Welcome to the CEO blog archive, a useful snapshot of our progress in the world of purchasing and supply management.
We change the blog monthly, and I would welcome your comments personally on email@example.com
The Foundation of our profession
Many of us take it for granted that we are going to be able to study for qualifications in our chosen profession, either by funding the courses ourselves or through our employers supporting our professional development.
But if you don’t have access to the internet where you live, if you don’t have transport to get to a study centre, and if you can’t afford the full cost of a study programme, then your access to education can be severely limited. I have seen for myself what enormous challenges some of our members in the developing world have to overcome in order to qualify, and yet, when they succeed, just how much this can transform lives.
I think it’s important for us to remember that CIPS isn’t just a professional body, it’s also an educational charity. We should use the powers this gives us to do what we can to help people who have the drive and the talent to make a successful career in procurement, but face obstacles in their path. And that’s why the launch of the CIPS Foundation marks an important new phase in delivering our public good agenda.
The Foundation is a separate charity in its own right, but linked directly to CIPS. Its aim is to support aspiring procurement and supply professionals who are economically disadvantaged in some way, and encourage the brightest and best to achieve their potential. The Foundation will also be focusing on helping to create career opportunities for young people.
The Foundation’s scope will be global – and this is an important point. It will help both UK and international members, at every level of the qualification. We do recognise, though, that there are some parts of the world facing bigger challenges than others so we’re planning to run a campaign with Book Aid for Africa to collect course books that are no longer wanted and ship them out to where they are most needed.
Of course, deciding where the money should go is going to be difficult and inevitably we aren’t going to be able to help everyone who applies, but we are putting in place some clear criteria to ensure that the funds are disbursed as fairly as possible. We’re starting small with a limited number of awards so we can make sure the processes are working properly, but over time we hope to be able to support more people.
CIPS will be setting funds aside to pay for the disbursements but to sustain the programme we’ll need to attract donations, both from individual members and organisations. We will be telling you more about how you can help, so watch this space.
To find out more, visit the Foundation’s dedicated website which will be launched in March at www.cipsfoundation.org
Sign of the times - January 2013
News that Rolls-Royce, British trade icon and a highly successful engineering and manufacturing company over many decades, is being investigated by the Serious Fraud Officer over deals in China and Indonesia, reminds us that the regulation of bribery in both the UK and the US is growing real teeth. The allegations are historic and relate to the use of intermediaries to smooth the path of international contracts. Rolls-Royce says that this method of doing business has been largely superseded and it has significantly strengthened its compliance procedures in more recent years.
However, both the SFO and the US Department of Justice have shown that they are prepared to levy very substantial fines on companies breaking bribery laws. It’s only a couple of years since BAE were hit with a fine of $450 million, so it’s not surprising that Rolls-Royce’s share value took an immediate dive when the investigation was made public.
Of course, it’s not just the financial impact of a big fine. The damage to a company’s reputation can harm its longer-term competitive position, hence the very firm statement by Rolls-Royce’s CEO that he will not tolerate improper business practices in his organisation.
Ignorance of the law is no excuse, and regular readers will know that CIPS has published guidance on the 2010 Bribery Act to help members understand all the implications and check that their own organisations are fully compliant.
We will continue to champion ethical procurement as a core element of our mission, and that includes revisiting our ethical code on a regular basis to make sure it remains fit for purpose. We need to ensure our code and the supporting guidance evolves, not just in step with changes in legislation but with leading thinking on ethics in business and the public’s desire for greater scrutiny of our corporations in order to protect their interests.
In 2013 we will be reviewing the code and our disciplinary procedures – watch this space for more information and the opportunity to have your say.
Sign of the times - January 2013
News that Rolls-Royce, British trade icon and a highly successful engineering and manufacturing company over many decades, is being investigated by the Serious Fraud Officer over deals in China and Indonesia, reminds us that the regulation of bribery in both the UK and the US is growing real teeth. The allegations are historic and relate to the use of intermediaries to smooth the path of international contracts. Rolls-Royce says that this method of doing business has been largely superseded and it has significantly strengthened its compliance procedures in more recent years.
However, both the SFO and the US Department of Justice have shown that they are prepared to levy very substantial fines on companies breaking bribery laws. It’s only a couple of years since BAE were hit with a fine of $450 million, so it’s not surprising that Rolls-Royce’s share value took an immediate dive when the investigation was made public.
Of course, it’s not just the financial impact of a big fine. The damage to a company’s reputation can harm its longer-term competitive position, hence the very firm statement by Rolls-Royce’s CEO that he will not tolerate improper business practices in his organisation.
Ignorance of the law is no excuse, and regular readers will know that CIPS has published guidance on the 2010 Bribery Act to help members understand all the implications and check that their own organisations are fully compliant.
We will continue to champion ethical procurement as a core element of our mission, and that includes revisiting our ethical code on a regular basis to make sure it remains fit for purpose. We need to ensure our code and the supporting guidance evolves, not just in step with changes in legislation but with leading thinking on ethics in business and the public’s desire for greater scrutiny of our corporations in order to protect their interests.
In 2013 we will be reviewing the code and our disciplinary procedures – watch this space for more information and the opportunity to have your say.
This month’s blog is another reflection on China, and how we’re promoting to new members, keeping current members informed and generally promoting CIPS and the profession in the region.
This work has coincided with the official leadership change which takes place every ten years. The new leaders will become the focus of a lot of media speculation in the coming weeks as to their plans for China’s future economic and political direction. In the last thirty or so years since China started opening up to the wider world, the economy has gone from being smaller than Italy’s to being the second biggest in the world, and by the time of the next leadership changeover in 2022 China could well have replaced the US in the top slot.
Although the rate of growth is expected to slow from around 10% to 6% or 7%, China will undoubtedly continue to be a dominant economic power for the foreseeable future. For the west, this brings particular opportunities and challenges. That growth trajectory is creating the world’s largest middle class, and consequently the largest consumer group, who are demanding the same sorts of products and services enjoyed in the US and Europe. Education is being increasingly seen as the passport to that lifestyle and the concept of professionalism is gaining a stronger foothold as a result.
Several UK chartered professional bodies are doing well here, and CIPS is no exception [CIPS China page]. We have been established in the education field for some years, working in partnership with the China Communications and Transportation Association (CCTA) and the Chinese National Education Examinations Authority (NEEA), and now have over 38,000 people studying CIPS qualifications in the region. Education is at the heart of our presence here, so, for me, a highlight of the trip has been the two awards ceremonies we have held in Beijing and Shanghai to celebrate students’ exam success. We had more than 100 students receiving their awards at each event, mini-versions of the annual Graduation Ceremony held in the UK.
The visit has also included three local professional network events, in Beijing, Shanghai and Guangzhou, to promote the benefits and demonstrate the support that a local network can provide to members and the profession more generally. In each centre we’re forming small teams to work together, with support from CCTA and CIPS staff, to develop these local networks and link them together to start forming a regional procurement community. Their aim will be to provide a point of contact for knowledge and advice, the sharing of best practice and raising the profile of the profession.
Next activity in China is a round table discussion on the future of procurement with local business leaders, and CIPS Head of Membership and Publishing, Malcolm Youngson, will be visiting branches in Thailand and Singapore to update members on the development of the CIPS network in this region. We are covering a lot of ground, but I have no doubt that Asia will be very important to CIPS’ global expansion in the next few years and has the potential for the CIPS community here to become the standard-bearer for good practice in the economic power-houses of the next decade.
The importance of rigorous standards in qualifications November 2012
More than 45,000 school students in England, Wales and Northern Ireland will be re-sitting their English GCSE exam after receiving lower than expected grades this summer following the shift in grade boundaries in between exam series. If you have a child caught up in all this, you’ll know that quite apart from the impact it’s had on individual pupils and their parents, it’s sparked a major row in the education world. Critics of Ofqual and the examination boards involved have described the moderation of the qualification as ‘chaotic’, and tantamount to an admission that over the years some qualifications have been ‘dumbed down’ to increase the number of passes. As a result, an alliance of schools, local authorities and teaching unions is seeking a judicial review to address what they see as mismanagement by the exam providers.
Whatever the legal outcome, this episode has shaken public confidence and raised doubts about the standards of the qualifications. For any organisation that offers regulated qualifications, like CIPS does, the integrity of those qualifications is absolutely vital. There has to be a level playing field and students and their employers must be confident that the results are consistent and fair. We must be able to demonstrate consistency across our entire suite of exams, that there is no difference in the marking regime whether you are sitting an exam in Peterborough or Pretoria, in May or November. We must also ensure that the standard of assessment for each qualification is rigorously maintained through our team of subject experts and rigorous quality assurance processes and procedures, and no more so than now as we launch our new qualifications for 2013.
Our experienced assessors work to strict guidelines and clear grade boundaries, but if a student challenges a result that’s a lot worse than they’d expected, this can be referred for review. As well as checking individual exam results, after each exam series the Senior Assessors publish reports on candidates’ performance generally, which go into a lot of detailed analysis. We’ve recently issued new guidelines for the Senior Assessors as part of our continuous drive to emphasise quality and improve the usefulness of the reports for candidates. The reports cover a whole range of issues about how well the question paper was answered, including what higher-scoring answers needed to include, tips to improve exam technique, and common mistakes to avoid.
On the up?
It feels counter-intuitive to some extent, but the World Economic Forum has upgraded the UK from 10th to 8th in the league table of global competitiveness. Against a background of three successive quarters of negative growth and most commentators revising their predictions for 2013 downwards, the WEF’s latest global competitiveness index seems to be taking an optimistic view.
So what’s behind it? The WEF points in particular to the flexibility of the UK’s labour market. Compared to many other countries, it’s much easier for employers here to hire and fire workers when they need to and the labour market is more efficient generally. Workers are also well trained on the whole, meaning that human resources are both available and effective. The UK has also been less damaged by the Eurozone crisis than some of our neighbours – France is ranked 21st while beleaguered Greece is down to 96th. We can’t be complacent though, given the threat of industrial action over the coming months.
The Olympics and Paralympics have provided really compelling evidence of the power of volunteering. They’ve shown that the cumulative effect of a group of people giving their time and energy to doing something worthwhile can have massive benefits, for themselves as well as society in general. As a professional body and charity, the contribution of our member volunteers is so important. From branch committees to members of the global board of trustees, each volunteer has an important part to play in delivering our mission.
One way volunteers can help is by talking to young people about procurement and attracting them into the profession. We’re currently trialling a pilot scheme in schools and colleges here in Lincolnshire in partnership with Young Enterprise, a national charity which works with young people to give them business experience, and we’re looking for local members to run the sessions. We’ve produced a resource pack so all that’s needed is your time and expertise. If you are interested in finding out more, please contact firstname.lastname@example.org
Procurement's role in London 2012
Now that we are all coming back down to earth after the spectacular success of London 2012, and while we take a breather before gearing up for the start of the Paralympics, we can start to reflect on procurement’s contribution to the Games and what we need to do to hand on the baton to Rio 2016 (with no apologies for the sporting analogy).
The UK proved the doom-mongers wrong. We delivered on time and within budget and predictions of security problems and travel chaos turned out to be groundless. Visitor satisfaction ratings have been very high and feedback from the athletes on the facilities and organisation has been very positive. Throughout the lead-up to the Games, procurement has been at the operational heart. The sheer scale of the undertaking has been staggering:
• Establishing a team from just four people in early 2009 up to 35 people in 2012
• 900 supplier contracts placed and managed, with total value in excess of £1 billion
• 1.8 million items of sports equipment, a catering operation to serve 14 million meals and 5,000 flower bouquets for the medal winners
• 2,000 buses and coaches to transport athletes and officials, 122 km of security fencing and more than 10,000 Olympic torches
• Of the c650 suppliers awarded contracts, more than 70% are SMEs and 90% are based in the UK.
And while the talk of the legacy of the Games has been around the stadia and other facilities, procurement has its own legacy. CIPS is already talking to the IOC about how we can help to ensure that the professional procurement practices that have contributed so much to the success of London 2012 can be rolled forward to Rio 2016.
Of course, even with the best organisation in the world, we wouldn’t have been left with such a warm glow if our athletes hadn’t performed in the way they did. At the closing ceremony Lord Coe reminded us of the theme of these Games, ‘inspiring a generation.’ The success of Team GB and the individual stories of determination and dedication will no doubt inspire many people to take up sport. Success breeds success and if the comparison isn’t too much of a stretch, in their own way the CIPS Supply Management Awards perform a similar function.
By celebrating outstanding achievement and showing what it takes to move from good to great at a national and international level, the awards give the CPOs of tomorrow something to aspire to. Let’s keep the feelgood factor of London 2012 going and celebrate the best of procurement. The Awards Dinner on 12 September should be quite a night.
The Chinese way, August 2012
The link may not be immediately clear, but the economic boom in China in recent years has been good news for a number of UK chartered professional bodies. CIPS, alongside other bodies such as RICS and CIOB, has experienced a surge in demand for our UK-regulated professional qualifications. From the first expressions of interest a few years ago, there are now over 33,000 individuals studying CIPS qualifications in China. Not only that, they both study and take their exams in the local language – and it’s no coincidence that the first language that CIPS qualifications were translated into was Mandarin.
This activity was developed in close co-operation with the Chinese education authorities and I was delighted to welcome a delegation from NEEA (National Education Examinations Authority) to renew our tripartite agreement with NEEA and CCTA this month.
The agreement will run for five years to develop, deliver and promote procurement and supply management education in the region. If the last five years is anything to go by, where 110,000 students registered through ten exam series, it will continue to be an amazingly successful partnership.
Around 60,000 of those students were also in full-time education, so this certainly supports our Generation Y plans to encourage new blood into the profession.
But, what will this mean as China’s dependency on the US and Europe export markets, makes it vulnerable to the economic downturn? In the last quarter China’s economy grew at its slowest rate for three years as foreign demand has decreased, and this is having a dampening effect on investment. In many ways this actually increases our opportunity to promote procurement and the value-add of a professional qualification to deliver sustainable supply management for times good and bad.
There is no doubt that the potential audience for CIPS in China is huge but there are also major risks in investing there, as many western organisations have found to their cost. Now that we are well established in the education field, the time is right to establish a presence on the ground and start to build CIPS’ profile. We have appointed a country manager to help the process of building a CIPS procurement community. It will take time to earn recognition and gain traction but over time our thousands of students may turn out to be the tip of the iceberg.
Procurement - the welcoming profession, July 2012
It’s our annual Graduation Ceremony on 23 June – our 14th – and once again I know I’m going to be bowled over by the sheer enthusiasm of our graduates and their eagerness to grab hold of the career opportunities opening up to them in the world of procurement and supply. Anyone who’s attended one of the ceremonies can’t fail to have been struck by the wide diversity of graduates from every background. Not only do they come from many countries and nationalities, there’s a wide range of age and experience, from those entering procurement in their early twenties, to those juggling career and studies with young families, to mature students making a career change later in life.
So when recently I read a report critical of some professions’ narrow approach to recruitment I felt I could honestly say that this doesn’t apply to procurement. The report, by the government’s social mobility advisor Alan Milburn, said that some professions were still perpetuating the old school tie stereotype and he urged them to open up the professions to talented people from different backgrounds, and particularly those from less wealthy backgrounds and minority groups.
Looking back in our profession’s history while gathering material for our 80th anniversary celebrations, it’s certainly true that when we started out, the profession was dominated by a particular social group: middle class, middle aged and male. Look around now and you’ll see how much has changed, and for the better. Part of that is simply how society has changed, of course, with better access to education and training and the removal of unfair barriers due to gender, ethnicity or disability, but CIPS has always been a broad church and has actively recruited from every walk of life.
The work we are doing now to promote interest in the profession among Generation Y, and our plans to launch a CIPS Foundation next year to increase access to professional education for those who are economically or otherwise disadvantaged, are all part of that ethos. What we’re after is what Milburn’s report calls ‘those with ability and aptitude’, the people who will be the CPOs of the future. Where they come from doesn’t matter. Where they’re headed does.
What now for manufacturing in the UK?
Last month’s Purchasing Managers’ Index on Manufacturing showed that although the rate of growth has slowed, the sector is still expanding. It’s good news that the index is still positive for the fifth successive month, but pegging back the optimism to some extent is the reality of weaker exports and a slowdown in production, mostly in the area of consumer goods. The Eurozone crisis appears to be coming to a head, and who knows what the long term impact will be on the market for 45% of the UK’s manufactured goods.
A recent survey of UK manufacturers by accountancy network BDO paints a similar picture. While confidence is increasing, the survey also reveals that only 26% of respondents thought that we have the right kind of policies in this country to stimulate and support growth in the manufacturing sector. So what kind of help are they asking for? Among the suggestions coming out of the research are increased focus on skills training, a clear policy to favour UK companies when awarding public sector contracts, and the creation of a bank for industry to provide the growth capital, particularly for SMEs.
The debate will go on, but if we want our manufacturing sector to help re-balance the economy we need to do all we can to create the right conditions for sustained growth.
Free travel buyers conference
If you’re a travel buyer in the UK and you’re a CIPS member, there’s just time to book your free place at the Institute of Travel & Meetings’s annual conference in Manchester on 21-23 May [link]. With today’s global marketplace, travel is now a significant spend for many organisations, and escalating fuel costs are putting corporate budgets under strain. ITM estimate that UK companies’ travel and meetings spend is now in excess of £14 billion. It’s a major cost of doing business, so managing this key overhead efficiently can have a big impact.
Tales of the unexpected
“To expect the unexpected shows a thoroughly modern intellect”.
Oscar Wilde said that over a hundred years ago in another context, but it’s a maxim that could equally apply to the management of supply chain risk. One of our key tasks as CPOs is to understand the risks inherent in our supply chains and take steps to ensure that any breaks in the chain due to unforeseen circumstances don’t stop our organisations in their tracks. In other words, do we have a Plan B?
It doesn’t always take an event of tsunami proportions to cause major disruption. An explosion in a single chemical plant in Germany last month is now threatening the global automotive industry. The explosion at Evonik Industries has halved the world output of nylon-12, a resin essential to the manufacture of vehicle components which has no direct substitute. World stocks are less than two months’ supply and Evonik estimate it could be six months before production re-starts.
Faced with the prospect of assembly lines grinding to a halt, the auto industry is doing something it almost never does. Companies which normally compete are collaborating in an effort to find a solution to the shortage in record time. They are working with each other and with other chemical companies to find a range of substitute products that collectively can do the job of nylon-12. If the crisis is big enough, then joining forces with competitors and suppliers to solve the problem can make a lot of sense.
Even something as apparently routine for the UK as a sudden cold snap can have serious consequences if your business is seasonal and you haven’t addressed the ‘what if’ question as well as you might. It’s been well reported that Marks & Spencer’s recent stock shortage contributed directly to a drop in sales of non-food products by 2.8%, which led to a fall in the share price when the trading figures were announced. The return of cold weather after a mild early spring led to a run on knitwear and boots and stores simply ran out of stock. Their suppliers, many in Asia, had already switched production to summer stock. Sales opportunities were lost as a result. M&S managers have admitted they could have sold three times the volume of warm clothing if it had been available for shoppers to buy. But if the weather had been exceptionally warm instead M&S would have been left with warehouses full of unsold goods.
There will undoubtedly be challenges for retailers this summer, with the UEFA European Football Championships and London 2012 Olympic and Paralympic Games. Accurately judging the impact hot weather or otherwise will have on sales will be critical for retailers looking to take advantage of the traditional increase in consumer spending during these kinds of events
In the end, it’s a judgement call we all have to make when we’re putting our contingency plans together to ensure sustainability of supply. But if the unexpected happens, then as professionals we have an important role to play in protecting our organisations from the effects.
If you have an interest in risk and feel you can contribute your expertise to our supply chain risk project, please send details to email@example.com
Faster, higher, stronger -
The run-up to London 2012 has moved up a gear or two and you can sense a real build-up of momentum. There’s a lot invested in those two weeks in the summer and so it follows that we all want to see the investment continuing to have a beneficial impact long after the last medal has been awarded.
We’ve heard Lord Coe and others speak eloquently about the Olympic legacy and there’s no doubt that the new stadia, sports centres and supporting infrastructure will have long-term social and economic paybacks. But the legacy goes deeper than state of the art facilities and new transport links.
The work that LOCOG (the London Organising Committee of the Olympic Games and Paralympic Games) and the Olympic Delivery Authority (ODA) have been doing in the area of supplier diversity is a case in point. The LOCOG Diversity Board has reported on how it is delivering on its promise to make these Games more inclusive than ever before. It is recruiting a diverse workforce through dedicated recruitment programmes targeting ethnic minority groups, those with disabilities, and older (or younger) workers. It is also creating employment locally – over 500 members of LOCOG’s staff come from the six host London boroughs and around one in eight were previously unemployed.
The other area of focus is the supply chain. LOCOG is actively encouraging contractors and suppliers to embrace diversity by making this a key element of their contract bids. The aim is to ensure that historically under-represented businesses, especially SMEs run by women, ethnic minorities, disabled or older people, have an equal opportunity to compete to supply goods and services to London 2012 as any other supplier.
CIPS has agreed to work with LOCOG to make sure their supplier certification process covers diversity and inclusion more fully. It means that from now on businesses being assessed will need to be able to demonstrate a significant level of improvement in their diversity performance to receive certification. We have already been doing a great deal of work in this area, including our role on the Executive of Supplier Diversity Europe and our involvement in the Enterprise and Diversity Alliance which promotes access to markets and to finance for SMEs and ethnic minority businesses.
We are very pleased to have this opportunity to work with LOCOG and play our part in delivering a good outcome for all London 2012 stakeholders.
What now for the UK Government?
Public sector procurement has taken a real beating in the press in the last couple of weeks. Understanding some of the challenges first hand as a non-executive advisor to the Government’s Procurement Executive Board, I know how frustrating this must be for those tasked with delivering our public services in these difficult times.
On the face of it, the numbers don’t look good. Recent analysis of more than 70 National Audit Office and Select Committee Reports (as reported in The Times) claims more than £31 billion of taxpayers’ money has been ‘wasted’ over the last two years. Examples have been given of delayed or abandoned projects and contracts which leave government departments carrying most of the risk.
So where does the fault lie? The finger is being pointed at a lack of commercial skills among those placing and managing contracts, and at supplier relationships which have been allowed to get too cosy. Is this really fair? Well, it’s probably a big part of the story. CIPS has long been urging the Government to adopt professional standards and to place a higher value on the role of professional procurement. Unless public procurement can show its commitment to raising standards, it will continue to be seen as the private sector’s poor relation, however unfair that might be.
Knowledge can be passed on and skills can be developed, and CIPS is working with government to improve skills and working practices, but perhaps the bigger challenge is cultural. The Chairman of the Public Administration Select Committee has asked the question: “Why isn’t there a professional procurement cadre across the Civil Service?” The answer is that, historically, procurement hasn’t been perceived within government as having the weight and value of other professions, and it has been difficult for procurement practitioners to find their voice.
Improved skills and procurement policies are only part of the solution. Those experienced procurement professionals who are now leading the drive to raise the bar need to have the sustained support and commitment of the politicians if they are to deliver. And please, let’s stop the ‘private sector good, public sector bad’ generalisation. People are working hard to break down the old stereotypes and actively encourage practitioners to be innovative and work in new ways. I look forward to CIPS playing a key role in that process.
A successful year for CIPS
In my last blog of 2011 I can look back on a very successful year for CIPS. Against the trend for many organisations in these challenging times, CIPS has grown and prospered. Global membership has continued to increase and the number of people taking CIPS qualifications is at an all-time high. It’s perhaps a little ironic that tough economic conditions are good for procurement, giving us a platform to promote the benefits of professional P&SM and the value our members can bring to an organisation, but we have certainly seen an increase in media attention and the volume of enquiries for qualifications, our products and leading thinking from all over the world.
We can’t be complacent, though, and I am well aware that this level of success will only be sustained if CIPS continues to deliver and be supported by our members. We have to remain relevant to our audiences and all those who use our services and come to us for knowledge and guidance. So it’s important that we keep our finger on the pulse and understand your needs and how we can improve the services we provide. That’s why the results of our recent customer satisfaction survey are so important.
Overall, the good news is that most of you are happy with the way we respond when you contact us and you like our style. Where you have said ‘could do better’ is by giving you easier access to information and giving you better value for your membership.
We’ve listened to your feedback and in early 2012 we will be launching three new membership benefits: a new recruitment service in January followed later by an online business intelligence service and a much improved online CPD system. Another big improvement you’ll see in the New Year is a revamped website which will make it a lot easier for you to find your way around.
Of all the respondents to the survey, 90% said they were happy to be associated with CIPS and to be part of the procurement community. I was particularly struck by one comment - “I work in an organisation that is full of professionals and by having MCIPS they see me as a procurement professional therefore treat me as an equal.” That’s where we continue to be relevant to business and organisations globally, by offering the highest possible standards and we are proud to continue to serve our members.
There’s a lot to look forward to in 2012 and I wish all our members and partners a peaceful and prosperous New Year.
Earlier this month we welcomed Merry Jing Liu MCIPS, our very first Council member for Asia to the Council meeting in London, proof that professional procurement is getting established in that part of the world. We now have a sizeable group of members and a large cohort of students and it is only right that they have a voice on our governing body.
What came over loud and clear in conversation with our new Council member is the mood of optimism and business confidence in Asia, in stark contrast to the fears of double-dip recession now gripping the Eurozone. While Asia is certainly not immune when the West catches a cold – and Singapore has recently cut its latest growth forecast in anticipation of its European markets shrinking – it has largely withstood the world recession.
Their trump card is that they are largely debt-free and they have the flexibility to switch from European and US markets to trade amongst themselves and in emerging markets like Africa and South America. And while the NIE countries (newly industrialised economies: Singapore, Korea, Hong Kong and Taiwan), being heavily dependent on exports, took a hit when the recession first bit, they have bounced back. They are growing faster than any western nation, creating wealth and consequently attracting investment and talent. A generation ago the ‘brain drain’ went to the US, these days the brightest and the best are heading east.
The head of the IMF has asked the BRIC countries to help with the Eurozone bailout, pointing out it is in their interests to keep their customers spending. Before they put their hands in their pockets they will want to see much greater resolve coming out of the G20 meetings over the next few months. Anything less than full agreement at the full heads of government meeting in November will not convince them that Europe has the collective will to manage its way out of debt.
Cause for celebration
There’s nothing quite so joyous as a roomful of people celebrating success, and at the CIPS-SM awards earlier this month we had a very big roomful and a lot of success to celebrate. Over 1200 procurement practitioners gathered at the Grosvenor House Hotel in Park Lane, London, for the 2011 awards ceremony, and an excellent evening it was too.
I don’t hold with those curmudgeons who dismiss award ceremonies as the opportunity for a bit of self-congratulation and back-slapping. For me, they epitomise what CIPS is all about. Each of the procurement teams competing for an award has set out to be the best they can be, and behind every entry is months of effort and determination to succeed. The awards also highlight the importance of inspirational leadership and the ability to work together towards a common goal.
As the achievements of each shortlisted team was read out, I was overwhelmed by the dedication to not just doing a good job, but doing a great job. The winners of the overall prize for procurement excellence, the Olympic Delivery Authority, exemplified this in the most impressive way.
The ODA had already won an award earlier the evening for the best public procurement project for its work on London 2012, one of the largest infrastructure and regeneration initiatives in Europe. With such a high profile and publicly scrutinised project, the judges were impressed by the team’s innovative approach which has resulted in key facilities being delivered ahead of schedule and bang on budget, or even in some case making significant savings.
The team itself is an exemplar of good practice, with an ethnically diverse workforce of whom 12% were previously unemployed. As the judges said, the practices employed by the ODA will become the industry standard for major infrastructure projects for years to come.
The awards ceremony shines the spotlight on such achievements and shows the world what professional procurement can do. It helps set new benchmarks that other organisations can aspire to. And that’s worth celebrating.
Congratulations to all the shortlisted teams and individual entrants. Please click here for more details and interviews with the winners.
Challenging times for technology companies
Supply chain problems have been blamed for pushing technology company Psion into the red. The company has just reported a half year operating loss of £5.2m compared with a profit of £4.8m for the same period last year. This dramatic reversal of fortune is, its chief executive says, the result of supply chain failures which resulted in delays in the shipment of one of its principal product lines.
While Psion claim to have ‘put the building blocks in place’ to improve performance in the second half of the year, market analysts aren’t convinced and the share price has dropped. Traders will need to be reassured that Psion has got to grips with its supply chain and taken the necessary remedial action. It just goes to show that while market conditions can make it difficult to hit sales targets, if you can’t get your product to market in the first place you could be facing an impossible task.
Much better news of course from Dyson, an object lesson in innovation and bold investment. On the face of it, putting your money into new technologies that won’t be commercially viable for five years or more seems quite a gamble in these precarious times. Yet being at the forefront of R&D has quite literally paid dividends – Dyson’s pre-tax profits are up 21% on last year. By employing the brightest and best engineering graduates Dyson are helping to keep talent in the UK. But like so many other technology companies, the actual manufacture and assembly of its products takes place in other countries where costs are so much lower. If we really want to rebalance the UK economy away from services and back towards manufacturing, it has to be viable for successful companies like Dyson to do the doing as well as the thinking on home ground.
UK growth halts
The UK growth figures for Q2 are disappointing, showing marginal growth of 0.2%, down from 0.5% in Q1. It could have been worse – some economists were predicting a negative figure – but flatlining is not great news. The Institute for Public Policy Research predicts that even if things pick up in the next 6 months the best we can hope for by the end of the year is 1.2%.
So what’s gone wrong, given that a year ago the Office for Budget Responsibility was forecasting more than double that rate of economic expansion. Well, it seems that two events in April had a big impact; the extra bank holiday for the royal wedding closing some businesses down for over a week and the effect on supply chains of the Japanese tsunami. So, the good news is that these events were one-offs and their effects are now over. The less good news is the continuing underlying problem of inflation following the rise in VAT and the pressure on household budgets reducing discretionary spend.
The government has re-stated its commitment to its fiscal policy and the Business Secretary has called on the Bank of England to inject a further £50bn into the economy to stimulate growth. We will see what happens, but in the meantime look out for the PMIs next week. My prediction is that we will see the service sector holding up but manufacturing under pressure.
We can all learn from the News International scandal
For those of us not directly involved, the unfolding of the News International scandal has been fascinating to watch. It’s been a salutary lesson that however big and powerful your organisation, if you get careless with corporate governance and you get caught out the whole edifice can come tumbling down. It’s just a coincidence that the allegations of inappropriate relationships between the police, government and the media have surfaced at the same time the Bribery Act comes into force, but it certainly helps focus the mind on what we need to do to protect ourselves and our organisations as responsible professionals.
For CIPS, that responsibility is two-fold. First of all we have a role to provide our members with guidance on compliance with the law. Then, as an SME with international subsidiaries, we have to make sure that all our employees and third party deliverers understand what the new act means for CIPS, wherever in the world we are operating. The best defence is to have robust policies and procedures and a clear ethical code of conduct for staff to follow
China gets closer
The British Prime Minister David Cameron has just signed a new agreement to improve aid between the UK and China and it made me think just how much business life has changed.
Where once China was the great producer; creating anything from children’s toys to electrical goods, the tide has turned to China as the great consumer. China is a large area of growth where Europe and the States has become static, and could eventually drive the world economy in a big way. Things are moving so fast, that with these new consumers, will come a tide of demand. This tide will want new products and innovative design and with that, new supply chains.
When it comes to innovation, Britain is up there and has a great deal to offer in powering its own economic growth. But, it’s in danger of losing this economic power to Chinese investors, who are as keen on buying up British businesses as we once were for Chinese mass-produced goods. According to Dealogic Consultants, Chinese companies have gained a foothold into 33 UK companies since 2008.
The Chinese do not recognise the recent recession as a world recession, but a West European one, and are keen to take opportunities where they are visible. We have established brands and a tradition of innovative design, and this is an attractive prospect for the Chinese as the figures bear out.
According to an Oxford University study, they are also no longer manufacturers in the main, and have moved their operations to countries such as Vietnam to concentrate on higher-spec opportunities. Their graduates, and there are more and more of them each year want a challenging career and no longer want to work in factories.
I’m delighted that this agreement has been signed and delighted with our own work with partners in China, though I for one would want to ensure that the relationship is a fruitful, and a balanced one.
New members for Jersey
I attended a breakfast meeting last week introduced by Interim Chief Executive of the Jersey States, John Richardson, at the launch event of a new CIPS branch in Jersey. There’s a real thirst to know more about procurement and supply chain best practice as the islands have their own challenges with the Comprehensive Spending Review. The event was well-attended by over 50 participants and a presentation from the CIPS president went down well, though more questions were asked than we could answer.
This will be the first of many events in the region, as we continue to tackle these challenges. We are of course including the island of Guernsey as a venue for future branch events, so we’re hoping those will be as well-attended and useful.
Ash cloud "not as bad" as last year
A year ago I blogged about the impact of the Icelandic ash cloud on supply chains around the world and at CIPS, how we pulled out all the stops to make sure the conference launching our new South African subsidiary went ahead despite keynote speakers being grounded in the UK. A year on and here we are again, although this time it looks as though the disruption is going to be a much smaller scale (though I'm still in danger of saying put in South Africa as I write...). Still, it’s a salutary reminder that we need to be prepared for business interruption and have those risk mitigation plans in place. Even US Presidents have to change their plans.
On another note, it was good to see senior CIPS members among the team of Crown Representatives announced by Cabinet Minister Francis Maude recently. Their job is to transform how UK government does business with its major suppliers by acting as a single customer. Suppliers will in future deal with one pan-government representative instead of contracting separately with individual departments.
The renegotiation of contracts with over 50 suppliers last year has saved around £800 million already. The plan is for the Crown Representatives to further leverage the huge scale of government spend to get an even better deal for the taxpayer. They will also be responsible for developing new suppliers to stimulate competition for contracts.
CIPS is at the forefront of helping these targets to be achieved. We co-sponsored a House of Commons event this month where I spoke alongside Greg Clark, the Minister for Comunities and Local Government on the subject of government procurement. The event was well-attended with over 50 senior local government officials, CPOs, finance directors and business directors. There is no doubt that the appetite for making much-needed change is alive and well.
BRIC countries becoming more powerful
We’re all aware of the growing economic muscle of the BRIC group of countries (Brazil, Russia, India and China) but they are now pressing for greater influence in the world’s financial and political institutions. At their recent annual summit in China, they called on the banks to change their traditional world view and recognise that the balance of economic power is shifting away from the US, Europe and Japan. BRIC are lobbying for Russia’s application for membership of the World Trade Organisation to be fast-tracked and are calling for a greater say on the UN’s Security Council.
The BRIC countries recovered quickly from the global financial crisis in 2008 and with the developed world slow to trade they have become more and more interdependent. They are increasingly trading with each other and with other, smaller developing economies. China and Russia are becoming reliant on each other to stimulate growth. Russia is a major commodity exporter and China is hungry for raw materials to fuel its industries. As a result, Russia is seeing its future in Asia rather than the US and Europe.
The explosion of demand in China is transforming Brazil’s agriculture as it switches to the production of soyabeans and pork for export. Last year China overtook the US as Brazil’s largest trading partner. This shift away from trade with the developed world and the formation of a self-sustaining economic group is changing the face of global business and has implications for us all.
Newsnight's job tips
On a different note, it was interesting to hear the job hunting tips from Dragons’ Den’s Deborah Meaden on the BBC’s Newsnight programme aimed at public sector employees facing redundancy. She is one of four high profile business mentors who have been asked to give advice on finding new jobs in the private sector. Not surprisingly, she homed in on the private sector’s preconceptions about public sector workers (risk averse, doing things by the book etc) and how to address these in job applications. But she also had useful things to say about the transferability of skills – she estimates that about 75% of anyone’s skills are relevant to all business roles – and the importance of networks.
The gender divide
How many women are on the board of your organisation? Does it matter? Does it make any difference to the board’s performance or the success of your organisation?
A recent report by Lord Davies of Abersoch reveals that in 2010 women made up only 12.5% of FTSE 100 company boards and the glass ceiling is still largely intact.
But why are things so slow to change when there’s mounting evidence that companies with strong female representation both on the board and at senior management level enjoy superior financial performance and strong corporate governance? It seems the problem is partly about the pipeline and succession planning – there are fewer women than men in senior positions just below board level – and partly about the mindset of the selectors who tend to pick their own kind.
So how does CIPS stack up? Well, it may have taken us 70 years to appoint our first female president but these days gender equality is almost a non-issue as far as the institute’s governance and management is concerned.
The current Board is 50% female and that’s mirrored in our honorary officers – two men, two women. This has happened naturally as members have come through the governance structure, not by design. Although gender is a factor in the appointment of new board members, it is probably the least important. This isn’t about paying lip service to a notional target but to ensure the Board is well balanced and is representative of the diversity of the membership as a whole.
It would be fair to say that in the past it could be a challenge to get women to put themselves forward for national office. Even 20 years ago there was still a view that CIPS governance was an old boys’ club that was not a welcoming place. Over time, things have changed and for the better. As more women have come through into senior positions and as CIPS has itself evolved as an organisation, more and more women have wanted to get actively involved with the leadership of their professional body and have a say in its future direction.
My own management team here at Easton House has a majority of female members – 5 women out of 9 – and that ensures we bring a range of experiences and perspectives to our discussions. Hopefully, that diversity also means that we take better decisions than if our team was composed of people with identical profiles.
Women now make up half of our annual intake of new student members and the number of women in senior procurement roles is increasing. So, even if the pace of change is slow out there in the world of business, it seems we can say equal opportunity is a reality at CIPS.
On another note, we were unsurprised by David Cameron’s strong comments about procurement in March but we are working with the UK Government on a range of initiatives that we hope will bring change and improvement.
How sustainable is your organisation?
In the lead up to the CIPS sustainable purchasing and supply summit at the end of the month, we are UK asking members to complete a short survey about their sustainability practices.
Questions cover, for example, whether your organisation has a sustainable procurement policy; if it follows practices outlined in the BS8903 guidance on adopting and embedding sustainable procurement principles; and how you measure the success of sustainable purchasing. We appreciate your time is precious, so anyone who completes the survey gets the chance to win £100 of Amazon vouchers. More importantly, your responses will form the basis of research and development into this area.
The summit will take place at London’s QEII Conference Centre on 31 March. Together with experts from sustainability consultancies, speakers include Ian Barham from the Department for Environment, Food and Rural Affairs’ sustainability procurement policy team, Andrew Jenkins, sustainable development manager at Boots and David Lawrence global procurement, compliance, risk and sustainability director at Diageo
New help for SMEs
SMEs account for over 50% of turnover in the UK economy yet they win only a small percentage of the billions of pounds of public sector business up for grabs. A common complaint from SMEs is that the over-complicated and costly system of bidding for public sector contracts actively discourages small businesses from tendering. So the Government’s announcement this month of a package of measures to open up the process and cut down on red tape should make it easier for them to compete.
From now on, all that SMEs will need to do is log on to the new Contracts Finder website which lists all contracts over £10k, say which ones they’re interested in, and they will be sent the details free of charge. To further simplify things, pre-qualification for low value procurements will become a thing of the past, and a one-time questionnaire will be used for all the rest, saving bidders having to submit the same information each time.
And if SMEs come up with innovative products and services, they don’t even have to wait for tenders to be issued. The Government has recognised that great ideas often start in small organisations but getting their ideas out into the marketplace can be an even bigger challenge in the public sector than it is in the private sector. So it’s launching Dragons’ Den-style surgeries for SMEs to come and pitch direct to a panel of senior procurement and operations professionals.
If we are going to turn this economy around and go for growth our SMEs have to be part of the solution, so I welcome this both as a boost for local enterprise and for greater transparency in public procurement. Perhaps the only disappointment is that Stephen Allott, the man who’ll be overseeing this, is a barrister rather than a procurement professional. There are some outstanding procurement practitioners in government and I urge him to start talking to them as soon as possible.
If the new measures succeed, we will see something like 25% of government business going to SMEs, and charities and voluntary organisations will be able to win more contracts for the delivery of public services. As long as this doesn’t slow down efficient procurement and supply management processes and the result is the right result, this is good news for everyone.
Manufacturing to the rescue
You couldn’t have failed to notice the good news stories in the press last month, after the economists and business leaders at the World Economic Forum in Davos predicted a general global recovery in 2011. Yet, uncertainty still remains amongst the more cautious commentators, especially when it comes to what is happening in the UK. The US and Germany may be seeing strong growth but the consensus at Davos was that the UK’s recovery will remain fragile for some time to come.
That’s not to say we haven’t made any progress, and it’s our manufacturing base that’s leading the way. The Purchasing Managers’ Index in manufacturing for the month of January showed the biggest rise in growth since records began in 1992. Employment has also risen at the fastest pace and it seems that all is golden in the manufacturing sector. It’s quite a turnaround. This is the same sector that took a battering at the start of the recession and has consistently lagged behind the services sector which it is now outperforming.
However, where there is good news, there has to be a small cloud in the silver lining, and it seems this cloud is in the shape of growing inflation. The PMI also showed that factory costs are rising, making it more likely that we’ll be seeing a rise in interest rates sooner rather than later. The Bank of England, so adamant about keeping interest rates low, may have to change course and allow incremental rises to prevent any further shocks to the economy. Two members of the Bank’s Monetary Policy Committee members. voted for a rise at their last meeting. How many hands will be raised when they get together next time?
With input costs rising, followed quickly by output prices, doing business is becoming more expensive for everyone. So though the growth in manufacturing is good news, there’s a tightrope the Bank of England must walk to keep the UK economy steady and encourage this fragile recovery to become more stable and lasting.
CIPS was invited to comment on Radio 4’s The World Tonight about the manufacturing turnaround
A happy New Year for SMEs?
As this is my last blog of 2010 I’d like to wish all our members and corporate customers a very happy Christmas.
The current icy snap is making Easton look particularly festive but if the predicted snow arrives we will be struggling with access once again. Those of us planning to travel over the Christmas period may well face some disruption to our journeys but the impact on businesses, and particularly small businesses, could be longer lasting.
The Centre for Economics and Business Research reckons that around 800 or 900 small businesses could go bankrupt by the New Year. Those in retail or leisure will be especially vulnerable, where cashflow is heavily dependent on seasonal trading. Estimates vary about the overall financial impact if the snowy conditions persist, but between 10% and 20% of the economy could be affected, costing the UK between £250 million and a billion every day.
If this all sounds a bit gloomy, it does seem that we are better prepared than in the last wintry blast. Councils have stockpiled grit to keep the traffic flowing and the Royal Mail is putting on 7000 extra delivery rounds this Sunday to ease the backlog. Companies are also doing more themselves to keep trading. The Federation of Small Businesses says its members are making arrangements for home and flexible working and have bought their own grit supply to keep their premises open for business.
Whatever the weather, on behalf of all the team here at Easton House, and in Melbourne, Dubai and Pretoria, enjoy the holiday and have a peaceful and prosperous New Year.
Building up our infrastructure
Any of you who, like me, regularly take the train to London or use the Underground will probably agree that investment in the capital’s rail infrastructure can’t come soon enough. The Crossrail project, a joint venture between TfL and the Department for Transport, will invest around £1 billion in new trains and depot facilities.
Its aim is to provide much-needed extra capacity on the existing tube and national rail network to relieve congestion and improve life for commuters.
The procurement phase of the project has just got underway, with the expectation that contracts will be awarded in late 2013. However, the Treasury has sounded a warning. A recent policy paper says the government needs to take a much smarter approach to procurement in major infrastructure projects. It goes so far as to label previous procurement processes ‘wasteful’ and ‘uncoordinated’.
The new National Infrastructure Plan just launched by David Cameron commits to ensuring that future procurements will be marked by transparency and mature supply chain relationships. Let’s hope they meet expectations and deliver a fit for purpose transport system at best value for the taxpayer.
Transforming supply chains - 3 December 2010
The run-up to Christmas is well and truly under way here in the UK and it’s make or break time for many organisations in the retail sector. The big names on the high street will be doing everything they can to bring in the shoppers, especially with the current extreme weather preventing people venturing out.
Retail giants like Marks & Spencer normally do very well at this time of year, but they’re not just relying on seasonal sales to boost their profits. The company has announced plans to fast-track the transformation of its supply chains. Instead of a network of 110 warehouses servicing its stores countrywide, it will move to a smaller number of ‘super warehouses’, of around one million square feet each, over the next five years.
Over the same period M&S aims to reduce its dependency on the ‘full service vendors’ who transport, store and deliver goods. This will give the company more control over its supply of food, clothing and household goods and improve stock availability. By introducing these measures faster than originally planned, M&S expects to save an additional £25 million a year over its projected savings, netting the company around £175 million a year by 2016.
An information world - 19 November
Managing information is a big challenge for any organisation. At CIPS we’re working on an ICT transformation programme to pull everything into a single integrated system that is fit for purpose across CIPS worldwide. As we extend our reach globally we need to make sure our information is properly joined up so we can provide a seamless and efficient service for our members and corporate customers.
So with the experience of what we’re doing here at CIPS I wasn’t surprised to read a report from Oracle which shows that poorly managed information flows can have a serious impact on business performance. The study, which looked specifically at supply chains, claims that this could be costing UK businesses over a billion pounds a year in missed sales. The reason seems to be that systems haven’t kept pace with the complex operating structures of today’s businesses environment.
This has left supply chain managers struggling with fragmented information systems and spending half their time trying to keep track of vital information Getting your systems in shape to meet 21st century business needs is expensive and can divert management attention from other things, but this research seems to show that it’s a wise investment and a crucial one.
Purchasers adding value once again - 12 November 2010
I’ve always thought that purchasers have a unique perspective on the organisations they work in. Maybe not exactly an all-seeing eye, but certainly touching every aspect of the business in one way or another. From raw materials to services to waste management, purchasers get to know how everything works.
They also get to know what’s happening out there in the supply marketplace and who’s coming up with the next great idea. This puts them in an ideal position to drive innovation, and I’m not the only one who thinks so. Starbucks’ procurement director, Nils Clement, is convinced that purchasers can really add value in this respect, especially when it comes to sustainability.
Clement says that Starbucks’ purchasers are becoming the people the rest of the organisation goes to for advice. They are leading the way in helping the company develop its environmental strategy through working with suppliers who are finding their own innovative solutions to sustainability challenges. A great way to sell the value of the procurement function to your CEO and your internal customers as well as creating a buzz amongst your customers.
The trouble with Serco - 5 November 2010
I’m currently in Hong Kong for a series of meetings with the international federation before going on to China, and I’ll update you on my travels in my next blog.
In the meantime, a story closer to home grabbed my attention this week. Serco, an outsourcing group which handles several big public sector contracts on behalf of the UK government, has had to abandon its plans to seek rebates from its suppliers.
The contracts include running prisons and RAF bases and the London Docklands Light Railway. Following the announcement of the public sector cuts, Serco asked its largest suppliers to help share the pain by paying a 2.5% rebate. Not surprisingly, this led to complaints and Serco has been forced to back down.
Whatever the rights and wrongs of Serco’s actions, this does illustrate the mutual dependency of the supply chain in this area. The UK Government has said it is relying on the private sector to create jobs and drive economic regeneration. If those who supply to the public sector are going to be squeezed still further and be asked to take bigger hits on their profits, their ability to expand and generate wealth will be severely limited.
I'm glad to say that The Telegraph also reported on the story and came to us for comment.
Looking back, looking forward - 29 October 2010
This weekend could be a pretty gloomy one for us here in the UK, what with Halloween and the clocks going back. It marks the turning point in the year as we head towards winter, and with economists divided over the likelihood of a double dip recession, there’s a lot of uncertainty about what the new year will bring once the public sector cuts and tax increases begin to bite.
So you’ll have to forgive me if I have reasons to be cheerful. That’s because I see this weekend in a far more positive light. For historic reasons, the CIPS year starts on 1st November, so for me this weekend is about beginnings, not endings. It’s the time our new business plan gets under way and we start work on the new projects and initiatives we’ve been busy planning over the last few months. It’s also a time for reflecting on what we’ve achieved over the past year. If you read my recent interview in SM (14 October) you’ll know what I’m proudest of: expanding our global membership to more than 65,000, rebuilding our financial strength as an organisation to enable us to invest, signing MoUs with the UN to develop procurement capability in emerging economies, and growing strong relationships with corporates and CPOs. It’s particularly satisfying that we’ve been able to stick to our plan and achieve what we set out to do, despite many challenges along the way. And of course, 1st November is the day our new President and Chairman take office, along with the other new members of the Board. I’m delighted to be working with them and looking forward to a successful 2011. Happy new year!
The news is out - 22 October 2010
Now that the dust is settling following the spending review announcement, we need to step back from the more strident headlines and take a measured view of what this all means for procurement.
There’s no doubt the cuts are going to hurt, but from a procurement perspective I think we can take some real positives from what the Chancellor had to say. Sir Philip Green’s report exposed the consequences of failure to co-ordinate procurement across government. The structures that have been put in place over the last few years have not brought the kinds of economies of scale that should have been achievable with the government’s collective muscle. What is needed now is a common framework and way of working so that individual departments can take advantage of centrally negotiated deals and take a co-ordinated approach to supplier management. The Efficiency and Reform Group is already making headway along these lines. The ERG’s contract renegotiations are expected to deliver hundreds of million pounds worth of savings this year.
We’ve heard a lot about accountability in the last few weeks, too. That means we need better monitoring and reporting of delivery outcomes so we can have confidence that we’re getting what’s been promised. CIPS has an important role to play, not just in helping to make sure we get public procurement right, but also in demonstrating to government that their chances of making this work will be a whole lot better if the people negotiating, managing and delivering the contracts are professionally qualified.
Professional procurement will be the driver for greater efficiencies - 22 October 2010
While we’re all bracing ourselves for the publication of the detailed spending review plans next week, there’ve been plenty of headline-grabbing announcements this week to keep us occupied.
Sir Philip Green’s report on government efficiency is damning, let’s face it (see my comments in this week’s News). It must have made sobering reading for every CIPS member working in central government. Of course there are massive inefficiencies, no-one’s denying that. But government is huge and complex and there are pockets of real excellence which don’t get any recognition. Sir Philip has also missed one very important point, the lack of properly trained, professional staff to implement and share best practice.
If this wasn’t bad enough, a report by PwC out this week predicts dire consequences for the private sector too. They estimate almost half a million private sector jobs could be lost when public sector contracts dry up.
And then of course we have the cull of the quangos. 192 have been cut altogether, with others being merged or re-formed. The Cabinet Office Minister Francis Maude has made it clear that his primary purpose in wielding the axe has been to make ministers more accountable for decisions and to have greater transparency around the cost of running these bodies.
The cumulative effect of all this is that no-one can be left in any doubt that the spending cuts are going to be really tough and are going to impact on us all. Our job, as I see it, is to keep hammering home the professional procurement message. We have to convince government that in the midst of the cuts what they actually need to do is invest – in the skills of properly trained and qualified procurement professionals. Otherwise what’s left of our government departments just won’t be able to deliver.
Leading the way for professional bodies - 8 October
Global warming affects each and every one of us and there’s no shortage of advice to help people and organisations reduce their carbon footprint. We’ve always done our bit at CIPS to support national initiatives and promote what the procurement community can do to reduce carbon emissions. You can find plenty of guidance material on our website.
But for me, it’s really important that we practise what we preach, so I’m delighted to be able to say that CIPS has become the first professional body to be awarded CEMARS certification. CEMARS is the Certified Emissions Measurement and Reduction Scheme, approved by the Environment Agency and ISO-accredited as the international standard for the measurement and management of greenhouse gases.
So how did we do it? Well, first of all you have to know what your carbon footprint is, so we’ve been measuring the impact of everything we do, from heating Easton House, to UK and international travel, to recycling plastic drinks cups. This has shown us where we’re already doing pretty well and where we have opportunities to do better. As a result of going through the certification we’ve now put a five year plan in place which will reduce our carbon emissions by 10 per cent. The savings will be across the board, from energy-efficient light bulbs to encouraging staff to take the train rather than the car.
It all adds up and I’m proud that CIPS is leading the way.
A new age - 1 October
The release this week of the IMF’s report on the state of the UK economy must make happy reading for the Government ahead of the spending review announcement. Everyone’s braced for what’s being called a new age of austerity and there’s no doubt some of the cuts will be deep and painful. So the IMF’s endorsement of the Government’s policy as the way to get the economy back in balance is welcome news for the Chancellor.
All the same, being told that it will do us good in the long run doesn’t make the medicine any easier to swallow. Other than the NHS and overseas aid, which are protected, government departments are facing an average budget cut of 25%. Some, such as the Home Office, could even see a thumping 30%. That’s the reality of the numbers needed to deliver £66 billion in savings over the next 6 years. The big question, though, that people are divided on, is will the spending cuts stop the economic recovery in its tracks? We’re not economists at CIPS but we keep our finger on the pulse through the PMIs, which give an up-to-date snapshot of the economy from a procurement and supply perspective. Last month all three indices (manufacturing, services and construction) showed a loss of momentum. If this month’s indices continue that trend it will add to worries that the economy may not yet be robust enough to withstand the effects of the cuts.
Procurement at the heart of business - 24 September
The CIPS conference this week promised a smorgasbord of discussion, presentations and a few surprises, and it didn’t disappoint.
Nearly 300 of us were packed into the newly-built concert hall at King's Place, the first built for a hundred years, so our current president Shirley Cooper mentioned in her opening address. The conference was a well-balanced mix of serious debate and presentations tackling heavy issues around outsourcing, bridging procurement and finance and of course the highly-topical challenge of public sector procurement.
One of the highlights for me, was the opportunity to talk to a range of professionals, and I suppose that’s usual for any procurement and supply conference. But, what was different about this one, apart from it being a CIPS conference of course, is the confirmation that procurement and supply is now at the heart of business. The panel discussion with past SM award winners on how their strategic procurement wins made such a difference to their organisations provided some perfect examples.
Entertaining and enlightening presentations from John Timpson, chairman of Timpson and the Rt. Hon Richard Needham, International and Commercial Director of Dyson, gave some left-field ideas on how to succeed in running a business by encouraging creativity and innovation amongst staff. This is just as true when it comes to running a professional institute. I was delighted to present our first-ever corporate film during the conference as a demonstration of how CIPS is changing and innovating. Available to view on our website in a few weeks.
Yet, the real surprise for me during the conference had to be Michael Portillo at the end of the day. His thoughts were well-rehearsed, his ideas developed and carefully managed, full of insight about the final Thatcher years and the end of his career. But, it wasn’t the speech itself that was surprising, but the question and answer session at the end. His honesty over his dealings with the MoD when he held the position of Secretary of State for Defence was refreshing for someone who had always toed the party line. He admitted in his own day there were some major procurement failures he’s ashamed of.
This was even more topical because of the recent Dispatches programme about the MoD and procurement errors. But, that was then and this is now. Things can only improve, and admitting you've got it wrong is the first step to getting it right.
Cold times ahead - 3 September
The US sneezes and the UK catches a cold. How many times have we heard that said since the collapse of the sub-prime market in the States triggered the deepest recession since the 1930s.
Almost regardless of what’s happening in China and Europe, the state of the US economy remains the major influence on market confidence in the UK. And the news coming out of the US is not good. Q2 growth fell to half the Q1 rate. Unemployment is rising as the low level of business activity is causing companies to cut back on expansion. Sales of new houses are at a fifty year low and the manufacturing sector has cut back on capital investment. The Federal Reserve has said it’s ready to pump more money into the system if necessary. All of which is raising fears that the US is entering a double-dip recession, which inevitably will wash up like a tidal wave on our shores.
On the other hand, the European Central Bank has just released figures that show the eurozone growing faster than the US, partly due to strong growth in Germany. The eurozone is an important market for UK exports and growth will stimulate demand. The ECB has raised its growth forecast for the remainder of 2010 and 2011, although with a health warning that any deterioration in global conditions could stop that growth in its tracks.
So where does this leave the UK? So far, most commentators have been saying that a double-dip is unlikely. It’s clear, though, that the recovery is slowing. This month’s PMIs all show a drop in the rate of expansion in all three sectors – manufacturing, construction and services. Manufacturing is at a nine-month low, construction jobs continue to be cut and the services sector marked out as the economy’s saviour has slipped back as concerns over public deficit cuts remain. So the hope that the recession really is at an end appears to be overly optimistic and we may all be shivering and sneezing for some time to come.
With power comes responsibility - 27 August 2010
How far should a multinational manufacturing company be expected go down its supply chain to check that its raw materials are being ethically sourced? Is it reasonable to expect CPOs to know for certain where and how these are being obtained, or should they be able to rely on the written assurances of their suppliers?
I suspect I wasn’t alone in feeling a sense of collective shame when I read the recent reports about child miners in the Democratic Republic of Congo (DRC). It seems that in our eagerness to purchase the latest mobile phone or games console we could inadvertently be adding to the misery of what, even in this day and age, is nothing short of child slavery.
‘Conflict minerals’ as they’re known are now right up there with blood diamonds as the hot topic for the corporate ethics debate. The DRC has gold, tungsten and tantalum in abundance. These metals are in huge demand to meet our ever-growing appetite for electronic products. Many of the mines that produce them are controlled by paramilitary organisations or government forces which use the profits to buy weapons. Providing the labour to fuel this vicious circle are the mineworkers, 40% of them children according to the World Bank.
Multinational companies wield a great deal of economic, social and often political power. But, along with power comes responsibility.
All the major electronic companies say that they have processes in place to prevent the use of conflict minerals, but they say they cannot be certain none slip through the net. No-one’s disputing that their supply chains are vast and complex but it should not be impossible to establish provenance and in future supplier assurances may not be enough. It may take legislation to force some companies to act responsibly. Last month the US Congress passed a law making companies say where their minerals have come from and exclude any from the war zones of the DRC.
That’s some progress. But in the end, it may be consumer pressure rather than law that proves to be the biggest catalyst for change.
Continuing professional development for everyone - 20 August
One of the perennial debates for any non-regulated professional body is whether to make it mandatory for its members to apply for regular re-accreditation and demonstrate that they’ve kept their skills up to date in order to keep their professional designation.
Up to now, our policy has been to encourage members down the Continuing Professional Development (CPD) path but with a carrot rather than a stick. We have plans to expand our CPD scheme even further by making it easier for members to manage their own development plans. We don’t insist that members get re-assessed every few years in order to keep their MCIPS – but maybe it’s time we had that discussion. There’s no statutory requirement for CIPS members to maintain their skills, but perhaps we need to do more now than merely show people the benefits of doing CPD for its own sake.
A couple of things occurred this week that made me think it’s time to revisit this. One of our members, Ed Harrison MCIPS, contacted me via this blog to say that he doesn’t think it helps the standing of our profession if members can retain MCIPS in perpetuity irrespective of whether they continue to invest in their own professional development or do nothing. He’s in favour of ongoing assessment and thinks the MCIPS ‘badge’ should be a sign to everyone that here is a practitioner whose knowledge and skills are up to date and relevant.
As it happens, in this same week I was invited to attend a board meeting of our US based sister organisation, ISM, which was being held here in the UK. If you saw the announcement of the reciprocation of our professional credentials, or you already hold both MCIPS and CPSM designations, you’ll know that all CPSMs have to apply for re-accreditation every three years and provide evidence that they have kept their knowledge current. For ISM, it’s a fundamental feature of professionalism.
There’s an argument that if you want procurement to be recognised as a serious profession, then it should be subject to the same regular and rigorous assessment as the regulated professions. Of course, if overnight we introduced re-assessment linked to CPD as a condition for retaining MCIPS, we could well lose those members who see no need for re-accreditation. But it seems to me that it is becoming the expectation and the norm for people to see their qualification as the real start of their development as professionals, not its completion. We should at least have that conversation and ask members what they think.
I know that this is an issue which is bound to arouse strong feelings on both sides of the argument. It’s also an issue that we’re going to have to tackle at some point and I’d welcome your views
Procurement at the top table - 13 August
It’s great news that John Collington’s going to be the new head of procurement in the government’s Efficiency and Reform Group (ERG). That’s not just because he’s a CIPS Fellow and about to join our Board in November – although of course I’m delighted he will be bringing so much knowledge and expertise to help us shape our public sector strategy.
What’s really good about the appointment is that it tells me the government is getting serious about procurement and the role it can – and must – play in driving down cost with the least pain for the taxpayer.
Pushing through reform on the scale now set out is a massive job by any standards but I like what John is already saying about how he plans to go about it. The key, as he says, has to be smarter procurement and replicating best practice across all departments. At CIPS we’re looking forward to doing what we can to support John and his team.
Professions are still important - 13 August
The latest CIPS exam results were posted on our website at the beginning of August and it occurred to me that we may be seeing a shift in the public perception of the value of professional qualifications versus university degrees. The number of members achieving their MCIPS via the CIPS Graduate Diploma this year is up 24% on 2009. It seems that MCIPS is being increasingly seen as a must-have if you want to have a career in procurement.
Although this autumn’s university courses are over-subscribed and competition to get in is fierce, the bad news is that this year’s university graduates are finding it harder than ever to get paid work and many are questioning the value of their degrees as preparation for the world of work. They’re not the reliable route to career success that they once were and more and more students are going on to further professional or vocational education to increase their opportunities. Most of the professional bodies we talk to report similar buoyancy in qualifications, so it seems that the professions are still an attractive option when times get tough.
Is food just another commodity to buy and sell? – 6 August 2010
News out this week that freak weather in various parts of the world may bring about food shortages makes for grim reading. Staples such as wheat, pork, orange juice, rice, coffee and cocoa are likely to be considerably more expensive in the coming months.
Extreme drought in Russia is the trigger for major price hikes on wheat which of course means products such as bread, pasta, processed foods, and animal feed will be affected, as Putin bans grain export to protect his own domestic market. Wheat prices have already risen by 92 percent since June. Meanwhile, emerging economies in India and China will add to the strain in world supplies as they need more food and raw materials as they have already pushed up industrial commodity prices in oil and copper.
This is not great news for the world, and certainly not the UK economy. All our Purchasing Managers’ Indices this week dropped slightly in July. Though there was still some good news in the manufacturing sector, there is still the concern that we’re not out of the economic woods yet. With food shortages likely, we will have inflationary pressures to contend with as well and a possible return to ‘stagflation’ This is a situation no one wants – high inflation with stagnant growth and my BBC News interview this week on the PMIs briefly explored what the figures showed for the economy.
Though we fear for our economy and our own pockets, the situation is much more serious in emerging and developing economies. If food prices shoot up, it’s a matter of life and death. As the unseasonal Russian weather may harm the next sowing season for sugar beet, potatoes and corn as well, the threat is very real.
The United Nations Food and Agriculture Organisation has tried to take a more measured approach and dispel fears of possible food riots last seen in Mexico and Indonesia in 2008. However, now that speculators and investors have muscled in, prices may fluctuate more widely. One hedge fund manager has invested £650m in the cocoa market and has basically taken a large part of the market. Do we allow this food speculation to continue?
Michael Barnier, the EU’s internal market commissioner, thinks not. He’s been on record as saying that speculating on basic food stuffs was ‘scandalous’ when there were starving people in the world. I’m inclined to agree.
The spirit of 1948 - 30 July 2010
It’s the news we thought we’d probably never hear – the Olympic stadium in Stratford is taking shape faster than expected, and the costs have not rocketed further. This must surely be great news for the country as the debate rumbles on about whether we can even afford the Olympic and Paralympic Games.
With only two years to go to London 2012, Sir Chris Hoy christened the new partially-finished Olympic Velodrome this week, complete with underfloor heating so competitors can stay warm between competitions. The overall costs of the Games continue to be phenomenal (about £20billion is one estimate from Jack Lemley, former chair of the ODA) and some may see such warming additions as utter extravagance in this new age of public sector cuts. This 6000 capacity, state-of-the-art facility will have cost £100million of the £7bn being spent on stadia alone.
The last time London held the Olympics, in 1948, they were called the Austerity Olympics. Much like now, Britain was deep in economic crisis with the additional costs and ravages from the Second World War. In 1948, The Games cost £732,268 and actually made a profit of almost £30,000. Athletes stayed in schools and nurses’ hostels, and with rationing still in place, they relied on multi-vitamins and Horlicks to keep themselves going. They even brought their own towels.
Yet the 1948 Games have been hailed as the most successful, the most cost-effective and simple games of the last century. I know Beijing is hard to beat, but perhaps the spirit of 1948 should be present in London 2012 as we focus on sporting achievement and the strength of the human
UK economy grows by 1.1% - 23 July 2010
It’s never advisable to read too much into one set of figures, but today’s announcement from the Office of National Statistics that the UK economy grew by 1.1% in the second quarter of the year has to be good news. It’s a big jump from 0.3% for the first quarter and the fastest quarterly growth for four years. Most of the growth has come from the services sector, but the construction industry also seems to be picking up. It will be interesting to see if next month’s PMIs (Purchasing Managers' Index) back this up.
It’s a move in the right direction but it doesn’t mean that the recovery won’t stall or even go backwards. The smart money is on rollercoaster results for the rest of the year as the government’s cuts begin to bite deeper.
All procurement professionals know how seriously to take waste management. It’s always going to be up there on your CSR (Corporate Social Responsibility) agenda. So you have to wonder what controls were in place at multinational giant Trafigura which has just been found guilty in a Dutch court of illegally exporting toxic waste to the Ivory Coast. Trafigura denies any wrongdoing and lays the blame on local contractors, but in the last five years the company has been fined €1 million and has paid out over $200 million in out of court settlements to Ivory Coast inhabitants. That’s a heavy price for mismanagement of this end of the supply chain.
Finally this week, I’m delighted to welcome on board Andre Coetzee as Managing Director of CIPS Southern Africa.
Andre takes the reins on 2 August and brings with him almost 30 years experience of South African and international markets. We’re looking forward to working with him to develop the procurement community in this rapidly expanding region.
Australians do it better - 16 July 2010
The MD of our Australasian office is currently in the UK, presenting to our board and council, and his visit has really brought home the different challenges faced by procurement professionals in different parts of the world. As CIPS increases its international footprint, it’s essential that we take these differences on board so that we can tailor our support to local procurement communities.
Australia looks to be doing a whole lot better than Europe. It has weathered the global recession and the economy is expanding, but it’s not immune to economic and political upheaval.
The recent row over big tax rises for the mining industry exposed the country’s reliance on its natural resources. The mining of ores and metals constitutes around 40% of Australia’s total trade, worth more than A$90 billion in exports, and representing over a quarter of the country’s annual capital investment. It’s not surprising that many Australians believe that that the country’s fortunes are inextricably linked to the prosperity of its mining industry. It’s also the employer for a sizeable percentage of CIPS members in the region.
So when the mining giants like Rio Tinto threatened to halt major investment projects in protest against the proposed 40% tax and launched an aggressive campaign on national television, it was bound to become highly political. It undoubtedly contributed to the demise of Kevin Rudd. With an election imminent, the top priority of the new PM Julia Gillard has been to negotiate a new deal to get the miners back onside.
What price education? 9 July 2010
It’s a big news week for education, with the furore surrounding the scrapping of a £55 billion school building scheme. Clearly, costs have to be saved across the board and all services are likely to be affected, but it looks as though there are going to be legal challenges from the local authorities and construction companies who thought their projects were safe.
The New Academies Bill announced in the Queen’s Speech has its own implications for procurement. The bill gives schools the opportunity to opt out of local authority control and apply to become independent academies. The idea is that parents will have more say in the type of education provided and head teachers will have more autonomy to drive up standards.
All well and good. But, in the enthusiasm to sign up for academy status there’s a real danger that the importance of procurement will get overlooked. Head teachers and parent-governors - except those who happen to be CIPS qualified, of course – aren’t procurement experts. They are going to have to negotiate supplier contracts and could find themselves paying over the odds. It’s not a given that they will understand lifetime costing and know that cheapest isn’t always best.
Local authorities have the benefit of in-house procurement expertise and the ability to leverage economies of scale to get best value from tight budgets. If they want to go it alone, I would urge every chairman of every board of governors of the new academies to employ a procurement professional. They will be worth the investment.
How much support is now left for small businesses? 2 July 2010
The emergency budget included plans to cut the eight regional development agencies at a saving of £270 million and replace them with local enterprise partnerships. The details haven’t been announced yet, but what we do know is that the government is also scrapping the regional Business Links.
It’s understood that the Business Link website, which has cost £35 million to develop, will continue, but that the government is looking for private funding to run the advisory service for small businesses.
Whatever support is put in place, it has to be geared to the varied needs of people starting up or running small businesses. The message from the new government is clear enough: they are looking to the private sector to drive the economic recovery. New businesses create new jobs and more needs to be done to support entrepreneurs and give them the advice they need to start up or grow their businesses.
There’s a role here too for CIPS. Most SMEs can’t justify the expense of employing a dedicated procurement professional, and in fact most SME MDs probably don’t even realise that when they’re buying in materials and services they’re acting as part-time procurement managers themselves – untrained, and without access to advice and technical support. Opportunities to save cost and add value will be lost, and could even be the difference between prosperity and business failure.
We can help by giving people like the MDs of SMEs a good enough grasp of the principles of P&SM to have a positive impact on their business. We’re busy developing ideas on the best way to provide support for this vital sector and plan to launch new services next year.
Procurement equals impact equals bottom line - 25 June 2010
If you’re trying to explain the value of P&SM to a CEO, talk about the positive impact on the bottom line and you’ve got their attention. If their answer is ‘so show me the money’, there’s now an increasing body of research to back up the claim.
The AMR Supply Chain Top 25 for 2010 report cites growing evidence of a direct link between the effectiveness of an organisation’s supply chain and its financial results.
The report ranks organisations according to the business impact of their supply chains. It shows that the companies with the best supply chain operations were more successful than their competitors and delivered strong financial performances.
There’s evidence, too, that the message is being received and understood in the boardroom. A generation ago it was rare for the head of the supply chain function to report direct to the CEO. In the sample companies surveyed for the AMR report, 61% now say their head of function reports to the CEO or president.
This was the theme of my presentation at this week’s Procurecon CPO roundtable and in the International news section of Supply Management magazine. We’re getting our seat at the top table. The challenge now is to demonstrate that we have the right to stay there.
The road to a zero carbon economy - 18 June 2010
The BP oil spill has re-opened the whole big business versus a greener planet debate. The effects of the disaster go a lot further than the physical damage to the environment and it’s not just the immediate communities who’re affected. The continued prosperity of multinational companies like BP is vital to pension funds and local economies, so it’s not in anyone’s interest to see them go under.
The spillage has also highlighted our continuing dependence on fossil fuels, so the publication this week of the Centre for Alternative Technology’s vision for a zero-carbon UK by 2030 looks even more of a challenge.
Their plans would save around 637 million tonnes of carbon dioxide, mainly by eliminating wasteful energy use and increasing renewable and clean energy sources. It would mean massive reductions in road and air travel, the end of traditional heavy industries and out of season fruit and vegetables would become scarce luxuries.
The social and economic impact would be huge and it would radically change how we manage our supply chains. Twenty years seems a very short space of time to achieve such a transformation, but even if this target is over-ambitious, similar messages are coming out from global bodies such as the UN panel on climate change. Whatever the route to a zero-carbon UK, P&SM will have a major part to play, whether it’s buying energy, reducing waste or sourcing closer to home, and CIPS members will be key players.
Spending wisely - 11 June 2010
The terms of reference for the new Office for Budget Responsibility make interesting reading. Coming hot on the heels of the announcement of plans for £6.2 billion in cuts during this financial year, the OBR will be telling the government whether these measures really can deliver its fiscal targets.
The spend review announced by George Osborne this week includes some measures that have real resonance with what we’ve been saying for some time; namely that public procurement is so vital to the health of UK plc that it ought to be a ministerial level responsibility. Further, that public sector procurement policy should take more notice of best practice and leading thinking from outside the sector if it’s really going to step up to the mark.
So, requiring every Secretary of State to appoint a minister with specific responsibility for driving value for money in the department looks like a step in the right direction. As does the plan to set up a group of experts from both inside and outside government to come up with innovative ways to cut costs without cutting service quality.
The government’s pledged to consult widely over the summer, from think tanks to pressure groups to the third sector - and you can be sure that CIPS will be representing the views of our profession as loudly and persuasively as we can.
Celebrating success - 4 June 2010
This Saturday we have one of the highlights of our calendar – the CIPS annual Graduation Ceremony, which once again we’re holding at the Birmingham Symphony Hall.
There’ll be around 1,000 graduates, families and friends at the ceremony and many of them will have made long journeys to the UK to take part – we have graduates coming from China, the US and Africa as well as Europe and, of course, from all over the UK. It’s fantastic to see everyone in their academic robes and you just have to look at the dozens of smiling faces to feel the pride in their achievement.
For me, seeing these young people emerge from this rite of passage as newly minted professionals is what this institute is all about. At the heart of everything we do is our standard of professionalism and its foundation is the Graduate Diploma. The fact that our graduates come from all over the world shows that when it comes to procurement the CIPS Graduate Diploma is seen as the standard to aspire to, wherever you practise your profession. The graduates of 2010 will in turn act as role models in their own communities and reinforce that message.
Congratulations to everyone graduating this weekend - I hope you have a truly memorable day and a long and rewarding career in procurement.
Success in Dubai - 28 May 2010
On my way back today from what’s been an outstandingly successful CIPS conference in Dubai. It’s been three years since we’ve held a major conference in the Middle East, and judging from the superb feedback from delegates, we’ve tapped into a real desire to develop professionalism in the region.
Dubai’s an amazing place to visit but despite its huge wealth it’s not been immune to the global recession and last year’s credit problems were widely publicised. Businesses here are looking for ways to improve organisational efficiency and there’s a lot of interest in what CIPS can offer.
The conference will also, I hope, be the launch pad for expanding our membership network locally and for establishing Dubai as CIPS’ Middle East hub as we grow our influence in the region.
Transparent government - 28 May 2010
We’re busy digesting the new coalition’s programme for government and considering our response to the proposed spending review, but one theme that’s already come out strongly is the commitment to transparency in government procurement.
All central government contracts over £25k will have to be made public, and local councils will have to list spend items in excess of £500 and publish tender documents in full. ICT contracts have often been at the centre of the efficiency debate and these will now have to be published on-line and be capable of being split into smaller components to create a level playing field for bidders.
This all sounds like a move in the right direction, but if you are at the sharp end of public sector procurement, how do you think it will affect what you do day to day? Will more openness deliver better value? I’d be interested to hear what you think.
Taking on the deficit - 14 May 2010
Now that the new Cabinet has been announced and we know who the key appointments are, we’re developing our plans to contact the relevant new ministers and start a dialogue on the role of procurement in delivering the new government’s efficiency targets. Cutting the public sector deficit is quite rightly top of their agenda and I will be explaining what CIPS can do to help. I’ll keep you updated on how this goes over the coming weeks and months.
Own goal for the tax man - 14 May 2010
As you may know from previous blogs, I’m a big football fan and looking forward hugely to the World Cup getting under way next month. It’s going to be an important opportunity for South Africa to showcase its economic development and attract foreign investment.
It will certainly leave a legacy of new stadiums to benefit the local population, but what’s causing a fair amount of push back is the fact that while taxpayers are footing the bill for the infrastructure development, the lion’s share of the profits will go to Fifa. Not only that, those profits will be virtually tax free under the terms of the agreement between Fifa and the host nation as a consequence of Fifa’s charitable status.
This is nothing new for these kinds of events, of course, and indeed the previous UK government agreed that the organisers of the 2012 London Olympics will be tax exempt, as will all the competitors.
Today David Beckham presented England’s bid to host the 2018 tournament. It will be fantastic to have the competition in England, but it won’t mean a windfall for the Chancellor.
In the balance - 7 May 2010
So, it’s going to be the first hung parliament since 1974 and at the time of writing we still don’t know who is going to be getting the keys to Number 10.
All of this creates a lot of uncertainty and indecision and ambiguity makes the markets very nervous. This morning the pound fell against both the dollar and the euro, with traders fearing that a coalition government might have to spend so much energy on horse-trading that it won’t have the will to tackle its biggest challenge, the public spend deficit.
We simply can’t afford for the interregnum to go on for too long. My message to the new government, whatever its complexion, is to get on with the business of governing as soon as possible and to issue a clear statement about how it proposes to cut the deficit. I’ve been talking to a lot of senior public servants recently and there’s no doubt that they are totally switched on to procurement’s role in reducing government borrowing. Getting procurement policy right will be key to the new government’s success and I will be seeking the earliest opportunity to explain how CIPS can play an important part in making that happen.
Greek tragedy - 7 May 2010
In any other week what is happening in Greece would be taking centre stage. Its people will pay a high price for the 110bn euro rescue package, but the implications for the rest of Europe are even more worrying. Spain and Portugal are already feeling the pain and other EU countries are openly challenging the conventions for bailing out fellow member states.
It could all get very messy and it would be a mistake to assume that we’re immune in the UK. There’s already been an impact on global share prices and we shouldn’t forget that the Eurozone is a massive export market for the UK. The last thing our recovering manufacturing industries need is the loss of key customers.
CIPS and UNOPS join forces - 30 April 2010
I am delighted to announce a new alliance between CIPS and UNOPS (United Nations Office of Project Services).
Jan Mattsson, UNOPS Executive Director, and I signed a Memorandum of Understanding at Easton House recently, to work on joint projects to deliver efficient services to people in need in the least developed and developing countries.
Our role will be to bring our expertise to help governments in emerging economies build their own local capacity and capability in procurement. Developing the capacity of national governments to manage their procurement process more effectively and raise standards in supply chain management will save money and ensure the quality and timeliness of goods and services procured for their people.
It is also a precondition for the transparent and accountable use of donor funds, and so an important part of our contribution to the joint projects will be to embed CIPS standards for individuals and organisations in the client countries.
This is a major and exciting opportunity for CIPS and we are looking forward to working with UNOPS to make a real difference in the parts of the world that need the most support. In addition their strong brand will support CIPS in being seen as the professional standard for our profession.
For more information and to see the joint press release, please go to our Media Centre.
Southern Africa update - 30 April 2010
Not all of us made the CIPS annual Pan-African conference as you know, but through the wonders of technology, we were beamed across the continent and were there – in a virtual sense. If you couldn’t make it yourself, then visit our Southern Africa pages to view the presentations.
We’ve had quite a bit of interest from the Southern Africa media too, with TV and radio interviews on Classic FM.
The trade press were there in force too, from Smart Procurement magazine to the Sunday Standard
CEO blog - 23 April 2010
It was a stroke of luck that ISM CEO Paul Novak made it across to the UK the week before the ash cloud closed UK airspace, so that we could hold our signing ceremony for the CIPS/ISM reciprocation agreement.
The agreement means that members of CIPS and ISM in the UK and North America will be able to apply for each other’s professional credential, giving them professional recognition on both sides of the Atlantic. With global organisations increasingly asking for their procurement people to be qualified to the same high standard wherever they’re based, this has come at exactly the right time.
And of course the benefits go further than increasing opportunities for the individual member. The agreement between the two biggest P&SM associations in the world gives us a platform to develop a universally recognised global standard for our profession. It will help us raise our profile and credibility as a truly international discipline. It’s a huge step forward by any standards.
This is what it means to you
Recovery continues - 23 April 2010
Figures out today from the Office for National Statistics show that GDP grew by 0.2% between January and March. The recovery continues, albeit slower than forecast. However, most commentators seem to think that this is down to the double whammy of the bad weather, which hit retail and leisure services in particular in January and February, and the increase in VAT which has curbed spending, rather than any major underlying recessive trend.
The ONS report points to growth of 0.7% in the manufacturing sector, which is the strongest quarterly performance for a very long time. It’s boosted confidence in an export-led recovery, taking advantage of the weak pound. This bears out last month’s manufacturing PMI which showed the fastest growth in production since 1994.
The threat of a double-dip recession does seem to be receding now, but it will be interesting to see what the PMIs for April have to say when they come out at the start of next month.
CEO blog - 16 April 2010
It’s been a nightmare day – I’m due to fly to South Africa tomorrow morning, along with CIPS colleagues and keynote speakers for the CIPS African Conference. Like everyone else due to fly to or from the UK in the next twenty four hours, I have no idea when or even if I’m going to get airborne. The timing couldn’t be worse, the conference is the launch pad for our new subsidiary, CIPS Southern Africa, and the team out in Pretoria have been working round the clock to put on a fantastic event to get the new institute off to a great start.
So, multiply our own little drama by thousands every day that UK airspace remains closed and it adds up to a whole lot of inconvenience, unforeseen costs and potential loss of business. It’s difficult to quantify the business impact but latest estimates suggest the cost to airlines could be at least £100 million. It’s already hit the share value – Ryanair has seen £70 million wiped off its share price.
In value terms, something like 30% of our exports go by air, mainly high-value, low-weight items like pharmaceuticals. Some businesses are going to be hit by the inability to get air freight in or out, although if the closure is short term it shouldn’t be too big a problem and most organisations will have contingency plans to cope with short term interruptions to the supply chain.
Perhaps a bigger problem is key people being stuck in the wrong place for an extended period. Yesterday some 4000 flights were cancelled, stranding 60,000 passengers. Assuming the CIPS team manages to get to South Africa this weekend, we may be relying on a change in the wind direction to get home again. It could give a whole new meaning to ‘remote working’.
Dubai Media International certification update
I mentioned some time ago how pleased I was to have awarded the certification – here’s the TV coverage
And they’re off! - 9 April 2010
The election bandwagon is well and truly rolling and as anticipated the public sector has become the main battleground. This morning’s headlines are dominated by one story, the argument over public sector cuts prompted by the announcement of the Conservatives’ plan for £12bn in savings if they’re elected next month.
CIPS has to be – and is – scrupulously apolitical, but it’s nevertheless intriguing to see that the plan’s author is Sir Peter Gershon, a CIPS Honorary Fellow. Gershon was, of course, an adviser to the government before leading the Tory efficiency review and was formerly head of the OGC. So he is someone with a lot of knowledge and first hand experience on the subject. He is also helping us in his Honorary Fellow role to get our views on public sector procurement across to both sides of the political divide. It was partly due to him that I have been able to hold meetings recently with cabinet minister Jim Knight and shadow minister Francis Maude to discuss these issues.
Gershon reckons that £9.5bn could be saved through cutting IT projects, renegotiating contracts and reducing spend on consultants and back office costs. Up to £2bn payroll savings could be made by capping top end salaries and leaving posts vacant when staff leave. Labour argues that these savings aren’t achievable and says the plan could mean 400,000 job losses and also harm those private companies that depend on government contracts.
The debate looks set to dominate our front pages for a while yet.
CSR withstands the pressure - 9 April 2010
A recent academic survey of CIPS members shows that Corporate Social Responsibility (CSR) is proving resilient in the face of growing environmental and economic challenges. The study, led by Dr Ian Harwood of the University of Southampton, asked senior practitioners in a wide range of organisations what they felt the future held for their CSR policies.
The vast majority (91%) are predicting an increase in environmentally responsible activity with 88% saying that they expect to be doing more to meet social agendas. The current top three environmental activities are recycling, energy reduction and carbon footprint reduction; the top three social activities are staff welfare, charity work and engagement with the local community.
The results indicate that CSR is less affected by economic pressures than some other reports have suggested. While legislation is a major factor, the culture and leadership of an organisation are key drivers behind the predicted growth. For more information about the study, contact firstname.lastname@example.org.
The first cut isn’t the deepest - 26 March 2010
Not many surprises in Wednesday’s Budget statement, but it was always going to be a revenue neutral budget that wouldn’t frighten the voters. Although sizeable cuts were announced, it’s generally accepted that these are just the start and even greater economies will have to come after the election. The Conservatives have already announced that if they win they will issue an emergency budget 50 days after taking power in order to start cutting public spending deeper and quicker than Mr Darling is planning.
What we really need to know is exactly how the £11bn worth of efficiency savings announced on Wednesday are going to be made – because procurement professionals will be expected to deliver. The government – whoever wins in May – needs to understand that it’s not just about cutting costs. There’s a big risk that short term easy wins will lead to longer term cuts to essential services if we don’t think instead about value creation, innovation and creative solutions.
The best way to support the drive for greater efficiency is to ensure that procurement decisions are made by procurement professionals. We also need good practice spread consistently across every part of the sector, and one way to do this could be to appoint a minister for procurement to set policy. I’d be interested to know what you think about this idea and get your reactions to the budget in general. Post your views in our Politics Zone forum.
It pays to be a procurement professional - 26 March 2010
Good news for everyone in P&SM. The 2010 Purchasing & Supply Rewards research from CIPS and Croner Reward shows procurement and supply professionals still get paid more than colleagues in equivalent posts working in marketing, finance, IT and human resources. Even better news for CIPS members is that you are earning up to £1,500 more than your non-member peers.
Even in these recessionary times earnings have gone up by an average of 2.5%, except for heads of function, whose pay has been pegged to last year’s level. The gender divide has narrowed across all job levels except director, where women get paid 13% less.
You’re all working harder and job security’s an issue, but generally most of you who responded said that job satisfaction is still high. A free summary of the report’s findings is available on the CIPS website to CIPS members (don’t forget you will need to log in).
Tanked up - 19 March 2010
Filling up at the petrol station is getting expensive again, with the price per litre expected to top £1.24 in the coming weeks. Although oil prices are not as high as this time last year, the cost of fuel is rising. Hauliers are protesting that they can’t pass on the additional cost to their customers, so they’re having to take the hit toon their bottom line.
There’s no sign, though, that higher prices at the pumps will reduce demand. Surveys suggest that only a small percentage of motorists will change their habits. Global demand for oil is forecast to increase by 1.7% in 2010 to 86.6 million barrels a day, with half of all that growth coming from Asia. China’s demand in January alone was an incredible 28% higher than in January 2009.
All this suggests that the global economy is expanding, but the oil producers are being cautious. OPEC met this week and decided to maintain output at current levels. They expect demand to rise sharply but want to keep prices strong. So it’s is not surprising that they are waiting to see if global economic recovery can be sustained before increasing output.
Take note - 19 March 2010
The Bribery Bill is on its way to becoming law and although I’ve mentioned it in a previous blog, I make no apology for raising it again. It’s essential that everyone involved in procurement understands what this is going to mean for them and for their organisations.
The Bill creates new offences, some of which are of particular importance for anyone who works internationally. Not only will it be a separate offence to bribe a foreign public official, it will also be an offence if an organisation fails to prevent it happening by not having adequate measures in place.
I would argue that CIPS members, bound by our ethical code, have a real responsibility here, to look out for bad practice and ensure it’s dealt with. They also have a real opportunity to guide and protect their organisations by introducing processes and policies and advising colleagues on ethical procurement And they need to do it now, not wait until someone gets caught out.
Budget warning of bumpy road ahead - 12 March 2010
So we now have a date for the long-awaited pre-election budget – 24 March. It is anticipated that the budget will continue what the Prime Minister has referred to as his tough approach to public sector spend. Although the economy is now out of recession, recovery is fragile and the decisions taken over the next few months will be hugely significant.
The government will set out in the budget how it plans to reduce the public borrowing deficit while protecting essential services. How far the cuts will go on this side of the election is anyone’s guess, although measures have already been announced to freeze the pay of senior civil servants. The chancellor has committed to protecting health and education but economists have warned that further substantial cuts and tax rises are inevitable if he is to balance the books. Go to the politics zone (you have to be signed in) for a summary of the Prime Minister’s announcement.
Talking of the Government and the economy, I also recently met with Jim Knight, cabinet secretary for the Department of Work and Pensions who was keen for us to work with him on the ‘Backing Young Britain’ campaign. More news soon.
Waste not want not - 12 March 2010
Waste management and how we reach our recycling targets is an issue for all of us involved in procurement but few of us have to tackle anything as big as a jumbo jet. It was a news item on the ‘breaker yard’ at Cotswold Airport that piqued my interest – just how do you recycle a decommissioned 747?
The answer is that you break the plane down into engines, fuselage and component parts and sell on the 50% that can be recycled. Engines can be reconditioned and re-used and there are a surprising number of people who like to collect old aircraft seats for their front rooms.
The dismantling process can cost up to £120k and takes around 12 weeks. What can’t be recycled currently goes to landfill, but that’s changing. The newer Airbus A320 has 95% recyclable parts and manufacturers are now working on planes that will be 100% recyclable when they come to the end of their service life in 30 years’ time.
Launch of CIPS Leaders’ Network - 26 February 2010
Yesterday evening (25 February) I found myself at the same London hotel as film director Tim Burton, in town for the royal premiere of his new film Alice in Wonderland. I happened to be there for our own, just as exciting launch, the inaugural event of the CIPS Leaders’ Network (CLN).
The CLN is designed specifically to meet the needs of CPOs across all sectors. Its aim is to raise the standard and status of procurement at the corporate level through facilitating the exchange of knowledge and providing a stimulating environment for deep discussion of the issues facing business leaders. It’s based on a mantra – the three Rs: intellectual rigour, business relevance and tangible results; and it’s supported by a comprehensive package of executive coaching, mentoring and access to cutting edge research.
The CLN grew out of a recognition that traditional approaches to management are no longer enough. To stay ahead of the competition, today’s procurement leaders must be clued up about the way technology and the management of knowledge capital are transforming organisations and the role of procurement itself.
For more information about the CIPS Leaders’ Network, email email@example.com
Cold comfort - 26 February 2010
It won’t be much comfort to Toyota to see that Suzuki, Nissan and Daihatsu have also announced vehicle recalls to fix faulty components, but it just serves to underline the lesson being learned at such cost by some of the world’s largest manufacturers.
Every car that comes off the production line is the sum of hundreds of different components which may be made by hundreds of different suppliers. What’s happened at Toyota bears out the old adage that a supply chain is only as strong as the weakest link.
Look out for my page in Supply Management next week, when I’ll be talking about the massive impact a supply chain failure can have, and why we should be looking at supply chain strength as a key indicator of organisational health.
African highlights - 19 February 2010
I’ve just got back from an extremely productive and informative visit to Africa. It’s been a hectic schedule, covering four countries in a week, but I’ve come away feeling extremely positive, not just about the warmth of the reception for CIPS, but about the appetite for professional procurement I found everywhere I went.
I bookended my trip with visits to South Africa for various meetings in preparation for the launch of CIPS Southern Africa in April.
Next stop was Zambia, where I appeared on national TV and also met up with members, the head of the Zambian public procurement authority, and the president of CIPS’ sister body, ZIPS. Much or our discussions were around recognition of the profession. In Zambia any professional (of whatever discipline) has to have a licence to practise. We have signed an MoU with ZIPS for the recognition of MCIPS which means that in effect the CIPS qualification is the licence to practise for procurement in Zambia.
It was then on to Malawi, where along with holding a meeting for members I had discussions with the minister of finance and the CEO of the Malawi Institute of Purchasing and Supply. MIPS has made it mandatory for all members of its council to be MCIPS. I also met the director of public procurement who reports directly to the President of Malawi. He was very supportive of CIPS and we will be developing this valued relationship over the coming months.
Last leg of my journey was Botswana. I once again met with local members and representatives of the Botswana public sector. Procurement does not yet enjoy the status there that it does in Zambia and Malawi but I hope that the efforts of practitioners on the ground and the opportunity for me to speak to the press will help to raise the profile. A highlight for me was the signing of an agreement with the University of Botswana to work together to improve the provision of P&SM qualifications.
Overall, the trip has confirmed for me the huge opportunities for procurement in Africa. Each country I visited is committed to developing the profession as a driver of economic growth. CIPS is being invited to play its part and I believe strongly that we have an obligation as the world’s leading association for P&SM to help make it happen.
Dubai Media Celebrate Certification - 12 February 2010
Last Sunday morning, when I expect most of you were enjoying a well deserved lie-in, I found myself on television in Dubai, being transmitted live across the UAE. I had the privilege of presenting HE Ahmad Abdalla Al Shaikh, Managing Director of Dubai Media Incorporated (DMI) with CIPS Certification. The Certification award recognises the achievement by DMI of the CIPS standard for organisational excellence in procurement.
This was just the latest in a series of high profile international presentations I’ve been involved with in recent months, and it’s a great indicator of the growing prestige attached to CIPS standards worldwide. The fact that the certification ceremony was broadcast live across the whole network in the presence of a member of the ruling family speaks for itself.
Politics Zone Launched - 12 February 2010
Speculation about the date of the election is really hotting up, with journalists seizing on the smallest hint from government spokespeople. The first week of May is currently favourite, and already the election bandwagons have started to roll.
CIPS, in partnership with De Havilland has launched a new service to help you keep up to date with all the latest developments. Our new weekly election diary [link]provides a summary report of what’s happening each week in the run-up to the election. It will pick up on the parties’ key policies, and we will be particularly highlighting those with a procurement angle. You can access the election diary at our new Politics Zone. It’s available exclusively to CIPS members, so you’ll need to log-in.
The Politics Zone includes a weekly Westminster round-up covering consultations and select committee meetings to keep you informed of the latest government initiatives and legislation. There’s also a monthly EU bulletin with highlights from EU media coverage and procurement policy developments.
Mixed messages - 5 February 2010
In last week’s blog I was wondering whether the announcement that the UK had crept out of recession in the last quarter of 2009 would be echoed by the PMI results for January. The answer seems to be, well, yes and no. The latest figures point to the fragility of the recovery and show there’s still a long way to go...
The disruption caused by last month’s snow has hit the services sector. Growth slowed in January to the lowest level since August last year. The increase in VAT has also pushed up costs and consumers are spending less after the Christmas peak. On the other hand, the manufacturing index shows activity in the sector rising at its fastest pace for 15 years as the weak pound boosts exports.
It’s hard to know if the services slowdown is just a weather-related temporary blip, but the Bank of England’s main priority will be to avoid falling into a double dip recession. For that reason, most analysts expect interest rates to stay at 0.5% until at least the second half of 2010.
New code of practice for supermarket suppliers - 5 February 2010
A new code of practice has come into force to help food producers who supply to the big supermarkets. The Groceries Supply Code of Practice is intended to stamp out practices such as altering supply contract terms retrospectively. Suppliers say that the supermarkets have too much leverage in negotiations and put pressure on small producers to take all the risk, and this damages their ability to invest in innovation.
In future, supermarkets will have to keep written records of negotiations with their suppliers and the government has started a consultation exercise to look at the appointment of an ombudsman to enforce the rules.
All of this will be scant comfort to 180 pea farmers in Norfolk and Suffolk who are further down the supply chain. Birds Eye has cancelled their contracts after an Italian export deal was withdrawn at short notice.
Time to move up? - 29 January 2010
I’ve been a Fellow for almost a decade now, so it was a surprise to me when I became CEO to find only a small percentage of members apply to upgrade each year.
I want to grow our community of Fellows and so we’ve taken a fresh look at how we promote and manage Fellowship. We’ve made the application process clearer and slicker and improved the Fellowship package. So if you’re an experienced MCIPS in a senior role but hadn’t thought Fellowship was for you, it’s time to take another look.
For me, it was the obvious next step. It was partly about my own professional development and partly about wanting to give something back to the profession. My FCIPS is something I value highly and I’m keen to see more people reap the benefits. There’s a lot more to it than just putting FCIPS after your name. Being a Fellow gives you access to tangible benefits like exclusive business events, senior networking opportunities and career enhancement – a recent survey [add link to Croner Purchasing & Supply Rewards Survey 2009] shows that heads of function who are CIPS Fellows earn as much as £22k more than non Fellows.
For more details and how to apply see our new Fellowship brochure
A long road to recovery - 29 January 2010
Well, we’re out of recession, but only by the very narrowest of margins. The long awaited ONS figures for the last quarter of 2009 show that the UK economy has limped into recovery by a fragile 0.1%.
With many commentators now predicting a ‘double dip’ recovery, we have to be cautious about the next few months. An election is looming and party leaders of all complexions are talking about further belt-tightening. But there are some grounds for optimism – last week unemployment fell for the first time in 18 months and house prices are starting to move. Will next week’s PMIs confirm the upward trend? Watch this space.
New category management tool available now - 23 January 2010
CIPS has just released a new category management tool for purchasing professionals which offers a structured approach to strategic purchasing decisions. The Category Management tool is a four- phase process consisting of six key activity steps which can be applied to most categories of significant spend. The beauty of the tool is that elements of it can be used separately where it’s not appropriate to adopt the full category management process so it’s flexible and easy to use. It was built using the expertise of the CIPS Supply Chain Group, and we’re grateful for their knowledge and guidance.
The tool also supports effective supplier relationship management and monitoring, and improves compliance across teams. It is available free to members on the CIPS website
Avoiding budget slippage - 23 January 2010
You may have seen in the news that Airbus want to cancel their contract with European governments for the A400M military aircraft unless they can negotiate new payment terms. It seems errors were made in estimating the cost of the project, blowing a hole in Airbus’s budget.
Large scale projects can be difficult to predict and it’s wise to allow for cost adjustments in any contract. Agreeing how to deal with unexpected additional costs up front can avoid big problems at a later date. A close supplier relationship can help to identify problems and tackle budget slippage early on. It’s also advisable to agree SLAs and KPIs at the start and stage them across the lifetime of the project, tied into the contract agreement. Open and transparent communication with your suppliers is key to avoiding the problem now facing Airbus and its client governments
CIPS and Traidcraft launch new buyers’ guide to sustainable procurement - 15 January 2010
Earlier this week I was in London for the launch of a new buyers’ guide CIPS has produced jointly with Traidcraft [link]. Win Win: Achieving Sustainable Procurement with the Developing World is part of the Responsible Purchasing Initiative. It sets out the key factors buyers need to think about when sourcing from developing countries, including environmental, social and economic issues.
The guide also offers advice on improving supply chain efficiency and encourages buyers to take the lead by shaping their organisation’s responsible procurement policy. Getting it right is increasingly a business and reputational imperative.
The new guide is available free.
MOD’s “Dragon’s Den” champions innovation - 15 January 2010
Encouraging suppliers to be a source of innovation is on most of our agendas, but it’s challenging to achieve in practice. The MOD has recently announced receipt of its 1000th supplier idea for innovation and improvement through The Centre for Defence – its very own Dragon’s Den. Since it was set up 18 months ago, the centre has approved research funding for 150 proposals – sixty percent of those coming from SMEs.
This is a fantastic example of what can be achieved when suppliers know that their customer is open to new ideas and most importantly, is prepared to invest in bringing these to fruition.
Happy New Year – and a prosperous one too? - 8 January 2010
A Happy New Year to all readers of my blog – and it’s good to be able to kick off my first message of the year on an upbeat note. Although the UK remains the only G20 economy still in recession, the CIPS manufacturing PMI out this week is indicating that the worst may be over for the sector. The index rose to 54.1 in December, up from 51.8 in November, the fastest growth in UK manufacturing activity for two years. New orders have hit a two year high and there’s evidence that job losses are slowing down too.
Some commentators think this is a temporary spike and remain pessimistic about whether this upturn can be sustained. Tax increases and businesses choosing to pay off debt rather than spend suggest that we should be cautious. Others are more optimistic that this signals recovery and, indeed, the immediate market reaction was a jump in the value of the pound and gains against the US$. It will be interesting to see what happens over the coming year – with an election thrown in for good measure.
Snow (supply) chains - 8 January 2010
The snow has made it very picturesque here at Easton on the Hill but it’s caused problems for CIPS along with other businesses in the area. And almost as inevitable as school closures are the stories about salt stocks running out and criticism of local councils’ supply policies.
In the extreme weather conditions we’re experiencing this winter there’s a new supply chain worry, the adequacy of our gas storage capacity. On Monday the National Grid issued a Gas Balancing Alert which is triggered when demand threatens to outstrip supply, only the second time this has happened. Not surprisingly, it was a story the media jumped on. In the event, big users like power plants managed their fuel demand and extra gas supplies were piped in from Belgium and Norway. Both the National Grid and the major gas suppliers have made it clear that there was never any risk of businesses or households running out.
It seems that there has been some scaremongering, but what this story does highlight is the importance of managing risk in the supply chain to safeguard strategic commodities.
Interview on Radio 5 Live - 7 January 2010
As the discussion about grit supplies rumbles on, I received a call from the BBC to discuss the issue further. If you have a moment, have a listen, and let me know what you think. It starts on 1:41 on BBC iPlayer.
Protecting your IPR - 18 December
Protecting your organisation’s intellectual property when you share information with your supply chain can be a major concern for buyers, particularly in the context of low cost country sourcing.
Member states and the European Commission met in Stockholm this week to discuss practical initiatives to respond to the increase in counterfeiting and IP theft. The plan is to set up a databank on the specific threats facing the EU. The current legal framework already offers the tools to protect intellectual property rights, but what is needed is a concerted effort to support law enforcement. The databank will help member states share information on IP pirates and protect their businesses in both internal and external markets.
Focus on professionalism - 18 December
One of the consequences of the banking collapse has been a loss of public confidence in our leaders of our financial institutions. The FSA, which came under fire for its failure to regulate, has been working with professional bodies to improve professionalism in the financial services sector.
The outcome is a report which tackles what it means to be a professional. It addresses the governance of professional standards, levels of competence and, above all, ethics. The FSA has recognised that professional bodies have a major role to play in ensuring probity and competence in business and public life. It is, perhaps, an admission that the role of the professions to uphold standards has been overlooked for too long.
What’s really interesting is the FSA’s description of an active role for professional bodies in supporting this initiative. It says that ‘the internal governance model will rely on recognised professional bodies to monitor members’ qualifications, CPD and standards of ethical behaviour …..and to inform us of breaches’. In other words, professional bodies will be asked to help the regulator to police the sector.
It’s acknowledged that this will inevitably mean more cost for the professional bodies, but on the upside it’s anticipated that the initiative will drive an increase in professional body membership.
Last chance on climate change? - 11 December 09
All eyes are currently on Copenhagen where the UN climate summit has been described as an "opportunity the world cannot afford to miss". The 192 countries attending have a big challenge on their hands, to come up with a deal to supersede the Kyoto Protocol in 2012.
The agenda is clear. To agree targets to curb greenhouse gas emissions, help developing countries with the cost of dealing with climate change, and finalise a carbon trading scheme aimed at safeguarding our forests. It’s a tall order and the disagreements have already started, with the developing countries arguing that the leading economies as the biggest polluters should bear more of the cost than is currently proposed.
Responding to growing public concern, 56 newspapers in 45 countries published the same editorial on Monday in 20 languages, warning that climate change will have dire consequences for the planet unless action is agreed. Whatever the final outcome of the summit, there’s no doubt that businesses will have to put more and more resource into minimising the environmental impact of what they do.
If you’re looking for information and advice on this issue and you’re a CIPS member, follow this link and check out GreenFILE. It’s a business intelligence service covering global climate change, green building, pollution, sustainable agriculture, renewable energy and recycling.
CIPS Business Intelligence
Cost cutting alone won’t be enough - 11 December 09
So the government is targeting £12bn in efficiency savings over the next four years, including an extra £3bn identified since the last Budget. £1.3bn of that will come from ‘streamlining’ central government – in other words, by axing jobs and cutting or postponing planned spend.
Government departments will be encouraged to set up ‘common spending policies’ to achieve better economies of scale, and some areas of project spend will be slashed. The sums spent on consultants and communications will be cut by a half and a quarter respectively, which is expected to save around £650 million. In this week’s pre-budget report five million public sector workers will also be facing a one percent cap on pay rises for the next two years.
Our message to the government is that while some cuts are probably justified, it’s not the only answer, and it won’t be enough in isolation to peg back the deficit. Getting best value from doing procurement better will deliver longer lasting benefits.
The long road back - 4 December 09
The CIPS-Markit PMIs are still getting a lot of media coverage as business commentators try to forecast when the UK is likely to come out of recession.
CIPS services survey economists reaction
In fact, I’d been asked to talk about the latest PMIs on the BBC yesterday, only to have the schedule changed at the last minute when the National Audit Office announced that the bank bailout had already cost us more than £850 billion.
You can understand why this was big news, coming hard on the heels of the bankers’ bonus story and adding fuel to that particular fire. While the NAO’s conceded that the bailout had been justified to save the system from collapse, its effects are going to be with us for years. Looking at the November PMIs in that context, the big question is whether the recovery we’re seeing right now is going to be maintained next year. The signs are that the recovery is slowing although respondents are still fairly optimistic – provided we get the right conditions for growth in 2010.
Police procurement to be centralised - 4 December 09
A new government white paper out this week, ‘Protecting the public: supporting the police to succeed’ sets a target of £400m savings over the course of the next parliament through centralising police procurement.
The paper promises a national approach to sharing procurement costs, something the Police Federation has been pressing for for a long time. Local police forces will have to use nationally agreed procurement frameworks and the Home Secretary Alan Johnson has said he expects to see major benefits, in particular in the procurement of IT systems. The new approach will save on costs but is also expected to improve information sharing between forces.
CIPS support for new BSI standard - 27 November 2009
If you’re responsible for sustainability in your organisation, keep an eye out for the new BSI Sustainable Procurement Standard which is going out for public consultation on 1st February 2010. CIPS has been involved in drafting it, along with the OGC, London Green Procurement Code, IEMAM and Action Sustainability.
The standard will help organisations by providing guidance on achieving and improving sustainable procurement policies, processes and procedures. If the consultation goes to plan, the new standard will be published next summer.
Chartered Institute of Housing Offers CIPS Certificate - 27 November 2009
These days it seems it’s not always enough to be an expert practitioner in your own profession. More and more professionals are expected to have a wide range of management skills beyond their personal specialism, or at least a good understanding of other disciplines and their contribution to the organisations we work in. This applies to procurement and supply just as much as to, say, finance and marketing.
As part of our mission to raise the profile of P&SM, we want to see procurement embedded in other qualifications, whether university degree courses or programmes offered by other professional bodies. This has two big benefits – other professionals start to ‘get’ procurement and they know who to come to for information and support.
So I’m pleased to announce that from March 2010, the Chartered Institute of Housing (CIH) will be offering its members the CIPS Introductory Certificate in procurement and supply. The programme will cover basic purchasing and supply principles, and will be suitable for staff with no purchasing experience, or those needing a refresher course. More information on their website.
A slow improvement - 20 November 09
While the OECD has upped its forecast for recovery in almost all the regions of the world in 2010, its view of the UK’s prospects are less rosy. It has more than doubled its growth estimate for its 30 member countries from 0.7% to 1.9% but predicts the UK will achieve growth of around 1.4 compared with 2.5% in the US. And none of the OECD countries is expected to outperform the BRIC nations, with China forecast to grow by more than 10%.
One of the main concerns for the UK is the size of our public sector spend. The government watchdog, the National Audit Office, has just published its report on the ability of government departments to manage complex, high value projects. The report highlights a shortage of staff with the necessary commercial skills to deliver large projects successfully. I was pleased to see that the NAO is recommending more investment in the recruitment and training of high calibre staff but I’d go a step further. I believe that it’s professionally qualified procurement personnel who are best equipped to handle these complex projects and we’re working with the OGC and other public sector bodies to drive that message home. We currently have over 7000 CIPS members in the public sector, and that number is growing.
UK tackles corruption - 20 November 09
A committee of MPs has been reviewing a proposed new Bribery Bill which will make it an offence for companies to bribe foreign officials in order to win lucrative offshore contracts. The bill will also create a new offence of corporate negligence which means that companies will have to prove they had put adequate checks in place to prevent bribery, or face prosecution along with the employees responsible.
The need for the new law has partly been driven by high profile cases like BAE Systems which has acknowledged that in the past it hadn’t done enough to prevent bribes. It’s also a big issue for us as we develop our global reach. We’ll soon be announcing more CIPS international offices , set up to support and nurture ethical procurement in cultures very different from the UK..
It’s a timely debate too - in the same week it’s been announced that Britain has fallen to an 11-year low in Transparency International's "corruption index".
UN introduces CIPS accredited courses - 13 November 2009
The UN has launched a new suite of procurement courses which have been accredited by CIPS. The courses are open to UN staff and their development partners, including donors, NGOs and governments. Available from 2010, the courses will be offered at a range of locations worldwide.
More help for SMEs - 13 November 2009
One of the barriers to the UK’s recovery from recession has been the lack of support from the financial services sector for SMEs. So it’s good to hear that a major banking group is launching a new package which it is hoped will help 300,000 new businesses start up by 2012. The new Small Business Charter from Lloyds Banking Group is designed for companies with a turnover of up to £15 million and will include seminars on finance and bidding for contracts. Good news for start-ups, but what’s missing from the package is advice on procurement. We plan to contact Lloyds to tell them about the practical help we can offer.
Welcome for CIPS in Singapore - 6 November 2009
On my way back from the CIPSA conference recently I routed through Singapore, where it’s clear there’s a huge opportunity to raise the profile of procurement. Singapore’s status as south east Asia’s business hub means that many multinationals are making it the base for their operations, and there’s a real hunger for good professional practice and a desire to work with CIPS.
During my two day visit I made presentations at Merck and Xerox, setting the foundations for the development of their procurement operations in the region. The Xerox presentation followed the award of CIPS certification in the US in September and involved all their Asian offices including Japan and China. I also discussed with the Singapore ministry of finance what CIPS could offer to support public sector procurement. Every organisation I spoke to was incredibly open to the professional procurement message and very keen to work with us.
We’re also looking to increase local support for students and members. We’re building an active CIPS branch and reviewing study opportunities for those working towards CIPS qualifications. All in all, some very positive messages from a very successful visit.
Former CIPS President heads up Olympics procurement - 6 November 2009
With less than 1000 days before the start of the 2012 Olympics, the organising committee (Locog) has started the procurement process for all the goods and services needed to make the games a success. Contracts worth £700m are up for grabs and the whole process is being managed by a former CIPS President, Locog’s procurement director Gerry Walsh.
Gerry’s message to potential suppliers is that there will be opportunities for companies of all sizes to get involved with London 2012. There will be eight categories of goods and services to bid for, from catering to security to production services for the opening ceremony. Locog has set up a dedicated portal, CompeteFor, to handle the bids.
Greener London - 30 October 2009
The Mayor of London’s Green Procurement Code awards were handed out this week and the organisations that have signed up to the code are reporting some impressive results.
Their combined spend on green products and services is up by 42% on last year to £436 million. As a consequence, nearly 120,000 tonnes of waste have been diverted from landfill sites and over 56,000 tonnes of CO2 saved from our atmosphere.
And if a spend value of £436 million is difficult to put into context, it’s more than three times as much as the whole of Taiwan spent on green products and services last year.
CIPS is a member of the Green Procurement Code steering group and was invited to help judge this year’s awards. The most encouraging message for us is not just about the growing percentage of ‘green’ spend in our capital; it’s about a culture shift away from thinking mainly about how much green procurement is going to cost, to how the public sector and its suppliers can work together to drive down the cost and achieve environmental benefits at the same time
Responsible procurement - 30 October 2009
It’s been a busy week for Boris. On Wednesday he published his Responsible Procurement Progress Report, which outlines how his annual £3 billion spending power is being used to deliver extra value for money for Londoners.
As well as meeting the GLA’s green agenda, contractors are being encouraged to deliver social and economic benefits, addressing issues like diversity, minimum wage and prompt payment. It’s good to see the GLA embedding responsible procurement practices – this year more than 200 staff have received training in responsible procurement techniques.
Beat the strike with Supply Management online - 30 October 2009
The ongoing postal strikes are bad news for all of us, and CIPS is no exception. It’s possible that delivery of your next issue of Supply Management magazine may get held up. We’re sorry if it is, but here’s a reminder that SM is available in a digital version so you can keep up to date online.
Winners and losers - 23 October 2009
There can’t be any of us who won’t be affected by the postal strike, both in our home lives and at work. Apart from the personal inconvenience, many businesses – particularly small businesses that rely heavily on the postal service – are going to be badly hit.
In a poll in this week’s Supply Management over a third of buyers surveyed said they planned to switch to another postal service supplier to ensure business continuity. The likelihood is that those changes will be permanent.
One group of people who aren’t too unhappy about the industrial action are our high street retailers. As we approach their busiest time of year, the prospect of shoppers deserting on-line retailers due to delivery worries and returning to the stores is as good as an early Christmas present.
Good news for exporters - 23 October 2009
Welcome news this week that ECGD, the UK export credit agency, has launched a letter of credit guarantee scheme to help UK exporters have better access to short-term finance.
Under the scheme, the risks associated with letters of credit for international trade transactions will be shared by the UK banks. The effect should be that more credit will be made available to UK exporters.
Five banks have signed up so far and it’s expected more will follow. It will be a real benefit in the current climate when banks’ reluctance to lend is still having a dampening effect on the UK’s export market.
‘Perfect Storm’ creates waves in Australia - 16 October 2009
This week’s CIPS Australia annual conference in Melbourne has been the biggest and best yet. The event’s attracted over 700 delegates, and it’s now the event in the procurement calendar in the region.
Entitled ‘the perfect storm’, the conference theme was procurement’s readiness to seize the opportunities coming our way. There’s been some great content that will be relevant to members outside Australia too, so we’ll be making video coverage available to you via this website – I’ll let you know when it’s ready to view.
I was there at the conference talking to our CIPS colleagues, sharing with them the new focus for CIPS and their valuable contribution to our global approach.
CIPS needs YOU – 16 October 2009
The Purchasing Managers’ Indices (PMIs) often get a mention in my blog because they are fast becoming one of the early key economic indicators in the UK. They are a great vehicle for getting CIPS’ messages and the thoughts of senior purchasing professionals into the mainstream business media.
We produce three indices with our partners Markit, in manufacturing, construction and services. What we need now are more purchasing managers in these sectors (in the UK) to join the panel discussions.
If you're accepted, you'll receive the reports free of charge. Contact firstname.lastname@example.org to be added to the list for consideration.
Xerox receives CIPS certification
A couple of weeks ago I told you about the procurement success story at Xerox. Here's a video of the certification ceremony.
How to succeed in business - 9 October
Those of you who like to keep a close eye on these things will have noticed the big increase in media coverage of procurement in the last few months. The number of mentions of CIPS in the press and the increase in requests from journalists for us to comment is all good news and helps build profile for our profession.
Not surprisingly, it’s the PMIs (purchasing managers’ indices) that generate the most interest, but what’s really encouraging is that we’re recognised as people with something useful to say about business in general. CIPS was quoted in the Times last week on the art of successful business negotiation, alongside psychologists and business school academics. Recognition, perhaps, that the skills and commercial nous of procurement practitioners add value to the whole business, not just the procurement function.
Probably the biggest procurement job in the world - 9 October
It’s encouraging to see that the man chosen to oversee the overhaul of US public procurement is a career purchaser. Dan Gordon, who has been appointed administrator for federal procurement policy at the Office of Management and Budget , has quite a job on his hands. He’s tasked with helping the US public sector deliver procurement savings in the order of 40 billion dollars per year. To hit those targets, he’s expected to introduce a raft of procurement reforms right across the public sector, including programmes to increase skill levels through education and training.
With public sector spend set to be the battleground for the next UK election, it will be interesting to watch developments on the other side of the pond.
Sharing success - 2 October 2009
This week’s manufacturing PMI is a reminder if we needed one that the road to recovery is going to be a bumpy one. It shows there’s been a slight loss of momentum, although new orders increased for the third successive month.
So it’s good to be able to demonstrate that those organisations who do procurement really well are continuing to be successful despite the ups and downs of coming out of recession. One of these is Xerox and I was delighted to go to their HQ last week to present them with CIPS certification. The celebrations weren’t just confined to the local team; the presentation ceremony was broadcast live to Xerox sites around the world. Their CEO shared the stage with me and gave the entire staff a half day holiday afterwards – what a great way to share success and show the whole organisation the contribution procurement makes to every part of the business.
Spotlight on supplier diversity - 2 October 2009
While some public bodies have really good supplier diversity programmes, take up amongst large public purchasing organisations has generally been low. We believe we can no longer rely on voluntary action to change how the public sector does business with SMEs. Through our membership of the European Supplier Diversity Forum we are lobbying government to make the new Equality Bill the vehicle to rectify this situation by using the Bill’s guidance on procurement to encourage greater supplier diversity.
The Forum, along with the Equality and Human Rights Commission, is pressing for a specific duty on supplier diversity to be included in the new Bill, to open up public procurement opportunities to a wider range of suppliers.
The Forum’s also recommending that the Bill should get contracting authorities to consider how they can encourage under-represented types of businesses to participate in the public procurement process. For more information about this initiative, contact Gerard Chick at Easton House.
The fight against corruption goes on - 25 September
The latest report from Transparency International highlights concerns that too many companies are paying lip-service to stamping out corruption. The report, which made a detailed study of private sector organisations in 45 countries, states that almost 40% of businesses surveyed claim they had been asked for bribes by government officials. About half those polled said their best estimate of the financial impact to their organisation was an extra 10% on project costs.
Interestingly, the report says that out and out bribery is only part of the problem. In many cases it is nepotism or informal “understandings” that contribute to what TI are calling “deceitful public procurement deals where non-competitive bidding and opaque processes lead to immense waste and unreliable services or goods”. TI are also quick to point out that the problem is not confined to emerging economies. The report cites what it calls “the corrosive impact” of the 16,500 lobbyists working in the EU to influence the decisions taken in Brussels, and calls on companies to publish the amount they spend on lobbying.
Does this ring true with your own experience or are TI overstating the case? I’d be interested to hear what you think. CIPS provides guidance for members on ethical business here.
An improving picture - 25 September
Professional bodies in the business space are uniquely placed to know what’s going on in their slice of the economy. If, like CIPS, they report on trends in their sector, the aggregation of all this output can be revealing – and should be of great interest to our political leaders.
Latest figures from the Association of British Insurers show that trade credit insurance claims have fallen for the first time in four quarters. Trade credit insurance claims typically go up when times are tough, helping to keep companies afloat during a recession. A drop in claims normally signals that things are getting better.
Just like CIPS, with our PMIs hinting that the recession may have bottomed out, the ABI is viewing these signs of improvement with caution and has warned its members that insolvencies are just as likely to happen during the recovery as in the downturn. It’s easy to dismiss one set of figures as peculiar to a particular sector. But if we look at all the data being published by professional bodies, the collective view from the professions is starting to look rather more convincing.
New service for corporates – bespoke business solutions - 18 September 2009
The CPOs and CEOs I’ve been talking to since I took over the helm at CIPS have been telling me that what they are looking for from the institute is a one-stop service to help them run their businesses more effectively. We’ve listened to what they’ve been saying and have put together a comprehensive package of bespoke business solutions which we’re launching this month.
This new service brings together a wealth of CIPS knowledge and experience and draws on a global network of practitioners and other experts in our field. It’s underpinned throughout by our standards, helping organisations to develop their people and their practices to achieve their business goals. Bringing it all into one package for the first time means that businesses, public sector departments and not-for-profit organisations can choose which parts of the package they need and at what point in their strategy and business planning to help them move forward. They’ll be able to mix and match from a menu of services and put together a programme that is tailored to their own particular needs.
This is a major step forward for CIPS and I’m confident our corporate customers are going to find it will give a real focus to delivering their strategic plans. If you would like to know more about the service, please contact Katie Smart at Easton House.
Chinese walls (and roads) - 18 September 2009
Those of you who are in the civil engineering industry probably saw the announcement this week that the Polish government has awarded a contract for building a motorway to a Chinese construction company – the first time a European country has awarded a contract of this type to a Chinese state-owned organisation.
The deal will save the Polish government millions because Chinese bid came in a staggering 60% lower than the guide price. Good news for Polish taxpayers but there have been some concerns about what this latest development in globalisation means for European member states generally.
The Chinese Overseas Engineering Group (Covec) will employ a proportion of Polish workers and will have to comply with EU employment legislation, but there are fears that there’ll be an influx of low-paid Chinese workers, leading to social unrest and unemployment among the local workforce. On the other hand, the deal frees up significant funds for investment in other public services.
This may be the first such contract but it’s unlikely to be the last as European governments look for ways to minimise public debt. I’d be interested to know what CIPS members think. Send me your views at email@example.com
Time to celebrate - 11 September 2009
When the going gets tough and people are working harder than ever, taking time out to reflect on and reward a job well done is all the more important. So it’s no surprise that the CIPS SM Awards, celebrating excellence in purchasing and supply management, have become the highlight of CIPS’ calendar.
The 2009 awards were handed out this week at a gala dinner at London’s Grosvenor House hotel. This was my first awards ceremony as CEO and it was a great party with over 1,000 guests, including entire purchasing teams. Competition was fiercer than ever this year and the judges had an incredibly difficult job to pick the winners from a really strong shortlist.
Our congratulations go to all our award winners. – there are some great success stories to be told, not just about outstanding P&SM practice, but about the contribution of our profession to business success across all sectors. We’ll be profiling the winning teams and individuals in an upcoming issue of Supply Management, so look out for that.
My vision for CIPS - 11 September 2009
You’d be forgiven for thinking I’ve taken over this week’s issue of Supply Management. I’m on the cover – a ‘first’ for me - and there’s a major feature article inside. I thought it was important, now that I’ve been in the job for some three months, to share with you my plans for our institute.
My main objective is for CIPS to be the standard for P&SM worldwide. A simple enough statement, but a big ambition. There’s no doubt in my mind that this is achievable. CIPS is already hugely respected around the world. Our qualification has international currency and our reputation in terms of integrity and professionalism is as good as it gets. What we need to do now is convince the CPOs and CEOs of all the top companies – and in the public sector too – that CIPS should be their first port of call. We need to move from being seen principally as experts in procurement education and training to being the provider of choice across a wide range of corporate needs.
In the next couple of months we’ll be starting work with our Council to develop a new three year plan to get us where we want to be.
I’d like to know what you think – please send any comments to me at firstname.lastname@example.org
PMIs show a mixed picture - 4 September 2009
On the eve of the G20 finance ministers’ meeting in London, the message coming out is that while the eurozone is expected to come out of recession by the end of the year, all the signs are that the UK’s recovery is going to take longer. So while the other member states are starting to talk about winding down their economic stimulus programmes, we are still looking for signs of sustained growth.
Our own latest reports on the UK’s economic recovery – which are continuing to get a lot of press coverage – seem to bear this out. The CIPS/Markit PMIs for August show that the markets remain fragile and we’re seeing some ups and downs compared with last month, although there are some encouraging signs.
Good news is that the services PMI, covering almost 40% of the economy, shows that the sector grew faster in August than for almost two years. There’s an element of catching up with the backlog, but it’s clear that this sector is starting to generate new business. The manufacturing index has dropped back below the neutral 50 mark, which is really disappointing after the earlier upturn – rises in unemployment and a drop in consumer demand seem most to blame. And while up to now the problems in the construction sector have been largely centred on the housebuilders, civil engineering companies are now feeling the effects.
Driving innovation - 4 September 2009
The announcement that BMW will be building two new models of the Mini in Cowley is great news for its 4,000 workers and fans of this iconic car, but it’s not that long ago that production had to be suspended when French suppliers of bearings for the cars’ steering units went on strike.
One car maker that’s recognised the importance of working in harmony with suppliers is General Motors. Back on its feet having filed for bankruptcy earlier this year, GM now has a new global supply chain head who’s making a lot of changes to improve supplier relations. One scheme will enable suppliers who come up with ideas to cut the cost of car parts to keep half the savings that result. Taking the view that manufacturers and suppliers are in it together to get out of recession, GM hopes this will help trigger innovation and incentivise suppliers to join the drive to minimise costs.
You can read more about this story in Supply Management Magazine
CIPS in South Africa - 28th August 2009
I've just got back from a very productive trip to South Africa which was a packed visit with a whole series of meetings with CPOs in both private and public sectors. I also met with the National Treasury senior directors responsible for supply chain policy. What struck me most during my time there was the sheer enthusiasm and appetite for CIPS and what it’s got to offer.
South Africa is a very interesting country with a lot happening on the business front, particularly in the area of procurement reform and professionalization. The objective of my trip was partly fact-finding and partly to build on the relationships we’ve made over the past five years, not least our affiliation with the local Institute of Purchasing and Supply South Africa.
The partnership we’ve forged with IPSA has gone from strength to strength, to a point now where we are ready to give tangible help in the development of procurement professionalization in this growing economy. On this point, although South Africa like the rest of the developing world has been suffering the effects of the downturn, the last two quarters have seen a rapid improvement and the country is forecast to show strong growth in 2010.
High Speed 2 - 28th August 2009
The news that the government is considering proposals for a new high-speed rail link between London and Scotland has divided opinion. If it gets the go-ahead the new link – known as High Speed 2 – will run up the west cost via Birmingham and Manchester. Due for opening in 2030, the railway line will cost £34 billion.
It’s not surprising that cities along the route are celebrating. Faster transport will make it easier for local companies to do business, both nationally and internationally. Business groups in the regions that are going to miss out are already campaigning for their share of the investment. It’s not a straightforward argument for passengers and environmental lobbyists either. Where high speed trains already operate in Europe, the cost of faster journeys is passed on to the customer, so getting to your meeting quicker comes at a price. The infrastructure development will take years and impact the environment – although Network Rail is forecasting that 3.8 million journeys a year will move from road to rail, so there could be longer term benefits.
And maybe there’s an opportunity missed. The Freight Transport Association claims that while this is good news for passenger travel, an investment in rail freight systems could have taken a significant percentage of freight off the roads at a fraction of the cost of High Speed 2. The government has said no decision has been made yet and the full costs and environmental issues will have to be fully assessed before the project gets the green light. As it’s likely to take at least five years to finalise the plans, this argument has a long way to run.
CIPS’ reach is far and wide - 21 August 2009
The African nations continue to astound me with their enthusiasm and thirst for knowledge as I met several South African contacts this week in Pretoria and Johannesburg.
The contacts were high-level in the country and included the Head of the National Treasury, also professionals from the Department for Public Enterprises who set policies and procedures for the Public Sector. CIPS is such a strong brand in the country where our every move and development is followed with great interest that I feel we have a great responsibility to our overseas colleagues.
The private sector were also included in the itinerary and I met representatives from Rio Tinto, a mining company, SAPPI, a paper producer and Telko, the telecommunications company. We talked standards, risk management strategies, controls and of course much-needed cost management skills.
More news in next week’s blog.
The message about good procurement is spreading - 21 August 2009
Virtually every time I open a newspaper these days, I find yet another story about good purchasing practices and strategies. This time it’s the fire and rescue authorities (FRAs) who are pulling together a procurement strategy to make the best of their limited budgets and also benefit the local community through their purchases.
Using bulk buying techniques, for vehicles, and equipment such as ladders and breathing apparatus, the predicted savings are forecast at £3.5million from a £100million annual spend. During these continuing recessionary pressures, where young people particularly are struggling to find work, the FRAs are also looking at how the strategy can increase training opportunities in the local community, help local businesses and encourage innovation.
Using a tendering process with standardised, simplified documentation is also likely to appeal to small and medium-sized enterprises (SMEs) who lack the funds and resource for complicated procedures. The strategy also recommends the use of professional buying organisations, which is part of wider government initiatives to support development in local economies and will save the much-beleaguered taxpayer a few pennies.
Can we be seeing a change in supply globalisation? - 14 August 2009
There is no doubt we live in an age of globalisation, but recent reports in the sector indicate that this trend may be reversing. Fuelled by the recession and the Copenhagen summit on climate change later in the year, businesses are looking hard at every aspect of their supply chains and looking to the sustainability agenda for answers.
It seems that companies are looking at their total spend on transportation costs and their carbon footprint in manufacturing for example, and deciding that buying closer to home may actually be more effective. As energy becomes more expensive, this makes good sense. Though goods half way across the world may seem better value in isolation, the carbon footprint attached may be too much to bear. When it comes to reducing costs, a smaller supply chain is also more efficient and less expensive to run.
Understanding the Climate Change Bill is crucial, and the impact that each business has on their world with their carbon footprint before legislation steps in first.
With this trend continuing, Eastern Europe may be the next hot spot for manufactured goods and favoured above Asia.
The credit squeeze may be easing - 14 August 2009
Following on closely from positive news posted by our CIPS/Markit Purchasing Managers’ Index® (PMI®) the CBI has reported this week that businesses are now finding it easier to obtain credit. They report an 18% improvement in access to credit across all sectors.
This has always been a large part of the difficulties of the recession. This shortage has choked supply chains and posed a great threat to small and large businesses alike for almost two years now. So this news from the CBI is most welcome. Bigger businesses seem to have benefited most as those with 5,000 or more employees have experienced the biggest improvement in acc ess to credit.
SMEs as usual still face major challenges though. Small and medium-sized businesses have reported a small increase of about eight percent so the recession’s bite is a little less severe, but they still have fewer options than bigger businesses to raise credit.
Supporting these findings, credit rating agencies have also eased the squeeze a little as they reduce their prediction rate of defaults. This gives renewed expectations that businesses will have more room to manoeuvre and rather than fold, they may have the opportunity to re-finance and stay alive.
As these reports come out, each offers a little more hope that this challenging time may be coming to an end.
Cautious optimism - 7 August 2009
The Purchasing Managers’ Indices (PMIs) have generated a lot of interest again this month. Commentators were waiting to see if the faint signs of recovery in June would be any stronger in the July figures. The answer is yes – but let’s not get carried away just yet.
The headline news is that the Manufacturing PMI reached 50.8, the first time it’s gone beyond the neutral position of 50.0 since March 2008. Manufacturing output rose for the second successive month and by the greatest margin since December 2007. All the numbers are going in the right direction but still too early to say we’re out of the woods. Unemployment is still rising and smaller firms are still struggling with cash flow.
Last week's decision by the Bank of England to pump another £50bn into the market shows that the bank’s policy committee believes that a return to growth is still some way off and they need to do more to stimulate the economy. So, despite evidence of some movement in the housing market and the reported increase in car sales, the consensus is that there’s still some way to go before we can say that the recession has definitely bottomed out.
Spreading the word - 7 August 2009
Last December the Consultative Committee for Professional Management Organisations (the CCPMO, now re-named the Professional Management Council), of which CIPS is a member, published a report showing how professional bodies and professional qualifications impact on people’s careers and on the economy as a whole.
The report contained hard economic evidence on the benefits of the business–related professions in particular, so I’m pleased to see that other bodies are now picking up on the message. The North West Development Agency is about to launch a new on-line tool to help careers advisors encourage people – particularly young people – into the professions. The site will include information about CIPS and how to go about qualifying for a career in purchasing and supply. It would be great to see this initiative rolled out round the country.
Result - 7 August 2009
Congratulations to all our students who’ve just received confirmation of success in the latest exam series. We’ve had a record number of entries for the May exams and the results have been extremely good for both our UK and international students. A real highlight for our education team is that all the entrants for our Level 4 Foundation Diploma achieved a mark of 70% or over. This year’s excellent results are testament to the sheer hard work and dedication of our students, many of them putting in long hours while juggling full time jobs and young families. A great effort – and it’s time to celebrate.
Greetings from China - 31 July 2009
This week I’m writing my blog from Shanghai, at the end of a week-long trip to China. Although I’ve been here many times before in a previous life, this is my first visit as CIPS CEO and I’m seeing the country from a new perspective.
CIPS now has almost 7000 members in China, most of whom are working towards CIPS qualifications. A few days ago I met up with a group of more than 200 members in Beijing, all very enthusiastic about what CIPS has to offer, and they really impressed me with their commitment to their studies and their desire to be recognised as professionals.
Our educational standards have been well received here, and now I want to roll out that success into the corporate world. As a first step, we need a better understanding of the needs of corporates in China and part of my mission this week has been to start a dialogue with some of the key players to find out what CIPS can do to help them. Shanghai has been a major advancement along that road; we brought together a top level gathering of CPOs for a round table discussion on the big issues facing procurement in China. We explored with them how CIPS could meet their needs in the future, and I’ve come away with a lot of ideas on how that could take shape.
I was pleased, too, to have the opportunity to include Hong Kong on my itinerary and I can report that our Hong Kong branch continues to be one of the most energetic and supportive arms of the CIPS family. There’s no doubt in my mind that China and Asia are significant areas of opportunity for CIPS both in terms of promoting best practice in organisations and embedding CIPS qualifications as the professional standard.
A future Supply Management article will explore this in more detail.
Year of the ox - 31 July 2009
There are signs that the Chinese economy is starting to recover. Industrial output is up and there’s a massive infrastructure investment programme under way. The short-term results are looking impressive as a result of the government pumping almost $600bn of financial stimulus into the home market. But what China needs is sustainable growth, not quick wins. It has to grow its exports too, and this will take time in a global recession. In the Year of the Ox, the virtues of patience and tenacity need to be the mantra.
Commentators are predicting a massive expansion in consumer spending here, but one consequence could be a steep rise in some commodity prices worldwide. Take the food industry. Chinese tastes are changing and there’s an increasing demand for western-style food products. This in turn is increasing the demand for imported wheat flour, sugar and other staples of the western diet. Coupled with climate change and the increasing use of food crops for bio-fuels, we may see the same cycle of scarcity and rising prices in some food products as we saw with copper last year.
Be prepared - 24 July 2009
Whether you’re genuinely worried about swine flu or think the whole thing’s been over-hyped by the media, one certainty is that if the worst happens, many companies will have under-estimated the impact on their operations. If the pandemic peaks as expected, one in five of the workforce could be off sick at any one time.
A recent survey suggests that the majority of companies aren’t prepared for the effects of mass absenteeism. This could have a big impact on supply chains. If SMEs are affected and deliveries get delayed, production could soon grind to a halt, so it’s a good idea to identify your critical suppliers and establish procedures with them to mitigate the risk. You could consider, for example, setting up automated payments so your key suppliers get paid even if finance staff are on sick leave.
The message is to keep it in proportion and take sensible steps to minimise disruption to your business. In the end, contingency planning – even for once in a lifetime events like this - is just part of good risk management.
Fair access - 24 July 2009
Fair access to the professions has been in the news this week, with the publication of a report on widening access to higher status, professional jobs. Alan Milburn, who chaired the study, maintains that the professions have a closed shop mentality and are becoming more exclusive, rather than inclusive.
I’d certainly challenge this as far as our profession is concerned. The days when the purchasing community could be written off as a middle-aged, middle-class gentleman’s club are long gone. I only have to look at this year’s Graduates to know that the face of our profession has changed enormously. We encourage practitioners from all countries and walks of life to join our profession and we actively support those who come from less privileged backgrounds, particularly those from emerging economies.
We’ve also been successful in bringing diversity into our governance structure. There’s a high proportion of women on our governing body, where the average age is well below that of many other professional bodies, and we have plans to increase representation from different ethnic groups. The report calls for professional bodies to publish social data for their new intake; if this happens, I’m confident that purchasing and supply will stack up well.
I strongly believe that purchasing and supply is a profession in which anyone can succeed. That doesn’t mean to say there aren’t still glass ceilings in some areas, but the opportunities are there for everyone.
New collaboration in public sector procurement - 17 July 2009
This week, I signed a Memorandum of Understanding (MoU) along with Nigel Smith, the CEO of the Office of Government Commerce, paving the way for a closer working relationship between the OGC and CIPS. This agreement sets out our intention to work together to raise the profile of procurement as a profession, by strengthening the practitioner base at local, regional and national level.
Nigel Smith and I enthusiastically believe this will provide clarity between our two organisations and our key stakeholders, where capacity and capability development across Government is the key driver. As the professional body can support OGC in the delivery of public procurement reform.
A key aim will be to develop practitioner skills and professional standards. CIPS and OGC will be working together to identify and address development needs through appropriate qualifications and professional development programmes. We’re also planning to get involved in each other’s conferences and training events, and jointly design and deliver a range of new products and services to support public sector procurement.
It’s a great step forward and we’ll be telling you more about what it means for you if you’re in the public sector in the next few weeks.
Protect your supply chain - 17 July 2009
The problems besetting the airline industry are well known but the headline writers tend to talk about fuel costs and falling passenger numbers rather than supply chain vulnerability. But, if key components aren’t there when they’re needed, planes won’t even get out of the hangar.
One of the manufacturers in this position is Boeing, which has just paid out $580m to own one of the key suppliers for its new 787 Dreamliner. The new jet’s already more than two years behind schedule and, to keep the production line rolling, Boeing has been forced to buy the South Carolina plant which makes the fuselage sections. This is the second time Boeing has had to take over an ailing supplier to shore up its supply chain. At a time when the airlines worldwide are cancelling or delaying orders, that’s not good news.
As the lack of access to credit puts growing numbers of suppliers under pressure, the risk of production delays and escalating costs increases. Keeping close to your suppliers is more important than ever so you know what’s going on.
The fight against corruption - 17 July 2009
The news that engineering firm Mabey & Johnson (M&J) has become the first UK company to be prosecuted for corruption in respect of overseas contracts is a salutory lesson for firms tendering for international business. The company, which supplies steel bridging, has admitted charges of trying to influence buyers in Jamaica and Ghana to win public contracts.
The firm’s new management has committed to eradicating corruption through education and training of its salesforce. But this is where buyers must also play their part. In any organisation, buyers can help to change the culture by embedding ethical trading at the heart of good practice. CIPS has a wealth of advice and information on ethical trading you can tap into.
More CIPS Certification Success Stories - 10 July 2009
The Metropolitan Police Service (MPS) is the UK’s largest police force with an annual budget of over £3.6bn and is London’s largest single employer with over 53,000 staff. Its 70-strong procurement services team handles an annual third party spend of £850m covering a wide range of categories from forensic services to police dogs to helicopters.
This week I presented Sir Paul Stephenson, MPS Commissioner, with the CIPS Certification Award, following a successful re-certification audit. Sir Paul said that re-certification had been key in demonstrating to suppliers and employees alike the MPS’s commitment to continuous improvement of its procurement service.
Another organisation celebrating re-certification this week was Dalkia, the energy and technical services company. Since initial certification three years ago, Dalkia has focused on the development of its procurement team and has made real progress in transforming its procurement activity from a back office function to a proactive element of the company’s operations.
Share your experience - 10 July 2009
I’m delighted to announce our new web-hosted discussion forum has just gone live. It’s just one of the new features we’re building into our website to give you more value for your membership. It gives you the chance to share experiences and procurement expertise with other members, air your views on procurement issues, and build your professional network.
You can be confident it’s a safe environment because you’ll need to be a current member to be an active member of the forum. Once you’ve logged on you’ll be able to join the debate and, if you like, you can start your own discussion on a topic that’s important to you.
We’re starting the discussion off with two topics on which we’d like to hear your views: where do you go to for guidance when you’re implementing sustainable procurement practices? Can you find the resources and toolkits you need, or are there gaps in what’s on offer?
The second topic is asking what members are doing to help struggling suppliers get through the recession. Have you put plans in place to support them through the lean times? Are you confident you have security of supply? Click on the link above and let us know.
Quick access to events
Another new development you might not have picked up on yet is that CIPS Events are now on Twitter. If you just want to know what’s on, log on to the events page for headline details and links through to our entire events programme.
Manufacturing shows signs of recovery - 3 July 2009
Figures just released from CIPS/Markit Purchasing Managers’ Index® (PMI®) for the manufacturing sector show that the index rose again last month to a 13 month high. The increase from 45.4 in May to 47 in June is another move in the right direction – an index above 50 shows growth.
The other encouraging news is that production is up for the first time since March 2008 and this increase in output is broad-based across the sector. While some of the improvement can be put down to catching up with a backlog of orders, there are signs that the extra efforts companies are making to stimulate demand are starting to pay off.
But with more redundancies being announced every day manufacturing hasn’t yet turned the corner. ‘Cautiously optimistic’ is probably the best way to sum it up.
Procurement contributes to ‘gross national happiness’ - 3 July 2009
Not so long ago Bhutan was one of the most isolated countries in the world. The internet, cable TV and direct flights changed all that and now Bhutan is modernising fast. Its government is determined to balance the effects of rapid economic progress with respect for the country’s ancient traditions and landscape, under its guiding philosophy of achieving ‘gross national happiness’.
CIPS is working with the Bhutanese government on a procurement capacity and capability project, supported by funding from the World Bank. The aim is to benefit the people of Bhutan by ensuring best value from public procurement practices and by helping to develop the skills and competencies of public procurement practitioners.
This two-year programme is our first experience of working directly with an aid agency and there are more projects in the pipeline in Bangladesh and Papua New Guinea. Working on donor-funded projects develops our understanding of procurement in developing economies. It’s also a key way in which CIPS can fulfil its Charter mandate to national and international prosperity through procurement.
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Success stories - 26 June 2009
Marks & Spencer may be a British institution but it hasn’t been immune to the problems affectingthe retail sector, particularly with cash-strapped consumers switching to low-cost clothing and food retailers. Companies under pressure could be forgiven for cutting back on investment in training and development, but M&S is committed to making sure its procurement operations are best in class.
This week I was delighted to be asked to present M&S CEO Sir Stuart Rose with the CIPS Corporate Award, with 12 certificates being awarded to staff in the programme. I took the opportunity to ask the M&S team about their experience of working towards the award – invaluable feedback to help us improve the design and content of our corporate programmes for the future.
It’s not just the big household name companies that are benefiting from our programmes. CEVA Logistics, who’ve just been awarded CIPS Certification, are a young company whose global procurement team has been in operation for only three years. Joining the CIPS certification programme and achieving CIPS qualifications were key objectives in a 5 year continuous improvement plan to meet best practice standards. The Certification award puts the seal on their success.
Find out more about CIPS programmes and how we can help your organisation.
The Times publishes SCM supplement - 26 June 2009
The Times newspaper has published a Supply Chain Management supplement in association with CIPS. Part of the Raconteur series, the supplement issued on 24 June features CIPS in an article on relationship management.
The supplement focuses on a variety of procurement issues, including the role of good purchasing in a recession, risk assessment in the supply chain, the use of technology to improve supply chain performance, supply chain financing and effective planning. A digital version is available.
Look out for the podcast - 26 June 2009
Keep an eye on the CIPS website next week – my first podcast is about to be released. It’s the first in a series in which I will be sharing with you my thoughts on our profession and what CIPS is doing to meet the needs of practitioners and organisations. I think it’s a great way to open up the debate and I’d be interested to hear what you think.
Celebrating success - 19 June 2009
Last Saturday I had the privilege of attending my first Graduation Ceremony as CIPS CEO. The Birmingham Symphony Hall was a suitably grand setting for this very special occasion and I was bowled over by the excitement and enthusiasm of our graduates and their families. It was great to see so many of our international students making the trip to the UK – and it was especially pleasing to welcome our very first graduate from China. It made me appreciate just how dedicated our students are and what a challenge it is to combine studying with work and family commitments. It was a great event and my congratulations and best wishes go out to all the participants.
At CIPS we believe in celebrating success and this month we are launching our search for the winners of our Lifetime Achievement and Swinbank Awards for 2009. These are our top awards for contribution to the profession and to CIPS and we’re looking for people who have had a lasting impact on procurement. Find out more about the awards and send in your nominations.
Election support grows - 19 June 2009
This year’s Council election results were announced at the recent AGM and we now have a full list of the successful candidates. Your new representatives will be taking their seats on 1 November.
The introduction of on-line voting for the international seats this year has had a dramatic effect, with voting for the Africa seat up by 17% and for the Rest of World seat by a staggering 64% on 2006. Around 95% of international members who voted did so via the web – UK on-line voting was up too - and this tells me that more and more of you are choosing to manage your relationship with us. We want to make sure that we develop our networks so that you get the most out of it, and to do that we need to know what you want it to deliver. Take our short survey and give us your views on on-line communications.
Hello and an introduction - 12 June 2009
This is my first blog as the new CEO of CIPS and I want to start off by introducing myself and sharing with you my first thoughts on how I see the future of our institute.
First and foremost, I am a procurement practitioner, with some 30 years’ corporate experience, principally in the manufacturing sector. For the last ten years I’ve been operating at board level, most recently as Group Supply Chain Director at IMI plc, a FTSE 200 company.
I’ve been a CIPS member since 1982, and a Fellow since 1994, and so I’ve had a long association with the institute and understand what it’s like from the customer’s point of view. I’ve also seen how CIPS operates from the inside, with a four year stint on the Fellowship Selection Panel, before being appointed to the Board of Management last November.
I think I probably have the dubious honour of the shortest Board term on record! I attended my first meeting in December and then stood down in May to take on the CEO role. But even that short spell on the Board has been extremely valuable as it’s given me the best possible preparation for the task ahead and an understanding of what needs to be done to ensure future success.
The future’s looking good - 12 June 2009
It’s early days, but it’s already clear to me that I am heading up an institute which has a huge opportunity to enhance the standing of P&SM, both in the UK and internationally.
I’ve inherited a growing and dynamic organisation that’s recognised as a leader of the profession worldwide, and I’m committed to ensuring that our educational qualifications and professional standards remain second to none. My initial thoughts and plans on this were shared with all the CIPS staff at the recent away day and as soon as possible will be made available to all.
In the current financial environment I am also convinced that P&SM has an important part to play in our economic recovery and that CIPS can play a key role in supporting our members, customers and their businesses. Our PMI data is already being used by economic commentators as one of the best indicators on the market.
I believe strongly that CIPS has a bright future and I look forward to sharing that with you.
Professional networks and you - 15 May 2009
If you’re reading this blog the chances are you’re comfortable using social networking technology in your professional life. Here at CIPS we’re seeing a growing shift from face-to-face meetings to virtual networks and an increasing use of our website to access shared learning.
Knowing how you choose to interact with the institute enables us to develop our member networks to meet your professional needs. Whether you attend branch events or are linked in to a virtual group, we want to know what you feel about it and where we should be focusing our development effort.
To find out, we’ve linked up with the Professional Association Research Network (PARN) to carry out an on-line survey. The survey’s live and on line until July and it’ll take just 15 minutes to complete. I look forward to hearing from you.
Prompt payment is simply good commercial practice - 15 May 2009
I was encouraged by the news that several high profile companies including Barclays, Sony UK and B&Q, have committed to sign up to the Government's Prompt Payment code. However, prompt payment is simply good commercial practice, something we need to do to maintain the health of our supply chains and is embedded in the CIPS code of ethics.
The lack of cash flow is responsible for many insolvencies and with the current short supply of credit, suppliers, especially SMEs, are at even greater risk from non payment than normal.
In fact, I urge all members to ensure that their organisations meet the payment terms agreed with suppliers. If partners need earlier payment, then keeping those lines of communication open and negotiating on what’s possible for both can only be good.
Don’t let late payment be the final straw that breaks your supply chain.
A glimmer of hope? - 8 May 2009
Start talking about ‘green shoots’ in the present climate and you can expect to be met with scepticism in certain quarters. After all, public borrowing is at an all time high and household name companies are going to the wall every day.
Through all this, purchasing managers are starting to detect signs that the recession may have bottomed out. The Purchasing Managers’ indices for April published this month, all report improvements - the first positive results for months. Economic growth may still be a long way off, but it’s clear that the pace of contraction has slowed significantly.
There’s no question that we are still in the grip of a deep and long-lasting recession, but it’s encouraging that the procurement profession is so well placed to signal the start of the recovery when it comes and media and economic commentators are keen to report these hopeful results.
Drug dealing - 8 May 2009
We take it for granted that when our GP writes a prescription, our local pharmacist will have our medicines on the shelf. Yet stocks of drugs are dwindling because of ‘skimming’, a new but perfectly legal practice where some pharmacies over-order in order to sell the surplus overseas and profit from the weakness of sterling.
Manufacturers and wholesalers are monitoring orders to try to stem the export of drugs out of the UK, but the net effect is that supplies of some drugs are in danger of running low. It’s forced some pharmacists to ring round manufacturers to ensure security of supply. With the possible threat of an H1N1 pandemic, this is one case where the potential vulnerability of a supply chain could have consequences for us all.
Tighten your seat belts - 1 May 2009
This weekend I am travelling to the US for the annual conference of our sister organisation, the Institute for Supply Management. The ISM and CIPS are the only two procurement institutes with an international footprint and I will be exploring with the ISM Board how we can work together to develop the profession worldwide.
Virtual meetings can save money but, sometimes, face-to-face contact is essential. So, it’s important for any organisation to know what it’s spending on travel and whether it’s spent wisely. The issue is not just cash cost but also the environmental cost in terms of CO² emissions. The Government has recently called on businesses to implement sustainable travel policies to protect the environment. Like many employers, we at CIPS have started work on quantifying our own carbon footprint on which we can build such a sustainable strategy.
This week’s issue of Supply Management includes a business travel supplement to help you find the answers.
Support for SMEs - 1 May 2009
The government needs to do more to help SMEs win public sector work. That’s the argument from both the Forum of Private Business and the All-party Parliamentary Small Business Group, who are pressing for the recommendations of last year’s Glover Report to be fast-tracked. Glover proposed 12 measures to help drive economic growth through SMEs by practising ‘transparent, simple and strategic procurement’. While the report stopped short of calling for a quota of contracts to be placed with SMEs, public bodies must now report on the number and value of contracts won by small and medium-sized businesses.
As so often, hitting this policy objective will depend on procurement – another reason why P&SM must be at the heart of corporate strategy.
Hard work – but it’s paying off - 24 April 2009
Procurement professionals in the UK are working harder than ever, but are rewarded with high levels of job satisfaction. That’s the headline result from the latest Purchasing & Supply Rewards survey into pay and conditions in our profession carried out by CIPS in conjunction with Croner Reward. The picture is one of a profession that is growing in confidence all the time.
Perhaps not surprisingly, with the UK now officially one of the hardest working countries in Europe, hours worked have increased significantly over the past year, with more professionals saying they regularly work up to 60 hours a week. On the upside, reward packages are getting a lot more attractive, with competitive salaries, bonus schemes and longer holidays. Senior and middle ranking procurement professionals are earning more than their equivalents in marketing, sales, IT, finance and HR.
Look out for more details on the survey in next week’s Supply Management.
Membership takes off in China - 24 April 2009
Our congratulations go to Miss Jing Liu who last month became the first student studying for the CIPS qualification in China to be awarded MCIPS. The qualification course, which was the first to be offered in a language other than English, is delivered and examined in Mandarin.
Since CIPS launched the programme three years ago we have seen a dramatic increase in take-up. In the last year student membership in China increased from 2,000 to almost 7,000. As they progress through to qualification these young people will become the foundation of a new professional community which is critical to China’s successful transition to a market economy.
Best in Class - 4 April 2009
No-one is recession-proof but good procurement people are worth their weight in gold. There is little movement in the recruitment market but that’s not through lack of demand; it is because smart companies are hanging on to good procurement teams as hard as they can. Consistent with this, demand for CIPS qualifications is as high as ever with examination entries for May on track for another record.
At times like this the CPO will want to demonstrate that his/her team’s procurement processes and methods are up with the best. One way to do this is to carry out a review such as the UK Government’s Procurement Capability Reviews, featured in this week’s Supply Management. A less expensive and more objective method is CIPS Certification of Excellence which benchmarks the client against a defined international standard and is followed by re-assessment at three yearly intervals. Clients coming through the process so far this year with success include two major players in the UK public sector, GCHQ and Defra (Department of Environment Food and Rural Affairs), Rank Xerox in Rochester, NY, and SM Awards winner Mapeley Estates.
EU - 4 April 2009
Not surprisingly the biggest regional group in the International Federation of Purchasing and Supply (IFPSM) is the one covering Europe, which meets this weekend in Croatia. Throughout ‘new Europe’ institutes or associations are growing up to establish and apply professional standards for procurement. Estonia is the newest recruit into IFPSM. Talks are under way with Kosovo, and CIPS is actively helping in Macedonia. The challenge facing all of us in the European network is to strike the right balance between the lead given typically by government at national level and the demand in the private sector for procurement standards that can be applied internationally. Squaring this circle will be top of our agenda at the weekend.
Our global remit - 27 March 2009
My attendance at last week’s Board meeting of the International Federation of Purchasing & Supply Management in Rio and this week’s visit to CIPS of Guy Callender, Professor of Strategic Procurement at Curtin University in Perth and a member of the Steering Group of CIPS Australia, bring the global remit of our institute into sharp focus in my mind just now. Being the biggest supply management institute in the world, our ability to provide a worldwide service depends in a complex web of delivery partners, study centres, regional representatives, universities, training providers and funding bodies. We appointed our first international director in October and earlier this month the Board approved a new international strategy which will give direction and purpose to our increasingly global activity.
Procurement and climate change - 27 March 2009
If, like me, you’ve been gripped by Andrew Marr’s recent television series on the legacy of Charles Darwin, you can’t fail to have been persuaded of the threat to our long term survival as a species if we continue to exploit our environment for short term gain.
As purchasers, we have to tackle head on the apparently contradictory goals of environmental protection and economic success. With so much conflicting information in the media, it’s important to know where to go for reliable help and advice. CIPS is running a programme of breakfast briefings on procurement and climate change to help practitioners develop sustainable procurement policies for their organisations.
Find out more about the briefings, which are being held in May and July.
Brazil hosts IFPSM Board - 20 March 2009
This week my blog comes to you from Rio de Janeiro, where I’m attending a board meeting of the international federation of purchasing associations, IFPSM. Brazil is predicted by the IMF to be one of the few countries outside Asia to ride out the global recession. Its long term policy of government control of its banks has protected it from the worst of the financial melt-down.
The member bodies of the federation are facing big challenges in their own countries, however, and we’ll be looking at ways IFPSM can help smaller national associations survive the downturn. As the largest procurement association in the world, I believe CIPS should take a lead role in supporting professional representation around the globe.
IFPSM is also starting to develop links with emerging associations in places likes Pakistan and Kosovo where embedding procurement standards is going to be an uphill climb. It’s all part of IFPSM’s vision of a universal procurement standard that all countries buy into. As the next step on this road, the board will be discussing the feasibility of establishing an international standard for education and training.
Temporary staff contracts – know the risks - 20 March 2009
With organisations looking to cut employment costs, we’re seeing an explosion in the use of temporary and specialist interim staff on short term contracts. UK business spends around £20 billion a year on this resource and, increasingly, this spend is being centralised in procurement departments.
Regulation in this area is growing rapidly and so are the legal risks. The government is currently consulting on plans to extend full employment rights to temporary workers, which will increase employers’ costs. Procurement managers will be expected to come up with strategies to manage the spend and minimise the risk to their organisations.
CIPS is holding a seminar on 23 April to explain the risks and how to deal with them.
It’s all about relationships - 13 March 2009
These days, collaborative relationships with suppliers are seen as key to holding onto competitive advantage in a declining global market. Organisations in pursuit of innovation and sustainable supply chains are being forced to re-think their buyer-supplier relationship model.
A new best practice guide from I-Relate offers practitioners fresh insight into developing and managing relationships with suppliers.
The result of research by CIPS and Bristol Business School, the guide includes an on-line diagnostic tool to help buyers analyse their current practice and identify where changes can have a positive impact.
The research covers both public and private sectors and can be downloaded free of charge.
Taking a stand on ethics - 13 March 2009
The recent tabloid exposure of MPs’ (alleged) abuse of corporate hospitality may have had more than a whiff of righteous indignation, but nevertheless we want our elected representatives to demonstrate the high ethical standards we expect of those in public life and that we ourselves embrace as professionals.
Part of the problem is that codes of conduct can be woolly and lack proper guidance on handling real life business situations. This week the CIPS Council has approved an update of the CIPS Code of Personal Ethics.
The aim has been to ensure the code remains fit for purpose and is clear and concise. The code also spells out what procurement professionals expect of each other, what others expect of us, and what the consequences are of non-compliance.
The revised code will be put on our website shortly but in the meantime you can find the new wording here.
Yes, Minister - 6 March 2009
An Early Day Motion tabled in the Commons last month is gathering cross-party support for a Minister for Procurement to improve public sector spending and help British industry. CIPS is in discussion with the promoters, and with the National Audit Office about this and other ways of raising the standard of public procurement. Opponents say the government already pays enough attention to procurement, but supporters claim that appointing a minister would help unite procurement policy across all departments and drive the government’s value agenda, as well as stimulating hard-pressed local economies by encouraging service delivery through local suppliers.
Do you think we need a ministerial champion for our profession? Email me with your views at email@example.com
2009 Awards Launched - 6 March 2009
I hope you’ve had chance to look at the CIPS Supply Management Awards launch supplement in this week’s Supply Management. The Awards Dinner is now well established as the highlight of the CIPS calendar and the event to be seen at for our profession’s top performers. In 2009 we’re aiming to exceed last year’s record number of entries so, if your organisation has done something amazing, we want to hear about it. You’ll find there’s plenty of useful advice in the launch supplement to help you put your entry together and make it stand out from the crowd. Deadline for entries is 9 April so don’t delay!
Visit www.cipssmawards.com for more information and an entry form.
Special relationship - 27 February 2009
Next week Gordon Brown becomes the first European leader to make an official visit to the new incumbent at the White House. Beating the PM by a short head, yesterday I met with my own opposite number at ISM, the largest purchasing association in the USA.
Like CIPS, ISM is focusing on ways to help its members survive the recession and be ready to seize opportunities when the upturn eventually comes. We have opened discussions about reciprocal membership and outlined a plan with the International Federation of Purchasing and Supply Management (IFPSM) for a way to offer one world-wide standard for procurement proficiency. CIPS members already have access to the ISM website and can tap into a wealth of useful information. Access ISM member only content here.
Branches are booming - 27 February 2009
Attendance at CIPS branch events is at a record high. More and more members are taking the opportunity to network and pursue their own professional development at local level.
An additional benefit for our UK members is our programme of free regional one day conferences. We hold seven each year in various locations around the country, with top class speakers on topical issues.
The next event is on 25 March at Derby County Football Club when the theme will be the role of procurement during economic instability. For more details on this and other regional events, visit our regional member events pages.
Waste not want not - 20 February 2009
Supermarkets were lambasted again this week for failing to reduce the amount of non-recyclable waste in packaging. According to a Local Government Association study, up to 40% of packaging ends up in landfill, spoiling the environment and costing local councils £32 per tonne to dispose of. The supermarkets argue that packaging actually reduces waste by protecting food products from source to table, but find themselves having to defend their green credentials yet again.
What the headline writers have missed is that excessive packaging is only a small, though highly visible, part of the picture. A lot more waste happens during manufacture, storage and distribution before goods even reach the shelves. Purchasing practitioners can play a key role by identifying opportunities to eliminate waste from the supply chain and winning management buy-in to their strategies.
CIPS provides guidance on developing a waste management and disposal strategy.
Global reach - 20 February 2009
As I write, our Australia office is signing a contract to deliver our flexible learning programme to the public procurement service in Papua New Guinea. PNG is the largest developing country in the South Pacific and it’s quite literally a young country – nearly half its population is under 20. With its abundance of natural resources and a growing tourist industry, PNG looks set to expand its economy. However, its large public service is a major ongoing cost. The CIPS courses, funded by Australia’s overseas aid programme, will help practitioners get the best from the government’s $3 billion annual spend.
True grit - 13 February 2009
One casualty of the heavy snowfalls was last week’s meeting of the CIPS Council – the first time it has been cancelled in at least twenty years.
The ability to move people and goods when and where they need to be is fundamental to supply chains. When this breaks down, the knock-on effects can quickly clog up the machine. The scramble to top up salt supplies to keep our roads open is a case in point.
When local authorities started rationing gritting runs, schools, hospitals and businesses faced major disruption. So, it’s been good to hear that government and the Highways Agency have set up a group (the ‘Salt Cell’) to advise suppliers on the stocking and distribution of available salt to keep the traffic flowing in future. As so often, behind the front page news story is a set of procurement policies and practices that should put the CPO at the heart of policy-making.
Live long and prosper
Organisations that nurture traits such as flexibility, awareness and resilience, are more likely to survive the recession, and even prosper. These are the findings from a survey of supply chain executives in the United States and the UK carried out for CIPS by North Carolina State University. The study identified some of the immediate actions that are being taken to beat the downturn. We are holding a breakfast briefings on 11 March in London to present the results of the research.
Small world - 30 January 2009
With members in 150 countries, CIPS is one of only two P&SM institutes round the world with a significant international footprint. Roughly 40% of our members and our turnover are non-UK and it is this sector that is growing fastest.
Three benefits flow from this. Firstly, multinational corporations are able to use CIPS programmes to raise the standards of procurement wherever they operate. Secondly, the CIPS footprint reflects the fact that wherever they are based P&SM professionals are invariably managing international supply chains. Thirdly, growth opportunities in one area may offset the effects of recession in another.
There are still tables available at the CIPS 2009 Annual Dinner – but not many. The dinner will be at the Dorchester Hotel on London’s riverside on the evening of Wednesday 11 March. We are on track for another sell-out and look forward to hosting the procurement community’s A-list at London’s classiest venue.
Fellows well met - 23 January 2009
At this week’s Fellows’ lecture Silla Maizey, Acting Customer Director at BA, talked about the challenge of running a profitable business sustainably. Listening to her refreshing lecture I was struck by the degree to which procurement heads have to juggle what at first sight look like incompatible business aims. That’s where peer groups like our Fellows’ network can provide real support.
CIPS Fellows are men and women at the top of their game who have a wealth of knowledge to share. The Fellows’ lecture programme brings them together twice a year to exchange views and hear first hand how other CPOs are finding solutions to today’s problems. Fellowship is the natural next step for experienced practitioners. For information on upgrading your membership, contact firstname.lastname@example.org
Jam tomorrow - 23 January 2009
One of the potential casualties of any period of recession is the relationship between buyer and supplier. The buyer’s instinct is to take more risk out of the equation and transfer it to the supplier, say by stretching payment terms. But if buyers lean too heavily, cash flow pressures can put suppliers out of business.
Smart buyers know that now is the time to build resilient supply chains and put long term security above short term financial advantage. This week’s Supply Management puts SRM under the spotlight with practical advice on strengthening your supply base.
Public Sector - 16 January 2009
My first CIPS event of the year was a dinner which I hosted at the Cinnamon Club for the people in charge of the external spend of Whitehall Departments and the devolved governments. This relatively small group of leaders oversee a spend of £175 billion and manage an army of 3,500 procurement professionals. Baldly stated, the value we get from every £ of tax paid, and the cost effectiveness of every government program or policy, depend on them.
Our discussion brought home to me how, although the public sector context is different (greater transparency, intrusive EU regulation, and continuous political intervention), the challenge is the same in public, private and third sector: to manage the supply chain, and to influence policy so that procurement becomes integral to strategy. Like procurement leaders everywhere, those in public service are mould breakers. All but one of my guests had jumped the barrier between public and private sector to join the Civil Service at senior level. Most have transformed the way business is done within their mandate. And already they are challenging the age-old fortresses which fragment government activity.
All of us in P&SM should rejoice in the recognition which was given to government procurement leaders in the New Year Honours. Two of my guests and one of their deputies received high level awards. The best public procurement in UK sets a standard internationally and deserves to be celebrated.
Happy New Year - 9 January 2009
and welcome to my first blog of 2009. Despite the inevitable weather-related transport disruption as we all headed back to work and the relentlessly gloomy reporting on the recession, there’s every reason for us in procurement to feel optimistic.
The downturn is increasingly focusing minds on the value that procurement can bring to any successful survival strategy. The spotlight is on us and we have the chance to make ourselves heard. At CIPS we’re increasingly asked to comment on the economy and procurement’s role – perhaps you caught some of our coverage over the past week on BBC television and radios 4 and 5 ahead of the latest interest rate cut. This all helps to raise the status of procurement and to communicate our message that managing supplies will be as critical to success after the recession as it is to survival in the meantime.
CEO blog archive 2008