Tag Archives: procurement news

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.

coffee climate change

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.

Outdated Tools

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.

Perfect Partner Suppliers

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.

Hanjin Shipping Bankruptcy

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

Taxi! Have Google & Uber Been Pipped to Self-Driving Cabs?

A number of major companies are developing self-driving taxis. But have they been pipped to the post by a Singaporean start-up?

Self-driving Cars - nuTonomy

Over the past few years, a number of organisations have been in a race to develop, and launch, self-driving vehicles.

Google and Ford have both entered the market for self-driving cars, while Uber has been more active in the taxi market. It’s even rumoured that Apple are set to join the competition in 2021 with ‘Project Titan‘.

But it appears that they have all lost the race to put a car on the road to a small, US and Singapore-based start-up.

Self-Driving Taxis in Singapore

nuTonomy was founded in 2013 by two MIT researchers, Karl Iagnemma and Emilio Frazzoli. It has both a US and a Singapore base of operations.

On Thursday last week, nuTonomy started a trial of its self-driving taxis in the business district in Singapore. The company is starting its test with just six cars, but hopes to double this number by the end of the year.

However, the timing of the test makes Singapore officially the first country to allow autonomous, self-driving cars on its roads.

Passengers in the business district will be able to hail the cabs using a smartphone app. In the early stages at least, nuTonomy engineers will be sitting in the vehicles, partly to monitor performance, but also to take over driving if needs be.

Significant Market Developments

The nuTonomy testing marks a significant development in the self-driving car market. Ford has made large investments in new technology companies, and increased its development team in Silicon Valley.

This is all part of the company’s ‘Ford Smart Mobility‘ plan, which aims to make Ford a leader in autonomous vehicles, particularly those for ride-sharing.

Uber have also confirmed that they will start testing of autonomous taxis in the coming months in Pittsburgh. As with nuTonomy, cars will be hired via their smartphone app, and a driver and engineer will be in the vehicle too.

However, there are questions about how much autonomy the cars will be given on the Pittsburgh streets. Experts have pointed out that there are still limitations behind Uber’s, and other companies’, vehicles, and that completely self-driving cars are still a way off.

“The reality is these cars will be closely supervised systems because it doesn’t matter if they are 80 percent self-driving or 99 percent self-driving, you will still need a human involved for the bit that is not,” says Bryant Walker Smith, an assistant professor of law and engineering at the University of South Carolina.

Significant Issues to Overcome

It raises an interesting question as to when truly driverless vehicles will be on the road, and on the market. There still appears to be a number of issues that must be overcome before this can happen.

As one article from The Register points out, no matter how advanced the technology has become, there are still glitches. While the rules of the road are common nature for many of us, it takes a lot longer to programme this into a computer.

Google’s self-driving cars are prone to be confused by traffic lights (or things that look like them), poor road markings, and glare from sunsets. Junctions, cyclists, bad drivers, and adverse weather conditions also create issues that need to be solved.

And, of course, there’s no accounting for human interactions. Tesla have recently been forced to tweak the definition of their ‘Autopilot’ software to a “driver assist function”. This comes after confusion that it was actually a self-driving function you might find in an aircraft, or science-fiction movie.

There is an argument that people want a self-driving car that doesn’t require them to have any input. But, without the technology to support this, there will be a reliance on some level of human interaction for some time yet.

Would you be happy to get into a self-driving taxi? Or buy a self-driving car? What would be holding you back from taking this journey?

In a week full of scandal in the procurement press, we’ve been scouring the headlines for the hottest topics…

Major US Retailer to Investigate Fake Cotton Claims
  • Major US stores are investigating if bedsheets and pillowcases are made from non-Egyptian cotton despite being labelled as such.
  • The investigations follow Target’s severance of ties with large textile manufacturer Welspun India.
  • Walmart, Bed Bath and Beyond, Costco and Macy’s are all supplied by Welspun India.
  • Welspun has announced the appointment of an external auditor to audit supply systems and processes.

Read more at the Chicago Tribune

Australian Companies Embroiled in Foreign Bribery Scandals
  • Two major Australian companies have been implicated in bribery scandals relating to foreign contracts.
  • Staff from mining company, Sundance Resources, have allegedly bribed the leader of the Democratic Republic of Congo to secure approval for a major iron ore project.
  • Additionally, Snowy Mountains Engineering Company staff allegedly bribed officials to secure a $2.3 million sewerage project in Sri Lanka, and a $2.2 million power plant project in Bangladesh.
  • The list of Australian companies implicated in foreign bribery continues to grow, with recent allegations implicating Tabcorp, Leighton Holdings and BHP Billiton.

Read more at The Age

Safety fears as Mylan Hikes EpiPen Prices

  • Pharmaceutical company Mylan is under intense scrutiny after raising the price of its epinephrine delivery system, the Mylan EpiPen, from $57 to over $500 in the US.
  • Mylan acquired the EpiPen auto-injector in 2007, but has only recently raised the price after the demise of its competitor Auvi-Q.
  • The single-use EpiPen delivers approximately $1 worth of epinephrine per injection. 
  • Commentators fear patients will stop buying the EpiPen, opting instead to inject by syringe. This risks an incorrect dosage or accidental injection in a vein, which can be fatal.  

Read more at Forbes

Fire Services Told to “Collaborate” on Procurement
  • The UK Government has told fire authorities across the country that they need to collaborate more on procurement.
  • It comes after a report that many authorities are paying vastly different sums for similar items.
  • The government said in a statement it was “determined to help authorities adopt a collaborative approach”.
  • This is the first time nationwide statistics on fire authority procurement have been released.

Read more at Supply Management

Procurement Goes Cloud-Based To Mitigate Risk

Many procurement professionals aren’t taking all available routes to mitigate risk in overseas transactions. Cloud-based solutions can change this.

Mitigate Risk

A high percentage of procurement professionals aren’t doing everything in their power to mitigate risk when trading with overseas countries, according to an Australian fintech startup.

Trade with international countries can be fraught with issues, warns Hugh Young, General Manager at Octet.  And while there are tools on the market to help mitigate risk, there are plenty of major companies that continue to trade without any kind of secure platform in place.

Mitigate Risk – Know Who You’re Dealing With

Young says that, to start with, it’s critical that you know who you’re dealing with. “It’s critical that anyone dealing with China and ordering meaningful volumes actually goes and visits the supplier on their own turf, which is a lot different to meeting them at a trade show,” he says.

He also adds that nothing can replace the peace of mind that comes with actually seeing the factory you plan to do business with. This helps to get get a clear picture of their production processes, something that’s paramount to mitigating risk.

Another thing for companies to consider is the importance of maintaining the professional relationship, and visiting at least once a year. Some businesses have chosen to engage quality control agents in China, or other countries, which is also worth considering.

Fraud Risk in Exports

“The other major issue is fraud risk. Quite often Chinese exporters are SMEs and they’ll require a company to pay a large balance to be able to finance the manufacturing of the goods for you.

“But we don’t recommend agreeing if they’re asking for the balance to be paid before the shipment has left China. The risk of fraud is too high. It’s also possible for these suppliers to go out of business, taking your money with them,” warns Young.

Another common issue is the exporter deliberately uses a related company bank account, which looks almost identical to the other one. This can cause confusion for procurement, and could mean money is paid into an account that isn’t the exporter’s at all.

Businesses must also be sure to carefully check bank account details, and the names on all of the invoices they’ve been sent. At all times, individuals must check the documented supplier paper trail carefully.

Don’t Get Caught With Hands in the Cookie Jar

While some companies have created their own secure online platform to mitigate risk, many others are leaving their company exposed by not utilising one of the myriad existing secure platforms on the market.

“The world is in a cloud environment. Procurement professionals need to catch up, and implement something that’s going to protect them and their company’s reputation. Everything is shifting toward a secure platform over the coming decade.”

Young says that it’s only a matter of time before something goes wrong for those not utilising a platform.

“The procurement department only needs to get their hand caught in the cookie jar once for the mud to stick,” he says.

Connecting Customers & Suppliers

Octect GM, Hugh Young
Octect GM, Hugh Young

Meanwhile, Octet has partnered with Chinese bank Asiafactor to provide SMEs with a global payment platform. The company will now connect its customers across China to more than 10,000 suppliers around the world.

The partnership means Octet can cater to both existing domestic small to medium enterprises, as well as a range of prospective exporters throughout China.

Octet has also been working with Westpac to offer Australian businesses a platform to facilitate overseas credit card payments. The platform supports 10 foreign countries, and is the first platform of its kind for Australian banks.

Octet is a supply chain management and financing platform that enables people to manage and pay international suppliers. 

The platform is utilised by more than 1,000 Australian and New Zealand importers, spanning more than 60 countries, and facilitating over $1 billion in transactions. Suppliers include Unilever, L’Oreal, Mars, BlueScope Steel and packaging giant Visy.

Construction Supply Chain Skills Shortage at Breaking Point

An acute skills shortage in the construction supply chain is impacting both budgets and the quality of projects. 

Construction Skills Shortage

A new survey from the Scape Group has highlighted the impact of the skills shortage in the UK construction industry.

The ‘Sustainability in the Supply Chain’ report surveyed over 150 contractors, subcontractors and senior managers at public sector organisations. It also examined supply chain stability, the tendering process and reliance on the public sector.

The report suggests that the skills shortage has impacted quality and budgeting of projects across the UK.

Skills Shortage at “Breaking Point”

One of the key concerns raised in the report was in the quality of the workmanship being seen projects. 58 per cent of contractors and suppliers cited a negative impact on quality.

However, when assessed in the public sector, a staggering 85 per cent of managers said they had seen a drop in quality in their projects.

Beyond quality, many respondents also saw the skills shortage as having a negative impact on budgets. Both public sector (80 per cent) and contractors (40 per cent) highlighted the difficulty of keeping within budget. The shortage of skilled workers has led to many bricklayers earning up to £1,000 per week.

Mark Robinson, Chief Executive at Scape Group, commented that although the impacts of the skills shortage were clear, there were basic steps that could be put in place to mitigate it. This could include the introduction of apprenticeships schemes, something that many contractors in the construction industry still do not have.  

The Private/Public Juxtaposition

The report also highlighted the huge division between public and private sector definitions of a “healthy” supply chain. Private sector organisations stated that long-term operational stability was their core aim (72 per cent), as well as with minimising waste and recycling (63 per cent) and supporting local economies (58 per cent).

However, only 63 per cent cited stable employment patterns as key to having a healthy supply chain.

This is in stark contrast to public sector organisations, where 70 per cent felt that long-term benefits for the local economy needed to be the highest priority. Furthermore, 67 per cent believed that local skills and suppliers were core to a healthy supply chain too.

Another key finding in the report was the challenge of communication between the public and private sectors. Both sides (75 per cent of suppliers; 80 per cent of public sector managers) believed that the public sector needed to do more to engage with its supply chain.

This included giving greater visibility of upcoming projects, and enabling contractors to start bidding up to 18 months in advance of contracts starting. SMEs in particular felt they needed to be more informed about projects. It was felt that this could be addressed by using digital platforms, and setting up regular forums for communication.

Report Recommendations

The report concluded by making some recommendations on what needed to be done in the construction supply chain.

1. Addressing the Skills Shortage

The skills shortage was seen by the vast majority of respondents as the most serious barrier to growth and efficiency within the industry. While there has been a drive to increase apprenticeships, it was agreed that more needs to be done.

Diversity and the gender gap was also highlighted as a barrier. Many felt that more needed to be done to ensure that more opportunities were made available to young men and women, from a range of backgrounds. These could be communicated via education programmes, support by social media.

2. Forward Visibility of Projects

SMEs face a challenging environment in the construction industry. It was felt that this could be helped by making tenders public more than 18 months in advance. This would allow SMEs to plan ahead, form relationships, and would ultimately allow for more stable employment patterns.

3. Greater Collaboration

Greater public sector engagement with suppliers, especially SMEs, will create a stronger supply chain and support efficient delivery. However, there is a mismatch between what the public sector believes to be important, and what the industry believes is necessary.

Consistent and forward looking digital communications, driven by government, would make it easier for the public sector to engage with SMEs. It would also help to make information about opportunities more accessible.

4. Local Spend & Social Value 

The public sector, by its very nature, must deliver greater social value through its supply chain. This is balanced alongside the increasing pressure to deliver savings and achieve more with less.

The supply chain is the vehicle through which the public sector can deliver this extra value, and there are greater opportunities for those who understand this key aspiration.

Do you work in the UK construction industry? What needs to be done to alleviate the skills shortage? Let us know in the comments below.

Need a conversation starter for Monday’s tea break? Here are the top headlines from procurement and supply chain this week.

Californian Wildfire Cuts Off Key Freight Corridors
  • A fast-moving wildfire has engulfed 30,000 acres in a single day across the state of California.
  • The “Blue Cut” fire has closed the main highway connecting Los Angeles and Las Vegas, and shut key freight rail routes.
  • Road and rail shippers moving goods through the area have experienced disruptions and forced detours, with delays of 36 to 48 hours.
  • More than 80,000 people have been ordered to evacuate the region, and 34,000 homes are threatened by the fire.

Read more at JOC.com

Spotlight on the Seafood Industry
  • A study of seafood served across 700 stores and restaurants in the US has found that one out of three fish are mislabelled, with unethical suppliers substituting lower-cost fish for pricier ones.
  • Once filleted, it is extremely difficult to tell different species of fish apart, meaning customers can easily be misled.
  • Federal regulators in the US have launched the Seafood Compliance and Labelling Enforcement program in response, using a genetic database to test imported fish.
  • The seafood supply chain is acknowledged to be one of the most complex and opaque supply chains in the world, with very little visibility of illegal fishing, country of origin or even species of fish.

Read more at The Daily Meal 

Nike Alliance Purchases Apparel Suppliers
  • Nike Inc. has formed a supply-chain partnership with private-equity firm Apollo Global Management.
  • The partnership comes in response to ongoing logistics issues that have seen product delays for Nike.
  • The alliance has purchased existing Nike apparel suppliers operating in the USA and Central America to create more “vertical integration” in the supply chain.
  • Last year Nike opened a distribution centre in Memphis, and the new alliance has purchased the warehousing and logistics business ArtFX.  

Read more at Market Watch 

Patagonia Rebuilds Wool Supply Chain
  • Apparel company Patagonia is rebuilding its supply chain to ensure the highest animal welfare standards.
  • The company has spent a year with suppliers and experts writing its own supply chain standards, in order to ensure that suppliers follow them.
  • Meeting with farmers and suppliers helped to ensure that the standards were both robust, but relevant too.
  • The company is expecting to ensure both quality and welfare standards in light of increasing public scrutiny of supply chains.

Read more at The Wall Street Journal

Can We Agree to Stop Calling Them “Soft Skills”?

How did soft skills become to be known as this? And does calling them this underplay their importance in the modern procurement world?

House - Soft Skills

The English language is full of misnomers. Just ask the killer whale (actually a dolphin), or the horny toad (actually a lizard). Once a word or phrase has entered common usage, it’s near-impossible to change it, even if the population generally understands that the term is misleading.

Which brings me to “soft skills”. I work for an organisation that provides training for procurement and supply chain professionals. As such this is one of the terms that I hear bandied about many times a week.

My argument is that defining this skill-set as “soft” actually devalues an essential part of every procurement professional’s toolkit.

To quickly summarise, soft skills are those used in dealing with other people. These include skills such as communication abilities, language skills, influencing skills, emotional empathy, and leadership traits. In contrast, “hard” skills – such as tendering or IT competencies – are readily measurable and (importantly) easier to train.

How Did They Come to be Called Soft Skills?

I’d be interested to hear if anyone has been able to pinpoint the first usage of this term.

The concept has been applied to business environments since at least 1936, when Dale Carnegie’s famous self-help book ‘How to Win Friends and Influence People was published. Carnegie’s work, which has sold a phenomenal 30 million copies to date, is essentially the definitive guide to soft skills. However, it stops short of actually using these words.

Recently, there seems to have been an explosion of articles and training courses focusing on soft skills, particularly in procurement. My theory is that procurement – having moved from back-office to business-partnership status only a decade or so ago – is, in effect, late to the soft skills party, and is currently playing catch-up.

It’s possible that the term “soft skills” simply came about as an antonym to hard skills. Perhaps it reflects the “softly-softly” approach, where managers choose to influence, rather than confront, and to make suggestions, rather than issuing orders. Whatever the reason, I believe it’s a misleading term due to the other connotations of “soft”.

These Skills are Anything But Soft

To my ear, “soft” means easy, pliable, or yielding readily to pressure. Yet a procurement professional with excellent communication abilities, who is adept at reading people, will be a “harder” opponent in negotiations, than a colleague lacking these skills.

Similarly, the connotation with “ease” is deceptive when it comes to trying to train for skills like change management or leadership. And quantifying the results of that training is more difficult still. Hence we’re hearing more and more that employers are hiring people based on their attributes (cultural fit, communication skills, willingness to change), recognising that hard skills can be easily picked up later on.

This has changed the approach recruiters are taking in job interviews. There is now less emphasis on hard skills, and more behavioural questions about how you would react in certain situations.

It’s worth considering whether, in the future, soft skills will become so vital, they’ll become a requirement for procurement roles. That situation already exists in some professions. Look at Medicine, where aspiring doctors are interviewed for qualities including maturity, communication, the ability to empathise and collaborate. Hugh Laurie’s Dr House, with his acerbic bed-side manner, would in reality never have gained entry into medical school, no matter how brilliant he was.

There’s a school of thought that when it comes to soft skills, you’ve either got it, or you don’t. Soft-skills training, therefore, is ineffective because you can’t change someone’s personality. Personally, I disagree because I’ve witnessed colleagues who have worked hard to develop skills like effective listening. There’ll always be hard cases, but the days of people dismissing these skills as “fluffy” or otherwise useless are over.

Three Alternative Names for Soft Skills

As I wrote at the beginning of this article, it’s nigh-impossible to change a term once it’s in common usage. However, if professional organisations, training providers, and the like, were to phase out the words “soft skills”, and call them something more accurate instead, we might see this phrase begin to disappear.

Here are three suggestions for a more accurate description of “soft” skills.

1. Essential skills: I’ve borrowed this one from ISM CEO Tom Derry, who also isn’t a fan of the term “soft skills”. Tom used the term “essential skills” when launching ISM’s Mastery Model to describe the many interpersonal attributes required on the journey to achieving accreditation.

2. EQ: “Emotional intelligence quotient” is the technical term for soft skills. I like this term simply because it contains the word “emotional”, which pretty much sums up what soft skills entail. Calling it a “quotient”, however, raises the argument that EQ, like IQ, is something you’re born with, and can’t be improved upon.

3. People skills: The simplest, and possibly the most accurate alternative for soft skills is “people skills”. After all, every one of these skills involves dealing with people, while hard skills can generally be put to use sitting alone at your computer.

If you have other suggestions, or already use a different terminology in your workplace, please add a comment below!

Need help with your people skills or EQ? Want to get your procurement career in shape? Stay tuned on Procurious in September for our Career Bootcamp. More information coming soon!