Tag Archives: supply chain management

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.

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.

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.

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.

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.

How to Introduce a Sustainable Procurement Strategy

Although the theory is well regarded, the practical aspects of introducing a sustainable procurement strategy are often overlooked.

This article is by Gerard Chick, Chief Knowledge Officer, Optimum Procurement Group.

About 10 years ago the UK government started taking the pursuit of sustainable procurement seriously. They established a task force of industry experts to try to define ‘sustainable procurement’, and develop appropriate standards for general deployment.

The Government’s goal was position the UK at the forefront of sustainable procurement in Europe by 2009. Their framework and recommendations have been instrumental in guiding sustainable procurement strategy, theory and practice across the globe.

What is Sustainable Procurement?

So what is this thing we call sustainable procurement? Sir Neville Simms, chair of the UK Procurement Task Force, described it as the use of procurement “…to support wider social, economic and environmental objectives, in ways that offer real long-term benefits” to organisations and the communities in which they exist.

These long-term benefits include:

  • The achievement of significant savings by focusing on a “whole life costing” methodology for procurement.
  • The incorporation of the “three Rs” (Reduce, Reuse, Recycle), to cut waste and improve the efficiency of resources.
  • The enhancement of businesses public image, by demonstrating a sustainable approach to business, and championing related environmental and social benefits.
  • The development of new markets for innovative products and services through technological advancements.
  • The improvement of management information, a focus on business and supply chain risk, and better supplier relationships.
  • Competitive advantage as a consequence of the early adoption of practices, focusing on increasingly environmentally-focussed legislation.

Developing Sustainable Procurement Practice

The UK Task Force devised a National Action Plan to inform interested organisations to adopt a sustainable procurement strategy. In 2006, Procuring the Future was published to support public and sector organisations in taking their first steps in this burgeoning area of interest.

To help you, here are the central planks of the report established as recommendations for those who wanted to develop sound, achievable, sustainable procurement practice:

  • Be a beacon: Provide clear direction for both procurement and your supply base providing consistent leadership and policy-making on sustainable procurement issues.
  • Set the standard: Fully implement existing procurement policy and standards. and ensure these are extended across all procurement activity. This will improve performance and underline expectations, including the establishment of well understood minimum standards for your suppliers.
  • Prioritise: Rationalise existing procurement standards into a single integrated procurement framework, which covers both policy relevance and appropriateness.
  • Test: Filter and select new procurement policies to ensure they are enforceable, before considering implementation.
  • Develop capability: Ensure you and your team have the requisite professional skills to support the efficient deployment of sustainable procurement.
  • Tool up: Provide the appropriate tools, training and information resources to execute these standards.
  • Be ready: Ensure you already have the appropriate budgetary mechanisms in place, and that your spending and budgeting policies facilitate your sustainable procurement strategy.
  • Be proactive: Encourage openness to innovation and look proactively for opportunities to drive social benefits through your engagement with suppliers and the wider marketplace.

There is no doubt that the UK’s lead is now being adopted elsewhere, and that the global procurement community seeks to embrace a sustainable approach with an eye on good practice coupled with other significant business rewards.

Harness the Power of Unstructured Data

Do we still need the smartest guys in the room if we have the smartest machine? IBM paint a vision for the future of procurement and the power of unstructured data.

Unstructured Data

“Are you going to be relevant in 3-5 years’ time?”

What a start to the day! Barry Ward, Senior Procurement Brand Manager at IBM Global Procurement, has just left the stage, leaving the assembled thought leaders with something big to think about.

Barry, a 27-year veteran in supply chain at IBM, is currently European lead for commercialising Procurement Analytic Solutions with IBM’s clients. This leaves him ideally positioned to provide context for all the discussions that will be happening throughout the day at Big Ideas.

Summarising the global business environment that procurement is currently operating in, Barry described a fast and relentless pace of change, major disruption across markets, and high levels of external upheaval.

Technology as a Disruptor

With increasingly stretched resources, organisations are being asked to do more with less, all the while trying to stay on top of information which, given a greater speed of dissemination, could quickly impact the brand and reputation of the company.

According to Ward, there are “mountains of data” available to organisations. However, as it’s 80 per cent unstructured, and needs sifted before use, it isn’t useful. Procurement needs to harness the power of this unstructured data. This is where the development of cognitive technology looks to be a boon to procurement.

The potential for these cognitive technologies, such as IBM’s own Watson, are just mind-blowing. As the technologies are developed, they will be able to do everything that a human can do, but in a fraction of the time. This is more than AI, it’s like have a computerised “colleague”.

Upskilling Procurement

These technologies will take over the manually intensive activities currently done in procurement, facilitating the ability for work to be carried out anywhere, at any time, in line with increasing mobile access and social collaboration.

The Watson Buying System is just one facet of this technology. IBM are at the stage of proof of concept of this technology. The system will assist with purchasing, based on needs of buyers. It can match pictures of items, or match speech too, to catalogues, and get goods bought for users and delivered anywhere it’s needed.

Systems will provide real-time data, showing potential risks in the supply chain, and how they are being mitigated. According to Barry, mitigating risk through predictive technology will no longer be a “nice to have”, but will become essential for organisations.

Procurement will play a major role in this cognitive revolution, using it to drive value-adding activities for the business, such as a focus on innovation. However, this will bring a challenge of ensuring that procurement have the correct skills to leverage this opportunity.

Procurement professionals will focus more on a data science-type role, as well as on SRM activities. Innovation will be found through building proper, collaborative relationships throughout the supply chain.

Challenge to CPOs

Barry ended by issuing 3 calls to action to procurement leaders:

  1. CPOs need to adjust the design of their organisation.
  2. Enabling success for procurement will be driven by using the right technology.
  3. Procurement needs to upskill in order to drive value-adds for the organisation.

There is no time to waste. There’s no time for incremental steps. As Barry says, it’s time for CPOs to be bold.

How Technological Megatrends Are Transforming Manufacturing

Technological megatrends are leading to major disruptions in manufacturing. And it’s affecting the way procurement and supply chain professionals plan for the future.

It wasn’t that long ago that manufacturing was a noisy and dirty process that involved huge numbers of staff and required significant factory floor space.

But that’s all changed. A number of megatrends have disrupted the manufacturing sector at a rapid rate, which Paul Markillie, Innovation Editor at The Economist, has documented in a number of articles and papers.

Given their disruptive nature, these technological megatrends are of significant interest to the procurement and supply chain professionals. Paul has been invited to speak on these mega-trends, and other technological advancements, that are disrupting and transforming manufacturing, at the Big Ideas Summit 2016.

“I’m particularly looking forward to the Big Ideas Summit because many of the things I talk about attract interest and curiosity. That can lead to some lively interaction, from which I often learn things from people who are already having to confront profound changes to the way they will do business in the future,” Markillie writes.

During his keynote, Paul will explain how manufacturing is going digital and how that will disrupt the conventional economies of production, and overturn established supply chains. He’ll also explain how companies are responding to these trends.

Changing the Manufacturing Rules

According to Paul Markillie, a handful of industrial revolutions have occurred, depending on who you ask. And, as has happened in other industries, such as publishing, music, films and electronics, the move to a digital world in manufacturing changes the rules comprehensively.

Developments like new materials, robotics, 3D printing, and computer-aided design and simulation, replace the old notions of economies of scale. This changes not just where companies locate factories, but also how they organise themselves, and arrange their procurement and supply chains.

As part of his work, Markillie has documented the dramatic pace of change in manufacturing around the world. This includes the carbon-fibre composites making light work of aeroplanes, and now cars too. BMW’s car factory in Leipzig produces a variety of vehicles, with a group of robots in one area moving in perfect synchrony as they assemble body section, with a precision no human could hope to match.

But there’s no thundering metal-stamping machines or showers of welding sparks here, as he documents. Instead, these car parts are black, and made from a composite material called carbon fibre. And by the mid-2020s, carbon fibre will be widely adopted in car making, he says. And this is just one of the technological megatrends we need to be keeping track of.

Advanced Manufacturing Methods

There’s many other examples of major innovation in the car industry in other parts of the world, too. Researchers in Tennessee have created an automated system endearingly known as Big Areas Additive Manufacturing (also known as a 3D printer), which is used to print cars.

The researchers work at the Oak Ridge National Laboratory, which is exploring a number of advanced manufacturing methods. In one experiment, it made most of the body and chassis for an electric replica of a classic 1960s sports car, and took just six weeks to design, print and assemble the car.

The dramatic pace of change proves that first-tier suppliers will need to work much closer with companies in the development process. While this already occurs to some extent, there will be huge opportunities for companies further down the supply chain to innovate.

For example, second-generation robots are more affordable for medium and small companies, while 3D printing processes are less wasteful of raw materials and allow greater production flexibility at lower volumes.

There are plenty of other new approaches to manufacturing, which give procurement professionals plenty of food for thought, likely to be explored by Markillie at the Big Ideas Summit. No matter how you look at it, manufacturing is a world away from yesteryear, he says.

Paul Markillie will discuss these disruptive technological megatrends in greater detail during his keynote at the Big Ideas Summit 2016 on April 21st.

Want to know more about Big Ideas 2016? Then visit www.bigideassummit.com, join our Procurious group, and Tweet your thoughts and Big Ideas to us using #BigIdeas2016.

Don’t miss out on this truly excellent event and the chance to participate in discussions that will shape the future of the procurement profession. Get Involved, register today.

Big Ideas in UK & Public Procurement

Social value and collaboration – just the tip of the iceberg for the professionals in UK and public procurement.

Ahead of the Big Ideas Summit 2016 this Thursday, we are taking a look at the key issues facing procurement in the coming years. We have asked experts and influencers in our community to share their Big Ideas on the themes we will be discussing on the day.

The concept of social value is one that has gained more traction, driven by public procurement professionals across the world. It also links heavily into the idea that procurement as a whole needs to collaborate and work together, something that we’ll also be discussing at Big Ideas.

We spoke to some of our UK-based professionals in the Procurious community to understand the big ideas in the UK and public procurement.

Helen Mackenzie, Head of Procurement, Scottish Local Government

Power Profiles - Helen MackenzieAs those of us working in or with public bodies across the world move forward through our journey of procurement reform, our challenge is now shifting from one where tackling corruption, compliance and procedures are key to one where we’re must add value whenever we can.

At the front end of the process, there’s been some innovative work looking at commissioning services using open problems. Barcelona and Stockholm have had some great results by shifting from specifying the service they wanted, to specifying the problem they wanted to solve.

Adding social value to public procurement contracts continues to be expected by policy makers. In Scotland, we’re including requirements to ensure fair work practices, including the payment of the living wage, and community benefit clauses, which have been used to create added value. For instance 1,000s of apprenticeships have been created as part of our contracts.

Ensuring our communities are involved at the heart of our procurement processes is perhaps the holy grail of public procurement. It’s something which isn’t easy to do, it’s going to require us to stretch our stakeholder engagement skills. The prize will be contracts which target resources where they are needed, people who feel public spending is actually being targeted at them and outcomes which will deliver real improvements in people’s lives.

If we’re successful in shifting our focus away from what we’ve always bought, to what we need to solve with community engagement and social value at the heart of what we do, we’ll certainly secure great contracts and we’ll make the savings we need to deliver in the process.

Jane Lynch, Lecturer, Cardiff Business School

Jane LynchLeading organisations today redesign processes for improving customer experience. This, they argue, leads to more effective business operations.

However, this may lead to initial process inefficiencies (i.e. higher process costs). Who and what should drive process improvement for our business? Is it the supply chain, the organisation’s strategy or is it all about the customer?

Chris Cliffe, Director, CJC Procurement Ltd

Power Profiles - Chris CliffeBig Ideas and innovation in procurement is certainly needed. However, not at the expense of the basics.

Think of Maslow’s hierarchy of needs and apply it to procurement. As a profession, and as individual professionals, we cannot ‘self-actualise’ until we have satisfied the more fundamental needs of our roles. 

As a professional collective, we need to get a lot better at collaborating as individuals, and as a profession, to ensure that the ‘physiological’ and ‘safety’ needs are met, which in our scenario is the basics such as spend analysis, market knowledge, proficiency at transacting procurement processes (particularly the regulated public sector processes).

With that foundation satisfied, we can move on to the ‘Love & Belonging’ and ‘Esteem’ needs, which for us is where many of us still struggle. Being invited to the top table at our organisations as true business partners remains a consistent challenge. 

At this level, we need to be more proactive in demonstrating and promoting contract management and supplier relationship management achievements, not just (but also) procurement process cost savings and force our way in to the strategic conversations. 

From this point we can dream of ‘self-actualisation’.  All contract spend is compliant and being managed well.  Our deep market knowledge is maintained, valued and collaborated on with peers and suppliers alike.  We are highly valued by our executives, and the ‘go-to’ people for business advice and guidance. 

Many of us can only dream of that utopia, and unless we work together on the basics, it will only remain a dream and no amount of retweets will improve our futures.

There’s still time to register for Big Ideas 2016. Visit www.bigideassummit.com, join our Procurious group, and Tweet your thoughts and Big Ideas to us using #BigIdeas2016.

Don’t miss out on this truly excellent event and the chance to participate in discussions that will shape the future of the procurement profession. Get Involved, register today.