in this set up. Venture capitalists and their investments are as much susceptible to market changes as any other business.

And given the global uncertainty that has been prevalent in 2016, many investors are looking for safer options. And this decrease in available funding has already seen a major impact amongst unicorns.

The pre-IPO investment firm Sharespost published an analysis in August that concluded that 30 per cent of all unicorns would lose their billion-dollar net worth. Some already have, and some have been pushed down that road in the past 9 months.

Big name companies like Theranos (once a unicorn, now subject of media interest for all the wrong reasons) and Evernote have already had valuations written down. Even Twitter and Uber have lost some of their valuation (though not enough to take them under the magic $1 billion mark).

Rise of the…Cockroach? Really?

Yes, really. Well, if you’re looking for a survivor, it’s well known that cockroaches could probably survive the apocalypse!

It might not be as glamorous a title, or an image, but the cockroaches are here to stay. Cockroach organisations differ from unicorns by having slow and steady growth, a closer eye on spending, and steady profits.

Cockroaches exist where funding doesn’t come as easily, but they can be smaller, more agile, and better prepared for uncertainty. And with smaller budgets, they are regarded as being more creative than their unicorn counterparts.

For investors, this represents a safer option, and a potentially better return in the long-run for them and their clients. While some unicorns will make it, and make it big for their investors, cockroaches are seen as a safer investment, something that is welcome in volatile markets.

Where will we be in another year? Who knows. We can’t predict which companies will still have their unicorn title, and which will be falling back. However, the chances are that the cockroaches are here to stay.

Cockroach or unicorn – which would you rather be involved with? Is the age of the unicorn really at an end? Let us know your thoughts below.

While you ponder that, here are this week’s procurement and supply chain headlines to keep you going.

Bangkok Fire Trucks Belatedly Enter Service

  • A fleet of 176 fire trucks are to finally enter service in Bangkok, a full 10 years after they were purchased.
  • The trucks have locked up in a warehouse for over a decade due to a prolonged legal dispute.
  • The Austrian-made trucks were locked up soon after delivery as part of a wider corruption scandal involving senior government ministers.
  • Due to their age, the trucks require extensive maintenance before they can be put to use.

Read more at The Nation

Self-Driving Delivery Boats to Ply Amsterdam’s Canals

  • The Amsterdam Institute for Metropolitan Solutions plans to use the city’s extensive  canal network to trial a fleet of autonomous boats.
  • The floating robot vehicles will deliver goods and provide driverless transportation for people along the canal network.
  • The boats can also be linked together to provide on-demand bridges and stages.
  • Amsterdam’s research into robot canal boats parallels the proliferation of self-driving cars in the US and elsewhere.  

Read more at The Verge

Amazon Business Hires White House Procurement Head

  • Amazon has hired the former head of the Office of Federal Procurement Policy, Anne Rung, in a bid to increase its sales to government agencies.
  • The role, titled Global Leader of Public Sector Sales, will focus on helping Amazon win government purchasing contracts.
  • Rung will work closely with government buyers to purchase goods and services more efficiently.
  • In her Federal role, Rung reportedly saved taxpayers more than $2.1 billion in procurement spending by reducing duplication.

Read more at B2B eCommerce World 

30 Under 30 Programme Goes Global

  • ISM and THOMASNET.com’s 30 Under 30 Supply Stars programme has returned for its third year.
  • The programme celebrates the achievements of young professionals in Procurement and Supply chain, with the goal of attracting more Millennials into the profession.
  • This year, for the first time, the competition has expanded beyond the US to include nominations from around the world.
  • Judges are looking for multitalented professionals who are influencers and trailblazers in their organisations.

Read more and Nominate at THOMASNET.com

Supply Chain Review Pressure Following Chicken Scare

Public confidence in supermarkets and their supply chains has taken another hit, following a scare about contaminated chicken.

A recent report has found that one in four chicken samples bought from major supermarket chains contain antibiotic-resistant E.coli. The findings are again putting pressure on supermarkets to tighten their supply chain quality assurance processes.

While supermarkets have worked hard to improve supply chain traceability, this report shows there is much work to be done. It also serves to highlight a wider issue in the food supply chain – the use of antibiotics.

There is on-going criticism about the overuse of antibiotics by humans, but use of the drugs on livestock is contributing to increased resistance to antibiotics by so-called “super-bugs”.

Issues Raised in Chicken Testing

The study of chicken samples was carried out by the University of Cambridge. It revealed that from 92 chicken pieces, including whole chicken, thigh pieces, drumsticks and diced breast meat, 22 pieces contained potentially deadly bacteria.

The “superbug” strain of E.coli was found in chicken samples from all leading UK supermarkets, including Tesco, Waitrose, Aldi and Morrisons. Similar strains were found in supermarket pork samples tested in the same study.

The findings raise concerns about the quality of factory farming in the UK, as well as the end-to-end supply chains of the big retailers.

Dr. Mark Holmes, part of the research team that conducted the study, suggested that more resources needed to be put into assessment of antibiotic resistance in animals in the supply chain.

“These results highlight the need for improvements in antibiotic stewardship in veterinary medicine,” Holmes said. “The levels of resistant E.coli that we have found are worrying. Every time someone falls ill, instead of just getting a food poisoning bug they might also be getting a bug that is antibiotic resistant.”

Supply Chain Quality Assurance

Quality control software experts InfinityQS suggest that, while the supermarkets themselves might argue that their quality assurances are sound, the findings suggest this is not the case.

“It’s clear that a disconnect exists across these supermarkets’ supply chains. It’s likely they’ll have stringent procedures in place for their own food traceability, but it’s imperative these are adhered to amongst their suppliers.”

The company suggested that closer relationships with both suppliers and farmers was necessary. This could mean a more pro-active approach to site visits to where they source food from, and understand how they could help farmers to make improvements.

“An effective supply chain process will ensure that controls are in place to manage the necessary people, activities, resources and data throughout the supply chain.

“If done correctly, that product will be delivered with the correct documents, with an agreed quantity, adhering to a set quality standard and all sent at the right time to the right place.”

Antibiotic Overuse Creating Resistance 

The report also serves to highlight the wider issue of overuse of antibiotics in humans and animals. As well as depleting global supplies of antibiotics, systematic overuse is creating resistant strains of potentially deadly bacteria, including E.coli.

It’s predicted that, by 2050, one person will die every 3 seconds around the world from antibiotic resistant bacteria. Globally, 70 per cent of bacteria have now developed antibiotic resistance, including to traditionally ‘last line of defence’ treatment.

It’s estimated that around 40 per cent of antibiotic use in the UK is for animals in the food supply chain. The drugs are frequently given to large groups of completely healthy animals, with the intention of stopping the spread of infections. Mass medication accounts for an estimated 90 per cent of all animal antibiotic use in the UK.

Intensive farming practices, and keeping large groups of animals in close quarters, is to blame for such practices. In such crowded conditions, even one unhealthy animal can have devastating consequences.

However, as farming practices change, and retailers aim to ensure higher animal welfares standards, this issue may be lessened. Retailers have also been urged to pay a higher price for meat such as chicken and pork. This would relieve productivity pressures on farmers, and reduce intensive farming too.

Will this change your dietary habits? How can procurement get more involved in changing the underlying issues? Let us know in the comments below.

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Career Boot Camp Reminder!

The Procurious Career Boot Camp kicks off in earnest this morning with the release of our first podcast! Today, as well as every day for the next 15 work days, we’ll be releasing a podcast at 9:30am (BST).

You can access everything you need to enlist for Career Boot Camp here. If you have any questions, read this, or get in touch.

We’ve been on the look out for all the top stories in procurement and supply chain this week. And here they are…

Bailout Rejection Makes Hanjin Liquidation Likely

  • The chances of a bailout for stricken shipping company Hanjin look unlikely, increasing the possibility of liquidation.
  • The bailout was needed to help the company combat $5.4 billion debts, and allow it to unload cargo at ports.
  • However, with decisions still to be made, the South Korean Government criticised the company for “economic irresponsibility”.
  • The company is conducting sales fund the release of $14 million worth of stock currently stuck on its cargo ships.

Read more at Supply Chain Dive

Sewing Robots to Join Garment Workforce

  • A company called Sewbo has developed a robot that can sew, and intends to replace humans in the garment manufacturing process.
  • The machine uses stiffened, pre-cut garment pieces and feeds them into a sewing machine, before dropping the completed garment into hot water to remove the non-toxic stiffener.
  • Automated clothing production provides a potential solution to labour abuses and sweat-shop conditions in the developing world.
  • However, large-scale automation would also put millions of people in the garment industry out of work.

Read more and watch the video at Engadget

Study Says Petrol Must Be Phased Out by 2035

  • According to a Climate Action Tracker report, the last petrol powered car will have to be sold by 2035 to limit global warming to 1.5 degrees Celsius.
  • A ceiling of 1.5 degrees was the most stringent goal set by world leaders at the Paris summit last December.
  • Current projections suggest that electric vehicles will make up only 5 per cent of the world’s car fleets by 2030
  • This means aggressive measures will be required to shift rapidly away from fossil-fuel powered vehicles much earlier than expected.

Read more at Fortune

“Poor Procurement” To Blame For Detention Centre Cost Blowout

  • Australia’s scandal-ridden offshore detention centres for asylum seekers have come under intense scrutiny once again.
  • An audit of the centres revealed “serious and persistent deficiencies” in the relevant department’s management of the contracts.
  • It identified failures in the open tender process for security, cleaning, catering and welfare services, with costs blowing out from a $351 million contract in 2012, to a current $2.2 billion contract.
  • The report also criticised the original open tender process, and negotiations that took place with suppliers in 2012.

Read more at The Guardian

Time to Panic? Climate Change Driving Coffee and Chocolate ‘Extinction’

Like to start your day with a latte? Make the most of it while it lasts, as climate change threatens extinction of the coffee bean.

No, it’s not scare-mongering. And yes, there are more important things in the world than a daily espresso. However, the possible extinction of the coffee bean could have a wider-ranging, and more devastating, impact than you think.

And that’s not all. Climate change is also threatening a number of other popular foods and drinks, including chocolate, wine and beer.

Climate Change Destroying Farmland

A new report by the Climate Institute has shed light on a number of worrying facts. They argue that, should global warming continue at the same rate, wild coffee could be “extinct” by 2080.

In addition, rising global temperatures, and increasing pests and funghi could halve the available farmland suitable for growing coffee by 2050.

And it’s not just gourmet beans, and your local Starbucks’ supply of arabica beans that are set to be impacted. With a global temperature increase of 3 degrees as a result of climate change, even instant coffee is going to suffer.

Climate change is also causing the spread of pests and funghi to coffee growing areas not previously affected.  Coffee Leaf Rust, a fungus, and the coffee berry borer, a pest, have destroyed crops in South America, and have started to appear at higher altitudes, impacting a greater number of crops.

Coffee – Supply Chains and Livelihoods

Around the world, people drink more than 2.25 billion cups of coffee each and every day. In the UK alone, 70 million cups of coffee are consumed each year. And by 2020, it’s predicted that there will be 21,000 coffee shops around the country.

Coffee is a major export for a number of developing countries. An estimated 120 million people would be impacted by the total extinction of coffee crops. In countries like Burundi, coffee makes up 59 per cent of its exports, while it accounts for 33 per cent of Ethiopia’s.

However, climate change is already taking its toll in a number of other coffee producing countries. In Tanzania, where 2.4 million people work in the coffee supply chain, output has dropped by 50 per cent since the 1960s.

In 2012-13, the spread of coffee leaf rust in South America destroyed 85 per cent of Guatemala’s coffee crop, caused damage worth $500 million across the region, and cost 350,000 people their jobs.

And while some growers can move crops to higher altitudes to mitigate this risk, it’s not an option for small farmers who make up 80-90 per cent of total coffee growers.

Making a Difference

However, there is still time to make a difference and help sustain the livelihoods of the millions of people who rely on coffee for an income.

Helping to reduce emissions is a good place to start. Limiting temperature rises to 1.5 degrees could make a major difference to coffee producers. On your daily coffee run, use a reusable cup – one paper cup has the equivalent carbon footprint to 811 passenger vehicles.

Consumers can also buy brands that give a good deal to small farmers. These funds can then be used to help the farmers adapt their practices and mitigate future risks.

Not Just Coffee…

Sadly for all the foodies out there, coffee isn’t the only crop that is under threat from climate change. Avocados, chick peas, honey, and bananas are all on the food equivalent of the ‘endangered’ list if current trends continue.

And what’s more, chocolate, wine and beer may also be at risk. Chocolate is suffering from over-demand (70,000 more tonnes were consumed than produced last year), and cocoa supplies could be exhausted in the next 16 years.

As for wine, with current temperature rises, an estimated 73 per cent of land in Australia, and all of the Bordeaux region, will be unsuitable for grape crops by 2050.

As consumers it’s time to change our habits, or face running out of some of our staples and luxuries. It’s high time we all make some changes.

Away from a world without coffee, chocolate and wine, we’ve been collecting the big stories in procurement and supply chain this week…

Hanjin Bankruptcy Continues to Disrupt Supply Chains

  • The fallout from the bankruptcy of South Korean shipping company, Hanjin, has continued throughout the week.
  • Despite a US Court granting Hanjin ships access to ports, there are still concerns that delays will create significant bottlenecks for retailers.
  • Companies including Samsung, Hugo Boss, and Nike have all reported having to source alternative logistics options due to shipping delays.
  • Hanjin Group has made an offer of 100 billion won ($92 billion) to help contain supply chain disruptions.

Read more at The Globe and Mail

Australia Asks Chinese Shipping Company to Pay Clean-Up Costs

  • The Australian government has asked Shenzhen Energy Transport to pay $120 million towards the clean-up of a 100-acre area of the Great Barrier Reef.
  • One of the company’s ships ran aground on the southern edge of the reef in 2010 after going off-course.
  • According to the Great Barrier Reef Marine Park Authority, the ship caused severe physical damage and considerable contamination by toxic chemicals, including the now-banned anti-fouling agent tributyltin.
  • Shenzhen is fighting the bill, arguing the costs are unrealistic, and that the Great Barrier Reef is “self healing”.

Read more at Mashable

UK Local Government “Off Message” on Cloud

  • A new report from Eduserv suggests that UK local council procurement teams are “off message” on the Government’s G-Cloud software.
  • Only one in three councils say they have both a cloud IT strategy and a procurement policy which allows them to use G-Cloud.
  • Over 27 per cent claim they have an in-house procurement policy that doesn’t let them use G-Cloud at all.
  • The report has suggested that councils need to bridge the gap between IT and procurement to drive G-Cloud usage.

Read more at UK Authority

Coupa Moves to Register for Public Offering

  • Cloud-based spend management platform Coupa Software has publicly filed a registration statement with the U.S. SEC for an initial public offering.
  • The number of shares to be offered and the price range for the offering have not yet been determined.
  • The company has announced plans to raise $75 million in IPO.
  • Coupa intends to list its common stock on the NASDAQ Global Market under the ticker symbol “COUP.”

Read more at VentureBeat

Reliance on Outdated Tools Hamstrings International Growth

An over-reliance on outdated tools and processes in the supply chain is harming growth, and cutting competitive advantage.

Today’s international business environment is more complex than ever. As this complexity, and volatility, continue to grow, companies need to ensure that processes and tools are up to date. Without doing this, they risk cutting their growth prospects, and erasing their competitive advantage.

Growing global risks, evolving supplier networks, and economic difficulties in key, and traditionally stable, markets all must be factored in. Businesses not taking advantage of Advanced Planning & Scheduling (APS) systems run the risk of much increased costs.

Failure to adapt to new technology also means that companies will be left with limited flexibility to respond to changing market conditions.

Responsiveness and Agility

In the past twelve months, the global economy has suffered from a period of unprecedented, and unheralded, volatility. Events like Brexit, ongoing civil unrest, and the rise of extremist terrorist organisations, have left global supply chains in jeopardy.

Organisations can no longer rest on their laurels and bank on continuing success. Ensuring success in this environment requires robust scenario planning, the ability to adapt quickly to change, and the capability to deal with changing suppliers and business partners.

As many experts have highlighted, procurement and supply chains need to be agile in order to adapt to external changes.

Outdated Tools and Systems

Global supply chain consultancy, Crimson & Co, recently conducted research into the tools and processes organisations were using in their supply chains. At a majority of respondents, they found a continued reliance on outdated tools, and legacy systems.

The research found that over two-thirds of those surveyed still relied upon ERP and spreadsheet systems.

The findings also showed the benefits that an effective APS system could deliver. Respondents highlighted a potential 20 per cent reduction in working capital, 5 per cent increase in service level, 6 per cent reduction in logistics costs, and 3 per cent reduction in the cost of goods sold.

This research has gained more credence in recent weeks, with the bankruptcy of Hanjin shipping, and the associated issues for US retailers.

Failure to Rise to Challenges

Dave Alberts, Director at Crimson & Co, explained:

“A continued reliance upon outdated planning tools like Enterprise Resource Planning (ERP) systems, bolstered by an array of spreadsheets, prevents many businesses rising to these supply chain challenges.

“If supply routes need to change following disaster, or old trade agreements can no longer direct freight transport, businesses leaning on ERP systems can find themselves on the back foot and unable to take advantage of such changes.

“All in all, these outdated tools can result in significantly increased capital and service costs in the case of any changes to the supply chain status quo.”

Alberts also highlighted the need for businesses to update their planning tools in order to remain competitive. Legacy systems inhibit the ability to innovate and improve supply chain processes.

Alberts argues that these companies will likely fall behind more reactive and agile businesses supported by more flexible planning tools.

“There is a clear incentive for businesses to adopt a robust APS system. Through benchmarking of planning and scheduling solutions, companies can quickly work out the systems that need updating and the practices that need improving. They can then work to develop these areas where necessary.

“In most scenarios, the adoption of an APS system can result in reduced overall supply chain costs and greater ability to deal with complex business decisions,” Alberts concluded.

In Search of Your Perfect (Supply) Partner

With an estimated 200 million suppliers operating around the world, how can you be sure you have the perfect partner? Fortunately, here’s where technology can lend a hand.

Recent estimates put the total number of suppliers operating around the world at a staggering 200 million. To put this in context, that’s like having every person in the UK operating a supply business. Three times over.

The risks for procurement in this scenario are there for all to see. With an enormous number of potential suppliers, how do you know you are dealing with the right ones? Are you getting the best deal you could?

And with the suppliers you do have on board, how are you driving contract compliance? As well as being expected to deliver the value in the contracts, procurement needs to ensure that objectives are aligned with internal stakeholders, including the CFO.

Innovation in ‘Tail’ Suppliers

Common thinking in procurement now is that the profession can no longer ignore small- and medium-sized suppliers. By continuing to use the same suppliers, procurement misses out on innovation opportunities, as well as savings opportunities.

Traditionally these suppliers have been dismissed as ‘tail spend’, and ignored in terms of strategy. As we experience a period of unprecedented market change and volatility, procurement is now looking to these same organisations to help drive efficiencies, and competitive advantage.

The other factor procurement must take into consideration is how to measure the risk within their supply chain. One slight issue from a first, second, or even third tier supplier, could have drastic consequences for an organisation’s reputation.

Technology as Competitive Advantage

If organisations want to thrive in increasingly volatile climates, they need to leverage their technology. Effectively using IT capabilities and procurement technology can help develop a competitive advantage.

More and more organisations are streamlining traditional procurement activities, and freeing up resources for strategic projects. The ability to do this, while sourcing and managing suppliers, requires up-to-date IT capabilities and analytics, as well as best in class procurement technology.

Oracle’s aim is to provide its client with complete, open, and fully integrated solutions which help to reduce both the cost, and the complexity, of the IT infrastructure.

David Hudson, Business Development Director at Oracle Cloud Solutions, believes procurement needs to realise that the future is now.

“Delivering the right capabilities for Procurement professionals to drive greater collaboration, process standardisation, increased efficiency at a reducing cost remains a big challenge.

“At Oracle, we aim to help our customers achieve great cost savings and overall value, while reducing supplier risk, and increasing compliance. Technology, such as our Strategic Procurement portfolio, can help to deliver these key benefits, particularly when integrated throughout the process, as part of a modern Cloud solution,” says David.

Build Your Competitive Advantage

Procurious Founder, Tania Seary, has previously stated that, “Today’s supply chain executives must be brave and bold. They are expected to handle cataclysmic events and act with extreme agility.

“There’s one qualification – and I would go so far as to say that it’s the defining qualification for today’s supply chain leaders – that separates the highest performers from the herd. And that’s courage.”

This courage can be bolstered by understanding the role and benefits of technology, especially Cloud software and platforms, in procurement strategy, planning and decision making. By being more informed, procurement leaders can make these bold decisions, and ensure they are staying ahead of the competition.

Web

To find out more on how procurement can better manage risk and complexity, and integrate technology to help them thrive in a changing world, join Tania Seary and David Hobson for a free webinar on 7th November. Find out more information and register here.

Give Your Career a Cardio Boost With Procurious’ Boot Camp

Do you want to add more value to your organisation? Do you dream of being a CPO? Then Procurious’ Career Boot Camp is for you!

Calling all procurement and supply chain professionals! Are you impatient to add more value to your organisation? Do you dream of becoming a Chief Procurement Officer (CPO) in the future?

With globalisation and technological change disrupting every aspect of our profession, making time to update your skills can catapult you up the ladder.

Get Your Career in Shape

According to Deloitte’s third annual Global Supply Chain Survey, individuals with leadership acumen are in especially high demand.

79 per cent of supply chain executives surveyed by Deloitte said it was very important or extremely important for new hires to have leadership and professional competencies (to help with change management, problem solving, etc.).

In response to this need, Procurious is launching a free, exclusive 15-day Career Boot Camp programme to help high-achieving professionals around the world get in the best career shape of their lives, and upgrade their skills while on the go.

Starting the 19th of September, Boot Camp will feature a short, daily podcast, from a selection of top procurement leaders and business influencers.

But, individuals who wait will lose out! Each podcast will be available for just one day before being replaced by the next one in the series.

Listen, Learn, Discuss – and Advance!

The podcasts will showcase a variety of topics, from being your team’s MVP and networking your way to the top, to incubating your big ideas, all designed to give participants a career cardio boost.

Coaches include:

  • Tom Derry, CEO of the Institute for Supply Management
  • Chris Sawchuk, Principal & Global Advisory Practice Leader, The Hackett Group
  • Dr. Tom Verghese, Principal and Consultant, Cultural Synergies
  • Stuart Brocklehurst, Chief Executive, Applegate Marketplace Ltd
  • Gabe Perez, Vice President, Strategy & Market Development, Coupa Software
  • Sigi Osagie, author, ‘Procurement Mojo’
  • Jon Hansen, co-author, ‘Procurement at a Crossroads’

And that’s not all! Each podcast will be accompanied by a blog article, and vibrant group discussions on the Procurious website.

We’ll also be hosting other articles and thought leadership pieces on every aspect of your career. Plus, we’ll be asking our senior procurement leaders to share the benefits of their career experience in our ’60 Seconds With…’ article series.

Build Your Workout Plan

The key thing to remember is that you can make Boot Camp fit to your schedule, and work for you. The beauty of Boot Camp is that it’s an entirely digital experience, which adds to Procurious’ current eLearning and skills development opportunities.

“The next generation in procurement needs to take the responsibility for their professional development into their own hands,” said Tania Seary, Founding Chairman of Procurious.

“Online learning is the fastest and easiest way to give yourself the skills you need. Just a few minutes a day can make the difference between standing still, or moving quickly into more impactful roles.”

So come on, don’t get left behind by your peers and colleagues. Build your personal workout plan, and get fit to meet these leaders’ needs! If you’re new to Procurious, try one podcast. If you’re a Procurious member, sign up for the whole programme!

Take a step toward your next promotion by registering for Career Boot Camp today.

How to Realise and Unlock the Benefits of Supplier Diversity

New research has revealed the benefits organisations can realise by having a top-performing supplier diversity programme.

Supplier Diversity Programmes

Full Benefits of Supplier Diversity Not Yet Achieved

Historically, supplier diversity programs have focused on a narrow combination of meeting government spend requirements, and participating in corporate social responsibility initiatives with under-represented communities.

For example, survey respondents in The Hackett Group’s 2016 Supplier Diversity Study report that their most important objectives are:

  • Improving the corporate image in the marketplace;
  • Supporting corporate culture around diversity and social responsibility; and
  • Complying with regulatory requirements.
Objectives for Supplier Diversity Programmes
Critical Objectives For Diversity Programmes

However, companies are starting to realise that they will not achieve maximum benefits from supplier diversity programs if their objectives stop there. In fact, by expanding the goals and activities of these programmes, organisations can gain access to new markets, innovative supplier partnering practices and avenues for improved corporate branding.

Several hurdles can prevent procurement organisations from obtaining the necessary support to invest in a supplier diversity programme. Often, business leaders worry that dedicating resources will ultimately mean sacrificing procurement savings.

However, The Hackett Group’s research suggests that not only do procurement organisations with top-performing programmes experience no dip in efficiency, but they extract even more benefits from the programme.

For example, 23 per cent of diverse suppliers often or greatly exceed buyers’ expectations and the majority of remaining diverse suppliers are meeting expectations.

Supplier Diversity Expectations & Ranking
How Diversity Suppliers Rank Against Buyers’ Expectations

Top-Performing Organisations Take Strategic Approach to Supplier Diversity

Supplier diversity is evolving from a check-the-box corporate social responsibility requirement, to a strategic enabler providing access to new and innovative products, and increased market share in new and developing communities.

Top-performing companies recognise this and have begun working toward achieving a broader range of benefits from their programmes. Successful ones typically address three areas: global expansion, supplier partnering and reputation management.

Global Expansion

Supplier diversity programs usually start small and then grow in terms of domestic volume and geographic reach. Our survey found that 76 per cent of organisations have diversity programs that are currently limited to the domestic (U.S.) market.

Of this group, 40 per cent plan to expand their program globally in the next two to three years. Global expansion of supplier diversity brings additional benefits, including investment in global economic development and improved relationships with local suppliers and their communities.

Organisations should be sure to engage the appropriate partners before designing a global expansion of their programme. This can include corporate diversity groups and third-party diversity organisations.

Supplier Partnering

Supplier partnering is the process of developing and enhancing relationships with suppliers. Small and minority-owned businesses can be the source of added benefits, including cost savings, process improvements and product innovations.

Investing in the development of local suppliers helps build productive relationships and prepares suppliers to be successful partners. Buyers should also identify candidates for strategic partnerships.

While this is frequently the most immature area of supplier diversity programs, benefits can be significant.

Reputation Management

Developing a strong reputation for dedication to supplier diversity can result in increased market share and talent retention. There are multiple channels available to facilitate a clear and positive message regarding supplier diversity, including both internal- and external-reaching activities.

Procurement groups should look for reputation management opportunities that align with corporate objectives to increase collaboration between groups.

Organisations with strategic reputation management practices typical utilise some combination of social media and local, in-person interactions to interact with stakeholders and communities.

Programme Objectives Must Come from the Highest Levels of the Company.

Top-performing supplier diversity programs are developed and planned with substantial guidance from executive leadership.

Leaders of supplier diversity initiatives should make it a priority to create a culture supportive of diversity and inclusion, not just in procurement, but throughout the enterprise.

All diversity objectives, including supplier diversity, workforce diversity, and community and market interaction, should have the same strategic objectives in order to take advantage of a larger network and create a more collaborative workplace.

Laura Gibbons is a Research Director for The Hackett Group’s Procurement Executive Advisory Program. She has industry and consulting experience in areas such as purchase-to-pay, strategic sourcing, payment strategies, and organisational and process design. You can contact her on Procurious or via email.

Learn more about Hackett’s Procurement Executive Advisory Program here.

Bankruptcy Spells Supply Chain Trouble on the High Seas

Global supply chains are sailing into troubled waters again this week following the bankruptcy of a major shipping firm.

A storm is brewing on the high seas for global supply chains thanks to the latest issue for the global shipping industry. One of the world’s largest shipping firms has filed for bankruptcy, having lost support from its national banks.

Hanjin Shipping, South Korea’s largest shipping firm cited debts totalling $5.4 billion, following a long period of financial distress. It is the largest container line bankruptcy in history.

The bankruptcy comes at a time of major strife in the global shipping industry. A combination of oversupply of ships, and an undersupply of cargo, has led to a raft of mergers, acquisitions, and cost-cutting exercises.

Seized Ships and Stranded Cargo

Hanjin currently owns and operates nearly 100 cargo vessels, as well as a further 11 ports. The ships move an estimated 25,000 cargo containers across the Pacific every day.

As a result of the bankruptcy, Hanjin has stopped accepting new cargo from customers, while the situation spells trouble for those ships already in transit to and from Asia.

Dozens of ships have been denied entry to ports in North America and Asia, including South Korea’s largest port, Busan. This is due to concerns that the company wouldn’t be able to pay fees for loading and unloading of vessels.

In China, 10 ships operated by Hanjin have been, or are expected to be seized, on behalf of creditors. This is in addition to another vessel seized in Singapore earlier last week.

The South Korean Government has stated that it will start help to prop up the company, a move that will enable it to stop ships and other assets being seized. However, it is unlikely to save the operator, with experts stating that Hanjin will struggle to recover from losing both its business and reputation.

Unhappy Holidays

The company’s bankruptcy has opened the door for other operators to pick up the slack. However, the situation stands to make life more difficult for retailers, with holiday season shipping on the horizon.

Manufacturers are being forced to look for new routes for a number of products, while on some major trans-Pacific routes, shipping costs have jumped by up to 55 per cent. There are further concerns about the potential knock-on effect further down the supply chain.

Rising transportation costs, delays, and a reliance on Hanjin as a freight carrier, could push other trucking and logistics firms out of business too.

Retail Woes Continue

All of this is set to have a major impact on US retailers in the lead up to the traditional holiday season. Retailers are anticipating a two to three-month delay on the arrival of South Korean goods being transported by Hanjin.

Concerns about the impact on the US economy has prompted The National Retail Federation to ask the US Government to intervene.

“Retailers’ main concern is that there [are] millions of dollars’ worth of merchandise that needs to be on store shelves that could be impacted by this,” said Jonathan Gold, the group’s vice president for supply chain and customs policy.

The situation is the latest in a long line of shipping-related trouble for US retailers. In early 2015, a strike by West Coast port workers saw ships similarly stranded, causing months’ worth of delays.

Whether the impact this time around will be as great remains to be seen. Should cargo be released soon, retailers may not suffer as much as expected. However, irrespective of how long the delays are, it’s sure to test the resilience of major global supply chains.

Are you impacted by the Hanjin bankruptcy? Do you have contingencies in place to mitigate the delays? Let us know in the comments below.

Away from the high seas, we’ve been hunting down the top procurement and supply chain headlines this week… 

Fire Closes Gap Distribution Centre

  • Gap Inc.’s main distribution centre in Fishkill, New York State, has been shut down after a massive fire damaged the premises.
  • All employees were safely evacuated, and investigators are working to understand the extent of the damage and cause of the fire.
  • The clothing and accessories retailer has launched contingency plans to move product through its North American network of distribution centres.
  • However, there are concerns that the disruption will create a bottleneck ahead of the upcoming holiday season.

Read more at MarketWatch

DHL Trials Augmented Reality Glasses

  • Logistics giant DHL is to roll out a UK trial of “vision picking”, following a similar trial in the Netherlands.
  • In “vision picking”, warehouse operatives are equipped with advanced smart glasses which visually display where each picked item needs to be placed on the trolley.
  • The company expects that having a hands-free augmented reality display will increase productivity, decrease error rates and improve employee satisfaction.
  • The augmented reality trial is part of DHL’s move towards “Industry 4.0”, which includes testing technologies including robotics and the Internet of Things across the supply chain.

Read more at Logistics Manager

GE Acquires Supply Chain Software Company

  • GE’s Transportation division has announced the purchase of supply chain software company, ShipXpress.
  • GE said the acquisition of the cloud-based software developer would expand its portfolio into the logistics value chain.
  • The company also sees this as a way of increasing its ability to deliver information and transaction services for railway customers around the world.
  • GE Transportation President & CEO Jamie Miller said the acquisition would “deliver the industry’s most advanced, scalable cloud-based solution to accelerate the movement of goods and information”.

Read more at Railway Gazette

SpaceX Explosion Threatens Launch Programme

  • A SpaceX rocket has exploded during a test, destroying the rocket and the satellite it was due to launch.
  • The explosion happened while the rocket was being fuelled, but that the cause of the blast is still unknown.
  • The rocket was due to carry a Facebook satellite into orbit, aimed at providing internet connection to Africa, the Middle East, and Europe.
  • The explosion could delay the launch of its programme to carry American astronauts in the future.

Read more at CNN Money