Dollars and cents: what are we really saving?

DiegoDeLaGarza_100.jpgBy Diego De la Garza

It might have started with dollars and cents, but what should procurement really be saving now? It is time to shift the dial.

Manufacturers: what is in your procurement toolbox?

SammeliSammalkorpi.jpegDriven by fierce customer demand and global competition, today's manufacturers are scrambling to deliver the highest quality products at the lowest possible cost. To remain competitive, manufacturers are turning to technologies, such as 3D printing, robotics, cloud computing, intelligent automation and advanced analytics (among other emerging technologies), to revolutionise every business aspect, from sales to the supply chain.

But with the benefits of digitisation and automation now abundantly clear, it is quickly becoming the norm across industry, leaving many manufacturers on the hunt for their next big competitive advantage. Many are now turning to procurement. Sammeli Sammalkorpi, VP: Customers and Co-founder of procurement analytics solutions provider Sievo, maintains that "the function presents a significant, untapped opportunity to leverage spend insights to drive a new wave of competitive advantage, owing to the fact that the function sits at the core of manufacturing operations".

What is the cure to the side effects of KPIs?

BertrandMaltaverne_100.jpgBy Bertrand Maltaverne

If there is one topic in business literature that has been covered exhaustively, it is key performance indicators (KPIs). But if you're not careful, the indicators you set might inadvertently encourage behaviours that can be dramatically damaging...

Case in point: in 19th-century India, the city of Delhi had a snake problem. A rather large population of cobras slithered the streets with impunity. The British government decided to get rid of the snakes through crowdsourcing. Officials offered a bounty for every dead snake that locals brought in. But something unexpected happened. Soon after the British started to pay for every dead cobra, they realised that local entrepreneurs had begun to breed snakes in order to get paid.

The government cancelled the programme. As a result, the cobra farmers released their worthless snakes into the streets.

It turned out that the British didn't want dead snakes; they just wanted fewer live snakes. By incentivising the wrong thing, they inadvertently doubled their problem.

Hey procurement, speak to startups!

MatthiasGutzmann_100.jpgAfter I left Procurement Leaders last year to join Old Street Labs, a startup that helps large organisations to work more collaboratively with their strategic suppliers and, ultimately, drive more value beyond savings, I was sceptical as to how we can catch the eye of these giant companies. Apart from having a timely and relevant product called Vizibl, both my Chief Executive Officer, Mark Perera (who also founded Procurement Leaders), and I came with a strong network of procurement professionals, which helped. Other unknown startups out there do not have that network and are thus having a very hard time even getting a foot in the door.

Matthias Gutzmann, Founder of Digital Procurement World, tells SmartProcurement more.

The top 10 supply chain risks of 2019

TobiasLarson_100.jpgShehrinaKamal_100.jpgModern supply chains are more complex and global than ever before. But that also leaves them open to a wider variety of risks and disruptions. Tobias Larsson, Chief Executive Officer, and Shehrina Kamal, Director: Risk Intelligence at Resilience360, a supply chain risk monitor that identifies potential supply chain disruptions, list ten supply chain risks to track over the next 12 months.

SA PMI heads south along with our trading partners

PMI_down_100.jpgThe seasonally adjusted Absa Purchasing Managers' Index (PMI) declined to 41.6 index points in September, down from 45.7 in August. This was the second consecutive large fall in the PMI and brought the index more than 10 points below a recent high of 52.1 points reached in July 2019. At the time, the Bureau for Economic Research (BER) did caution that the robust July reading was unlikely to be sustained given weak underlying demand conditions.

When does directing a company become Board interference?

SOEs_100.jpgPerformance of SOEs remains a top priority for the president and by extension the minister of public enterprises. The question remains, to what extent will these changes affect procurement and supply chain? What is the proper way of governing SOEs?

At the recent 13th Annual Smart Procurement World Indaba, discussions centred around the restructuring of state-owned enterprises, focusing on methods to increase economic impact and development. Further discussions showed the danger of executive influence on procurement and performance of SOEs.

So, when does directing a company become Board interference?

6 strategies to rank as a procurement leader

LindaAshok_100.jpgIt is excellent if you have already gained a grip on procurement's changing landscape. If not, for many businesses, procurement remains quite intimidating. There are concerns about co-ordinating upstream and downstream processes. Risk management, supplier intelligence, advanced analytics and a drive towards innovation all suffer from disruptive digital transformation. "To keep up with the fast-changing supply chain landscape, a procurement leader has to have control over aspects that govern procurement", says Linda Ashok, a content, communications and branding professional.

Abusive compliance practices hurt retailers and their suppliers

KateVitasek_100.jpgVendor compliance programs have become a major roadblock to retail store success. But who is to blame? Retailers and suppliers point that finger at each other. One expert says there is a "state of chaos" with retailer vendor compliance programs for both bricks-and-mortar and online stores.

A Supply Chain Digest Retail-Vendor Benchmark Study does not hold back, asserting, "To state the current business environment is a challenging one for both retailers and manufacturers is putting it mildly." Consultant and author Norman Katz of Katzscan Inc. is more harsh in a stinging critique of retailer vendor compliance practices in his recent Journal of Supply Chain Management, Logistics and Procurement (Vol. 1 - No. 3) article titled "How Abusive Vendor Compliance Programs are Affecting Retail Store Success."

Kate Vitasek, Professor in Supply Chain Management at the University of Tennessee, unpacks the effects of vendor compliance practices used by Retailers.

Oxymoron: Ethical policies and public procurement?

StephenBauld_100.jpgWe would all agree that government procurement should be held to the highest level of ethical standards.

It is very important to the entire system that everyone working with or for a municipality be of the same mind set. The whole idea of the importance of adherence to an appropriate standard of ethics in the conduct of the procurement function is self-evident.

Yet in historic terms, concern with respect to ethics is a fairly recent phenomenon, particularly at the local government level, says Stephen Bauld, a government procurement expert.

CPO Leadership Profile: Pascal Exbrayat

PascalExbrayat_100.jpgThis month SmartProcurement profiles Pascal Exbrayat from Nestlé East and Southern Africa Region (ESAR).

Full name: Pascal Exbrayat

Position: Head of Procurement, Nestlé East and Southern Africa Region (ESAR)

Your organisation's procurement expenditure: US$450-million

Who does P & SM report to: Head of Supply Chain, Nestlé ESAR



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