Tag Archives: risk management

World’s Deadliest Supply Routes: Antarctica

Are you responsible for sending your people into danger? In a new Procurious blog series, The World’s Deadliest Supply Chains, we investigate the most high-risk supply chains out there…

By Thelma Amaro Vidales / Shutterstock 

The sight of 1900 rolls of toilet paper would not usually excite your typical urban dweller, but when the consignment supplies a remote Antarctica camp of 350 people for the whole winter it’s a case of unfettered joy and – of course – relief.

The most essential of household essentials was among the 3000 tonnes of provisions and equipment delivered by the chartered US vessel MV Ocean Giant to New Zealand’s Scott Base in January.

The supply drop – which can take up to nine days to unload – included 200 kilograms of coffee beans, 100 cans of peaches, a Toyota Landcruiser, two rowing machines and a triple-glazed window.

According to Antarctica New Zealand logistics manager Paul Woodgate, organisers need to think of everything the isolated community might need, including spare parts for water plants and heaters.

“We need supplies to keep the base clean, everyone fed and warm, and the water flowing,” he told Maori Television.

While routine, MV Ocean Giant’s delivery trip reflects the enormous task of supplying myriad human needs to the frozen wilderness.

While Antarctica might be known as the Lonely Continent, human activity abounds with no fewer than 36 permanent scientific and research bases operating there. In the summer months, many smaller facilities spring up too, all needing to be supplied by the mother camp.

Dangers lurks underneath every crevasse and ice flow, in an environment in which temperatures can fall to minus 90 degrees and winds can howl at more than 300 kilometres an hour.

As with Mt Everest, dozens of people have died on Antarctica’s icy expanses over the years – not just derring-do explorers but workers charged with ensuring the bases are supplied with thousands of items that city folk take for granted.

In 1976, 11 Argentinean airmen were killed when their plane crashed on a reconnaissance mission over Drakes Passage. In a tragic postscript, a helicopter dispatched to recover the bodies also crashed.

In 1971, a Hercules C-130 made a forced landing on a re-supply run to McMurdo Station (the US base on Ross Island that hosts Antarctica’s largest community).

No-one was injured. But the overseers of the US Antarctica program did their sums and realised that salvaging the aircraft would cost $US10m, compared with the $US38m replacement cost.

Seventeen years after it went down, the Hercules was fitted with skis, flown out and pressed into service once again. A testament, indeed, to the durability of the so-called ‘workhorse of the skies’.

As with the Argentinean incident a decade previously, the mission did not have a happy ending: in December 1987 two US sailors died when a different Hercules crashed, while conveying spare parts to the refurbished plane.

These days, the supply chain is made safer with technological advances such as GPS positioning, powerful ice breakers, carbon-fibre skis, freeze-proof laptops, satellite phones and sealed, all-weather runways.

But ‘safer’ is by no means ‘safe’, with many mishaps happening in more recent years.

In January 2016, helicopter pilot David Wood stepped from his aircraft and straight in a crevasse on the Western Ice Shelf, while on a routine mission to re-supply a fuel cache. He was rescued after four lonely hours, but subsequently died from hypothermia.

His death resulted in criminal charges being laid against Australia’s environment departments and a helicopter contractor.

To mitigate the ever-present dangers of Antarctica, governments are constantly stretching the envelope to make the complex logistics requirements that much safer.

In a breakthrough flight, a Royal Australian Air Force Flight C-17A in September 2017 supplied Davis Station from Hobart and then returned to the Tasmanian capital without landing at the base. The 10,000km round trip was made possible by a difficult mid-air refuelling exercise.

The plane air dropped nine tonnes of supplies – including fresh produce – to the base, which is inaccessible by sea from April to October.

Within the next decade, Antarctica’s logistics needs will only expand as more nations establish a presence there, if only to ‘fly the flag’ or with a view to claiming dibs on potential large oil and gas reserves in the future.

Most notably, China has established three bases and three airfields, reportedly spending more on its Antarctic program than any other country.

Six countries have territorial claims to Antarctica: Argentina, Australia, Chile, France, New Zealand, Norway and the UK.

But the Antarctic Treaty actually covers 53 countries, 29 having “consultative status”, which allows them to carry out research.

With 20 airports dotted around Antarctica, helicopters and fixed-wing aircraft are playing an increasingly prominent role – especially during winter months when sea access isn’t possible and roads on the continent are out of action.

“With more time and advancing technology, carrying goods to remote locations in Antarctica will only get easier,” says the Dubai-based Gulf Worldwide Logistics.

“The logistics industry is preparing for advancement in this continent over the next few years.” But again, ‘easier’ does not imply ‘safer’ and logistics operators perennially need to be alert to the dangers. Like the Emperor penguins, Antarctica is not the type of wild environment that can ever truly be tamed.

If you’d like to read additional related content or get involved with thought provoking discussions check out the Supply Chain Pros group – a one stop shop for all your supply chain need


How To Seize The Opportunities and Manage The Risks

Where supply chains are already complex, increased visibility throughout the supply chain and closer monitoring of risk are becoming more common…


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In 1992, Yoshihiro Francis Fukuyama, the American political scientist and author, published the much-praised The End of History and the Last Man, which suggested that the spread of liberal democracy and free-market capitalism meant that the final and ideal form of human government was now clear and established. He foresaw “the end of history as such.”

It’s clear that 25 years on, life has not quite worked out like that.

The world continues to be as unpredictable as ever, with the rise of unexpected leaders such as President Trump, the emergence of China as a global superpower, Brexit, wars in the Middle East, and many other developments. All we can say about the future is there is still plenty of history left to be written, and anyone who tells you they know what is going to happen is a genius, crazy, or simply a liar.

Look for opportunities

But of course, times of change bring huge opportunities, too. The digital revolution has turned industries upside down, with disruptive market entrants seizing market share. Some incumbents adapt well and others don’t. Emerging markets hold great potential, too, which many western firms have been slow to pick up on. For instance, by 2050, Nigeria will be the third-most-populated country in the world, with more citizens than the United States.

It is also amazing how rapidly the politico-economic situation appears to change today; a few weeks ago, the press was reporting that the United States and Europe were about to enter a trade war. One meeting later, all seems well again, and the “U.S. and EU reach deal to calm trade war fears,” as The Guardian reported.

Where does this apparently ever-increasing pace of change leave the procurement professional and the organisations in which they work?

I’ve previously compared Brexit to the over-hyped “millennium bug” (Y2K) and related challenges stating that unlike Y2K, where there was a defined risk and problem to solve, Brexit poses significantly more uncertainty and therefore perhaps a wider range of risks to review.

That uncertainty is central to the challenge for organisations. We know there will be issues to be faced; tax, customs, and trade complexities, for example. But it is impossible to know yet exactly how Brexit will affect the business environment at the national, sector, or individual company level. So although it might seem tempting, this is not the time for procurement executives (or indeed anyone in business) to pull the blankets over our heads and ignore the situation – the “wake me up when it’s all over” approach, we might call it. The UK was, after all, an independent nation for many, many years before it joined the EU. 

We know life will go on after March 31, 2019!

 Be prepared

Indeed, fortune favors the prepared. Scenario planning, looking at the “what if” questions, is essential for organisations that can see their business being potentially impacted by Brexit. And whatever happens, procurement or supply chain leaders, with their focus on the external world, have a particularly important role to play.

Where supply chains are already complex, increased visibility throughout the supply chain and closer monitoring of risk are becoming more common with the help of leading edge technology including blockchain and “cobots”.  Increased deployment of blockchain solutions, for example, enhances frictionless, secure transactions and smart contracts, minimising paperwork and effort to manage compliance with increased regulations. While it’s early days for blockchain adoption outside of financial services, almost all major manufacturing organisations have ongoing work in this area.

But let’s finish with two key takeaways for procurement leaders based very much on currently available technology. Both relate to areas where digitalisation should continue or even be accelerated to position the organisation well for Brexit and a period of change.

First, make sure your procurement “fundamentals” are in good shape.Digital technology provides the means to do this more effectively than ever: robust vendor master data; visibility on spend and suppliers; and accurate, relevant, timely data about spend and spending plans, suppliers, and contracts. Understanding the supply situation in its widest sense is essential if the organisation wants to be well positioned to handle future change, shocks, and opportunities.

Second, consider the specific need for supply chain risk management to be robust, effective, and dynamic. That covers not just political risks, of course, but also financial risk, reputational risk, “man-made” risk (e.g., labor disputes at supplier plants), or natural disasters. It also needs to consider multi-tier supply chain risk, not just immediate suppliers. Technology is a key enabler here, as well, but organisations need to consider skills and mindset too when it comes to effective risk management.

To sum up, while no one would pretend that there won’t be issues, problems, and costs associated with Brexit, for the UK and indeed other countries, there will be opportunities, too.

SAP Ariba are sponsoring Big Ideas Summit London on March 14th. Sign up now as a digital delegate to follow the day’s action wherever you are in the world. 

A Supply Chain That Never Forgets

How do you retain knowledge and talent and how do you ensure your supply chain team doesn’t forget key information?  Imagine having a supply chain that never forgets…

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At last month’s CPO roundtable in London we discussed the importance of improving diversity and inclusion in the workplace, how to nail your next big career move and how AI is enabling supply chain professionals to add greater value to their organisations.

At this point, supply chain and procurement professionals might be getting a bit impatient with AI. We’ve all heard how this technology is poised to revolutionise the supply chain, but day to day you’re not working in R&D; you’re responsible for P&L. You need the insight across the business and with your suppliers – but don’t have a technical degree.  The obvious question you might be asking yourself is – what’s in it for me and the bottom-line performance of my business?

Roger Needham, IBM Supply Chain Consultant, led an insightful discussion on why AI does matter to supply chain and procurement professionals.

IBM’s $2.47 billion supply chain consists of a 12,000-strong supplier base across 100 countries with 150,000 contracts managed. It’s no mean feat managing the risks associated with such a large-scale operation. So when it comes to AI, Roger argues, it’s not a theoretical concept. “AI has been deployed in IBM’s supply chain over four years and it is delivering real bottom line benefit.”

“What led to AI being directly implemented within our supply chain centered around the trade lane and visible logistics elements and how these impacted the supply chain. You can set up a factory perfectly but if you can’t get the materials you need to it then it’s a completely wasted effort.”

“After a Japanese tsunami disrupted our supply lanes in 2011, we asked ourselves how to get better predictive insights of real world supply chain disruptors. IBM Watson Supply Chain is the result.” AI can help manage unforeseen disruptions by alerting key decision makers and working towards solutions.

In Roger’s experience AI can supply chain teams to learn on a daily basis and to do more with less. From concept to final delivery the platform is developing but as a minimum we have to be able to do more with the same. With AI We don’t need to hire three more people, we can do more with the five we already have. And we are learning every day how to deploy this AI into our supply chain.”

Roger outlined the four pillars of Watson Supply Chain.

  1. Identify and alert – Control towers are able to alert supply chain professionals when something goes wrong
  2. Analyse and understand – Watson is able to analyse the impact of a disruption on the business. How many orders will be affected by a tsunami in Japan and what is the value of those orders? A supply chain that can feedback that critical business data is important.
  3. Interact, Collaborate, Resolve – If there’s a challenge that needs solving, Watson can bring all the relevant people into a virtual room and resolve it quickly, also advising who should be in that room.
  4. Learn and Share – How do you retain knowledge and talent and how do you ensure your supply chain team doesn’t forget things?  If your team encounter a problem that has happened before – you won’t know to resolve it if those involved the first time around have now left the business. You’re effectively starting from scratch. Watson, on the other hand, is like an elephant – it never forgets.

“Human and machine always get a better answer than human alone or machine alone” Ginni Rometty, THINK 2018

“Watson gives the information, and the ultimate decision rests with a human being,” explains Roger. “But an issue is solved with two individuals and three email exchanges with Watson advising versus three weeks to resolve with fifteen people and dozens of emails.”

Putting the D in D and I

In today’s workforce, diversity has become a buzzword, with organisations increasingly communicating its importance through their advertising and core business values.

But what does diversity mean, why is it important, how do you achieve it and, once you have it, what do you do with it?

Joelle Payom, Global Strategic Sourcing & Vendor Management Lead explained that there is an enormous pressure for organisations to hire people that are different. But alongside that moral pressure to ‘do the right thing’ is a very strong business case.

“A UK report revealed that the British economy could be boosted by as much as £24 billion if black and minority talent was fully utilised. When you have a diversified workforce you have a broader [talent pool] who are able to bring different ways of working, different ways of dealing with issues and can provide greater innovation.”

As Joelle points out, there is no point in building a diverse workforce if it is not nurtured into being an inclusive one. “To reap the benefits of a diverse workforce it’s vital to have an inclusive environment where everyone is treated equally, feels welcome to participate and can achieve their potential”

Diversity = The What 

A mix of diverse types of people

Inclusion = The How

The strategies and behaviours that welcome, embrace and create value from diversity

“What I want people to take away is that diversity and inclusion (D & I) is not only for women or for people of different ethnicities or sexual orientation. It is for everybody. D & I, which is much more important than diversity, means that we need to provide each human being with equal treatment in the corporate world. By having an inclusive corporate environment for people we can make a change and improve the way society works.”

Being a business leader

Lucy Harding, Partner and Global Head of Practice, Procurement and Supply Chain at Odgers Berndtson led a discussion on what it takes to get to the top and the qualities that will set you apart from the pack when aiming for the C-Suite.

She advises that ambitious procurement and supply chain professionals put the business first and the function second.

“The biggest reason CFOs go to market [for a CPO or Head of Supply Chain] is because they need a business leader, not a function leader.”

They will assume you can do the mechanics of a procurement or supply chain role and will spend far less time testing these specifics, particularly given that most CFOs aren’t in a position to test technical procurement and supply chain competence. “You should know your stuff and they’ll assume that.”

What a hiring CFO really wants to know is how you’ll apply what you know to their business and how you’ll build a talented team below you. Everyone else on the shortlist will equally qualified, from a procurement and supply chain perspective, so it’s about differentiating yourself.

Lucy highlighted a further four crucial capabilities for a prospective CPO or Head of Supply Chain

  • Breath of experience – function and broader business
  • Leadership
  • Learning agility
  • Embrace technology and innovation

IBM Watson Supply Chain sponsored Procurious’ London CPO roundtable on 13th February. 

To request an invitation contact Olga Luscombe. If you’d like to read additional related content or get involved with thought provoking discussions check out the Supply Chain Pros group – a one stop shop for all your supply chain needs

84% Of CSCOs Say Lack Of Visibility Is Their Biggest Challenge

84 per cent of Chief Supply Chain Officers say that a lack of visibility is their biggest challenge.  How can AI help?

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Supply chains are the lifeblood of any business, impacting everything from the quality, delivery and costs of products and services, to customer service and satisfaction. Last, but not least, they have an impact on the company profitability.

Mastering the supply chain is a central element of the customer experience and the competitiveness of any company. However, until recently, supply chain management has been considered a support function.

Today, we are beginning to see that the trend is reversed, as supply chain management becomes more and more a strategic function. Artificial intelligence (AI) is being adopted by leading businesses, with application in the supply chain.

Supply chain organisations struggle to make sense of a sea of data, including multiple ERP & Supply Chain Systems, multiple data sources, both structured and unstructured, extensive supplier and partner networks and relationships.

How can AI augment supply chain organisations?

A smarter supply chain is critical to the success of the business. The ability to reconcile structured and unstructured data to generate insights is a hallmark of AI, machine learning and intelligence.

Let`s translate this, shall we?

  • Gaining end to end supply chain visibility across systems and data sources
  • Retrieving data up to 90 per cent faster
  • Proactively predicting and mitigating disruptions
  • Cutting disruptions by up to 50 per cent
  • Arming professionals with information needed to take action
  • Reducing mitigation time from days to minutes
  • Aggregating knowledge on SC disruptions and build playbooks

What is Watson Supply Chain Insights and what can it do for your supply chain?

Watson Supply Chain Insights is an AI-powered visibility and collaboration platform for supply chain professionals, which helps to deliver insights, predict and mitigate disruptions and retain organisational learnings. This innovative and global value proposition helps supply chain leaders drive greater visibility and mitigate disruptions.

Genesis

Continuing the work initiated by IBM’s supply chain teams, in our labs, we educate and teach Watson all the complexity and nuances of the supply chain world for different industries, so that it becomes operational and efficient as quickly as possible to help companies identify disruptions, predict impacts and consequences, and bring together the appropriate team for the resolution.

Watson infused into an Operations Center Cockpit

Watson Supply Chain Insights has the ability to collect and exploit structured and unstructured data relevant to the supply chain; whether the data is inside the company, such as ERPs, logistics systems, stocks, or outside the ecosystem.

What about external data?  Smarter supply chains leverage social networks, road traffic, weather forecasts or regulations.

Partner with Watson in the Resolution Rooms

Resolution Rooms allow supply chain professionals to deal with the uncertainties that inevitably occur in all Supply Chains. Concretely, when a hazard is observed or predicted, the solution generates a virtual work environment that brings together the experts of the extended enterprise. These experts define the solutions together whether it’s alternative sourcing, reorganisation of the production line or a replacement carrier. All these resolutions are documented, which on the one hand constitutes a real digital “playbook” and contributes to learning. and knowledge of Watson. Thus, progressively, Watson is able to recognise the various hazards, to bring together the relevant experts, and even to directly propose suggestions for resolution by supporting them.

In 2018, this success prompted us to market this solution created by IBM for its own needs. The solution has been packaged under the name of Watson Supply Chain Insights, and is already deploying to customers in France and across Europe.The adoption of AI in the Supply Chain is a journey and Watson Supply Chain Insights is here to accelerate this adoption.

For more on the IBM supply chain story, take a peek here.

Author : Yassine Essalih – Cognitive Supply Chain, Client Solution Professional


Cybersecurity – What Does It Mean For Procurement In 2019?

How should procurement professionals be addressing cybersecurity within their organisations and addressing the weak links?

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Google and McAfee estimate there are 2,000 cyber- attacks every day around the world, costing the global economy about £300bn a year.  The widespread adoption of digital solutions for the management of big data is a threat that is making organizations vulnerable to security breaches.   The proliferation of new SaaS products on the market and the use of cloud-based solutions are focusing our minds on how to protect our data and intellectual property.  The growing use of bring-your-own-device (BYOD) is adding to the complexity of defending organizations from attacks. 

Protection from data hackers has traditionally been the responsibility of the I.T. department where it should be taken seriously, although some companies have been inclined to put the issue on the back-burner.  Procurement’s interest in cyber-security is two-fold: 

a) it has to manage the myriad of potential security issues within the supplier community

and

b) it has to concern itself with data security issues within its own operations

Cybersecurity at suppliers  

Cyber-attacks do not always come in through the front door.  Many breaches come through weaknesses in the lower layers of the supply chain:   e.g. importers, agents and other service providers. Hackers, whose main objective seems to be to hold organisations to ransom, can infiltrate any of these layers. 

The weak links

  • Your suppliers’ suppliers are often targeted because they are more vulnerable.   They may have access to important information of yours and only have a very immature approach to data security.  It is estimated that over a third of corporate IT breaches are via third-party suppliers.
  • A lack of awareness among employees about how hackers gain access to systems.  The act of “phishing” which attempts to acquire usernames, passwords and credit card details via email for fraudulent purposes is a widespread activity that preys on peoples trust.   
  • The lax use of BYOD at suppliers can cause major security issues as malware protection and detection on these devices is often inadequate. 

 “Cybersecurity is never just a technology problem; it’s a people, processes and knowledge problem.”

US National Institute of Standards and Technology (NIST)

How to tackle the weak links

  • Due diligence.  Conducting risk assessments on each supplier before contracting will allow you to identify any areas of concern.  Firstly, potential suppliers should be vetted to ensure that they are not on any denied party or watch lists. On-boarding of new suppliers should include asking leading questions about their approach to data security and which protective systems they are using.  Many large organizations are adopting ISO 27001 which accredits them through an auditable security management system.               
  • Access control.   The level of access of each approved user to information needs to be monitored especially when there is any change in the relationship with a supplier.  This could be an organisational restructure or a takeover at the supplier which affects access to a shared system.  The aim is to prevent unauthorised access to data and procedures.
  • Education and training of staff Awareness programs and training staff about their responsibility for data security should be standard practice, both in-house and at suppliers.  Advice such as don’t click on unknown attachments, always use strong and unique passwords, and keep an up-to-date backup is a start. 
  • Notification about breaches   A contract clause that requires a supplier to inform the organisation regarding any security breach that may impact either business should be included in any supply agreement.

Cybersecurity within procurement

Large warehouses  of data are used by procurement professionals to identify cost-saving opportunities through spend analysis within their organisations.  Other files include supplier contracts, financial information and many P2P transactions.  We need to protect the confidentiality, availability and integrity of our information.   Cyber-attacks can be delivered through counterfeit hardware or software that is embedded with malware.  Outsourcing procurement functions with no due diligence or using unreliable and untested software packages can open the door to hackers.  Security gaps can arise due to the incompatibility of legacy systems with the outsourced solutions.  

Remember the data breach at TalkTalk in 2017?  The then CEO, Baroness Dido Harding said,

“There was the IT equivalent of an old shed in a field that was covered in brambles, all we saw was the brambles and not the open window.”

 She was referring to the weakness in their legacy systems.  The firm was fined £400 000 by the Information Commissioner’s Office.

What can we do today?

  • Collaborate with our IT department to regularly monitor systems, frequently update internal policies to create a security fence for the organization
  • Assist suppliers to build a robust cybersecurity plan to strengthen their IT infrastructure and cyber resilience
  • Stay updated on the latest innovations in data protection  
  • Work with suppliers to ensure that their IT systems and infrastructure are regularly updated. Ongoing reviews at regular intervals will help to identify emerging concerns
  • Develop a contingency disaster recovery and continuity plan to accommodate any potential supplier failure, including alternative suppliers. Always have a plan B.

Traditionally, procurement-specific risks just meant price fluctuations, delivery disruptions, supplier failure, fraud and non-compliance but no longer.   

Besides the reputational risks such as environmental crises, unfair treatment of staff and safety issues, the loss or corruption of corporate information can severely disadvantage a business.  The extent of the financial and reputational damage depends on the size of the breach, number and type of stakeholders affected and how quickly and effectively the company acted. 

Streamlining Your Supply Chain With AI

How can AI help supply chain professionals streamline their processes and improve visibility?

By Chakarin Wattanamongkol / Shutterstock

Did you ever manage to find out what happened when one of your shipping containers went missing? Are you able to recover your products in time?

Many global companies are struggling with this in an ever-changing, digitised world where there is an increasing demand for transparency and visibility. Consumer satisfaction is being tested by speed of delivery, and as a result, accuracy in your supply chain is essential. Supply chain professionals must find ways to deconstruct the barriers in their organisation’s communications, improving visibility, for example, between a supplier in the North and customers in the West.

AI (artificial or augmented intelligence) technology can keep a constant overwatch on your supply chain looking for signs of trouble and alerting you early granting extra time to solve the really damaging issues, such as an impending weather event likely to close a vital port.

In supply chain management, people often work in silos: detached, isolated, and often far removed from the decisions being made in the C-suite or within other functions of the business. This leads to an unnecessarily complex chain of communication that is difficult to untangle when something goes wrong. Imagine if, in the future, all the elements making up your supply chain could be connected into a fully transparent process where internal barriers are broken down.

When you improve visibility across your network you can gain wider insights into your customer demand and be better prepared if things fail to go to plan. For example, if the demand for your product is outselling your current supply you need to communicate with the supplier to increase the stock in order to maintain your profit margins. Instead of an arduous trawl through past invoices, imagine a service that simplifies this, increasing your customer satisfaction by offering accurate and guaranteed product and shipping information.

In addition, by using AI-enabled orchestration your analysis of total costs and value is more precise and time effective, allowing you more time to concentrate your energy on satisfying customer engagement. This ensures the greatest level of accuracy giving you an overview of your products’ end-to-end supply chain journey.  Supply chain professionals will be able to look beyond their network itself and review potential impacts from other areas, such as weather, news, and transport conditions. As your process evolves and becomes more efficient real-time product guarantees, such as same-day delivery, become the norm instead of an anomaly.

As your supply chain becomes more transparent, it furthers the opportunity to increase business results as the time previously spent on administrative tasks can be refocused.

A real-world example that could benefit from this style of operation is the supply chain in the run up to a major sporting event, such as the Rugby World Cup later this year. Supplier A of miniature replica rugby balls needs to ensure these products are well stocked in their customers’ stores two months prior to the start of the tournament. Unfortunately, due to the extreme weather conditions currently hitting America, Supplier A’s usual plastic provider cannot deliver on this order. By making the supply chain more transparent and with the help of AI, this blocker is flagged early in the system before any time delay arises and Supplier A opts for a European plastic provider instead. The issue is managed successfully and in good time. As a result, the quick response enables Supplier A to meet their quota with their retailers, guaranteeing delivery in time before the start of the event, at a lower cost than if they’d spotted the issue later. Supplier A and their retail customers will not be pipped-to-the-post by competitors.

Now let’s consider the situation when Supplier A’s sellers have spotted that the market for their miniature replica rugby balls is projected to be a lot smaller than at first thought. In many organisations, the supply chain team might go to extreme efforts to get the product’s problem sorted, while the sales department is shifting away from selling the product: an exemplar of common miscommunication resulting in delays and increased costs. Up-to-the-minute communication and feedback from the supply chain right the way through to the consumer provides the correct knowledge to facilitate informed decisions. This enables flagship products to be given first priority, as opposed to products that can get away with a delay of a few weeks.

The efficiency illustrated in the example above highlights how supply chain isolation no longer needs to have a detrimental effect on business results because the internal organisational silos have been broken down. Instead, a more transparent system acts as the catalyst for even greater customer satisfaction. Not only does this positively influence Supplier A and their retailers but, most importantly, the fans’ experience of the Rugby World Cup will be that little bit brighter.

In summary, by increasing visibility across communication channels it furthers delivery accuracy, time efficiency, and business results. All of which can contribute to providing your customer with the very best service you can offer.

IBM Watson are sponsoring Procurious’ London CPO roundtable on 13th February. To request an invitation contact Olga Luscombe. 

If you’d like to read additional related content or get involved with thought provoking discussions check out the Supply Chain Pros group – a one stop shop for all your supply chain needs.



The Key Procurement And Technology Trends for 2019

The times, they are a-changing, and so are the markets and environments that procurement operates in. What then are the key trends in procurement and technology you need to watch for in 2019?

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As I am reliably informed by my Christmas-mad colleague, there are only 125 sleeps (as I write) left until Christmas. That means there’s a little over 18 weeks until the year ends, so it’s time to start looking forward to what’s coming in the next 12 months.

2019 is set to be a seismic year around the world. Major changes, such as further geo-political upheaval, the looming spectre of global trade wars and tariffs aplenty, have the potential to disrupt supply chains and set metaphorical trip wires for procurement professionals everywhere. And, as we’ve already heard, it’s rarely been more important to get a solid grips on the key factors in the market and external environment.

So gather round as we gaze into the opaque mists of the future and make some educated insights into the key procurement and technology trends waiting around the corner.

  1. Supplier Management

Let’s start with an oldie, but a goodie. Wait, I hear you cry, supplier management isn’t a new trend! We’ve been talking about this for years. Well, if we’ve talking about it for years, why aren’t we any better at it? And why is it that it’s one of the key areas a large number of procurement teams fall down on?

Like it or not, your suppliers hold the key to all your wildest procurement dreams. Innovation, top and bottom line cost reduction, avoidance and savings, stress-free supply of services and goods and free cake for all! (Ok, maybe not that last one!)

In their Vision 2020 publications, pwc state that the top 25 per cent of procurement functions will have gone beyond incremental improvements and be implementing fundamental change to process and policy alike. This includes how they interact with suppliers and shifting focus from cost and value to Return on Investment (ROI).

These outcomes all hang on better supplier relationship management in order to tease out further innovation from suppliers (who are seen as partners, rather than sponges to wring cash out of) and closer collaboration to source solutions to problems we don’t even know we have yet.

At the heart of this is great communication. Select the right suppliers and talk to them more. You never know, you might just learn something!

  1. Blockchain and Digital Adoption

Unless you’ve been living in a cave on a remote hillside (or perhaps a Faraday cage in your basement), you should have heard by now about blockchain.

From blog articles to webinars, it’s one of the hottest topics in procurement right now, and is likely to still be throughout 2019. Blockchain is and will continue to be a key tool in shaping the transparency of a supply chain. Information is shared and transmitted easily and safely, while the technology allows an “immutable signed and time stamped record of identity, ownership of assets, transactions or contractual commitments”.

This transparency will have the added benefits, and some drawbacks, of making procurement and CPOs more visible in the public environment, say EY. Procurement will wield greater power and have greater opportunity to interact with external stakeholders. But, at the same time, organisational processes and procurement will play out in a public setting like never before.

In line with blockchain’s increasing influence, there is a predicted rise in digital adoption and use of the Cloud. An estimated $1 trillion of IT spend will be moved to the Cloud by 2020, according to Gartner, as organisations look to make their IT services more agile.

  1. Social Value

There is a prevailing opinion amongst the procurement professionals I speak to that 2019 will be the year for social value and sustainability to really take hold. Organisations have begun to realise that cost and quality are only a part of the overall package and not only do they need to be seen to be doing more in the community, but they need to follow through on it.

That goes for the wider supply chain too. Using work practices and value-adding benefits for communities into tenders will become the norm and procurement will no longer be able to award contracts on cost without taking the wider impact into consideration.

  1. Next-Gen Workforce and Automation

Disregard what you’ve heard very recently regarding automation, machine learning and AI as scaremongering. Yes AI will take on tasks and people may have to move to new roles, but it’s not a future that we should be burying our head in the sand about. It’s a natural human reaction to fear change, but procurement needs to muscle up and be brave in order to evolve and survive.

Infosys estimates that AI and procurement automation will eliminate human intervention in 15 per cent of digital spending by 2019. If that’s the case, then procurement needs to embrace the change and develop, train and retain its Next-Generation workforce to meet the demands of new roles where human interaction and input is still key.

  1. Risk

From Brexit to trade wars, risk is going to be possibly the biggest trends for businesses as a whole in 2019. The organisations who will thrive in this unstable environment will be the ones who are best prepared to deal with the unexpected.

Deloitte believe that procurement will become the forecasters of risk in an organisation, raising the profile of the function as it factors total cost of risk and risk mitigation in supply chains into contracts and tenders.

Risk runs throughout the other trends that have been suggested above. Brexit, protectionism and trade wars make supplier and supply chain management all the more important. The increasing need for cyber security as technology advances is something that cannot be ignored.

Procurement is ideally placed to deal with all of these risks, but it needs to put its hand up and be at the front of the queue, or face being left behind and marginalised at a time when the function has a crucial role to play.

A Little Less Hesitation, A Little More Risk Taking

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

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

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

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

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

Life is like a game of poker…

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

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

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

The benefits of risk

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

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

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

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

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

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

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

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

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

Caspar Berry spoke at Big Ideas Summit London. Register as a digital delegate to hear more from him and catch up on the day’s action. 

4 Realities of a Cloud Spend Management Implementation

Implementing new tools and systems is enough to make the bravest of procurement pros shudder with dread. So what are the four biggest risks associated with cloud spend management implementation…

With a wide array of cloud-based applications on the market, many organisations are saying goodbye to out-dated, legacy systems and adopting new Software as a Service (SaaS) solutions. These tools are changing the game in spend management, providing companies with increased visibility across all areas of spending and identifying new opportunities to drive cost savings.

However, despite all of the obvious benefits associated with these cloud systems, implementing a new tool across an enterprise can still be very challenging. For example, change resistance is often problematic when it comes to encouraging end users to utilise new systems. Without proper planning, you risk running into multiple issues that could derail the process and prevent a successful implementation.

Below are the top four risks associated with implementing cloud-based spend management solution:

  1. Getting Suppliers On Board

To successfully implement a new spend management solution, supplier enablement is imperative. The amount of work that’s necessary to get all of your suppliers on board with the implementation is commonly underestimated. In order to get it right, you should develop a supplier enablement strategy that carefully outlines each step of the process. Make sure you clearly communicate all of the changes that will take place, what your expectations are for suppliers, and how implementing the new tool will improve day-to-day workflows.

  1. Navigating the Integration

Don’t believe all the hype that you hear during sales demo—take everything with a grain of salt and follow up with questions about the integration process. Even if the integration sounds simple, remember that somebody has to do the work. There are several things to address regarding integration: Who is doing the mapping and file transformation? Which Enterprise Resource Planning (ERP) system will be used? Whose standard is being adopted?. You will also want to learn the integration method and inquire about any limitations per integration object. Make sure the vendor spells out all of these details before you sign a contract. This will guarantee you aren’t met with any unwelcome surprises down the road.

  1. Achieving End-User Adoption

Although it has become much easier with SaaS-based source-to-pay (S2P) and procure-to-pay (P2P) systems, achieving end-user adoption is still one of the biggest challenges that organisations face when implementing a new tool. The resistance to adoption typically begins when specific use cases are overlooked or not addressed appropriately. Lack of support from senior leadership, poor communication, and inadequate training can also be roadblocks to end-user adoption. You can avoid these roadblocks by considering all applicable use cases and crafting a detailed communications plan that includes all key stakeholders.

  1. Addressing All Use Cases

To avoid resistance and ensure your new spend management tool is meeting your needs, make sure you have selected a solution that will address each unique use case. Ask yourself: Who will be using the tool and for what purpose? Simply having an assortment of features and functions isn’t enough. In order for the implementation to be a success, you need to make sure you understand how the tool’s features and functions specifically address all of the use cases to ensure the solution meets your business needs.

Although it’s certainly important to keep these major risk factors in mind, don’t let these challenges get in the way of implementing a cloud-based SaaS solution at your organisation. Creating a carefully outlined implementation plan will help mitigate risks and ensure the process goes smoothly for everyone involved.

Are you having trouble selecting a new spend management system or navigating a complex integration? Contact RiseNow today for a free supply chain consultation to help get you started.

This article, written by Matt Stewart, was originally published on Rise Now 

How To Prepare For Post-Brexit Procurement In The Dark

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

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

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

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

International Supply Chains

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

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

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

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

The Invisible Border

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

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

What can international businesses do?

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

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

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

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

When will these changes happen?

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

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

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

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