Tag Archives: supply chain management

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

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

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Talk of a Hard-Brexit Sparks Global Concern

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

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

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

Weak Pound Triggers Rise in UK Services Sector Prices

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

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

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

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

Is Brexit Scaring Off Entrepreneurs?

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

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

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

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

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

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

Samsung in Trouble Again

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

Read More at Business Insider

Uber’s Self-Driving Cars

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

Read more at Tech Radar

Supply Chain Leaders Pressured to Embrace Climate Change

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

Read more at Supply Chain 24/7

Drones Tested for Emergency Cell Service

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

Read more at Fortune

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

10 Ideas to Encourage Suppliers to Go the Extra Mile

Are your suppliers willing to go the extra mile for you? What can you offer them to drive the extra effort?

Extra Mile

Buyers rely on suppliers to perform numerous requests from the very beginning of their relationship.

From the first RFx, to the laundry list of requests on tight timelines, suppliers play an integral role in the sourcing process. And having them wanting to help can make a huge difference.

What can supplier enablement do to encourage suppliers to meet their deadlines, and even go the extra mile beyond the bare minimum?

Here are ten potential ‘carrots’ to offer suppliers: 

1) Invite to Assist with eProcurement Pilots

Suppliers welcome getting as much exposure as possible. Particularly if they are a new supplier, or you’re rolling out a new eProcurement system.

You can let suppliers know that if they can meet or even exceed your requirements that you’ll highlight them during testing and User Acceptance Testing (UAT). You can include them in your test scripts, and call them out during demos, amongst other things.

2) Feature on eProcurement System’s Home Page

Some modern eProcurement systems give admins the ability to display whatever you’d like on the homepage using business enabled CMS blocks.

Offering this prime real estate to highlight suppliers who have excelled (e.g. provided an awesome catalogue or offered heavy discounts) would be a huge inspiration for a supplier.

3) Float Sales Items to Top of Search Results

Modern eProcurement systems allow admins to affect search results giving specific items more weight or even float to the top of search results.

Similar to how suppliers promote sales items on their B2C sites, you can offer suppliers to boost items they agree to put on sale for at least a period of time.

4) Invite Onsite for ‘Meet and Greet’

Most suppliers will welcome the opportunity to come in and informally meet with their end customers. Maybe even allow them to setup their trade show booth or a table in the office lobby.

I’ve seen some buyers even create some co-branded marketing material, including booth signs or posters, stating that the supplier’s products were available on the eProcurement platform.

5) Visit Them Onsite

When suppliers have to come in to meet with you in your office, it’s typically a nerve-racking experience for them. They’re probably all dressed up and a little nervous as they enter your, likely relatively lavish, corporate office building.

But offering to come to their office for an informal tour/meet-n-greet would likely be an enjoyable honour for them. 

6) Promote in an Email Blast

How every supplier wishes they had the ability, and their buyer’s blessing, to send even one email to all your employees.

Offer them the chance to promote their offerings in a company-wide email blast and every supplier will jump at the opportunity. 

7) Display an Ad on your Intranet

It’s in a buyer’s best interest to entice more employees to use their eProcurement system to make purchases. The buyer’s intranet is probably a popular place where employees go daily.

You can display an ad on your intranet to let employees know they can procure that supplier’s category via the eProcurement system. For example, “The New iPhone 7 – Now on eBuy!”

8) Offer a Testimonial

Suppliers are very proud of their relationship with their customers. They’re especially proud of being selected to tightly integrate with a customer’s internal eProcurement system after all the effort both have put in. 

When a buyer gives a supplier a testimonial that they can use to grow their business. It’s often a very welcome shot in the arm for the supplier’s marketing efforts.

9) Blessing for a White Paper

A step up from a testimonial would be a buyer’s blessing to allow the supplier to create a white paper on how they’ve helped you.

For example, getting the supplier to tell the story of how they exceeded requirements for the buyers on a new project. 

10) Issue a Press Release

While I’ve never heard of it being done, there is one absolute ultimate carrot (apart from a multi-million dollar contract) which would ensure the extra mile from the supplier.

This would be to give the supplier their blessing to issue a press release to let the world know about the partnership. Ideally the release could also include a quote from the buyer.

Admittedly, this would only make sense if it was a very strategic and unique arrangement, and that a press release would make BOTH companies look good.

Some of these may be out of the question for your organisation. But hopefully they’ll at least give you a sense of what’s often valuable to suppliers, and some ideas on how you can help them to help you.

What are some other examples of ways you’ve been able to encourage suppliers to go the extra mile?

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

How Our Consumption is Driving Global Warming

Global warming isn’t just about the cars we drive, or the industries we run. Our consumption is a much bigger driving factor that we might know.

Consumption and Global Warming

This article was originally published on Farm Machinery Locator.

When we think about global warming many of us immediately think about cars and industry ruining the planet, but does this tell the whole story?

While transportation, including travel by road, sea and air, contributes over 13 per cent of our annual CO2 emissions there is another factor, which we may not initially consider, but which has a bigger impact.

Figures highlighted by Farm Machinery Locator show that there are nearly 8.3 million cows in the UK alone. These cattle provide us with hundreds of thousands of litres of milk, and thousands of pounds of beef every day. We often assume that agriculture is natural and therefore can’t be damaging to the environment, but that assessment is wrong.

The ever-increasing amounts of farm machinery – tractors, cultivators, combine harvesters and balers – for sale and in use, only adds to the current issue of rising average temperatures across the world, due to the pollution they expel.

So, whilst being natural, the negative connotations of farming and the agricultural industry mustn’t be brushed over. We will explain the role livestock plays in global warming too, below.

Livestock’s Contribution to Global Warming

In fact, if we look at figures published by the Food and Agriculture Organization of the United Nations, agriculture contributes 18 per cent of the total release of greenhouse gases worldwide, a much higher figure than that for transportation.

Emissions from cattle are particularly damaging because it is not CO2 that cows are releasing, but methane. Every single cow releases between 70 and 120kg of methane per year. While this is a greenhouse gas like CO2, its detrimental impact on the planet is 23 times higher than the negative impact of CO2.

In addition, livestock cause over two-thirds of the world’s ammonia emissions, and this greatly contributes to acid rain. When you consider there are over 1.5 billion cattle worldwide the damage quickly adds up.

Livestock figures are rising because of the general increase in our level of prosperity, which brings with it a higher demand for beef and milk. It’s not only emissions from cattle however that are causing problems to the planet. Intensive farming also leads to a whole range of other environmental issues.

Land Clearance and Deforestation

Livestock now use over 30 per cent of the world’s available land. Much of this is used for grazing although there is also a substantial portion which is utilised to grow feed.

A need for all this space has been a major contributor to deforestation, and with deforestation a further release of CO2 into the atmosphere occurs. This comes about due to two main reasons.

First, as the trees are cut down, the carbon dioxide they store is released. Second, fewer trees leads to lower levels of photosynthesis, a process which would normally help to absorb carbon dioxide.

In addition, once land has been cleared, if it is then overgrazed it runs the risk of turning to desert. This has already happened on 20 per cent of pastureland.

Drought

Cows also use a substantial amount of water. Each cow requires 990 litres of water to produce just one litre of milk. As global warming continues an upward trend, water becomes ever more precious.

Furthermore many of the antibiotics and hormones used to treat cattle can end up in drinking water. This can then lead to risks to human health.

Pollution

There will always be a level of pollution produced by livestock and ultimately this will wash down to sea level. Nutrient run off causes an overgrowth of algae which consumes oxygen in the sea.

This can kill coral reefs and lead to so called ‘dead zones’. One in the Gulf of Mexico is around 6,500 square miles in area. It has predominantly been caused by US beef production waste, which is carried down to the coast by the Mississippi River.

We all need to lower our carbon footprint. And when we realise how much of an impact agriculture has on the environment, we should consider reducing the amount of meat and milk we consume.

The planet’s population is growing substantially every year. The western diet, which is meat and dairy heavy, has a widening appeal, even in countries where fruit and vegetables used to be the mainstay of meals.

If we want to become greener in all areas of our lives we should all be a little more aware of the detrimental impact our own consumption of meat and milk is having and take steps to reduce it.

Throwback Thursday – Procurement’s Greatest Ambassador?

If we’re to change the image of procurement, we need a figurehead to point to. Could Apple CEO, Tim Cook, be the ambassador the profession needs?

Tim Cook - Procurement Ambassador

One of the key goals of Procurious is to improve the image of our profession. We are the brown cardigan brigade no longer (unless it’s a snazzy, modern cardigan!). The latest generation of procurement pros are highly intelligent, motivated, and tech-savvy.

However, to help push the image change along, procurement needs a figurehead. A high profile ambassador for the profession, who highlights just how far you can go. And Apple’s current CEO, Tim Cook, could be that ambassador we need.

We take a look back at an article from last year, highlighting Cook’s journey to the top.

Procurement’s Greatest Ambassador?

It’s fair to say procurement has received a bad rap over the years. We’ve been dubbed corporate policemen, paper pushers, roadblocks, as well as a raft of other unflattering names we dare not mention.

Thankfully, due to the innovation and hard graft of procurement professionals, the function is shedding this negative image and starting to become recognised as an integral part of any successful business.

Perhaps the greatest exemplar of procurement’s ascendancy to date is Apple CEO Tim Cook.

In 1998, Tim was the vice president of Corporate Materials for the Compaq computer company. The role saw him hold responsibility for the organisation’s procurement and inventory operations.

Despite having no real intentions of leaving this role, the enigmatic Steve Jobs managed to convince Cook to take on a role at Apple (pre iMac, iPod, iPad, and iPhone).

Stellar Performance

Tim’s performance at Apple was stellar, particularly from a procurement point of view. In his authorised autobiography of Steve Jobs, Walter Issacson described Cook’s methodical approach to supplier rationalisation and inventory management.

“Cook reduced the number of Apple’s key suppliers from a hundred to twenty-four, forced them to cut better deals to keep the business, convinced many to locate next to Apple’s plants, and closed ten of the company’s nineteen warehouses.

“By reducing the places where inventory could pile up, he reduced inventory. Jobs had cut inventory from two months’ worth of product down to one by early 1998. By September of that year, Cook had gotten it to six days. By the following September, it was down to an amazing two days’ worth.

“In addition, he cut the production process for making an Apple computer from four months to two. All of this not only saved money, it also allowed each new computer to have the very latest components available.”

The procurement and supply chain decisions made by Cook highlight the critical importance of procurement to Apple’s success. The strength of the company (and arguably its competitive advantage) has been in building and managing a complex network of suppliers.

The company has then successfully leveraged this network to produce ground-breaking technology products. Put simply, without the supply network, there is no product.

Recommendation From The Top

Cook’s performance in Apple’s supply chain clearly caught the attention of Steve Jobs, who gave the follow recommendation of Cook during his departure from the firm.

Jobs stated, “I strongly recommend that we execute our succession plan and name Tim Cook as CEO of Apple.”

The promotion of Cook to CEO shows that the board of Apple understands the critical importance of external suppliers as a source of innovation for the company. Apple clearly sees the procurement function as the conduit to successfully managing these relationships and ensuring the future success of the business.

Apple is the world’s most valuable brand. It has undergone a remarkably successful business transformation, and has produced products that have changed the way we interact with each other and the world around us.

With so much of this success being attributed to great procurement practices, could there really be a stronger endorsement for our profession?

“Tim Cook came out of procurement which is just the right background for what we needed.” – Steve Jobs

How Does it Feel to Be a Supplier to You?

Being a customer of choice in procurement is important. Ensuring your supplier feels part of the team is also important.

Supplier to You

As procurement professionals we care about the quality, delivery, cost, innovation and sustainability performance of our suppliers. These are usually wrapped up in Key Performance Indicators (KPIs), a key tool within the procurement community.

Now that we as a population are facing resource scarcity, what sort of questions should we start asking ourselves to ensure that we continue being the ‘customer of choice’, and make the supplier feel that they are a prime source of value to our organisation?

Why ‘Customer of Choice’ is Important

Every day, news headlines and scientific reports reflect a world increasingly impacted by unsustainable trends and catastrophic climate events.

Oceans are becoming more acidic, with devastating results on coral and connected ecosystems. The air in major cities is full of dangerous particulates. Crop-growing regions for key commodities are shifting. Sea levels are rising.

All this could potentially lead to resource constraints and risk in the supply chain which procurement, amongst others, should mitigate.

The essential questions procurement should be asking itself are:

  • How can organisations possibly develop a ‘single point of truth’, which is reliable and up to date?
  • How can they manage contracts and monitor KPI’s?
  • How can they handle data and information and avoid rework and duplication and look at the relationship from the supplier’s perspective?

Key Questions for Your Supplier

It starts with the sourcing process where the supplier is evaluated, perhaps even audited, and then at the end when a contract is developed with them. Suppliers will evaluate whether these selection processes run fairly and competently.

In the on-boarding and the execution part of the relationship, the supplier will most probably evaluate how the communications went, how easy it was to create and implement changes to the administrative routines, and how the on-boarding was tackled.

When the relationship starts out, the evaluation will typically be how time consuming or complicated it is to deliver goods and services, and whether the same information is requested by different people.

When it comes to the strategic relationship, a key question to ask yourself is whether you ask your suppliers their opinions about issues that might affect them, including issues around risk.

And then, when you ask them, are you then open to new ideas, new products, and new ways of doing things?

Organisational Benefits

How would this benefit organisations? The time it takes to manage the relationship should become more effective. So should the visibility from spend analysis to sourcing exercises to strategic relationship management.

As a result it should help drive better relationships and help achieve competitive advantage for both parties. And this should of course be linked to your company’s sustainability journey.

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

Management of a Global Supply Chain in Emerging Markets

Managing a global supply chain is complex, and fraught with risk. So what tactics can you use to minimise this risk?

Global Supply Chain

This article was written by Rob Barnes, Founder at PrimeRevenue.

In many ways, sourcing goods and services internationally is easier than ever, with the internet making it possible to research, source and communicate with global suppliers from the comfort of your desk.

But in reality it isn’t always that simple. Setting up and managing an global supply chain is a complex, and often risky, business. Without careful planning, local expertise and meticulous management, there’s a lot that can go wrong.

Not only are you dealing with numerous rules, regulations, taxes and constantly fluctuating currencies – all of which have the potential to significantly impact your bottom line. You also have cultural and language differences to contend with, which, in the world of business, can be daunting and confusing to say the least.

On the other hand, getting it right can give you a huge competitive advantage, with cost savings and higher quality or unusual products just a couple of the potential benefits.

So how can you make sure your global supply chain works effectively, while minimising the risks to your business? Here’s a few pointers:

Strategic Planning  

Planning and management of a global supply chain affects the whole organisation, not just certain departments. That means ownership must come from the top, and involve all areas of the business, from procurement and finance, operations and logistics, to sales and marketing.

Don’t allow teams and decisions to become siloed. Make sure there is transparency across the business. Otherwise you’ll be missing important pieces of the puzzle, and find that your supply chain isn’t delivering the value you need, either for the customer or the bottom line.

Local Expertise

Knowledge of the local market is crucial to ensure you understand what to look for in a supplier and how to handle local business practices, from taxes and duties, to employment law and health and safety regulations.

If you don’t have this local expertise internally, consider hiring somebody who does. Or look to bring on a consultant who can guide you through what, and who, you need to know.

Prioritise Relationships  

The foundation of a successful supply chain is building strong relationships with as many elements of the chain as possible. While the internet can help you at the research stage, it’s crucial to visit suppliers regularly, to make those personal connections, scope out their operations in person, and discuss ways of maximising efficiency and collaboration.

In many countries, personal relationships and networks are even more important than in the UK, so it’s in your interest to prioritise this valuable bonding time.

Sales Forecasting

Forecasting is crucial when sourcing products globally, to avoid ending up with too much or too little inventory to deliver on what you need.

This is partly due to timing – your goods are going to take longer to arrive from far flung locations – but there is also a cost element, with taxes and duties to pay every time you move your goods.

Accurate forecasting means that you’ll be transporting the right quantity to arrive at the right time, to deliver on projected demand. You’ll also avoid wasting money on warehouse space by over-ordering.

Technology

Technology is your friend when managing a global supply chain, helping you to streamline processes and minimise unnecessary administration.

Look for a supply chain management solution that works across the different markets you’re operating in, so you don’t need to work with numerous systems.

You can also streamline your invoicing and payment terms using a supply chain finance platform, avoiding the need to negotiate these on a case by case basis, and improving consistency and transparency across suppliers.

Performance Tracking

Just one disruptive link in the chain can impact your whole operations. Make sure you implement a system to measure the success and efficiency of each supplier regularly – delivery times or product quality for example.

By doing this, you can spot any warning signs early on and be ready to replace an underperforming supplier if necessary.

Have a Plan B

Even with top notch processes, you can never be sure what’s going to happen, so have back-up suppliers ready to go in case of any unexpected disasters. This will keep your supply chain running smoothly and avoid lots of unhappy customers.

Focus on Long-Term Sustainability

To minimise risk in the chain, look for ways that you can support your suppliers both financially and logistically. Make sure your lines of communication are always open, so any potential issues can be aired quickly and easily.

You can also help your partners manage their cash flow through supply chain finance, allowing them to choose to be paid more promptly if and when they need. This is particularly useful for suppliers in emerging markets.

This reduces the need for them to take out expensive bank funding or overdraft extensions, minimising costs and risk in the long-term.

Supply Chain Finance from PrimeRevenue and AIG caters to thousands of mid-market, non-investment grade companies, by providing financing, with the credit risk insured by AIG’s market-leading trade credit insurance. It enables suppliers to take early payment less a small discount, while enabling buyers to standardise and potentially lengthen their payment terms.

Why Elon Musk Thinks Supply Chain is “Tricky”

If Elon Musk describes something as tricky, then you know that it’s something organisations should be paying close attention to.

Elon Musk

When someone who:

says something is “tricky”, it means something!

“Tricky” Supply Chain

Elon Musk, founder of a number of high profile companies, including Tesla motors, PayPal and SpaceX, was interviewed recently at Code Conference 2016.

In the interview, Musk tells a couple of stories and anecdotes about Tesla’s Supply-Chain that highlights how things can derail fast and put your production to a halt.

It helps to illustrate the role that procurement can, and must, have in anticipating and preventing such situations. Also, in minimising impacts, and if the worst happens, to react quickly, and get back to normal as fast as possible.

You can watch the whole interview below (I recommend you do). If you prefer to go directly to the part I am referring to (1 hour 10 min into the interview), it is here.