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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.

Can trust be measured?

The 2014 Edelman Trust Barometer report should really give business, governments and indeed all of us, a reality shot in the arm. It is a survey from around the world measuring the public’s level of trust in those organisations that are fundamental to the function of our societies – namely governments and business.

In business circles, trust isn’t discussed that often. In capitalist societies around the world, making money and profit appears to be the only goal but recent events from financial crises to political and environmental incidents have changed the perception and role of what business should be and towards more ethical and caring goals.

A dictionary definition of ‘trust’ will suggest reliance, strength of character, honesty and effectiveness. Dependability and confidence are also staples of this most valued of traits. Yet it is also something intrinsically ethereal and intangible. Because once lost, it can never be regained at the same level.

The report highlights that experts in their field are the most trusted and CEOs the least. This implies that CEOs should hide in the shadows of their organisation in case any negativity is attached to their organisation. But, I don’t see it that way.

Remaining visible, active, striving and driving change and influence will turn perceptions around and the report itself later confirms this as a recommend approach. We need to answer difficult and challenging questions with honesty and openness to create strong foundations of trust between all communities touched by the work we do.

79% of respondents to the report think there should be regulation around food and energy because there’s so little faith in business to self-regulate. That’s quite damning. The American business magazine, Forbes, said that the most valuable commodity in business is trust. There’s a sad future awaiting us all if this negative perception isn’t turned around, and soon.

Catch up with my column in Supply Management magazine