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.