Tag Archives: supply chain management

Best Procurement Books – Explaining Procurement with Apple Pie

The Faculty’s Hugo Britt shares one of the best procurement books he has found. Did we mention it happens to be for pre-schoolers?!

chook1

“But mum/dad, what is procurement?” How many times have your kids asked you this question, and how often have you struggled to explain your complex role in simple language understandable by a child? The best response to this question that I’ve ever heard is “I do the shopping” – which paints a relatable picture of mum or dad pushing a giant supermarket trolley around all day at work.

The best procurement books should be able to answer that question, and I’ve found a picture book that answers it much better than I can. One of the many books my three-year-old enjoys reading with me at bedtime (hundreds and hundreds of times over) is Marjorie Priceman’s whimsical “How to Make an Apple Pie and See the World”.

Best Procurement Books - Cover
How to Make an Apple Pie and See the World – All Images are copyright to Dragonfly Books

The book is delightfully illustrated, about a little girl in Edwardian times who wants to make an apple pie. The premise is summed up in the first few lines:

“Making an apple pie is really very easy. First, get all the ingredients at the market. Mix them well, bake, and serve … Unless, of course, the market is closed.”

list

The Apple Pie Supply Chain

And this is where this great little book becomes a textbook on Procurement. The little girl packs a suitcase, puts on her walking shoes and takes a steamship bound for Europe and beyond. Along the way, she sources a number of ingredients which will help to make the apple pie:

  • Semolina wheat from Italy
  • Elegant eggs from a French chicken
  • Cinnamon from the bark of a Sri Lankan kurundu tree

kurundu

  • Milk from a good-mannered English cow
  • Seawater and sugarcane from Jamaica
  • And, of course, apples from a Vermont orchard

orchard

She appears to be a master negotiator (or perhaps just very charming), as there’s no mention of money changing hands for any ingredient. Along the way she has to overcome many of the challenges faced in Procurement, such as language barriers and creative means of transport.

The little girl then goes through the exhaustive process of turning the raw materials into the ingredients she needs, milling the wheat into flour, grinding the kurundu bark into cinnamon, evaporating the seawater from the salt, boiling the sugarcane, persuading the chicken to lay an egg, milking the cow, churning the milk into butter, slicing the apples, and finally mixing the ingredients and baking the pie.

process 1

Her reward is to share the delicious pie with all the new friends she made on her journey, including the chicken and cow.

Before my son demolishes a piece of cake or pie, we sometimes pause to talk about this book. It’s fantastic to see him wonder about all the work and ingredients that went into his slice of cake, and he’s even starting to think the same way about everyday objects all over the house, including clothes he wears and toys he plays with.

I give this book 5 out of 5. Do you have any children’s books to recommend that touch on Procurement? What are the best procurement books you have found answering that all important question? Share your thoughts below!

All images above are the property of Marjorie Priceman (and publisher Dragonfly Books). You can purchase How to Make an Apple Pie here: http://www.amazon.com/Make-Apple-World-Dragonfly-Books/dp/0679880836

Hugo Britt is a Research Consultant at The Faculty, helping to support The Faculty Roundtable, an influential group of Australian procurement leaders who gather to share their experiences and insights. 

For more information on The Faculty Roundtable contact Program Manager, Belinda Toohey.

Modern Slavery Act 2015: Supply Chain Transparency Requirements

In October 2015, the UK government issued statutory guidance relating to supply chain transparency and reporting obligations of the Modern Slavery Act 2015.

Modern Slavery Act

This article was first published on Greenstone.

The document confirms who is required to comply and when they need to comply by, as well as including essential details on the all-important annual statement. You can read the document here.

Here is everything you need to know and what you need to do.

Background

Consolidating UK law on slavery and human trafficking, the Modern Slavery Bill was first introduced to parliament on 10th June 2014, and subsequently passed into law on 26th March 2015.

With the aim of preventing employment exploitation and increasing disclosure of labour practices, the Modern Slavery Act introduces new grounds of compliance for commercial entities. Not only do organisations need to ensure that modern slavery is not an issue in-house, they also need to take, and report on, actions to prevent the issue from occurring within their supply chains.

Which Companies are Captured?

The threshold to determine which companies have to adhere to the Modern Slavery Act has been something of a discussion point for the vast majority of the year.

Following a government consultation period earlier in the year, it was confirmed that the Act applies to any organisation that supplies goods or services and that has a turnover exceeding £36 million, aligning the legislation with the definition of a ‘large business’ in the Companies Act 2006.

Furthermore, this threshold is valid for any organisation that has operations in the UK, regardless of where it was formed. This means that many non-UK organisations, providing goods or services within the UK’s geographical boundaries, will have to engage with their suppliers, essentially resulting in diverse, complex and global supply chains being assessed.

Annual Statements

A key part of the Modern Slavery Act is the stipulation that captured organisations need to prepare and publish an annual statement. The statement details the ongoing process they are taking to ensure that there is no modern slavery within their business and supply chains.

To be published at the end of the organisation’s financial year, and required to be approved at board level, the statement must be publicly available via a prominent link on the company’s corporate website homepage.

What does the statement need to look like?

There are 2 routes that organisations can go down when it comes to preparing the slavery and human trafficking statement. Captured organisations must prepare and publish either:

  1. A statement detailing steps the organisation has taken during the financial year to ensure that slavery and human trafficking is not taking place in any part of its own business or supply chains; or
  2. A statement that the organisation has taken no such steps.

Although Option 2 is the simpler journey, having a publicly available statement that effectively says that the organisation does not care about the issue of modern slavery risks a backlash from stakeholders. As such, the safest route to compliance is certainly the first.

In terms of what the annual statement needs to looks like, the Act does not stipulate the exact parameters, but does provide some key areas that should be covered:

  • the organisation’s structure, its business and its supply chains;
  • its policies in relation to slavery and human trafficking;
  • its due diligence processes in relation to slavery and human trafficking in its business and supply chains;
  • the parts of its business and supply chains where there is a risk of slavery and human trafficking taking place, and the steps it has taken to assess and manage that risk;
  • its effectiveness in ensuring that slavery and human trafficking is not taking place in its business or supply chains, measured against such performance indicators as it considers appropriate;
  • the training about slavery and human trafficking available to its staff.

What do captured organisations need to do?

The statutory guidance confirmed that the supply chain transparency and reporting provisions of the Modern Slavery Act commenced on 29th October 2015.

However, a transitional period applies to businesses with a financial year-end date between 29th October 2015 and 30th March 2016, meaning those who have a year-end of 31st March 2016 will be the first to publish the statement.

So what should companies be doing to prepare for these new supply-chain requirements? Regardless of when the year-end date is, it is imperative that organisations start engaging with their suppliers now and assess the level of risk. Without an extensive, and ongoing, information gathering exercise, taking steps to prevent the risk and subsequently reporting on them is simply not possible.

Where to start

As it is now a requirement for companies to collect and interrogate data from across their web of suppliers, it is essential that they make the process as efficient as possible.

We understand that this can be a complex and time-consuming process. The traditional offline data collection methods are not suited to the demands of today’s globalised supply chains. As such, it is an increasing trend for companies to move the process online.

For advice on what you need to consider when moving your supplier risk and compliance process online, please read our previous blog article on the subject.

Gyles is Head of SupplierPortal at Greenstone, a non-financial reporting solutions company providing software and supporting services to clients in over 100 countries.

Greenstone’s SupplierPortal solution enables buyers to effectively manage supplier risk and compliance through a secure and private online platform. Buyers have the flexibility to distribute standard framework questionnaires, as well as proprietary questionnaires, to their suppliers and can then manage and analyse this information through a comprehensive suite of analytical tools.

Technology Will Expose Supply Chain Deficiencies in Near Future

In the not-too-distant future, technology will reveal everything about products, and expose all the supply chain deficiencies that exist.

Supply Chain Deficiencies
Molly Harriss Olson, CEO, Fairtrade Australia and New Zealand

Smartphones, embedded with the technology that enables consumers to scan items in the supermarket and see the entire supply chain process, will happen sooner rather than later, according to Fairtrade Australia and New Zealand CEO, Molly Harriss Olsen.

“We’re getting to the point that we can build these technologies. Mark my words, it’s on the way and it will be instantaneous. The world of connectivity isn’t coming – it’s here,” she told the room.

Cleaning Up Supply Chains

While the procurement industry well and truly knows about the challenges of cleaning up the supply chain, the fact that the technology that would automatically expose supply chain deficiencies was met by furrowed brows. As she made the statement, you could literally hear a pin drop in the large conference room.

Fairtrade assists marginalised producers (mostly in the agricultural space) and addresses issues like child labour, environmental issues, water usage, waste management, ensuring the employment of women and helping these farmers to have profitability in their farms and a robust foundation upon which they can succeed.

This includes the 30 million coffee farmers around the world who are at the mercy of speculative financial markets.

She impressed on the procurement professionals in the room that they had the power in their hands to either resolve the problems the planet faces in the future, or contribute to it.

“The biggest leadership decision you need to make as a procurement leader is implementation. Once you make that, you can’t even begin to imagine what the impact might be.”

Moving Away From Economics

Harriss Olsen was asked by a major Australian food brand representative, whether Australian businesses were embracing the initiatives implemented by Fairtrade.

“On the whole, I’d say we’re on the edge of embracing it. I’d urge you to take the next step. We need to stop making every decision based on economic grounds. We are either part of the solution, or we’re part of the problem. All our decisions are based on improving the planet. Virtually everything we can buy is traded on the stock market, and value the farmer gets on a daily basis,” she says.

“It might come as a surprise to you that while we got rid of slavery some time ago, there is still an extraordinary amount of it going on today. And until is blows up in your face, you often don’t know what you’re dealing with it.”

Dynamic Solutions to Dynamic Problems

‘Pop up Warehousing’ and ‘Dynamic Warehousing Networks’ are new terms hoping to provide dynamic solutions to solve an old problem – large fluctuations in stock.

Dynamic Solutions - Dynamic Warehousing

Whether predictable or unexpected, most businesses have had to deal with stock maxing out their facilities from time to time. Moreover, as managing average or normal stock levels has become more sophisticated and accurate, the effect of the pinch points becomes more acute.

Of course, any predicted overflow can be accommodated. However, just because it is predictable (for example, seasonal storage gluts), doesn’t mean its impact, or the challenge of solving it, is reduced. Furthermore, not all stock excess is predictable – far from it! Taking advantage of bulk purchase opportunities or running promotions make good business sense, but often create storage headaches.

Historical Solutions

Historically, the solutions that companies resort to cost money and may adversely affect operations. They may rent additional warehousing to accommodate extra stock, or find themselves involved in costly shuffling of inventory across locations, both existing and new.

Outsourcing – getting a third party provider to pick up the slack – is the obvious course to follow, but has traditionally suffered from a lack of transparency and the sense that a better solution might have been missed. After all, an emergency is not always the moment to run a tender process!

Dynamic Solutions

However, the growth in dynamic solutions such as Pop-up Warehousing (the colloquial term for on-demand storage space) is now set to change the game.

This ability to quickly identify available warehouse space and pricing on the internet, represents a step-change in how to deal with over-spill. It means that solutions can be found locally or in strategically relevant hubs – dependent on the user’s need – and that rates are benchmarked by the market.

On top of the transparent pricing and availability that these dynamic solutions provide, they also facilitate a direct dialogue with providers across the country. This means that users can identify, secure, and make use of available warehouse space immediately.

This level of choice can mean the economic benefits of bulk buying or customer promotions are not diluted further down the P&L, and the added flexibility can also allow companies to be more daring in their development – testing new products, markets or distribution strategies with less inherent cost (and risk) and modelling the impact of more permanent solutions to their business without making significant investments or sweeping changes.

Speed and Flexibility

The ability to quickly react and adapt can be particularly beneficial to fast growing or new e-commerce businesses. These business are often unclear about what mid- or long-term capacity they need, and the resources required to support fixed logistics costs.

Dynamic warehousing allows them to upscale logistics in line with their growth rate, without overwhelming resource and cost implications, nor the distraction and risk of running a fast-growing logistics function.

With end to end logistics costs averaging 12 per cent of sales value, not doing it as efficiently as possible can make a material difference to competitiveness. For a third party logistics provider, that 12 per cent is their 100 per cent, and they have the vertical and horizontal experience of logistics to build skills and capabilities from shared experience. Outsourcing logistics can, therefore, make a lot of sense for younger companies – as long as the most appropriate providers can be found easily.

Whilst outsourcing is not a new concept, the catalyst for the recent upsurge in interest has been the development of interactive online platforms by companies such as Flexe Inc in the US and, more recently Zupplychain in the UK.

These websites provide a degree of aggregation and transparency that means all businesses, whether large or small, mature or a start-up, can benefit from a level of flexibility. This means users can be more responsive and make better decisions for the present and future health of their company.

Zupplychain employs algorithmic matching of customer’s search requirements to warehouse availability to show warehouse pricing, along with an automated and structured process to progress enquiries and a cloud based system to manage customer stock in provider’s warehouses.

How Walmart, Hanesbrands and Mattel Reduced Supply Chain Risk

It’s the million dollar question. How can corporates minimise supply chain risk, without significant disruption to their core business?

Supply Chain Risk

Global retail giants, headquartered in the US, have had to address their supply chain risk in a bid to forge ahead in the new world of corporate social responsibility. It hasn’t been an easy exercise, that’s for sure.

Retail giant Walmart, apparel brand Hanesbrands, and toy manufacturer Mattel, are among the countless others to bring about major changes within downstream manufacturing to ensure corporate risk is above board. Each turned to brand protection firm ICIX to implement a new way forward.

Management Wake-Up Call

Company founder Matt Smith explains that supply chain risk was starting to enter the corporate vocabulary in 1999.

“Companies were starting to get jittery about their corporate responsibility. Emails and back then, faxes, were being sent from management looking to address this issue, as they started to wake up to the fact that there were major risks within the supply chain that they had to actually take responsibility for. Before this time, it hadn’t really dawned on management that supply chain risk had anything to do with them,” Smith says.

Suddenly, the race was on to find a way to outsource the task of conducting factory audits and ask the hard questions. Fast forward more than a decade, and the events of 9/11 shone an even brighter spotlight on these issues and what it means for corporate entities.

Smith was at the coalface, watching the opportunity emerge. He set about creating a solution, and today ICIX remains the leading operator in this space. ICIX was born in 2004, initially to respond to the challenges faced by the food industry in securing the food supply chain, and addressing increased safety requirements of the Bioterrorism Act of 2002.

During this time, Smith worked with some of the world’s largest retailers to help them address issues of supply chain transparency and inefficient information sharing. ICIX worked to connect all trading partners into a single network to centralise collaboration, making it one of the earliest cloud-based SaaS companies.

Risk a “Complex Beast”

The company grew early food customers into other retail segments, including general merchandise and apparel and footwear. It also extended its solutions to include not just safety, but also quality, compliance and corporate social responsibility.

Today, ICIX helps companies understand where its products are coming from, streamline collaboration with trading partners, drive compliance and safety, and as a result, secure and maintain customer trust.

Smith says that those working on the risk side of a business are often frowned upon by those working on the business side, which makes it a complex beast to juggle. Frequently, the CIO within a business isn’t necessarily on the same page as someone in the CEO chair.

“I could see a really big opportunity opening up in the US, with several major retailers over here scrambling to find a solution.

“And today, businesses are spending more on managing risk than ever before. Those in procurement are battling for budget and attention, until something bad happens like people get sick or someone dies because of their product. That’s when the purse strings always open up. That’s what it often takes for people to want to solve the supply chain risk related issues.

“We realised that tackling this as a network was going to bring about far greater efficiencies, however retail is a complex industry in which to do this, which complicated the process,” Smith continues.

Role of Technology

For example, barcodes don’t match purchase orders or product numbers, and without that universal product identifier, it can be a complex process. Technology has played a huge part in bringing scale to the organisation, with cloud technology supporting a new way to assess and identify potential risk.

“Supply chain risk management is a huge area, and we were looking for ways to take that network architecture and make it accessible to everyone.”

ICIX does this by taking various feeds of information and assessing it. This could include shipping feeds, purchase feeds, ethical and responsible sourcing data and much more, and then cross-referencing all of these to determine supply chain risk.

The sheer size of retail giant Walmart put it under the consumer spotlight and forced it to look at improving supply chain transparency. Company management was eager to speak to Smith to bring about better efficiencies.

The catalyst for the changes at Walmart were the issues with Mattel matchbox cars in 2007, when consumers got wind of the fact that the children’s toys contained lead paint. New government regulations introduced as a result, required companies to act and take responsibility.

“Firstly, we see whether the vendor is meeting all their safety and testing requirements, then we can fast forward a few steps. And if they’re missing a test report, we can request that information on their behalf and rectify the situation and re-test,” Smith says.

Such solutions provide assurances that companies are ‘doing the right thing’ – that they are providing, safe, quality products that are ethically sourced and compliant. With ever increasing customer demands for transparency, information and responsibility, such programs are critical not only for companies to protect their brands and enhance their customer trust, but to survive.

Supply Chain Sustainability: A Strategic Responsibility

Supply Chain Sustainability is in the spotlight, thanks to the influence of social media. Companies realise that they must lead the way in this area.

supply chain sustainability

The supply chain function has evolved significantly over the past decade, becoming a key strategic pillar of business. Going beyond its core role
 of delivering goods on time, in full, it has a vital role to play in customer experience and brand perception.

Supply chain now has a seat in the boardroom in many organisations. Barely a week goes by without a supply chain issue – be it supplier failure or reputational risk – hitting the headlines and the share price.

The proliferation and influence of social media has put supply chain sustainability and risk firmly in the spotlight. Companies are publicly held to account for the actions of all tiers of their supply chain. This is why companies must lead the way on sustainability issues.

Supply Chain Sustainability

The sustainability discussion evolved from companies purely focusing on taking from society and wanting to give back, to realising there are risks to reputation from non-compliance.

Sustainability issues are often supply chain issues. For example, the introduction of the Modern Slavery Act aims to ensure that slavery and human trafficking is not taking place in businesses or supply chains.

Today, however, organisations are now seeing supply chain sustainability as a strategic opportunity that can increase competitive advantage.

Two main streams have emerged:

  • The risk dimension: what do companies have to do to avoid risk of brand damage?
  • The aspiration dimension: what is the strategy for the long-term survival of the  business?

Creating a Positive Impact

Supply chain sustainability is increasingly seen among senior executives as essential to delivering long-term profitability. A sustainable supply chain captures value creation opportunities and offers significant competitive advantages for early adopters and process innovators.

At the same time, supply chain is one of the key components for organisations 
to create a positive impact in the world, with an estimated 80 per cent of global trade passing through supply chains. Many large corporations, such as Nestlé and Nike, want to do good business and do the right thing.

A recent study on the global supply chain community saw three current trends emerging on supply chain sustainability in 2015/2016:

  • Industry collaboration is the biggest opportunity
  • Eliminating supply chain risks is the main driver
  • Traceability and environmental concerns are the biggest risks to watch out for

Industry Collaboration

Starting with ethical and responsible sourcing, supply chain professionals have begun to understand the importance of building long term relationships with suppliers. Having a win-win partnership is crucial. Companies who are a valuable customer to their vendors will have a considerable competitive advantage.

Organisations are demanding more 
from their suppliers. Traceability and transparency are key requirements. Companies sharing their big picture vision with their suppliers, and their role in the long-term strategy, will get more from their partners. Too many businesses are still failing to achieve this. Partnering with suppliers empowers them to unlock innovation quickly.

Working on more collaborative partnerships helps to minimise the risk factors too. Companies are liable for all tiers of their supply chains. Increased collaboration with others is vital to be
 able to efficiently assess all layers of the supply base.

Organisations can never 
be too informed if they want to prevent risk. They also need to demonstrate they have acted responsibly when risks are exposed. Companies must start with themselves, and build open and transparent relationships with their suppliers.

Codes of Conduct and Audits

Some pharmaceutical organisations,
 like Takeda, have recently established
 a supplier code of conduct in line with
 their international business ethics. They proactively audit and monitor their vendors to review performance in line with this code. It helps Takeda to have a much stronger supplier selection process, as they are able to build stronger relationships and reduce risk exposure.

Collaboration with other industry leaders can be very valuable in sharing information when it comes to supplier audits. Takeda recently joined the Pharma Supply Chain Initiative, composed of 20 companies. It has a supplier audit program and engages with the suppliers on behalf the member companies to make sure they comply. It also raises awareness from an environmental and ethical point of view.

Collaborative Platforms and NGOs

However, collaboration between businesses from the same industry is not widespread. Many companies fear a loss of commercial control and competitive advantage by working closely with others. As a result, there is an emergence of collaborative platforms. One of these is EcoVadis, which works with many global brands to provide supplier sustainability ratings for global supply chains.

Collaboration can also take the form of partnering with NGOs. They can help and guide organisations on environmental
 or ethical issues. Greenpeace is one such organisation. In the past they have worked with Kimberly-Clark to practice responsible forestry management, as well as Unilever and others on palm-oil sourcing. In building those partnerships, the willingness to talk is key, particularly when there is a history of conflict.

Supply Chain Sustainability can also be a source of competitive advantage for organisations. Stay tuned for the second part of this article to find out more.

Supply Chain Transparency: Why We Need It More Than Ever

As scrutiny over supply chain practices increases, organisations need to ensure supply chain transparency, from Tier 1, all the way down.

Supply Chain Transparency

This article was first published on Greenstone.

As non-financial reporting frameworks and requirements for organisations evolve, so does the need for transparency throughout supply chains. There is an ever increasing emphasis within current, and upcoming, regulations on being able to demonstrate a deeper understanding of your suppliers and vendors.

Most recently we have seen evidence of this advancing mood through the UK Modern Slavery Act, the EU corporate disclosure directive, and, of course, the Dodd Frank Act covering conflict minerals.

Last summer UK Prime Minister David Cameron further clarified the criteria surrounding the UK government’s commitment to anti-slavery and supply chain transparency in a speech in Singapore.

The prime minister stated: “From October [2015], we will also require all businesses with a £36 million turnover or above to disclose what they are doing to ensure their business and supply chains are slavery free. This measure is one of the first of its kind in the world, and it will be a huge step forward, introducing greater accountability on business for the condition of their supply chains”.

Legal Requirements

Guidance for compliance with the Modern Slavery Act was published in October 2015. And businesses with a turnover of greater than £36 million have some work to do. This includes involving internal buyers and procurement departments so that they are aware of any potential implications of the Modern Slavery Act, and can prepare to embed it in their processes. As well, as including the requirements into any current audit practices.

Supply chain transparency is also being driven by EU Directive 2014/95/EU, relating to disclosure of non-financial and diversity information. This requires by 2017, that all companies concerned (all companies based in the EU with over 500 employees) disclose in their management report, information on policies, risks and outcomes with regards to the following:

  • Environmental matters;
  • Social and employee aspects;
  • Respect for human rights;
  • Anti-corruption and bribery issues; and
  • Diversity in their board of directors.

Even though there are already mandates around CSR reporting in some EU countries, and many large enterprises already report on their environmental and social impact, the new directive will demand further commitment, as it also requires disclosure on the supply chain.

Placing Responsibility on Companies

The Dodd Frank Act, also known as the conflict minerals law, has been in operation for over two years. Under the law, over 1000 U.S. listed companies report their conflict minerals status to the Securities and Exchange Commission.

The law is designed to reduce the risk that the purchase of minerals from Central Africa contributes to conflict or human rights abuses. It places a responsibility on companies to be able to trace the designated minerals throughout their supply chain. This is something that can only be achieved through increased transparency of information at all levels.

Companies have struggled to accurately disclose information through their conflict minerals reports. They may also struggle with the Modern Slavery Act and the latest EU Directive. Like organisational level, non-financial reporting before it, supplier information disclosure and supply chain transparency is a new way of working for many businesses.

Those that address this area now will be creating robust processes that ensure a competitive advantage, as well as being well positioned for future legislation.

Role of Software

At Greenstone, we are increasingly seeing organisations turning to software solutions. This is not only to drive supply chain transparency, but to enable organisations to handle the burgeoning reporting requirements, and stakeholder expectations, efficiently.

Previously, supplier compliance has been a box ticking exercise for organisations. The processes of data gathering were ill conceived and incomplete, and information gathered was rarely interrogated, and almost certainly not used for reporting purposes. This lead to disillusionment amongst suppliers, and even lower levels of engagement.

However, we are now seeing that users of SupplierPortal are utilising the analytical tools available to manage suppliers and their data. The increasing emphasis on transparency and reporting means that organisations are no longer ticking boxes, but adopting new processes and procedures in order to identify and manage non-compliance.

What is more, is that this doesn’t have to consume a great deal of additional resource, but rather for organisations to acknowledge a new way of working, and realign current practices.

Gyles is Head of SupplierPortal at Greenstone, a non-financial reporting solutions company providing software and supporting services to clients in over 100 countries.

Greenstone’s SupplierPortal solution enables buyers to effectively manage supplier risk and compliance through a secure and private online platform. Buyers have the flexibility to distribute standard framework questionnaires, as well as proprietary questionnaires, to their suppliers and can then manage and analyse this information through a comprehensive suite of analytical tools.

Rio Olympics Focus on Global Supply Chain Sustainability

A focus on supply chain sustainability gives the Rio Olympics the opportunity to revolutionise global sustainability, and create a lasting legacy in Brazil.

Rio Olympics Supply Chain Sustainability

The Rio Olympics’ commitment to supply chain sustainability (with 100 per cent recovery, disposal and use of goods and waste) has the capacity to revolutionise supply chain sustainability worldwide as well as creating a legacy for positive change in the region, says supply chain consultancy Crimson & Co.

Despite a backdrop of political and economical uncertainty, Brazil has promised that the first South American-hosted Olympic and Paralympic Games, taking place in less than 100 days, will bring permanent changes to the city of Rio de Janeiro, with benefits spread throughout the country. Central to this has been the drive to ensure all suppliers are adopting sustainability practices.

“Most Sustainable” Olympics Ever

The London 2012 Olympics was billed as ‘the most sustainable ever’ but associations with key sponsors including BP, Rio Tinto, Dow Chemical and McDonalds, provoked a backlash from a coalition of campaign groups, keen to highlight the negative social or environmental impact of these firms.

In the run up to the Games in Rio, event organisers have been keen to ensure that all suppliers adopt sustainable practices, including managing waste, minimising the use of harmful substances, making conscious use of energy and water and maintaining ethical labour practices. Additionally, businesses are invited to participate in training sessions on sustainability as part of the bidding process.

For Richard Gurney, General Manager of Latin America for Crimson & Co, this commitment to sustainability represents the positive impact the Games can have on Rio and further afield:

“Sustainability throughout the Games’ management cycle – from initial planning to after the event – has been in the DNA of the Rio proposal since it first announced its interest in hosting the greatest sporting event on the planet.

Learning from Past Mistakes

“Brazil’s hosting of the FIFA World Cup in 2014 was not without controversy. More than $3 billion was spent on building five new stadiums and renovating seven existing ones, but many of these so-called white elephants are as likely now to collect dust as they are to generate ticket receipts. Brazil does not want to see a repeat of this and that is why there is such a huge emphasis on sustainability.

“When the Games finish, and until 2017, the Olympic Operations Committee will manage the dissolution process. This includes closing contracts, selling property assets and managing donations and returns. This planning, i.e. what will be done with each item after the Games, was part of the purchasing process and is considered part of the total cost of acquisition in purchasing decisions. The goal is 100 per cent recovery, disposal and use of goods and waste.”

Gurney continued: “In addition to reducing the environmental impact and the volume of waste after the Games, the initiative informed producers about how to get more sustainable alternatives to their products.

“Companies were invited to participate in training sessions as part of the bidding process to win contracts. Many companies still have the perception that sustainable products are more expensive. In fact, more often than not, the price of a product or service can be greater, but the cost reductions and elimination of waste in the value chain through sustainable practices lead to a lower total purchase cost.

“Time will tell on the impact of these decisions for Rio but, if carried out effectively, it has the capacity to revolutionise supply chain sustainability as well as creating a legacy for positive change. If that is the case, it will certainly have cause to rival London 2012 for the most sustainable Olympics ever.”

Burritos and Ice Cream – Supply Chain Failure and Success

Burritos and ice cream – the contrasting fortunes of two organisations and the difference between supply chain failure and success.

Supply Chain Failure

Burritos and ice cream. Who doesn’t love them? Carne asada and guacamole. Chocolate and cherries. The combinations are endless, and so are the places that offer these tasty treats. So what can a burrito chain or an ice cream brand do to stand out from the crowd?

Chipotle and Ben and Jerry’s (known for burritos and ice cream, respectively) have both come to the same conclusion: leverage the supply chain and use it as a brand differentiator.

They have decided to draw customers in with high-quality ingredients and a transparent supply chain. Chipotle and Ben and Jerry’s as brands have both become champions of local suppliers, fresh produce, and organic and non-GMO foods.

However, if you’ve been watching the news over the past months, you’ve probably noticed one of these companies has been more successful in their mission than the other.

Supply Chain Failure

Chipotle has been plagued by outbreaks of food-borne illnesses in the past few months, to the point where they shut down all their restaurants for a day to address food safety issues. As a result of these outbreaks, there have been calls for the chain to centralise their procurement strategy and source from large, well-known suppliers, rather than working with small farmers who may not adhere to as stringent food safety standards.

Chipotle appeals to the coveted millennial market and a supply chain failure, and a failure to live up to their lofty supply chain goals, may have a severe impact on their brand value.

Ben and Jerry’s has succeeded in the arena where Chipotle has come up short. After being sold to Unilever, a multinational corporation, Ben and Jerry’s received certification as a B-Corp, essentially a company that doesn’t allow board influence to sidetrack their CSR efforts. In their case, their parent company may actually be an asset rather than an obstacle as Unilever itself is also known for ambitious environmentally friendly initiatives.

For example, the company has pledged to make a $90 trillion investment in infrastructure over the space of 15 years to build a sustainable economy and combat global warming. “Companies make up 60 per cent of the global economy. If they don’t play an active part, how can we solve this crisis?” said Unilever CEO Paul Polman.

The Role of Procurement

Procurement needs to play a central role in CSR efforts, especially when supply chain promises are a primary piece of the brand message. Procurement should be responsible for staying on top of current and potential suppliers, including second tier and beyond when possible, making sure they have the necessary qualifications to live up to your brand image.

Procurement also needs to be ready to pivot to new suppliers quickly in response to any supply chain disruptions, whether they are result of illness outbreaks, drought, or changing government regulations.

Where Chipotle failed, and failed big, was that it wasn’t just one outbreak — there were five in the space of six months. Even if they can’t be traced directly back to a weak link in the supply chain, rumours and public perception can still have damaging consequences. Of course, Chipotle isn’t the only company to have suffered from a supply chain failure. Read about a more extreme case here.

Both Chipotle and Ben and Jerry’s have proven supply chain doesn’t have to hide in the shadows; there’s a place for it in the limelight. After all, now more than ever, people want to know where their food comes from.

But from Chipotle we can see companies will suffer if they don’t live up to their brand promises. However, with proper alignment to business objectives and recognition as a strategic player, Procurement can help prevent this from happening.

Hillary Ohlmann is the knowledge base developer at DeltaBid, easy-to-use procurement management software.

Innovating the Last Mile of the Supply Chain

From Amazon delivering your groceries, to a host of companies delivering your dinner, the competition for the last mile of the supply chain is heating up.

Last Mile Supply Chain

At the Big Ideas Summit 2016 last week, there were a whole host of discussions around the future of the supply chain. Paul Markillie discussed the future trends in manufacturing (and you can watch Paul’s Big Idea video too), while Lucy Siegle discussed the increasing need for transparency and ethics in the supply chain.

Ahead of the Summit, we also asked the Procurious community about their Big Ideas for the future of the supply chain, and logistics, industries.

David Weaver, Online Marketing Manager, INFORM GmbH

Big Ideas Supply Chain - David WeaverIt truly is an exciting time to be involved in the supply chain industry. Over the course of 2016, technological advancements in the field of robotics will continue to reshape manufacturing and warehouse facilities.

Based on what I saw at some of the events I attended in 2015, I believe picking bots in large warehouses will become a reality, sooner rather than later. Additionally, the migration of supply chain planning into the Cloud will continue to expand and the implementation of advanced analytics to successfully plan across all supply chain functions will experience an upward trend.

Furthermore, companies will have to get creative with their methods for increasing transparency across their value network. However, in order for companies to be successful, the 4 important T’s of transparency must be fulfilled:

  • The topic must have traction within the organisation,
  • Internal and external trust must be established,
  • Appropriate supplier training programs should be in place, and
  • Today’s available technology needs to be implemented.

Next to all of these leading topics, I expect some of the biggest ideas to be aimed at solving the “last mile” logistics problem. Over the last few years we have seen several last mile logistics providers introduce their innovative approaches to solving the problem (Doorman, Roadie, Deliveroo, etc.).

I expect the fight for control of this market to continue, and as a result of the high level of competition, we will continue to see new, innovative problem-solving methods. 

Even although the event itself is over, there’s still time for you to get involved with the Big Ideas Summit 2016. Visit theBig Ideas Summit website, join our Procurious Group, and Tweet your thoughts and Big Ideas to us using #BigIdeas2016.

In the coming weeks, we’ll be sharing exclusive and unique thought leadership, Big Ideas, and discussion that will shape the future of procurement. Don’t miss out – get involved, register today.