On the first day of Christmas my true love gave to me ...

By Sarah Kingdom-Evans

On the first day of Christmas my true love gave to me... Procurement in a Category Tree

Granted, this is a weak link to our industry and the season of goodwill, and whilst the gift of a category tree may not be on many lists for December 25th, it could be a valuable present to yourself in the New Year.

Transforming Procurement – Myth or Reality...?

By Richard Hogg

I took the opportunity to attend the final Real World Sourcing Series expert briefing of 2013 last week in London. This time the excellent session was delivered by the ever-green Peter Smith, and in amongst the brilliant quiz jollies – it had some really great content that got me thinking… 

What if Twitter was your Sourcing Tool of choice? (Part 2)

By Steven Low

So how on earth could the twitter approach work? Well, to be on twitter you create a profile of some description. This could be where suppliers fill up all the boring bits of information about themselves. The covers off the upfront chunk of an RFI or RFP straight away! Buyers would essentially do the same thing on their side. Next, they could start tweeting in real time about Sourcing opportunities coming up – in less than 140 characters of course. Suppliers could ask questions back instantly about exactly what and wasn’t required.

What if Twitter was your Sourcing Tool of choice? (Part 1)

By Steven Low

We all heard or read about the hype surrounding Twitter’s initial IPO a few weeks back. A stellar success by all accounts although like me, I’m quite sure you never got your hands on any shares to make a healthy profit. The social media darling – who has yet to make any profit of its own is worth way more than British Sky Broadcasting Group and almost worth as much as the once-mighty Royal Bank of Scotland, i.e I don’t think I can afford to buy it anytime soon.

Wanted: Procurement Skills and Talent

By Mickey North Rizza

Much has been written about the Supply Chain talent shortage, but not the various aspects of Supply Chain like procurement, sourcing and supplier relationship management. As these areas continue to evolve to more “value contribution” organisations, so too must the people skills evolve. Below are some thoughts on the skills required to move the Procurement organisation to a valued business and Wall Street performance contributor in the next few years.

Are you taking a slice of the ‘Bread of Heaven’?

By Sarah Kingdom-Evans

The 17th October saw the inaugural BravoCymru event held at the Millennium Stadium in Cardiff. The event had been created as a result of our international BravoConnect event in London Heathrow in July and looks likely to be continued across the Bravo family...

To Centralise or Decentralise? (Part 4)

By Paras Sood

To round off this week's short series of posts on whether to centralise or decentralise your procurement function, let's wrap up by looking at the longer term activities involved in this process:

To Centralise or Decentralise? (Part 3)

By Paras Sood

Having discussed the short-term activities for an organisation to consider when organising their procurement operations, let's now take a look at the medium-term activities:

To Centralise or Decentralise? That is the question... (Part 2)

By Paras Sood

From my perspective, the argument for centralising purchasing operations has to revert back to the original intentions of strategic sourcing and how much an organisation wants to control the procurement activity within a company. If we assume that an organisation is looking to drive cost savings and manage their spend, the next steps are largely based on the organisation’s cultural drivers for how ‘spend under management’ can be achieved.

Applying Big Data Transparency to Improve Our Lives

By Mickey North Rizza

In 2002 I was using a Handspring Treo, a personal device assistant (PDA) to capture my address book information and emails. A few years later, I was using a RIM Blackberry to do the same, but it had the added benefit of being a mobile phone too. These days I can do a thousand things on my smartphone which is a PDA, mobile phone, camera, media player, GPS and an internet tool that lets me tie all my interactions together in one device. WOW, it’s pretty cool and a superb all-in-one personal device. But nothing compared to all the information that it touches and captures.

Failure to Communicate = Misalignment

By Mickey North Rizza

Business strategies are developed all the time. Business strategies often fail during implementation because the strategies are not shared with those that need to execute them. George Palmatier said it well: Failure to Deploy is often a Failure to Communicate. Communication failure leads to misalignment. If you don’t communicate the expectations, how do you expect others to execute when they don’t know the expectations?

It’s Budget Season: Do you have your list of requirements yet?

By Mickey North Rizza

As we transition into autumn and back to school, for over 75% of companies it is also the time to start discussing budgets for next year. Oh, how even the word “budget” conjures up long days of negotiating to save your current budget and add more to it!

Communicating the Power of Contract Management

By Pete Hodgkinson

Many organisations are still trying to build a business case for contract management internally.

Effectively communicating why it matters and how it will improve not only the negotiated deals procurement have put in place, but the broader organisation is an important component of a business case. If you want to become a strong advocate for contract management, you need to communicate to the decision maker:

Spend Recovery Audits - Can you afford to ignore them?

By Mike Roberts

Spend Recovery audits are a hot topic across central government at the moment with Francis Maude requiring all departments to have completed a review by the end of the calendar year. However, this is something that should be considered across all sectors. As well as delivering almost immediate value, the recovered monies can be used to fund investment in procurement technologies, which can drive additional and longer term savings strategies.

So why would spend recovery, normally associated with finance or audit, be linked to procurement?

Housekeeping... at home and at the office

By Sarah Kingdom-Evans

I’d like to think I am on-top of our household spending.... I know to the penny how much the Mortgage, Council Tax and Gas costs each month, however I recently changed Mortgage product and as part of the simple online application I had to list the expenditure of our household....” Easy” I thought and quickly listed the figures  I was certain of, although to my surprise there were many that I had to look up. When I read through my bank statement it became apparent that a significant number were a revelation!

To Centralise or Decentralise? That is the question...

By Paras Sood

For many organisations, procurement functions undergo numerous transitions over their lifespan. Purchasing may originate reactively or tactically through stock purchasing rooms and localised buying, but as the procurement organisation matures the driver swiftly becomes 'strategic sourcing' from the centre, identifying the best innovations from the supply-base, leveraging economies of scale.

Gaining Five Benefits through Contract Management

By Pete Hodgkinson

The discussion regarding whether or not procurement is the right fit to own contract management was certainly a lively one. Let’s push that aside, and discuss why contract management really matters, no matter who takes charge.

What’s Next in Sourcing Excellence? Agility’s the Word...

By Mickey North Rizza

There’s not a lot of debate about the value strategic sourcing plays in driving cost-savings. Best-in-class sourcing organisations, talked it about in our recent blog, use strategic sourcing to drive almost 12% in year-over-year cost reductions, vs. others who average just over 3%.

Is Your Sourcing Organisation Best-in-Class?

By Mickey North Rizza

If you’re like many CPOs and procurement executives, you often run the gauntlet of finance and others asking for details on annualised savings numbers. Cost savings remain a major component of the value that strategic sourcing offers most organizations and, as with many things in life, what’s good can always be better.

And Now for Something Completely Different...

By Sarah Clarke

At the last Real World Sourcing Series briefing of 2012, full of Christmas cheer and good will, I somehow found myself volunteering to join Guy Allen and a band of merry men to support them on a cycle trip to raise money for charity.

Giving the Economy a Boost: Andy Murray, the Ashes, a Heat Wave and the Royal Baby

by Richard Hogg

I stumbled across something quite odd on the BBC last week: three positive stories about the UK economy...

The Sourcing Revolution - Market Informed Sourcing

We're gearing up for the return of the 2013 Real World Sourcing Series in September, in partnership with Spend Matters and industry expert Guy Allen.

Registration for the fourth briefing in the series is now open.

The Problem with Procurement – Is there really only one?

Authored by Claire Sexton

The global procurement director at PricewaterhouseCoopers (PwC) wrote a new Harvard Business Review blog post that has been the source of many conversations in our office recently about what procurement can do better and what’s stopping that progress.

Going Beyond Supply Chain Risk Basics

Authored by Claire Sexton

My American colleagues often read Deloitte’s ongoing series in the Wall Street Journal regarding supply chain issues. One of the consultancy’s latest articles was about risk in the supply chain and the questions they often are asked.

Procurement – Its Own Worst Enemy? (Part Three)

By Sarah Clarke

Spurred on by an article on procurement from the Harvard Business Review, which highlighted poor communications in procurement teams both with internal and external stakeholders, I decided to write a couple of posts around some tools that can assist with communications.

Procurement – Its Own Worst Enemy? (Part Two)

By Sarah Clarke

Yesterday we took a look at an article on procurement from the Harvard Business Review, which highlighted poor communications in procurement teams both with internal and external stakeholders.

Procurement – Its Own Worst Enemy? (Part One)

by Sarah Clarke

I recently read a post from the Harvard Business Review titled ‘The Problem with Procurement’. It was an interesting read and I’d recommend any procurement professional to go and take a quick look.

Supply Chain Disruptions = 30% Lower Shareholder Returns

By:  Mickey North Rizza

In the spring of 2005, the Production and Operations Management Journal published an article, “An Empirical Analysis of the Effect of Supply Chain Disruptions on Long-Run Stock Price Performance and Equity Risk of the Firm.”   The study found companies have experienced 30% lower shareholder returns compared to their peers in the wake of a publicly announced supply chain disruption.

Conflict Minerals: Three Steps to Supply Chain Compliance

By Mickey North Rizza

Human rights groups won a major battle last year when the SEC approved new rules that force public companies to disclose if any of their products contain conflict minerals sourced from the Democratic Republic of Congo.

Conflict minerals – which include tin, tantalum, tungsten and gold, among others – are core components of many high-tech products that consumers use every day, like smartphones,  MP3 players and laptops. The trading of these minerals, however, is believed to fuel deadly civil wars in the Democratic Republic of Congo and Uganda.

Even The CFO Is Focused On Risk!

By Mickey North Rizza 

Risk continues to be a hot topic for businesses; but like the old adage about EF Hutton, when the CFO starts talking, people start listening — or in this case, start strategising for the future.

At a recent Wall Street Journal CFO Network Conference, attendees noted four critical aspects to prepare for global business risks: Thinking regionally; Cyber-security; Manage the supply chain; and Interrelated risks. The group was co-chaired by Robyn M. Denholm, Chief Financial Officer, Juniper Networks; Bob Shanks, Executive Vice-President and Chief Financial Officer, Ford Motor Company; and Trace T. Travis, Executive Vice-President and Chief Financial Officer, Estee Lauder Cos.

Capitalizing on the Magic in Gartner’s Strategic Sourcing Magic Quadrant

By Mickey North Rizza

Gartner recently released The Strategic Sourcing Magic Quadrant. The ‘MQ’ as it is affectionately known, positions technology players within a given market, in this case Strategic Sourcing. The MQ plots the providers ability to execute against the completeness of vision: resulting in a quadrant positioning the leaders, visionaries, challengers and niche players.

Turning Japanese...

By Ben Turner - 4C

I’ve recently been helping a number of clients in the retail sector carry out eAuctions for their Goods for Resale (GFR). Coming from an indirects procurement background, I was used to English eAuctions, which allow a feedback process between suppliers, enabling them to adjust their position in response to their ranking. Japanese eAuctions do not incorporate this feedback process.

Supply Chain Transparency in the Land Down Under: “Track my MACCA”

Authored by Mickey North Rizza

In a revolutionary move, McDonald’s in Australia has introduced an iPhone app that allows consumers to track to the source of their purchased burgers, chicken, fish or buns. The “Track My Macca’s” app (“Macca” being Australia’s moniker for McDonald’s) gives the consumer the ability to learn more about ingredient sources and their suppliers by simply scanning a QR code located on the product packaging.

Procurement Looks to Service Professionals for Help with Negotiations

Authored by Mike Roberts

Recently, at the Procurecon Marketing Conference in London, Steve Lightfoot - communications procurement manager for the World Federation of Advertisers (WFA), spoke about the importance of procurement teams learning about the marketing and advertising business.

Contract Management: Who’s really in charge? (Part 2)

By Pete Hodgkinson

Firstly, many thanks for all the comments directly on the first part of this two part blog and within the many discussion groups/forums.

Following on from my last post I would like to expand on the reasons why I believe Procurement should oversee contract management. Many procurement professionals I meet firmly believe that procurement should play a larger role in contract management but I am often asked, “But how can we convince our leadership teams and budget holders that this is important?”

Procurement Contributes Largest Share of Savings to UK Government

Authored by Mike Roberts

Cabinet Office Minister Francis Maude recently spoke at the Treasury, praising government buyers for their work to save taxpayers money.

Hoping for a Crystal Ball

by Steve Balding

In my career I’ve been lucky enough to meet many really good procurement practitioners. Just like any profession, their experiences informs their opinions.

Ask them the question, “What’s the one thing you’d change in your job” and you’ll hear a common response: “Gain earlier engagement from the Business, they leave it too late to ask for our support, then we can’t deliver it to their timescale”.

Contract Management: Who’s really in charge? (Part 1)

By Pete Hodgkinson

I have been asked a number of times who should lead with contract management, should it be procurement, category managers, or end users? Some people are sceptical that the procurement function can properly oversee contract management from start to finish. I read with interest Peter Smith’s paper as he believes that, “as the fundamental procurement task is to obtain value and competitive advantage from suppliers, then how contracts and suppliers are managed post contract award was simply too important a topic to ignore.”

Implementing a New Major IT System – How do Difficulties Arise?

Authored by Sara Omer

Last week we looked at Category Management, what is actually is, its benefits and how to ensure a successful programme, this week we will be looking at the difficulties involved in implementing a major new software system and how those difficulties can best be over come. In this first post we’ll start with an introduction on how these difficulties may arise. 

Supplier Challenges

By Claire Sexton

Reluctantly I am writing a short post which is actually a bit of a moan....however it is a moan that I am sure plenty in the procurement world will identify with; the subject being - supplier challenges.

How Samsung Spends its Profits

Authored by Mike Roberts

Samsung has an interesting approach to when, where and what the company spends its money on. Below is an excerpt from the Wall Street Journal that explains it better than I can:

Category Management - Ensuring a Successful Programme

Authored by Fayaz Haq

Now for the final part in our series of posts on Category Management, yesterday we looked at the benefits of Category Management and the effects it has on your organization, and finally we center on how to ensure a successful program when implementing a Category Management approach.

What are the benefits of Category Management?

Authored by Fayaz Haq 

In the last post we discussed what Category Management actually is and how adopting a strategic approach can maximize business profitability and result in competitive advantages for an organization. In this post we look more at the effects on the organization and focus on the benefits associated with Category Management. 

Category Management - What is it?

Authored by Fayaz Haq

This is the first in a three part series of posts on Category Management where we will look at the benefits of Category Management and identify the factors that endure a successful programme, but to start with, we will answer the question; What is Category Management? Category Management is a strategic procurement approach that focuses on optimizing an organization’s spend on goods and services. It is process based and incorporates business improvement in hand with change management. This is largely due to the fact that a successful Category Management program requires the active participation of and engagement with stakeholders, functions and individuals across the business.

Three Headlines from Last Week that You May Have Missed

Authored by Richard Hogg

Another busy week of supply chain and economic headlines! Below are three stories that had our office talking.

Technology Supply Chain Security Standard

By: Mickey North Rizza

Risk management is a standard practice in most companies, and definitely those with IT products. Counterfeit and intentional malfunctioning or sabotage to technology products is widely known. To combat the counterfeiting and tampering, The Open Group published a technical security standard for a technology acquirer “to protect a company from acquiring maliciously tainted or counterfeit products.” 

New Survey: Half of UK Businesses Fail to Enforce the UK Bribery Act

Authored by Claire Sexton

A recent poll of procurement managers and directors conducted by Ernst & Young found that nearly half (48 per cent) of British firms fail to vet their suppliers for compliance with the Bribery Act.

Tragedy in Bangladesh: A Case for Better Supplier Visibility

Authored by Pete Hodgkinson

An eight-story building which was home to several garment factories collapsed in Bangladesh last week, killing at least 87 people, and bringing back memories of the devastating factory fire from last November. Within the building were garment factories that supplied clothing to well-known brands including, Benetton, Primark and Matalan. 

Challenges of the Acronym Shuffle – NHS PCTs to CCGs

By Claire Sexton

During the last couple of months I have visited a number of my NHS customers to catch up on all of the latest changes that they are going through with the switch from PCTs to CCGs. NHS professionals across the country have spent the last 6 to 12 months working towards the deadline day of 1^st April 2013 when Primary Care Trusts (PCTs) would be no more and instead all commissioning activities would be transferred to the newly formed Clinical Commissioning Groups (CCGs) and their supporting commissioning support providers.

Supply Chain Risk Factors Cause Major Disruptions

Authored by Pete Hodgkinson

Are you prepared for the unpredictable?

Procurement professionals manage risk every day, but a lot of risk factors are out of their control. Economic disruption, natural disasters and supplier bankruptcy can strike at any time. 

A new study reports that two thirds of businesses in the EMEA region have experienced disruption to their value chains in the past 12 months. The number is even higher (70 per cent) in the UK. Surprisingly though, only a quarter of organisations have performed a risk assessment on all elements of their supply chain. 

Mass Auto Recall Highlights Importance of Supplier Diversification

Authored by Claire Sexton

Last week, Japanese automakers, Toyota, Honda, Nissan and Mazda announced that they are recalling 3.4 million vehicles sold around the world due to faulty airbag inflators.

So what’s the thread that ties these four automakers together? Their airbag supplier – Takata Corp. the automakers all purchase airbags from the suppliers in an effort to improve collective buying power, driving prices down.

Who Deserves More Training: Sales or Procurement?

Authored by Claire Sexton

If you haven’t been keeping up with Maggie Slowik’s updates about the Procurement Leaders Mini MBA series, you definitely should. In her latest post, she cited a remarkable statistic: “An experienced sales representative could get nearly four times as much training as their procurement counterparts.”

The March Services PMI Numbers: Three Positive Economic Signs

Authored by Mike Roberts

The latest Markit/CIPS Services Purchasing Managers’ Index (PMI) recorded a figure of 52.4, a slight increase from February’s score of 51.8. This reading was the best in seven months and has helped the UK bounce back from the brink of a triple dip recession.

March: Top Supply Chain and Procurement Headlines (Part 1)

Authored by Richard Hogg

It was another busy month in the supply chain and procurement worlds; here are two headlines that grabbed our attention in March. We will also share two additional headlines later in the week – and a few things to be on the lookout for in April.

Headline #1: CPOs search globally to fill the procurement talent gap

We first started to write about the procurement talent gap in January of last year – and still then, the topic is only gaining momentum in the industry.

Supply Chain Risk Management Tools

Authored by Mickey North Rizza

A recent survey from Deloitte of 600 global supply chain executives reveals a wide range of tools used to manage risk.  Of this list of technology tools, very few respondents use some of the top risk tools - only 36% report using predictive modelling and only 29% use risk sensing data, worst case scenario modelling and business simulation tools.  

In my own discussions with many Supply Chain leaders, I found one thread in common with the Deloitte risk management findings: Supply Chain risk management technology utilised in a silo does not deliver full value until it is coupled with additional data sources, advanced capabilities and applied to problems within the supply chain.  One executive told me technology tools are definitely enablers, but the linkage and pushing the technologies capabilities to solve the supply chain problems is where the rubber meets the road.

Starbucks Becomes Its Own Supplier

Authored by Sarah Clarke

Starbucks recently bought its first farm, a large plot in Costa Rica.

From a CSR and ethical sourcing point of view, Starbucks plans to use the centre to help coffee farms mitigate climate change and support long-term crop stability, in addition to helping support growers and their families.

Arguably the more important benefits include: Starbucks’ move gives them more control than ever over their supply chain, and allows them to test and create new blends of coffee.  The company can now oversee the production of their coffee, literally from the moment the seed is sown.

What this means for the sourcing process:

• 100 per cent control over lead times and inventory 
• Protection of product innovation – including the development of new coffee blends
• Improved profit margins by eliminating the cost of land in the supplier mark-up

A New iPhone……Already?

Authored by Emily Chandler 

Apple’s iPhone5 was released less than a year ago but online speculation immediately began, regarding when we would see a new iPhone model. 

The latest rumours point to a release date for the iPhone5S as early as this summer.

Consumers might be excited, but this rapid innovation is placing major pressure onto Apple’s supply chain. Long gone are the days of relying on the “cash-cow” product that could sit on the shelves for years without updates or upgrades. The new business model revolves around customer demand for constant innovation, and the ‘latest-and-great’ technology.

While a traditional product life cycle traditionally involved 4 stages – introduction, growth, maturity and decline – the new version aims to almost eradicate the “decline” stage, ensuring that a product never becomes obsolete.

Supplier Relationship Management: Crucial to Supply Chain Success and EPS

Authored by Mickey North Rizza 

Much has been written about Supplier Relationship Management (or SRM), from the process of SRM, to the value of SRM, to issues with SRM. SRM is crucial to improving operating margins, return on invested capital, return on assets and earnings per share. But few companies focus on the value that can be derived from their supplier relationships. A few months ago I had a discussion with a client on how to improve their supplier relationships. When I asked what the issues were I received the following responses: 

1. Our suppliers do not listen to us. 
2. Our suppliers do not deliver what we request. 
3. Our suppliers would rather work with competitors rather than us. 

I didn’t ask for specifics, but the more I listened the more I discovered this business was dictating their needs to all suppliers regardless if they supplied nuts and bolts, packaging, housings or electronic components. I asked the VP of Sourcing and Procurement if they had ever heard of supplier segmentation. The answer was a resounding “no.” So we started peeling back the onion and much to their delight, they discovered suppliers are not all equal; supplier issues may or may not impact the supply; and suppliers do want to satisfy demand, but conflicting signals within the company can impede progress. Perhaps most surprising to this team was the fact their suppliers want to be treated as trusted partners and reap the value along with them of satisfying their clients demands. 

Critical Players for Supply Chain Success

Authored by Pete Hodgkinson 

A new survey conducted by CIPS and Supply Management reports that 86.2% of purchasers think regulators don’t have a sufficient understanding of the supply chain industry, and even worse, only 13.8% have confidence in them. These are numbers that we hear all too often in this industry.

Without a practitioner-based deep understanding of the issues affecting supply management, regulators cannot provide the necessary oversight and guidance to avoid and resolve supply-chain crises, like the horse meat scandal, that can then impact the entire business - especially marketing and sales. However, 35.8% of the survey respondents said that they felt their CEO and/or board, does not engage with the procurement function on risk management strategy. An even scarier statistic; 46.8% of respondents did not have a risk strategy along the whole supply chain.

Avoiding a supply chain disaster calls for the help of stakeholders outside of the procurement and supply chain teams. Business leaders, risk/compliance officers, production managers, and externally, suppliers and regulators. All must collaborate to ensure that speed-to-market and quality are not downgraded. If not, their companies might end up making the next headlines.

Fishy Business on the Other Side of the Pond

Authored by Mickey North Rizza 

On the heels of Europe's horse meat scandal, more stories are emerging about fraud in the food industry – this time with fish and in the U.S. 

A December report by Oceana, a non-profit ocean conservation group, revealed that seafood fraud is running rampant in major U.S. cities, including New York City, Boston and Los Angeles. Restaurants and fish sellers are practicing the art of the bait and switch – promise one kind of fish, such as tuna or wild salmon, and delivering escolar or farm-raised salmon instead (both cheaper options). 

According to the report, 39% of NYC restaurants and retail fish sellers were selling fraudulent fish, while Boston came in at 48% and LA at 55%.

Promising one thing and delivering a completely different product opens up restaurants and sellers to liability suits and exposes consumers to a host of unwanted consequences – from simply a less satisfying meal to potential allergic reactions or chemical exposure. 

Top Supply Chain & Procurement Headlines of Last Week

Authored by Richard Hogg

It was another busy week in the supply chain and procurement realms, so we've decided to roll out a new weekly feature that summarises the top stories you may

CPOs search globally to fill the procurement talent gap. Four top CPOs shared their new strategies for finding procurement talent around the globe and how to create effective teams, even when staff is scattered in several countries. It is a worthy read and a hot discussion topic at any procurement event as many organisations struggle to find staff with the skills and technology expertise needed to excel.

Construction sector hits three-year low. The Markit/CIPS UK Construction Purchasing Managers Index (PMI) for February shows that the UK construction sector has declined at the fastest pace since October 2009 – yet another victim of the lagging economy. Reduced new business volumes have contributed to a major decline in purchasing activity at construction companies. However, the construction firms surveyed are confident that losses will turn into gains in activity during the next 12 months. Only time will tell…

Social Influencers – Procurement and Supply Chain LinkedIn Groups

Authored by Sarah Clarke

Now that you know who to follow on Twitter, here are several UK-centric procurement, sourcing and supply chain groups to participate in on LinkedIn.

Procurement Professionals UK |1900 members | As a subgroup of the largest Procurement Professionals Group on LinkedIn, the smaller UK audiences focuses on the latest economy, government and industry news dictating strategy shifts for procurement.

Purchasing & Supply Chain Professionals (UK) | 466 members | A big bonus of being a member: The group manager is often posting the latest headlines from Procurement Leaders, Logistics Manager and more.

Supply Chain Social Influencers – Part 2

Authored by Sarah Clarke

Earlier this year, we shared with you a list of 10 supply chain influencers to follow on Twitter. Here is the next installment of the top supply chain Twitter handles to watch –  

1. PIU (Procurement Intelligence Unit) | @procurementiu | (420 + followers) Official feed of the research firm and Procurement Leaders partner, Procurement Intelligence Unit.
2. Jo Confino | @joconfino | (4,200 + followers) Jo is an executive editor of the Guardian, and tweets about the connection between sustainability and the supply chain.
3. Bob Ferrari | @bob_ferrari | (1,200 + followers) Global supply chain influencer, thought leader, consultant, blogger and independent supply chain analyst.
4. Purchasing Insight | @purchaseinsight | (1,700 + followers) Follow for purchasing, purchase to pay, e-invoicing and supply chain news.
5. Guardian Tech | @guardiantech | (1.9 million + followers) As technology plays an even more critical role for procurement, be sure to keep up with the latest news from the Guardian’s technology team.

Procurement Influence (Part 1): The Elephant in the Room?

Authored by Scott Pryde

As I visit procurement executives from across the UK public sector, we often come to discuss what seems like an ‘elephant in the room’ - how much of the total spend on goods and services is actually under some form of procurement influence. Often procurement can be considered as simply an operational department placing orders and completing tenders, their influence reduced to only a proportion of the total goods and services expenditure. There is a mismatch between this reality and the expectations of policy makers and senior management who, especially in the current economic climate, still expect significant savings and commercial governance across all spend categories.

The role of procurement in high impact categories

In many private and public sector organisations, non-procurement specialists specify the goods and services required. This may be an engineer, clinician, IT professional, construction expert, etc. Often these categories of spend carry a high cost and business continuity impact and harnessing the specification process and point of demand for those goods and service is crucial to long term organisation and supply base efficiency.

In the public sector the top 5 categories of spend are; Construction, Pharmaceuticals, Social Care, Medical technologies and Information Communication Technologies (ICT). They constitute over 50% of the public sectors spend on goods and services.

In these categories, it can often be the case that procurement influence is limited to an operational or administrative tender execution role, rather than being involved in the early stages of the product or service specification.

Thoughts Around Data Quality for Spend Analysis

Authored by Mike Roberts

As those who recently attended our webinar Accessing Spend Analysis through the Government Procurement Service (if weren’t able to attend you can view it here) will recall, there were a few questions raised about the quality of data required in order to perform spend analysis. It is often wrongly assumed that to make spend analysis worthwhile that you need the most granular data at a invoice or PO line detail. I agree it certainly helps, but analysis without this level of detail can still be immensely valuable.

Clearly with the right data analysis at a product level including unit price and volume can provide great value, however this kind of analysis is really only relevant once all the broader strategic objectives are in place for a particular category (e.g. medical products price benchmarking). And very likely they may only realise marginal savings compared to those delivered by the larger strategic decisions. For example, in a collaboration with similar organisations it is often the high level supplier/category views that are used.

Worlds Collide – Sourcing, Social, Information, Mobile and Cloud

Authored by Sarah Clarke

The cloud, social, access to information and mobile are driving market forces, and to remain effective, competitive and relevant companies need to embrace them. That particularly rings true for sourcing managers.

Gartner recently released a report on the impact these forces will have on strategic sourcing in 2013, and in it Frank Ridder, research vice president at Gartner, says that sourcing managers need to better understand “wider IT service market trends” to more effectively do their jobs.

Here’s Gartner’s explanation as to why these four areas are ones to watch – 

1. The cloud is on the rise, which means that sourcing managers need an in-depth understanding of cloud-based options and how they differ from traditional models.
2. Sourcing managers want access to spend analytics, supplier data and the tools they depend on wherever they go – and that means mobile, proactive alerting and a bigger focus on usability.

What is a Supply Chain?

Authored by Mickey North Rizza 

I was with my husband at a recent event and an old friend of his asked what I did in the business world. I told him and then he said, “Wow, is what you do related to what some call Supply Chain?” I of course told him yes, and then this highly educated man said to me, “What’s a Supply Chain?” I laughed and proceeded to tell him the following:

A supply chain is series of steps (or links on the chain) that are utilised to take a concept or product idea into a real product that is delivered to another business or consumer.

Economic Glimmers of Hope – But Uncertainty Holds Strong

 Authored by Claire Sexton 

Last month's Markit/CIPS Manufacturing Purchasing Managers' Index (PMI) offered a glimpse of hope for the UK economy: Manufacturing output grew at the fastest pace since September 2011 – a strong start to 2013.

Economists are hoping that this improvement is not a random occurrence, but rather the beginning of an upward trend. However, there is a major caveat to this growth: Although it’s a positive sign for the manufacturing sector, that sector only accounts for 10 per cent of Britain’s economy.

The CFO’s Number 1 Concern in 2013: Rising Costs (Part 2)

Authored by Mike Roberts

Rising costs will always worry CFOs, but what other risks are on their minds? 

• Supplier compliance. This encompasses elements of supplier relationship management – from delivering what the company needs when it’s needed, at the agreed upon price, to complying with ethical standards. Supplier compliance has dominated recent headlines, especially regarding Wal-Mart’s stronger regulations on unauthorised subcontracting. 
• Economic risks. While there are signs that the economy is improving, companies are closely watching for any wavering indicators of regression that could affect customer spending, currency values and global growth. 
• Effectiveness of internal IT spending. Departments will have a more difficult time justifying major investments in technology. And post approval, there will be more pressure to demonstrate that the actual results were equivalent to the proposed ROI. 

Something to consider: Taking blind risk is dangerous, but taking risk backed up with the right data and insight is what separates truly innovative companies and the laggards. Tweet

The CFO’s Number 1 Concern in 2013: Rising Costs (Part 1)

Authored by Mike Roberts

Although it’s rather obvious that CFOs always have money on the mind, the CFO Survey 2013, published by 4C Associates, highlights that rising prices are a growing worry for procurement’s finance colleagues: 65 per cent of participants listed ‘price risk’ as their top concern – up more than 15 per cent since last year.

Most companies are still struggling to combat volatile commodity prices and rising inflation. Indirect costs are climbing on the operational side, too. Yet, customers have little-to-no sympathy about the plight of corporations because they face a similar battle: the skyrocketing cost of living with stagnant wages. The result: Companies that pass on cost increases to maintain profit margins risk alienating customers and losing critical sales.

The responsibility to improve margins and deliver more value to the business – and when done well, the glory that comes with it – has been somewhat of a tug of war between procurement and finance. By shifting the dynamics so both departments can become allies, rather than competitors, cost savings will improve, and the process will easier for both parties.

How is your organisation bridging the gap between the procurement team and the finance department?

Check back for the next post on this topic to read about the other risks that worry CFOs as we head into March. Tweet

The Benefits of Appointing a Super User in the Successful Adoption of an eSourcing Solution

Authored by Emily Chandler

eSourcing has become essential in best-in-class procurement organisations. Strategic sourcing improves efficiency, communication, and consistency – all of which are highly regarded in any organisation. As companies implement an eSourcing solution to take them to the next level, often all of the emphasis is placed on negotiating the best price or having all of the bells and whistles of functionality. 

A tool however is standalone unless the organisation sufficiently allocates dedicated resource to drive adoption and best practice. 

What I have found in my experience is that those organisations which have developed high levels of eSourcing adoption often have a dedicated specialist or team of specialists (depending on the size of the organisation) supporting the change process and implementation. Not only are they platform super-users, but they act as a focal point for the intersection of e-Sourcing process and category knowledge, ensuring smooth running of events, minimising stakeholder resistance and ensuring best practices are shared and adhered too. Typically they build and develop all of the necessary process documentation and communication materials including case studies - all of which helps to build confidence. They track eSourcing programme performance metrics against contractual KPIs, adoption, and the original business case to identify risk. Central eSourcing teams can also support configuration work, coach and encourage both communities of buyers and suppliers to adopt the new process. 

Price vs Quality

Authored by Pete Hodgkinson

It’s Thursday night, I’m sitting with my father-in-law in a specialist unit for heart and lung patients in Liverpool. 4 hours ago he had a heart attack. Within just 90 minutes of the alarm being raised he was receiving what I would term as a major operation, but what medical staff referred to as a ‘fairly standard’ procedure in which they inserted a stent into a coronary artery to free a blockage.

Having previously worked for the NHS in purchasing I have experience of procuring items which varied from IT systems to medical products including stents. For those who do not know, stents are ultimately a mesh tube that is used to allow fluid to flow freely through what is an infected or blocked tube.

I have memories of meeting medical teams to discuss the merits of what constitutes acceptable products for all sorts of procedures. I do have one vivid memory though, when meeting a consultant to discuss a surgical implant, he said ‘well if price is the focus then you are putting the patient at risk’. His perception of procurement was a function focusing just on price regardless of merit.

UK Government Gets Serious About Taxes: Proposal Could Ban Tax-Avoiding Suppliers from Public Contracts

Authored by Richard Hogg 

Tax season has arrived and the government isn't playing around this year. Fed up with corporate tax avoidance schemes, the Treasury and Cabinet offices have proposed new regulations that could ban companies from winning lucrative government contracts.

The new proposal, if passed, will allow buying organisations to require suppliers and contractors to disclose information about tax payments for contracts worth more than £2 million. Suppliers found to have been involved in failed tax avoidance schemes could be barred from the tendering process, and have existing contracts terminated. Adam Leach provides a detailed breakdown of the proposed regulation on SupplyManagement.com.

According to The Guardian, Francis Maude, who oversees government procurement deals, said: "It is only right we ensure that only companies which are meeting their tax obligations can win government contracts. These new rules provide a framework that allows departments to promote tax compliance through the bidding process."

A Tougher Stand Translates to Accountability

Authored by Mickey North Rizza 

Joann Lublin wrote a great article in The Wall Street Journal on the growing number of U.S. companies that are limiting the upside for top leaders in down years for stock prices, restricting certain compensation when total shareholder return is negative. In the article, A Tougher Stand on CEOs with Bad Returns, Lublin points out “fifteen big and midsize businesses have capped incentive-plan payments since 2006 and seven of these have been since 2011.” Irving S. Becker, of Hay’s U.S. Executive Compensation Practice estimates that 10% of all public U.S. companies pinch executive pay due to a negative return and he predicts nearly 40% may do so by 2015. The point is accountability is critical in business. 

Putting this in perspective with respect to a CPO or VP of Procurement, Sourcing or Supply Management, “accountability to business outcomes” might mean, as an example, these leaders would be paid a base salary, but a bonus might be based on their ability to deliver cost reductions and containment of cost increases, or their ability to impact working and fixed capital positively and work closely with suppliers to mitigate revenue risk of required supply. This type of “pay for performance” structure is not new to the business world, but rarely utilized for Procurement, Sourcing or Supply Management.

Procurement: Put Yourself in the Suppliers’ Shoes

Authored by Claire Sexton 

The procurement industry talks a lot about supplier risk and supplier management, but what about ‘buyer risk?’ More and more stories are popping up in the news and industry publications about big companies – with large cash flows – that aren't paying suppliers on time, or at all. 

Bottom line: Failure to meet contract terms (by the supplier or buyer) is a sign of a poor partnership.

Yet, buyers are also now building longer payment terms into contracts, up to 180 days. While that keeps cash in a company’s pockets for the short term, it has a tremendous impact on a supplier’s financial health. And in turn, the supplier’s value and perception of the buying organisation is negatively affected.

What we can learn from Business Travelers?

Authored by Pete Hodgkinson

In a recent survey by Business Travel News, business travel policy was once again at odds with travelers and procurement. Only 54% of business travelers were aware of their company’s written travel policy compared to 95% of the buyers who are responsible for buying the travel services; 31% of travelers believed there was an unwritten policy compared to 5% of buyers; 12% of business travelers said there was no written corporate policy and. 0% of buyers thought there was no written policy; and 4% of business travelers did not know their policy vs. 0% of buyers. The point is, policy might be set and enforced by procurement, but adherence to the policies is often the point of contention.

At the end of the day, traveler preference, flexibility, work/life balance, business requirements, title and yes, even age of the traveler will make a difference in policy compliance. Younger travelers may use more do-it-yourself (DIY) approaches with their mobile devices and internet travel sites; older individuals prefer to use travel agents and booking assistance. Some individuals work long days and then travel, while others incorporate their travel into long days. Most travelers adjust their schedule for weather, family emergency, customer delays and the unforeseen surprise. Many business travelers tie their business travel to end at their family vacation destination; restarting work travel from the family destination. The point is demographics, flexibility, complexity and business agility all play a role in business travel.

2013 - The Year of the Snake!

Authored by Mickey North Rizza 

Happy Chinese New Year! How are you doing on your personal and business resolutions? Sunday 10th February was the start of the Year of the Snake and according to the Chinese Zodiac, the Year of the Snake is meant for steady progress and attention to detail. 

The snake is the sixth sign of the Chinese zodiac, which consists of 12 animal signs. It is the most enigmatic, intuitive, introspective, refined and collected of the animal signs. 2013 is the year of the water snake, and according to the Chinese, all things are possible. 

Saving money and being thrifty will be top priorities – hmm, sounds like a typical procurement department. And like great procurement negotiators, the year of the water snake also tells us to stay alert because delusion and deception are common. Gaining the greatest benefits requires us to control our spending and use our talents wisely – another great feature of best-in-class procurement organisations. 


So, practice the art of the Chinese zodiac ­stay alert, save money, be thrifty and use your procurement talents wisely. All will bring great value contribution on the road to procurement excellence. 
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The Impact of Procurement- The good, the bad and the ugly (part two)

Authored by Chloe Hanley

Yesterday we concentrated on the darker side of procurement & supply chains, so today I would like to lift the Strategic Sourcing blog team and reader’s moods prior to the weekend and share with you some positive news stories from our industry. 

Marks and Spencer- Supply Chain Champions
Good old M&S! Not only are they one of the UK’s much loved stores, they are also on track to become “The world’s most sustainable retailer”. In early 2007 they launched the “Plan A Sustainabilty Programme”. This is made up of comprehensive and far-reaching goals to create changes in its global supply chain, to be completed by 2015. The company are working with charities such as Oxfam, Woodland Trust and WWF to name but a few, to help make sure each step of its supply chain is sustainable as possible. With suppliers in 70 countries and 2 million people working for them this is no mean feat and has lead to them winning the GSB Supply Chain Award (Guardian Sustainable Business) in 2012. 

Timberland aim to build a better life for workers families 
Timberland's mission statement is “Our mission is to equip people to make a difference in their world. We do this by creating outstanding products and by trying to make a difference in the communities where we live and work while doing it.” This is an essential part of Timberland's supply chain. Happy workers = sustainable and well made products. Companies can only thrive to massive proportions if the supply chain is strong. What if every multinational company had this outlook? Click here for more information. 

The Impact of Procurement- The good, the bad and the ugly (part one)

Authored by Chloe Hanley

From Horse meat “Beef burgers” to “Halal Pork” you can’t miss all of the supply chain issues in UK media recently. It is evidently clear that the supply chain effects many lives, perhaps a lot more than some would think. 

Here are some recent news stories that reflect on the bad and ugly of the supply chain:

The Horse Meat Scandal
This has been big and shocking news for many in January. Consumers were outraged to find that the meat in their Tesco Everyday Value burger contained horse DNA. The FSA (Food Standards Agency) have traced it back to a Northern Irish Burger Supplier that despite an agreement with the food giant that all sourcing would be done in the UK and Ireland, was using frozen blocks of meat off cuts, imported from Poland......Tasty! 

Pork DNA in Halal Products 
Just a few weeks after the horse meat scandal a new supply chain disaster story was revealed. Pork DNA had been found in Halal products served to prison inmates in the UK and Ireland. This prompted outcry from the Muslim community. Dr Ali Saleem of the Islamic Cultural Centre said that for a Muslim, eating pork was "equivalent to taking drugs". These products had also been sourced from a N.I. supplier. Dark times for the Northern Irish meat industry and the FSA. 

You Get What You Pay For

Guest author – Guy Allen

You Get What You Pay For ....

How I hate that phrase. It’s just an excuse for the lazy to pay more for something than they really need to, or perhaps in private life, to justify buying the latest sparkly phone with all the bells and whistles on.

I’d hope most of my industry colleagues wouldn't be seduced by such a statement. Prices are set by the rules of economics, with a little amendment for buyer/seller power, where either party may seek to bend those rules to their advantage for some short term gain.

And too often negotiators approach their objectives with a very singular approach. Yes of course you need to do a negotiation plan, but it needs to include flexibility to allow you alter your approach according to how the situation develops. Sure there are times to get emotional and bang the table, but you subsequently you might be best served by pursuing the logic of the cold analysis of a PPCA (Purchase Price Cost Analysis).

Walmart: Contract Management Powers Ethical Sourcing

Authored by Claire Sexton

The intersection of sourcing and corporate social responsibility is making headlines again.

Following last November’s devastating factory fire in Bangladesh that killed 112 workers, Walmart has announced a new zero-tolerance policy, which will permanently ban suppliers that subcontract without the company's permission.

According to Supply Management, “The factory was not an authorised supplier to Walmart, but had been subcontracted by another vendor without the retailer’s knowledge.” 

The official announcement from Walmart also outlines new health, safety and environmental standards that suppliers must follow. 

Speaking about last November's fire, Walmart's Vice President of Ethical Sourcing Rajan Kamalanathan said, “The fire and tragic loss of life at the Tazreen factory in Bangladesh has brought to the forefront a number of opportunities for improving the safety standards of our global supply chains. These new policies are designed to strengthen compliance of important safety standards around the world.”

What is Sustainable Procurement?

Authored by Claire Sexton 

Whilst I was sat with a client last week having a coffee, we got around to discussing Sustainable Procurement and what this actually means.

I see Sustainable Procurement as the process of improving the efficiency by which public money is spent whilst at the same time using influence to bring about major environmental and social benefits locally and globally. It is the process of purchasing goods, services and works that takes into account the social, economic and environmental impact that such purchasing has on people and communities whilst still achieving value.

Public procurement is central to delivering the social, economic and environmental benefits that sustainable economic growth demands.

I believe that it is important that organisations develop specific plans, policies, procedures and targets to promote the buying of more sustainable goods and services.  In the eyes of the tax payer we all want to see a commitment to ensuring that the money the public sector spends on behalf of the country achieves value for money and contributes to sustainable economic growth.  Sustainable Procurement is good procurement and has to have a recognised role within a balanced approach alongside improved quality and reduced costs in the continuous overall drive for better value for money.

Amazon tops Apple for Supply Chain Leadership

Authored by Pete Hodgkinson

When you think of the best supply chains in the world, Apple and Amazon almost always come to mind. But which company is the best?

According to a new survey by SCM World of more than 1,100 executives, 58% of respondents admire Amazon most for its supply chain management practices. Only 37% said Apple was the best (5% said neither). Amazon also won the battle in three out of four practice areas:

• Agility (62% to 33%) — the ability to quickly and cost-effectively shift amounts or type of production to improve operational performance 

• Collaboration (59% to 31%) – the ability to work across organisational boundaries to solve systematic operational problems and create new value for both customers and partners. 

Promoting Supplier Innovation (Part Two)

Authored by Sarah Clarke

Yesterday we highlighted a blog from Harvard Business Review’s Rosabeth Moss Kanter on Stifling Supplier Innovation. For each of the supplier innovation stiflers, Moss Kanter lists ‘Innovation Promoters’ which can have the opposite effects to the stiflers. Again, here’s my pick...

• Encourage ideas from suppliers as they often know your business better than some of your own team. 
• Promote your commitment to the supplier innovation programme and ask your suppliers to invest time into providing new ideas. Respect their time by giving them as much notice of changes to requirements and key members of staff, so they can spend the time on innovation.