One of the supply chain highlights of the year was the launch of the world’s largest air vehicle, which unfortunately crashed during a test flight ©Press Association Images
One of the supply chain highlights of the year was the launch of the world’s largest air vehicle, which unfortunately crashed during a test flight ©Press Association Images

2016: the SM year in review

22 December 2016

As 2016 draws to a close, we leave you with a summary of some of the most popular and most important stories of the year. Alongside technology and the fight against modern slavery, one of the main themes of course has been the uncertainty caused by Brexit from June onwards.

January 

One of the early top stories of the year according to our readers was an inside look into Taiwanese cycling manufacturer Giant. The country is a hub of cycle component manufacturing and this has allowed the firm to create a close-knit supply chain full both expertise and precision-machinery.

The adoption of the European Single Procurement Document attracted a lot of attention, aiming to simplify the tendering process and reduce the administrative burden on SMEs in particular.

In a year full e-commerce and drone deliveries, SM’s focus on what makes Amazon so successful. Patience, relentless investment and serial innovation is the short, sharp story.

February

An explosion at a steel plant supplying Toyota caused production lines across Japan to grind to a halt. The disruption showed how vulnerable the car manufacturer was to supply chain disruption, and the firm said at the time it expected production to fall by 70,000 over the year as a result. 

Almost half of manufacturing businesses globally said they feared supply chain disruption, the Business Community Index’s annual poll found. This said, the risk had slipped down the rankings from fifth to seventh, behind cyber attacks, data breaches and acts of terrorism.

How do you spot a fake factory? Auditing is full of pitfalls and it’s easy for a supplier to take you to show a factory, “especially if there’s no name or if it’s a Chinese name outside,” Amanda Lockley of Matrix APA told SM. The first step is to include someone who speaks the local language in your party.

March

The return of the airship! In March, Hybrid Air Vehicles was preparing to test the world’s largest airship. Using helium-filled hulls, the 92m vehicle claims to be able to carry 10 tonnes of cargo and stay airborne for three weeks. Unfortunately, the test flight in August ended in a crash landing, but the Bedfordshire-based firm said repairs were being made and have scheduled a flight in early 2017.

There was a welcome flurry of supply chain transparency reports by early March, but the bulk of them failed to contain the mandatory information required by the Modern Slavery Act, analysis found. The CORE Coalition and Business & Human Rights Resource Centre reminded firms their reports had to be signed off at board level or above, and feature prominently on the company’s home page.

Progress in the profession was celebrated as SM turned 20, with a look at some statistics - including that in 1996 the average buyer’s salary was £25,778. Two decades on it stands at £41,661.

April

No supply chain is immune to the risk of labour abuse, as highlighted by a BMA report of serious abuse of workers in Malaysia and Thailand making latex gloves for the NHS. The trade union called on suppliers of NHS equipment to do more to protect workers from abuses such as working in extreme temperatures, having passports confiscated and excessive working hours.

A report on how technology will replace many procurement roles in the future was just one of the stories this year highlighting issues for the future. Cognitive procurement and the use of big data to speed up decisions about suppliers were picked out here.

A lack of skills training was picked out by a CIPS survey that found two in five procurement professionals had never had any soft skills training, and only 12% of firms had adopted internal training on emotional intelligence. This was despite 66% of respondents saying a better understanding of this would help them in negotiations. 

May 

The UK became the first G7 country to commit to the Open Contracting Data Standard, as part of a set of commitments on transparency, anti corruption and open government, and the entire government contracting process becomes public

Starbucks launched a sustainability bond to finance $500m of projects in its supply chain. The 10-year bond will pay for loans to farmers and support projects verifying coffee suppliers. The bond would also “offer a way for investors to better understand the work we are doing to help… farmers and our industry,” said CEO Craig Russell.

Usually considered a force for good, a darker side to 3D printing was revealed, with news that thieves had learned to use the printers to replicate the security devise used to seal cargo containers, helping to conceal cargo thefts. The report by G4S also said files posted online allowed anyone with a printer to recreate keys to open industry standard locks.

June

The end of June overshadowed the month's top stories, as the UK woke up on 24 June to a future of big change. And although the prime minister has since reassured the country that “Brexit means Brexit”, no one is still quite sure what that means.

Nonetheless, the uncertainty creates an opportunity for procurement to step up, Noble said in the aftermath of the result. “This period is going to require a high degree of professionalism as well as sanity, calmness, problem-solving skills and developing new relationships as well as shoring up old ones.”

Buyers were told to brace themselves for change and uncertainty, and consider the short-term affect of the crash on the value of the pound, as well as the long-term implications for relationships with European suppliers.

July 

Will regulations be rolled back? How will the UK’s automotive industry be affected? Is there going to be an economic meltdown? Are UK passports becoming blue again? The news starts to look in detail at Brexit, and we summarised some of the talk around the town.

As it transpires, business does continue after Brexit... Almost eight out of 10 firms said managing supplier risk was a growing concern for them, a survey by Greenstone found. While almost three quarters of firms said they collected non financial data about their suppliers, less than half only collected this through the tender process and “cannot be sure that suppliers remain compliant throughout the period in which they deliver services”.

The shortlist was announced for the CIPS Supply Management Awards, showcasing some excellent achievements of teams and individuals in their day-to-day activities. Cath Hill, CIPS group marketing and membership director, told them to “talk to your families and your friends and your colleagues about the work that you do, because I can assure you that they will be blown away”.

August

Supply chain risk hit a three-year high, the latest CIPS risk index showed. Slow global economic growth, subdued commodity prices and, of course, the UK’s vote to leave Europe had rippled through global supply chains. CIPS economist John Glenn said businesses needed to develop bespoke contingency plans for their supply chains. 

Top-down changes to NHS procurement structures are hard to understand and implemented without the consultations of those who would end up using them said the Health Care Suppliers Association, which represents procurement and supply professionals within the service. 

The news that Nike had created a new strategic partnership, consolidating some of its supplier drew attention. Private equity firm Apollo Global Management established a new apparel supply chain company and began acquiring Nike suppliers in North and Central America. The two firms said it would vertically integrate Nike’s supply chain in the region, but did not go into details about the partnership.

September

Heathrow Airport’s procurement department landed three trophies at the CIPS Supply Management Awards. As well as the top award, the team were also recognised as the most improved and as having the best people management initiative.

Primark, Jaguar Landrover and the DVLA were among the other winners at the annual ceremony. The event was hosted by comedian Ed Byrne who joked the procurement professionals were saving money by having the event on Wednesday not Friday.

October

Syrian child refugees were found working in Turkish factories supplying British clothing chains, including John Lewis and Asos, according to an investigation by BBC Panorama programme. The two firms said they were taking action to remedy the issue.

North Lancashire Council suspended three senior members of staff from the corporate property and procurement department following an investigation into procurement processes. An internal tip off launched the investigation into the potential abuse of procurement practices.

Samsung also had a bad month when batteries in its flagship smartphone started exploding. Attempts to shift the blame onto suppliers were not entirely successful, as SM examined.

And the realities of Brexit really hit home in #Marmitegate.

November

Marmitegate brought to public attention the issue of rising costs to businesses, caused by the fall in sterling after Brexit. Public outrage peaked again when Mondelēz International redesigned its iconic Toblerone bar by introducing a flat section between peaks. The move was to shave some weight off the bar in order to mitigate higher commodity costs.

If Brexit defined June, Donald Trump’s equally unexpected election as US president defined November. His victory brought a fresh round of uncertainty as to what changes his incumbency would bring to international trade, security and the economy.

No single procurement professional can do anything about Trump and Toblerone, so perhaps it’s best to start closer to home. Nicky Taberner, director at Hays Procurement and Supply Chain, gave SM her top tips for keeping your procurement career on track. Among them is to read an industry publication.

December

The government’s joint buying venture, the Crown Commercial Services (CCS), came under fire for not providing value for money. The National Audit Office criticised CCS in a report, saying the Cabinet office rushed through the transfer of departmental procurement functions without focusing on how it would manage them once centralised.

The Department for International Development (DFID) was criticised by a parliamentary committee for spending £285m on an airport that could not be used for commercial flights. The Public Accounts Committee said DFID only realised after construction was complete that wind conditions were too dangerous for certain planes to land. The department says it is working to find solutions.

And finally, apparel brands - among them Adidas, H&M and Gap - were praised for efforts to tackle supply chain slavery. Adidas told SM how it worked closely with primary suppliers to reach past its first tier with training and direct auditing.

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