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Global CEO blog

Welcome to the Global CEO (UK) blog. Its aim is to draw attention to developments and ideas in the world of procurement and supply management and in the work of the profession’s Institute.

We change the blog monthly, and I would welcome your comments personally on ceoblog@cips.org

David Noble FCIPS

What goes up must come down
The volatility of the global economic markets is still keeping us on our toes.  Just as we are lulled into a false sense of near-security, there are always a few surprises in store.
The worst global recession for a generation appears to be receding into history but it’s a patchy recovery. Though Germany is soaring ahead, France is still stagnating and Chinese manufacturing growth has dropped for three months now. This is the background landscape in which supply chains are operating. Add political, environmental and social factors and it’s a capricious and unpredictable mix.
But data shows that risks to supply chains are actually falling.  This is certainly the result of our findings in Q2 of the CIPS Risk Index (CRI) published this week. For the first time in 18 months, the level of global risk has actually decreased. It is a truth universally acknowledged in our profession and now increasingly amongst governments and businesses that the vulnerability of supply chains is increasing and the number and intensity of the problems are multiplying
So, to see that risk has actually decreased is an attention-grabbing development that deserves further investigation. The index has measured risk decreasing for three consecutive quarters since the financial crisis began in 2007. It tracks all the impacts of economic, political and social factors and showed a fall to 78.1 in Q2 this year, compared to the high of 82.4 in Q3 of 2013. The stability in sub-Saharan Africa appears to have been instrumental in the reduction of risk, along with Kuwait’s achievements in infrastructure projects bringing a level of security in the Middle East which still remains one of the most troubled regions in the world.
So though the immediate future for supply chains may be promising, there are possible storms ahead. No one is yet certain how the Ebola crisis will pan out. Could there be a pandemic on the horizon along the lines of the flu crisis a few years ago and will the war of sanctions between East and West with Russia at its core, tip the balance back into instability. As global recovery is taking hold, there may soon be stagnation and further threats to supply chain health, if these fears become a reality.Catch up with my column in Supply Management magazine

The problem with retail. Again.

It bears repeating that bullying is a short-term tactic that is unlikely to bring long-term gains. This is something that as procurement professionals we have long known, not least because of the moral and ethical aspects, but also because it simply does not work. ‘Pay to stay’, and long payment terms or intentional late payment are all examples of poor practice.

That’s why it beggars belief, why the supermarket chains should continue to take such an approach. Almost 90% of supply chain professionals who took our retail survey earlier this year were in agreement that such tactics gave our profession a bad name. Because, that is not how many successful sectors work, so why should retail be different?

Our call for a licence for the profession means self-regulation first, and the confidence this can bring to consumers and businesses cannot be underestimated.  Especially as there are fears, not entirely unfounded that the Food Standards Agency, the Groceries Code Adjudicator and other official agencies are unable to successfully tackle the issues we in the profession understand so well and have solutions for. 

The retail industry may have some unique challenges – speed to market and the incessant push for new products to the highest quality, which are all major drivers in how retail does business. The survey highlighted these as some of the admirable aspects of the sector. But the survey also revealed that transparency and traceability were the biggest areas for improvement. This is nothing new in good management of supply chains but almost half the respondents in the survey said that retail must implement these developments as a matter of urgency if they are to recoup some of the financial and reputational losses in recent years. Such findings echo the results of an earlier survey amongst our members which revealed that almost three quarters of British supply chain professionals have zero visibility of their supply chains and only 11% had full visibility.

It’s time for change; real change, and commitment after years and years of scandal and malpractice. Consumers and business deserve better and to know their goods are being procured in a fair and transparent manner, and we in the profession have full accountability and responsibility for that process.

 

 

Finally, almost 90% of the survey’s respondents said those running retail supply chains should have professional qualifications and training. CIPS has a big part to play. We’re listening.