Tag Archives: Procurement

Globalization Creates New Avenues for Supply Chain Risk: riskmethods Shares its Predictions for 2016

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As part of our ongoing series on what procurement technology providers see as the biggest challenge for procurement in 2016, we recently spoke to riskmethods to hear its thoughts on the topic. Heiko Schwarz, riskmethods founder and managing director, pointed to increased external risks, globalization and regulation compliance as the main issues procurement and supply chain managers will have to tackle in the new year.

These three major trends will expose organizations to risks in 2016, Heiko said. External risk will continue to be an issue. For example, extreme weather such as rain or snow storms will expose and disrupt supply chains even more than in the past, he said. Political risks have been a growing trend for years, but will continue in 2016 as well, he added.

Globalization is also pushing enterprises to search for new suppliers in countries or regions they probably have not worked in before. Procurement’s scope in the last year has dramatically changed, going from a “domestic-centric” view to a more global one, Heiko said. Specifically, he believes we will see movement away from China as the cost of operating there continues to rise. China is no longer a low-cost sourcing country, and this is putting pressure on companies to move to new areas, places such as the northern regions of Africa, he said. This globalization push will put increase supply chain complexities in 2016.

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5 Data-Driven Supply Chain Challenges to Overcome in 2016

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Supply chain, sourcing and procurement executives are feeling immense pressure to cope with the expansion into global markets, waves of disruptive innovation, rising customer expectations and complex regulatory requirements. These are catalysts that require supply chain management strategies to become bimodal and to make a shift from tactical to strategic.

In addition to the sourcing of goods and services, cost management and internal stakeholder compliance, executives’ responsibilities will include the ability to promote and support the top line. They have to be a trusted advisor to internal business partners and will have a tremendous impact on the success of an organization engaging with suppliers, managing relationships with strategic vendors and solving business problems.

For 2016, I see leading supply chain organizations making these top-five data-driven supply chain management challenges a priority.

1. Meet Rising Customer Expectations on Supply Chain Management

2. Increase Costs Efficiency in Supply Chain Management

3. Monitor and Manage Supply Chain Compliance & Risk

4. Make Supply Chain Traceability and Sustainability a Priority

5. Remain Agile and Flexible in Volatile Times and Markets

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Global supply chain threatened by terror and flow of migrants

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Supply chains are suffering a rise in costs and multiple disruptions due to the reintroduction of border controls in Europe and the rise of radical Islam in the Middle East.

The Charted Institute of Procurement and Supply (CIPS) – with a presence in 150 different countries – confirms that ISIS activity and Russia’s rigid attitude in world politics have contributed to the heightened risk.

Meanwhile, the migrant crisis is making some European countries close their borders, as is happening in Hungary, Croatia and Slovenia. Crossing the border in these countries can take up to 90 minutes, while other activities such as the transport of livestock have stopped entirely for several days in the past month.

This supply chain issue has caused the delivery prices for some German companies to rise by as much as 10 per cent and has increased the risk of the supply chains in other several countries of the Middle East and North Africa, such as Kuwait, Bahrain, Turkey and Tunisia.

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Two thirds of buyers not managing supply chain risk effectively

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Almost two thirds of buyers think their organisations are not managing their supply chain risk effectively.

Responding to a mini-poll held during a webinar organised by Supply Management in association with business information publisher Bureau van Dijk, 63 per cent of listeners said they didn’t believe their organisations managed threats in the best way.

Ted Datta, BvD’s strategic account director – London, said a majority of negative response underlined the increasing awareness among companies and buyers of the key importance of good supplier risk management. This was increasingly important because legislation was covering new and wider areas, said Datta.

“Know your suppliers, business partners and third parties,” he said, emphasising buyers needed to be up-to-date with new risks as situations changed every month. Datta said as there was so much information to monitor, companies could segment their supply base to identify key strategic suppliers and monitor those suppliers ‘in real time’ or as frequently as possible depending on their resources. Others could be reviewed in a more structured way, he said.

David Lyon, head of procurement at Cancer Research UK, told the webinar, Enhanced supplier due diligence: the implications for supplier risk management, reputation was vital for a charity and it had to ensure suppliers were aligned with its core purpose. “As an organisation that spends 80 per cent of every pound donated on our core mission of research, we must work hand in hand with all our suppliers,” he said.

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4 ways retailers can improve supply chain management

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Retailers and their suppliers are under more pressure than ever before to deliver more goods to more destinations faster.

To stay competitive, “retailers need to know where things are at all times so they can redirect shipments, rebalance inventories and respond to new demands on the fly,” says Rich Becks, general manager, Industry Value Chains, E2open, which delivers cloud-based supply chain collaboration solutions.

And if there is a problem with their supply chain, and they can’t get products to stores and/or consumers, retailers (and their suppliers) risk losing customers.

So what steps can, and should, retailers take to make sure their supply chain operations are running smoothly? Following are four suggestions from retail supply chain experts.

1. Use cloud-based software that can track and manage inventory in real time.

“Retailers struggle to balance uncertain consumer behavior and long, complex supply chains,” explains Kurt Cavano, vice chairman & CSO, GT Nexus, a supply chain technology company.

2. Use source tagging and RFID to keep track of inventory and stock levels.

“To improve supply chain management from the moment product leaves the manufacturer’s warehouse all the way through to the point-of-purchase, retailers should deploy a source tagging solution,” says Steve Sell, director, North America Marketing, Retail Practice, Tyco Integrated Security.

3. Become a part of a B2B e-procurement network.

“B2B [or e-procurement] networks can help companies predict supply chain disruptions and act quickly to adapt business processes,” says Sundar Kamakshisundaram, vice president, Procurement and Business Network Solutions, Ariba, an SAP company.

4. Make sure your marketing and supply chain teams are in sync.

“When executing a promotion, a lot of retailers overlook the alignment of the supply chain and marketing teams, which is crucial [if you want] to successfully launch a promotion,” says Pat Sullivan, senior vice president, Promotions Management, HAVI Global Solutions, a consulting company.

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Five New Supply Chain Risks and Regulations

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Five New Supply Chain Risks and Regulations

Supply chain risk is a major issue, and new sources continue to pop up. Adverse weather, natural disasters and factory fires have historically grabbed the attention of CPOs, but there are other risks procurement leaders must be aware of that are just as hazardous. The world of procurement is constantly changing, and supply chain managers must be on top of their game. Here are 5 new threats that you might not be ready for:

1. Financial Fraud

Financial fraud can come in the form of collusion, poor monitoring of employee expenses, or misconduct from the vendor, including falsified labor and inflated bills. Did you know that less than one-third of executives are utilising data-analytics tools that can detect fraud or vendor waste?

2. Cybersecurity Threats

Many companies have lax procedures in protecting critical data, leaving businesses vulnerable to attacks that could harm customers, operational processes and brands. Even if you have security measures in place, the suppliers you work with may not.

3. Supply Chain Management Regulations

New rules and regulations continue to pop up in the supply chain, and companies need to be ready to disclose information about their sourcing and supply chain practices. For example, the Transparency on Trafficking and Slavery Act requires companies to file annual reports with the SEC, disclosing efforts to address specific human rights risks in the supply chain.

4. The Talent Gap

Baby boomers are retiring and there are few up and coming procurement gurus to take their place. CPOs are scrambling to find a solution to this problem, as the implications of this issue are likely to last for at least a decade.

5. Rising food costs

Droughts are worsening across the United States, increasing food prices and ultimately raising the cost structure for many firms. Overall food prices are expected to increase by 2.5-3.5 percent this year, with fruit up 3.5-4.5 percent and vegetables up 2-3 percent.

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