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Articles in category: Value creation
At American Airlines, John MacLean - retiring this month (April) - expanded purchasing and supply chain management to new heights, piloting the company through some of the worst storms in the airline industry’s history.
"Get in the game early. Don’t sit on the sidelines."
Last month, the Hackett Group, as part of its Procurement Executive Insight series, released its 2014 Procurement Key Issues report on Rethinking How Procurement Defines Its Value, Balances Risk, and Gets the Most from Technology Investments. It had some very interesting findings, including the fact that Procurement in 76% of companies surveyed indicated that a top priority was to expand procurement's scope/influence.(Read Full Article)
Hong Kong-listed property development group Shanghai Zendai has outlined ambitious plans for the development of an R84-billion 22 km2 “city” on the sprawling Modderfontein property the company bought from South African chemicals group AECI for R1-billion in November.
The development, dubbed Zendai Modderfontein, would be funded by Zendai, the Export-Import Bank of China and the China Development Bank and was envisaged to house 100 000 residents, and employ a further 200 000 people upon its completion in 2024.(Read Full Article)
We have heard the rationale behind strategic sourcing for so long that you’d think the concept would be universal today, or at least widespread. Is it? Bob Rudzki doesn’t think so, and he has a theory of why it isn’t.
Back in the early 1980s, the venerable Harvard Business Review published an analytical piece by Prof. Peter Krajlic that called for a more strategic approach to purchasing. Even before then, some leading CPOs had been preaching the gospel of strategic sourcing.
Purchasers who aspire to be a chief procurement officer should make sure they gain a wide variety of experiences.
That’s the advice from Paul Jones, director of indirect procurement in Europe for Kellogg's, who said: “Gone are the days where I think someone should just work in indirect procurement. The best way is getting the real skill set to become CPO one day.”
Speaking at the ProcureCon Indirect conference in London yesterday, Jones said to reach the next stage of their career, purchasing professionals may sometimes have to move sideways or even down a step. “They have to ...(Read Full Article)
Reverse auctions in South Africa: modern-day competitiveness? The complexities of modern-day competitiveness certainly challenge the traditional business process. Take supply chain for example: it is progressively evolving from overseeing a few...(Read Full Article)
Many people believe that Africa is a giant waking up. It will be the next frontier of business opportunities and as always this will be driven by innovation.
Here I like to see that Africa – in this case South Africa – has really begun building the infrastructure needed to support innovation efforts. They have companies committed to innovation including Discovery, which I really think is in a global elite based on my interactions with them last year.You even got good stories to tap into such as the fact that Elon Musk of SpaceX, PayPal and Tesla is South-African born.
On ...(Read Full Article)
There’s a right way and a wrong way to do everything. On the surface, at least, it appears that Boeing may be reducing supplier costs the wrong way.
Last spring, Boeing told suppliers if they didn’t reduce pricing and waste they would go on a "no-fly" list, barred from bidding on new programs the company may develop. In sports parlance, that’s called playing hard ball, and while the intimidation may work initially, it may not be good in the long run - either for Boeing or suppliers. Parties making such threats can lose credibility, and not just if ...(Read Full Article)
Barloworld Logistics’ eleventh yearly supply-chain foresight survey has revealed a shift in consumer power, with companies subsequently realigning their supply chain strategies and business models to meet increasing customer expectations. Based on independent research by business consulting firm Frost & Sullivan, conducted on behalf of logistics group, the study revealed that emphasis had shifted from customer service to customer centricity, which Barloworld Logistics marketing executive Kate Stubbs said clearly demonstrated an understanding by businesses that customer satisfaction went beyond simply offering good service.(Read Full Article)
Apple CEO Tim Cook recently said something to a shareholder that you very rarely hear: take a hike. I’m paraphrasing, but only slightly.
At the company’s latest shareholder meeting, a think tank, NCPPR, pushed Apple to stop pursuing environmental initiatives like investing in renewable energy. Cook went on a tirade — or at least what passes for one from the very cool and collected CEO. He made it clear that he makes choices for reasons beyond just the profit motive.(Read Full Article)
With the cost of capital low and corporate bank accounts flush, there may be more mergers this year, say some economists. Procurement will play a big role in these mergers, so it’s good to see what’s involved and how procurement has handled other mergers.(Read Full Article)
There are many skills required to bring about a consistent change in a function, but there are some qualities that leaders share.
In the latest article for our series The Financial CPO, BravoSolution’s Mickey North Rizza notes that reactive thinking is commonplace, but overcoming that and becoming strategic requires a change of mindset.
She writes: "To start this process, procurement must gain a solid understanding of the function’s performance to date, including self-assessment, and more importantly getting honest feedback from key internal and external stakeholders.
Buyers of outsourcing will focus on service rather than cost savings in the next 12 months, according to Deloitte’s support services predictions.
Oliver Hemming, strategy consulting partner in Deloitte’s business services practice, explained companies are now considering value to be measured on outcomes.
“This is putting increasing pressure on outsourcers to find innovative ways of delivering value to clients, while ensuring that contract margins are maintained,” he said. “Innovative service delivery will be crucial; however, minimising risk in such an environment will be a key challenge for outsourcers in 2014.”(Read Full Article)
Across industries, leaders and managers may be missing a critical piece of the big picture. The increasing importance of procurement to the bottom line success or failure of their companies. In fact, 80% of a typical company's expenditures go toward procured goods and services, and procurement is often the single function that makes decisions around all external costs.(Read Full Article)
Looking for the most innovative way to generate savings remains the number one priority for travel managers worldwide over the next 12 months.
The research from Carlson Wagonlit Travel (CWT) also found traveller experience and user-friendly services are also top priorities for the 970 respondents.
The sixth annual Travel Management Priorities report found 70 per cent of travel managers want to find innovative ways to generate savings. “As business travel and prices grow in 2014, companies with mature travel programs will be looking to exploit opportunities for incremental savings, as well as bring new areas into the scope of the ...(Read Full Article)
For corporate South Africa, the tumbling rand has been both a blessing and a curse: a windfall for mining houses, it has also saddled domestic manufacturers and retailers with higher costs and weaker consumer demand.
The currency free fall has left a raft of companies - including mobile operator Vodacom and the local arm of Toyota Motor Corp - scrambling to contain the damage.(Read Full Article)
This is the second in a two-part series from Pierre Mitchell on having a culture of innovation in your procurement organization. For example, procurement needs to embrace ambiguity. This can be a difficult value, but if we want our supply chains to be more resilient, we also have to challenge ourselves to become more resilient. Read on for principles 4-7 and how to implement them.
There is a clear trend, both in terms of research and anecdotally, that companies are looking to centralise their procurement functions. Is this always the right path to follow?
We have recently published our research into Procurement Operating Models (you can access the executive summary here). One of the key questions of the study relates to impulse to centralise.
Clearly, this trend can be coupled with the dramatic rise of the procurement function. Even in established global brands, a dedicated purchasing department can be a relatively new emergence. The first remit of new CPOs, it seems, is to expand spend ...(Read Full Article)
Early engagement is still an uphill battle: time-consuming and energy-sapping, with a high risk of no reward. Procurement isn’t invited to the party, it’s still waiting by the phone.
In this guest post, Procurement Leaders welcomes a call to action from Bill Young of Kestrel Ops - Procurement needs to get the attention of the business and it needs to think differently in order to do it, he argues.
2013’s biggest stories with the most impact on - or which hold the most potential for - procurement.
Virtually every business publication at this time of year reports on what the editors think were the biggest stories of the year. So, why shouldn’t bloggers and columnists do the same? Hearing no objections, here is my take on the two biggest stories with the most impact on - or hold the most potential for - procurement.
It may seem out for character for someone with procurement and supply chain background to say cost reduction is not the most important thing to work on, but sometimes, it is better to do the exact opposite of what was taught as best practice in business school.
Firms that focus solely on cost reduction as the only major initiative should be very careful. These initiatives do improve profitability - at least for a short time anyway. Simply put, cost reduction or any operational improvement/transformation initiative helps to make a company more efficient, but only to the same revenue base.(Read Full Article)
State-owned power utility Eskom’s eta Awards this week unveiled exceptional efforts by South Africa’s individuals, students, companies and other institutions in energy efficiency initiatives to reduce strain on the national grid. The eta Awards, initially established 20 years ago to create awareness and encourage action in the energy efficiency field, sought to recognise and reward excellence in energy efficiency.
INNOVATION(Read Full Article)
Welding solutions specialist Shield Technologies was the winner of Innovation category with its weld spatter product – Spatter Guard HT Plus – which reduced the amount of spatter caused when welding. Energy intensive methods, such as manual grinding and needle ...
Procurement has been faced with fundamental changes of the business environment over the last few years and from my point of view there is one decisive factor to turn trends into opportunities: people.
The transformation from a traditional purchasing department to a modern service unit requires a radical change of style and mindset. Experienced managers charged with the restructuring of a company’s procurement operations are aware of that hurdle and start their job by determining who of the staff is able and willing to support the endeavor and who is not.(Read Full Article)
A recent post on the HBR Blog Network on Six Drucker Questions that Simplify a Complex Age poses us with a interesting inquiry -- can they simplify a complex supply chain?
- What Does the Customer Value?
SI agrees that regardless of what has happened since his death, Drucker would still be asking this question -- and it would probably be the first question out of his mouth in any business discussion. The tighter times get, the more the customer focusses on what they really need where necessity is concerned and what they really want where discretionary spending, which is limited in difficult ...
- What Does the Customer Value?