Supply Management blog

Now's the time to hire some graduates

By Paul Snell

According to figures released by the Association of Graduate Recruiters today, there are on average 48 applicants for each vacancy for students leaving university this year.

The findings of the group's study also point to starting salaries being frozen at £25,000, and the situation is unlikely to improve in 2010.

But according to chief executive Carl Gilleard firms are not abandoning their graduate recruitment schemes and are likely to start rehiring "at the first sign of an upturn in the economy".

Without wanting to sound callous, what a fantastic opportunity for the procurement profession.

Rather than waiting for the start of the upturn, why not launch your graduate campaign right now? With more candidates available and less competition from your rivals it is a great chance to steal a march on your rivals, as well as winning some positive publicity.

Even if jobs can't be offered immediately, introducing graduates to the profession and your business will give you an advantage when your recruitment budget is reopened.

Suppliers are not afraid to sue

By Rebecca Ellinor

Earlier this year SM held a roundtable debate quizzing CPOs on whether they thought good supplier relationship management would fall victim to the recession.

Their overwhelming advice was, it could – but it shouldn’t.

“The supply base brings more arms and legs to focus on removing waste. They can bring us ideas, for example, stacking pallets in a more efficient way to unlock some value,” said NHS Supply Chain’s procurement director Roger West talking about vendors’ role in innovation.

“Being easy to do business with is also hugely important. Some customers are not good at telling you what they need or at the purchase orders and payment processes. Other customers are slick and professional: they are the ones you want to do business with,” added Paul Bestford, senior director, procurement EMEA, Wyeth.

They’re not alone.

In April last year we spoke to purchasers who’d lived through the last recession to seek their views on what will be different this time. One of them was Michael Pitchford, who was working first in avionics and then in the City during the recession of the early 1990s, and is now a procurement trainer. He said: "In the 1990s we didn't have partnering. Now it is a force to be reckoned with, and we're basing our decisions on relationship strategies."

And now recruitment agency Edbury Daley has launched a survey entitled A study into the increasing importance of Supplier Management which seeks your views on the issue.

All the expert advice highlights the importance of these relationships, yet legal challenges are on the increase – particularly from suppliers but also buyers. Paying promptly as well as ensuring all the i’s are dotted and t’s crossed in contracts (and tenders carried out correctly) has never been more crucial.

Strong bonds based on plenty of communication could just give you the edge – and save you a heap.

Green shoots?

By Jake Kanter

Ever since business minister Shriti Vadera made the widely criticised comment about the economy's "green shoots" in January, the term has haunted me.

You hear it everywhere. So much so, you could quite easily draw comparisons between the economy and a farm.

Don't get me wrong, I enjoy hearing and reading positive sentiment about financial conditions, but my gut tells me it's all a bit premature.

I think today's construction PMI reflected this. The rate of decline in activity has steadily slowed in recent months, but today contraction accelerated.

As CIPS CEO David Noble comments, the industry is on a "knife edge" and the data adds to the speculation of a "w-shaped" recession. This means while we are witnessing improvement in some areas, we are far from out of the woods. It is a prediction I am far more comfortable with.

Which way will the economy go? Will future PMI's add weight to the idea of a w-shaped recession?

Fresh pair of eyes

By Jake Kanter

My web story yesterday highlighted the importance of using external expertise during large-scale procurement projects.

It is thought the recommendations of someone fresh to a programme could help mitigate risks such as cost and time overruns.

Yesterday's advice was issued by the OGC, but I think it could apply to all sectors.

What benefits can external expertise bring to a major procurement project? How often do you call in consultants to keep standards high?

Procurement's priority

By Jake Kanter

Speaking to the CPO of a UK retail giant recently, he told me the number one duty of a procurement function is to get costs down and deliver savings for the business.

Now many will raise their eyebrows at this mantra, which is so often associated with the retail industry. Indeed many supermarkets traditionally gun for savings, usually at the expense of suppliers.

Other readers will champion the array of skills procurement brings to the table, including delivering value for money and mitigating risk.

But if you were pushed, what would say the first priority of a purchasing department is? Is this ever likely to change?

Go Dutch on salaries

A former CEO of Channel 5 television has suggested the BBC should hold Dutch auctions for the hire of senior staff to prevent it paying “extraordinarily high salaries”.

Speaking on Radio 4’s Today programme, David Elstein, said: “Publish the job specification, draw up a shortlist of people who want to do it and see who will do it for the lowest end.

“It’s typical standard procurement policy which people deploy all over the world in terms of resourcing most cheaply. The idea that there’s only one person for each job is clearly untrue.”

Can you see your company doing that as a way of controlling costs? Are there any drawbacks to this approach?

Sustainable procurement sustains

By Jake Kanter

At a sustainable procurement conference I attended yesterday I met Nigel McKay, head of procurement at construction firm Bovis Lend Lease.

He told me that he spends 20 per cent of his working life completely focused on the sustainability agenda. I thought this was quite a revelation.

During the economic downturn, the construction industry has endured a torrid time and it is fantastic to hear big issues such as the environment and social responsibility have not being dropped or discarded.

It backs up our SM100 poll from late last year, where 66 per cent of purchasers argued sustainability has not fallen in importance, despite the financial crisis. Those polled suggested that adopting long-term sustainable strategies could deliver greater savings and more security of supply.

I was also struck by the certainty with which Nigel made this statement. Are other buyers so sure about how they split their time? How much time do you spend on sustainable procurement?

How can you convince colleagues to use technology?

By Paul Snell

While writing my feature about how buyers can use technology in “tricky” spend categories, the one thing I noticed was the similarities, rather then the differences, in approach.

The advice given by professionals could just as easily by applied to simpler, commoditised categories as it can to sophisticated, creative services. After all, who would disagree with the concept of encouraging supplier engagement, increasing transparency and accountability and improving relationships with internal customers?

But if it is so simple, why are more organisations not taking advantage of the opportunity? Maybe it is the “underlying thread of arrogance used to defend the status quo” highlighted by research from the Aberdeen Group.

Do you struggle to convince colleagues of the value technology can bring to procurement?

Better visibility

By Steve Bagshaw

Results of the Basware report we cover in the latest issue reveal some positive results. Over half of financial decision makers think we are becoming more strategic. Good news.

But there are also some less positive findings – the main among them that 36 per cent believe purchasing is “still largely administrative”. Plus, only just over a quarter of chief financial officers share the view that procurement has a positive effect on profitability or growth.

If there is one thread connecting these negative findings, it may
be what the report calls “the efficiency of data” which continues to be a problem for CFOs in the UK, US and beyond. There are many organisations, products and programmes that can help buyers improve in this area, and many buying departments use them to achieve excellent visibility of what they spend.

Nonetheless not everybody is and even those that are making the savings may not be communicating them well enough throughout their organisation or to their finance colleagues. Hence the survey findings.

When we reported on Homeserve’s victory in last year’s CIPS/SM Awards, this was one of the key things they were doing – reporting on a monthly basis exactly how the savings made were impacting P&L. I’m sure their CFO was in no doubt about their “effect on profitability and growth”.

As we have covered previously the successful Homeserve team has now been disbanded. I would be very interested to hear from other organisations who have cracked this problem. The number of CFOs convinced of the positive effect (27 per cent) may not be a terribly impressive figure but it means lots of organisations have collected and presented their savings in such a way that they are able to demonstrate how they meet the aims of the finance department.

I’m sure the rest of SM’s readers will be interested to hear how you have done it.

Do vendor lawsuits put you off?

 By Paul Snell

As a journalist you quickly learn there are certain people you should be extra careful with when writing about or interviewing them because they have a reputation for being litigious.

It made me consider whether this is ever a consideration for buyers when selecting a supplier. Evidence suggests that challenges to procurement processes from suppliers have increased during the economic downturn.

But if a vendor had successful challenged a procurement with another client, would that put you off inviting them to tender? Would their be any solidarity in the procurement profession, which may essentially “blackball” a vendor?

I guess the difficulty would be the justification of excluding them from the tender process (after all, you wouldn’t want to give them an excuse to challenge). For a private sector firm this shouldn’t pose too much of a problem, you can just invite whoever you want. But in the public sector, EU procurement regulations make this far more difficult.

Could you justify excluding a supplier from a tender based on their past legal action with other clients?