The UK Vaccine Taskforce triumphed in the CIPS Excellence in Procurement Awards
The UK Vaccine Taskforce triumphed in the CIPS Excellence in Procurement Awards

News review of 2021 - part two

Will Green is news editor of Supply Management
29 December 2021

July

Procurement salaries in the UK rose by an average 5%, above the national average of 4.2%, according to the 2021 CIPS/Hays Procurement Salary Guide. The average procurement and supply chain salary in the UK was found to be £47,435. The average salary for all European procurement and supply chain professionals was $92,070.

CPOs designing a responsible sourcing strategy were advised incorporate it into the procurement decision-making process or it will be “relegated to the background”. In a report Gartner said procurement teams needed to decide between four levels of responsible sourcing and then communicate this to suppliers.

Porsche announced it would demand 1,300 suppliers use renewable energy to manufacture components if they wished to continue doing business with the company. The firm said as of July 2021 all new supplier contracts would need to meet Porsche’s clean energy requirements as it worked to achieve a carbon neutral supply chain by 2030.

 

August

Draymen from one of the UK’s biggest beer suppliers threatened to strike ahead of the August bank holiday in a dispute over pay. Around 1,000 draymen from GXO Logistics Drinks deliver around 40% of the UK’s beer supplies, including brands such as Heineken, to pubs and other hospitality outlets. Following talks the strike was called off.

Timber prices rose sharply due to a triple hit of high demand, HGV driver shortages and natural disasters. The Timber Trade Federation said suppliers had faced a post-pandemic “surge in demand”, leading to the average import price of softwood increasing by 50% between January and May. Meanwhile construction activity grew at the fastest pace since June 1997, with DIY and building projects accounting for the two-fold rise in demand for softwood.

Amazon billionaire Jeff Bezos filed a lawsuit against Nasa claiming “unlawful and improper evaluation of proposals” in its procurement. Bezos’s commercial space travel company Blue Origin sued Nasa over its decision to award a contract to build a lunar lander to SpaceX, arguing the process should be re-run. However, the claim was later dismissed by the courts.

 

September

The UK government’s Vaccine Taskforce claimed overall victory in the CIPS Excellence in Procurement Awards 2021. The project, run by the Department for Business, Energy and Industrial Strategy, won Procurement Project of the Year as well as Procurement Team of the Year – Large Organisation. Receiving three standing ovations at a glittering live event in London, the taskforce was recognised for successfully sourcing and deploying Covid-19 vaccines to three-fifths of the UK adult population and 550,000 people in Crown Dependencies and overseas territories over eight months.

The former CPO at Kraft Heinz Company (KHC) agreed to pay $100,000 over allegations he oversaw inflated cost savings as part of financial misreporting by the company. In a court filing the US Securities and Exchange Commission (SEC) said Klaus Hofmann, CPO and global head of procurement at KHC between July 2015 and September 2019 before leaving in May 2020, “negligently approved and failed to prevent supplier contracts that masked the true nature of the transactions”.

Warnings were sounded over UK food supplies after high natural gas prices caused a ripple effect through the supply chain. Supermarket Iceland and food trade bodies said a shortage of CO2, a by-product of fertiliser manufacturing, could hit production of fizzy drinks and beer and the humane slaughter of livestock. It is also used to create dry ice which keeps food fresh in transit. Ultimately the government stepped in with financial support to keep fertiliser plants running, which had shut down due to high gas prices.

 

October

Researchers found massive backlogs at critical Chinese ports were exacerbating supply problems at European and US ports. Data from Project44 showed there were 386 ships anchored and moored off Shanghai and Ningbo ports, with an additional 45 container vessels waiting to moor, setting up shortages and raised costs for US and European businesses ahead of the festive season. Meanwhile the UK’s biggest container port at Felixstowe was forced to turn away ships from Asia due to a backlog of containers caused by a shortage of HGV drivers.

The lorry driver shortage continued to reverberate with the logistics industry reacting with anger to government plans to change cabotage rules, which limit the number of times foreign drivers can pick up and drop goods in the UK. The Road Haulage Association said the changes would undercut UK logistics operators by attracting low-cost foreign hauliers.

UK chancellor Rishi Sunak unveiled his autumn budget, outlining impacts on inflation, HGV taxes, fuel duty, and shipping.

Meanwhile the UK government said it was considering setting up a new unit to oversee all sustainable procurement policy. It said it would “explore the possibility of establishing a new single unit for all sustainable procurement policy within government to strengthen performance, coordination, and oversight”. On 30 September new rules came into force stipulating all firms bidding for government contracts worth more than £5m a year must commit to achieving net zero by 2050.

 

November

The alarm was sounded after a slowdown in magnesium production threatened metal supplies. China, which supplies 87% of the world’s magnesium, said it would shut factories to cut power consumption against the backdrop of an energy crisis. A coalition of European trade bodies warned the continent would run out of magnesium – used to make aluminium and steel – by the end of November.

Current supply chain disruptions were “just the beginning” was the warning from Kuda Kadungure, head of procurement (works) at the UK Parliament. Kadungure, who has previously worked on procurement for HS2 and the London Olympics, told delegates at Procurement & Supply Chain Live to expect disruptions for a further year. He said: “This is a foretaste of things to come when it comes to material shortages. It is just the beginning. It's going to take maybe about 12 months for the situation to stabilise.”

Procurement and supply chain professionals were said to be looking for a “clear direction” from the COP26 summit as they worked to tackle climate change. Malcolm Harrison, group CEO at CIPS, said procurement and supply chain managers had a “critical role” in achieving sustainability goals, and it was important for businesses to understand “the messy reality” of the impact of supply chains on the planet.

Commentators warned of the risk of inflation as pressure mounted on the Bank of England (BoE) to raise interest rates. With input costs rising for firms and retail prices predicted to follow suit, expectations – subsequently found to be correct – were that the BoE would increase the base rate from 0.1% to 0.25%. In a report IGD identified six key inflation drivers.

 

December

The UK government said it would give six months’ notice of “go-live” for a new set of public procurement regulations, though it was likely to be 2023 “at the earliest”. The new rules, possible because the UK is no longer subject to EU regulations following Brexit, had been modified following a consultation on the government’s green paper Transforming Public Procurement. SM summarised eight key points from the government’s plans.

A report from the World Bank said green public procurement (GPP) should be seen as an opportunity to deliver “high quality public services” and build trust with populations. The bank, which reviewed GPP across the globe to promote its uptake, said it required a “radical change in perspective”.           

A book examined the conflict between rules and discretion within public procurement as countries grappled with rapidly-changing circumstances during the pandemic. The tension between discretion – where buyers have flexibility to use their own judgement – and strict regulatory frameworks lay at the heart of public procurement approaches, said the book from the Centre for Economic Research Policy. It identified an “agency problem”, in which the behaviour of buyers could be “corrupt” – seeking to enrich themselves – or “lazy” – they can't be bothered to achieve their contractual objective.

And a Russian container ship was detained after the crew were found drunk when it veered out of a shipping lane and headed at speed towards the Polish coast at 4am. Officials boarded the ship after radio communications failed and altered its course to avoid an accident. Three crew including the captain were tested and found to be intoxicated.

Click here for part one

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