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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

Looking to the East - April 2015

My recent return from an event in Poland organised by the British Polish Chamber of Commerce (BPCC) and our partners at Profitia has only confirmed to me what I have known for some time about the interest shown in developing and extending procurement professionalisation across Eastern Europe.

We already have an agent in Ukraine working in the public sector and tackling similar issues in a very challenging environment. After talking to government agencies and businesses attending the BPCC event, it shows there is further momentum for change and improvement across the region.

The event in Warsaw attracted around 110 attendees and around half were from the public sector. Presentations at the British Embassy in the city included those from the Ambassador, Robin Barnett and BPCC’s Chief Advisor on Policy, Michael Dembinski who offered a UK example of best practice from the Crown Commercial Service responsible for £40bn of taxpayers’ money. The CCS uses a single source agency and transparent approach, and with a target of 25% directed at SMEs, offered an alternative approach to public sector procurement which is quite different in Poland.

Poland’s economy is the sixth largest in the EU and in 2010 the economic growth rate was around 3.9%, which was certainly better than the rest of Europe struggling in recession. This year the rate is expected to be around 3.5% so the opportunities to capitalise on rising economic prosperity are there for the taking. At the event, colleagues from Profitia outlined some practical and positive case studies around best practice in the country and how group purchasing had saved around 30m złotys each year. So, the understanding around cost savings is already in evidence, but Polish procurement currently only concentrates on two areas – public procurement law and negotiating techniques, which is a limited approach to say the least and one which CIPS’ involvement can support to improve. The implementation of the EU’s Public Procurement Directive is also likely to have a significant effect on change, which was discussed at the event.

The discussions centred around not just creating value in the supply chain, but also around damage to reputation if things go wrong, so there was also some recognition of the inherent risks if improvement did not come quickly enough. Overall, the level of discussion was in-depth, the number of attendees was surprising and the seniority of those who came was impressive, and included the director of the public tenders department at the highways agency GDDKiA, the director of the Gdańsk University Clinic, and the procurement director at PKN Orlen;  a great mix of public and private sector. In summary, I was really struck by the enthusiasm for good procurement in the country, so am looking forward to the success of more events later in the year in Kraków, Wrocław and Poznań.

Completing the ethics test

The Modern Slavery Bill received its Royal Assent last month and became law as the Modern Slavery Act 2015. One of the first in the world; and the first in Europe, this development means that there is more protection for victims and gives police forces and law courts the ammunition they need to help eradicate this immoral trade.

This came at a time when I was completing the CIPS ethic test as part of my own personal development and to support the Institute in retaining its own CIPS corporate ethical mark.  All CIPS staff around the world are involved and I take personal pride in achieving such an important award. CIPS has to lead the way and offer practical steps if we are to encourage other organisations and corporates to achieve this mark and stand out as an example of good ethical practice.  The test itself includes a module on slavery as it continues to be a scourge on the modern world.

Have you completed yours?