Perceptions of Gartner's No. 1 in supply chain management

When actions speak louder than words

Sadly tonight, yet again Newsnight gave a focus to procurement - this time under the spotlight were 2 Sisters Food Group. 2 Sisters Food Group have a commitment to sustainability, and that is supposed to include responsible business. From a procurement perspective, here's what they claim on their website:

Procurement

Our vision - We partner with our suppliers to our mutual benefit and engage in the development and implementation of responsible sourcing standardsOne of the great sustainability challenges of our generation will be feeding 9 billion people on the planet, many of whom will be achieving increase in wealth. The growing population and increasing middle class bring bigger demands on land, what is produced and how it is produced. The potential impact on sensitive ecosystems is huge, and we will work with suppliers to prevent this through use of responsible sourcing standards. We are already certified to RSPO, are members of RTRS and UTZ, and supply MCS fish. Where relevant we will continue to support and champion responsible sourcing standards and develop approaches where they do not exist in the market.

A big challenge we face sourcing from over 50 countries is ensuring we protect people from exploitation and abuse. This is a complicated area, with many different challenges across the world depending in the size of suppliers, cultural differences and ways sectors operate. As members of SEDEX we are championing this to our supply chains, and have made a commitment to use this system to assess, risk rate and take action where required.  We will provide support to suppliers to ensure we can implement effective solutions that ensure the sustainability of both supply chains and 2 Sisters.

- See more at: http://www.2sfg.com/sustainability/#procurement

Later this week, on Thursday, we have another BBC exposé related to procurement, Apple's Broken Promises:

Apple is the most valuable brand on the planet, making products that everyone wants - but how are its workers treated when the world isn't looking? Panorama goes undercover in China to show what life is like for the workers making the iPhone 6. And it's not just the factories. Reporter Richard Bilton travels to Indonesia to find children working in some of the most dangerous mines in the world. But is the tin they dig out by hand finding its way into Apple's products?

There's something ironic that the profession is celebrating a name change and the ability to award individual Chartered Status while the media is pouring shame on our peers, sorry highlighting the shame of our peers. What I also find strange is how CIPS are being left out of any of the media discussions - are they part of the solution?

Premier Foods procurement strategy going from bad to worse

Last year I wrote about the procurement strategy of Premier Foods which has suddenly become a hot topic and now looks as if the chief executive has been coerced into setting aside.

Initially the rationale of the Premier Foods procurement strategy was to supplier reduction and a focus on strategic suppliers. The objective wasn't necessarily wrong but the implementation was flawed in both rationale and implementation.

Now to add to that confusion the chief executive has said "in my view that is just one of many kinds of discounts. It's an investment on growing our business and that's entirely appropriate". That seems a massive shift in last year's justification! Did the chief executive understand the 2013 rationale? Was there any Board buy-in to the risks of what could happen and the potential fallout which has now led to adverse national press and media converage?

Gavin Darby, the chief executive, to me, has made things worse by stating:

If the optics of this scheme for some people feel uncomfortable, I'm happy to move on and move the scheme to a more traditional discount .. we would just say we have an invest-to-grow campaign, we want people to come with us to invest in our business and that would be reflected in a discount soon the terms they have offered in the past.

If Premier Foods had wanted "[suppliers] to come with us" they should have thought a bit more about how they would bring the supply market with them.

Darby seems to forget that some of last year's suppliers appear to have now chosen to opt out of supplying and some who did pay-to-stay never received any business anyway. How will Premier Foods go about negotiating the new discounts with those firms? Let's face it Premier Foods have now lost the initiative and common sense would suggest that suppliers should just refuse to budge on discounts.

Setting all that aside, we have yet another example of procurement damaging brand value and I assume adding to remedial costs associated with retrieving reputation.

Then we have the issue of do they really understand the concept of strategic supplier management? Sadly, I fear, Premier Foods are working to their own recipe and it has a remarkably bad taste.

Is it responsible to start procurement without having the funding?

Is it responsible to start procurement processes without having the money? I suppose the answer depends on what you mean by procurement. 

I ask the question as Danny Kenndy, the Minister for Regional Development in Northern Ireland, is reported to have stated the procurement and planning process for several [road] schemes was "well advanced", but "then we need the money".

In the procurement cycle which starts with defining the need, I would be happy that the business case stage ensures the money is available, and if that is what is meant by the procurement process, then so be it. It could also be that the Minister is referring to soft market testing and establishing the budget robustness - that would be okay too provided al the relevant stakeholders are clear on what is happening. However, if, as I suspect in this case, 'the procurement process' is really the tendering process, then, while I think there is a need to have the necessary planning approval, I do not think it is responsible to start a procurement process before confirmation the required finance is available.

We've heard so much about making it easier for SMEs to do business with the public sector and reducing the costs of doing so, but surely starting a tendering process without the required funding is placing an unnecessary risk and burden on the bidding community - that's not responsible. The only circumstances in which I think it is justifiable to place that cost on bidders would be if the buying organisation agreed to cover the cost of bidding should the procurement process not be progressed through to award. Would the NI Assembly be prepared to accept that cost?

The dream of the Stonehenge tunnel procurement

As we approach the Winter Solstice (and the next election) it has been announced that a new road is to be tunnelled near Stonehenge - a world heritage site and one of the wonders of the world.  As I understand it no one actually knows the origins of Stonehenge and I doubt they know what is actually underneath or surrounding it - the new tunnel may turn into an archaeological discovery mission.

But a modern myth is also being told, after all this scheme dates back to 1995! Are we being sold a dream which can easily be set aside in future spending cuts? We have the mystical belief that the UK has the skills and money to delivery such an ambitious project - on what basis? It could create jobs but when and how sustainable will they be? It will require money but when will the money flow?  Is there a justification for spending so much money on a road tunnel when we have people in the UK reliant on food banks and there are potholes in virtually every street?

Was it only last year that we learnt that a third of major projects were over budget or late? Could we have an update on the lessons learnt which will be transferred to the Stonehenge project?

Dominic Cummings, in today's Times claims the civil service lacks skills in budgeting, contracts, procurement, legal advice, and project management.  If he is right, and history provides plenty of examples, what are the chances of effective project delivery of the tunnel? Perhaps euphoria over the award of the east coast rail franchise has been a cause for a vision of such a landmark project. Perhaps it is easier to visualise completion of the Stonehenge tunnel than something which may impact on the lives of people today.

The amazing thing is that 5,000 years ago someone conceived and delivered Stonehenge - whether it was to time, cost and quality we haven't a clue, but for all our sophistication, it strikes me that they had skills which are not common and are urgently needed.

What I would like to know is, will anyone be accountable for the delivery of this dream?

Lean is supposed to about getting rid of waste

I could barely believe my eyes when I read today that public sector managers are now going back to school, gaining an FICiPS en route, to learn about 'lean'. It's not that I don't agree with the need to implement 'lean' thinking in the public sector, indeed back in the 90s I was writing about the application of lean supply in the public sector. No, my concern is that the UK government have been preaching the 'lean' message for years too - indeed we have the 'Lean sourcing: The standard solution'.

What has gone wrong with their recruitment that they now need to invest in training for these managers - did the recruitment process actually let staff through the system without checking their understanding? Are we to view this as an admission that central government is 30 years behind the curve in management thinking?

My suggestion is quite simple: give each of the managers who require training a copy of either The Machine that Changed the World, Lean Thinking, or Systems Thinking in the Public Sector get them to research why the Japanese local government has struggled to implement 'lean', and then set within their personal objectives an appropriate objective to pilot a 'lean' initiative, reporting on the difficulties, how they overcome the difficulties, and the lessons learnt. No £17,000 training course, no mercy, if they can't deliver chase them - I can't see that after so long any other approach will work.

"Purchasing: Can we bridge the gap between strategy and daily reality?"

A new academic paper is in press at the moment for publication in Business Horizons: 'Purchasing: Can we bridge the gap between strategy and daily reality' by Knoppen and Saenz which I think is worth a read. The paper is based on the survey findings of the International Purchasing Survey - over 600 usable responses from North American and European purchasing professionals - and a few anonymised case studies.

At first I wondered why the paper wasn't published in one of the mainstream procurement journals, then I decided it may be the reported findings quite possibly jar against the message their editors generally want to accept.

Nevertheless the findings are important and certainly merit further debate and validation.

I am not going to steal the paper's thunder, but the key messages include that 47% of the respondents believe Purchasing (I take that also to cover the Procurement function) is not included in the strategic planning process, and 56% the purchasing are not focussed on long-term issues that involve risk and uncertainty. Furthermore that organisational structure tends to be either centralised or decentralised with little development of hybrid models.

Those findings certainly act as a reality check on the rhetoric but, I have to say find some resonance with what I have all too often seen in big household name companies. If the findings are reliable we need to stop the bluff and really get down to asking the serious question of why is Procurement still suffering from an identity crisis, despite almost 30 years of procurement's potential contribution having been identified, the financial crisis, and even the recent spate of procurement related supply chain risks manifesting themselves? Why are simplistic structural models still prevalent despite the benefits of hybrids? Is the problem that with the profession of those who look at the profession?

However, leaving solving the world's problems for another day, and getting back to the paper. In answering the core question the authors pose: Can we bridge the gap between strategy and daily reality? The authors use the case studies to demonstrate the answer is 'yes',  and identify key pitfalls in bridging the gap, namely:

1. No time for reflection;
2. Lack of scale;
3. Lack of scope;
4. Unaligned incentives. 

While I may question some of the content and approach, and feel there may be an over-simplification of the discussion and recommendations,  I encourage you to give some thought to the findings.