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Articles in category: Value creation
Leading company procurement organizations reap double the measurable cost reduction versus other companies, while also driving competitive advantage through supplier-driven innovation and risk management. While procurement organizations for leading companies have continued their upward trajectory, most companies only sustained the gains they made between 2008 and 2011.
These findings were reported in a study released today by A.T. Kearney titled “Procurement Powered Business Performance: Assessment of Excellence in Procurement (AEP) Study 2014.” This year’s AEP is the eighth edition in a series that started in 1992.
.(Read Full Article)
It is generally accepted that efficiency represents the optimal, aspirational state for any market. Efficient markets, which feature many buyers and sellers and perfect information flowing between them, determine the “right price” and hence allocate society’s resources optimally.
Those are indeed positive features. But every good thing is like a face caressed by the sun. The rays that light and warm the face automatically cast a dark shadow behind it. The shadow of an efficient market is increased price volatility — quite the opposite of what we expect from efficient markets.
Think about how markets evolve. We’ll take the ...(Read Full Article)
Bill & Melinda Gates Foundation and Grand Challenge Partners Commit to Innovation with New Investments in Breakthrough Science
Seattle — A consortium of partners including Brazil, Canada, India, Norway, South Africa, the United Kingdom and the United States will fund a new phase of Grand Challenge initiatives.
At an event in Seattle commemorating the tenth anniversary of Grand Challenges, a group of international partners today announced three new initiatives aimed at creating breakthroughs in science.
This anniversary event, attended by scientists and researchers from around the world, celebrates a decade of progress since the Bill & Melinda Gates Foundation's launch of the initial Grand Challenges in Global Health initiative. This original US$450 million research initiative was created to ...(Read Full Article)
It seems as if this represents a real change from it being a privilege to do business with Unilever to it being a privilege for Unilever to do business with suppliers, especially those who share your values and commitments.
Read this inspiring interview with CPO Dhaval Buch where he discusses Unilever’s strategic approach to supplier relationship management and it’s Sustainable Living Plan.
A study conducted by AT Kearney, the Institute for Supply Management (ISM) and CIPS found leading teams generate almost £1 million in financial benefits per procurement employee each year. Building the ...(Read Full Article)
The winners of the CIPS Supply Management Awards 2014 were announced on 11 September. The even took place at the Grosvenor House Hotel, Park Lane, London.
Take a look at the category winners and runners up.
The challenge of ensuring adequate, nutrient-rich food for an expanding global population is a daunting one, especially given constraints on key resources like water and agricultural land.
As it stands, the two leading approaches to enriching and enlarging the world's food supply are genetic engineering and industrial processing with additives and chemicals. Now, a third solution is emerging: vertical farming.
Academic studies have found that locally cultivated vertical farms - stacked greenhouses that use artificial light to grow crops - can provide considerable savings, which could then be passed along to consumers. But questions about such farms' fundamental economics, especially for ...(Read Full Article)
Relationship management is the primary skill missing from procurement teams, according to a survey.
More than half (60.3 per cent) of the 120 purchasing professionals surveyed by ProcureCon Europe, cited it as a skills gap in their organisation, followed by risk analysis (51.7 per cent), and supply chain analysis (39.7 per cent).
The poll emphasised the importance of building relationships in order to achieve sustainable success, not only internally with stakeholders but also externally with suppliers.
Roger Davies, group head of procurement at Marks & Spencer, told the survey that relationship management and influencing skills were core to ...(Read Full Article)
The head buyer at Telkom has said he will be working with core suppliers in a “collegiate” way to cut costs by “as much as possible”.
Ian Russell, who has been CPO at the South African telecoms firm for six months, said in the past the company had “tactical and transactional” relationships with suppliers but he wants to treat them “more thoughtfully and carefully”.
In the last financial year Telkom spent R17 billion (£961 million) with around 2,400 suppliers, but 80 per cent of that spend was with 23 suppliers. Total revenues in the period were R32.5 billion ...(Read Full Article)
Recent research from The Hackett Group claims that procurement’s ability to generate big savings is declining dramatically. Despite what you might think, that’s good news.
It’s not that savings are unimportant. Of course, they’re important, and they always will be. They are a large part of what organizations expect from procurement. But, as every CPO knows, they aren’t the only things procurement can provide.
For example, in manufacturing companies, procurement can identify suppliers who can suggest alternatives to new product designs that can accomplish the design intent more cost effectively.
(Read Full Article)
The financial impact of ineffective procurement in Africa, calculated as value leakage, is estimated at a “staggering” $31.5-billion for the continent and $24.9-billion for sub-Saharan Africa, a recent report by professional services firm KPMG has revealed.
Although the firm believed that the role of procurement in an organisation was becoming increasingly strategic, 73% of C-level executives polled during KPMG’s ‘Power of Procurement 2.0 Survey’ did not believe that procurement added real value.(Read Full Article)
Comparing public and private sector procurement practices isn’t an easy thing to do; both sectors operate in such different ways, with so many variables that it’s hard to conduct a like-for-like assessment.
Procurement technology is one of those points of difference. Private firms are eons ahead of their public sector counterparts in terms of processes like predictive procurement, smart data and real-time collaboration. However, there is good reason for this. The disparate nature of many public organisations means that, both structurally and culturally, it’s tough to integrate systems and gain compliance from staff around digital procurement.
One ...(Read Full Article)
There is still time to share your procurement and supply chain organization's success. The 10th Annual Institute for Supply Management® – Michigan State University Awards for Excellence in Supply Management is open for submissions. The annual competition is designed to further the understanding and importance of supply management by recognizing supply management organizations that demonstrate innovation, leadership and best supply management practices. Entries are due August 22, 2014.(Read Full Article)
Science and Technology Deputy Minister Zanele kaMagwaza-Msibi says her department will invest more in research and innovation to ensure that the country produces more scientists and engineers.
Speaking to SAnews shortly after briefing Parliament's Portfolio Committee on Science and Technology on Wednesday, the deputy minister said these areas needed special attention to ensure that the country moves towards improving the lives of people by investing in the knowledge economy.(Read Full Article)
Historically, AP and procurement teams have operated in business silos; each responsible for certain parts of the procure-to-pay (P2P) process, but rarely cooperating as true teammates. Perhaps it’s because they come from two different worlds (one financial, one more operational), frequently leverage different technologies and solutions, often have different priorities for the organization, measure success differently, and report to different bosses that they don’t collaborate more than they do. But the fact is that they should – they co-manage a single process and can both benefit from greater collaboration(Read Full Article)
It makes no sense to waste your time and valuable resources on unprofitable and unreasonable customers.
My students were desperate for strategies and tactics to help them out of these “price reduction only” discussions with their customers and broaden the conversations. We worked hard to develop some effective strategies for negotiating with buyers and bullies who focus on price only. These include:
1. Every time a customer asks for another price reduction, suggest trading for something in return. Ask for something of value back such as move volume, another division, another project. Never concede, always trade.(Read Full Article)
2. Keep opening the ...
Having the right frame of mind and utilising data and facts are two of the key ingredients for successfully driving transformation. Speaking at a CIPS member event in London last week, Toby Munyard, partner at procurement consultancy Efficio explained the six elements of effective change management. These were:
Data and facts. “This is probably the one thing that gives you an ability to be able to have a discussion,” said Munyard.(Read Full Article)
The procurement function of the Renault-Nissan Alliance generated €1.036 billion (£824 million) savings in 2013.
Purchasing, which is jointly managed by the Renault-Nissan Purchasing Organisation, was the biggest contributor for cost reductions, cost avoidance and revenue increases last year.
Overall, the Alliance posted record “synergies” of €2.87 billion (£2.3 billion) in 2013, up from €2.69 billion (£2.1 billion) in the previous year. It explained that only new synergies – not cumulative synergies – are taken into account each year.(Read Full Article)
IF THE private sector is to invest more, the public sector must start delivering on its own investment programme.
As President Jacob Zuma reminded us in his recent state of the nation address, the public sector has spent more than R1-trillion on new infrastructure over the past five years, and it has committed to spend a further R847bn over the next three years.
In theory, that should be lifting constraints on growth and encouraging private businesses to start investing to expand their own enterprises.(Read Full Article)
The Mpumalanga provincial government is expected to create 390 000 additional and sustainable work opportunities by 2019, says Premier David Mabuza.
“Over the next five years, we will target economic growth that is above 5% per annum and such economic growth will be expected to create approximately 390 000 additional and sustainable work opportunities by 2019,” he said during his State of the Province Address, on Friday.(Read Full Article)
France will be making a sound investment by taking a stake in Alstom, its chief executive said on Monday, adding however that the government would be buying in too late to have a say in the use of proceeds from its tie-up with General Electric.
France won an option to buy 20 percent of Alstom from conglomerate Bouygues on Sunday, in an eleventh-hour deal clearing the way for the agreed sale of most of Alstom's energy business to GE.(Read Full Article)
SPENDING a week recently in the US city of Bentonville, Arkansas, to attend Walmart’s shareholders’ meetings, underscored why the company’s investment in South Africa three years ago when it bought a majority stake in Massmart (which I now chair) was a resounding vote of confidence in South Africa that ought to be leveraged to the maximum.
To give a sense of what the investment meant, consider that Walmart is the largest single company on the planet.(Read Full Article)
The South African options for consulting in procurement and supply chain are expanding steadily. The latest entrant, Xoomworks, recently announced taking a foothold in the African market through the establishment of Xoomworks South Africa. The new consulting practice was created in conjunction with Gauteng-based The Supply Chain Partnership. In a market where the pool of procurement and supply chain talent is constantly under pressure, this new addition is good news for procurement organisations targeting large transformation initiatives or strategic sourcing events.(Read Full Article)
President Jacob Zuma placed the growth-sapping issues of labour instability and electricity insecurity at the centre of his post-election State of the Nation address to lawmakers on Tuesday night. He also used the platform to announce a series of new interventions, ranging from a study into the institution of a minimum wage, through to the development of better housing in mining towns and the creation of a Cabinet subcommittee to tackle the country’s energy challenges.(Read Full Article)