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How is Procurement Your Company’s Most Strategic Function?

Part 1:

Try to visualise this scene. Your R&D department has just finalised your new product design. You’re excited! The development from prototype took months. Jeff from procurement happens to walk by.

“Hey, that looks cool.” He picks up your new GPS integrated, smart phone compatible, Spotify connected, ultra slim, fully waterproof fitness watch, and rubs its smooth, sleek finish. “It’s such a shame we’re going to lose the waterproof functionality.”

“What!” You exclaim. “But that’s our core functionality!”

“Really? No-one told us that. Yeah, the supplier of the small silicone O-rings, protecting the watch from the water, has ceased production. We highlighted his company as a risk, but R&D wanted to push on with the spec he designed. We suggested an alternate supplier who was developing a new type of thermoplastic rubber, but we were told we couldn’t wait that long. I think they’re now in partnership with Fast Fitness.”

“How could this have happened! Everything’s ready to go. Our marketing campaign is centred on the waterproof functionality!”

“Hey man don’t ask me; I only work in procurement.”

The evolution of procurement

Sound familiar?

The modern business landscape is dynamic and ever changing. In order to keep the pace, procurement has had to constantly evolve and adapt to these shifting trends. Globalisation, technology, consumer demands, outsourcing, and sustainability, constantly drive change in the business environment. In parallel, procurement has shifted from a function of tactical support to one of a key strategic player.

Modern industries focus more on developing their core capabilities, with 82 % choosing to outsource activities not part of their ‘sweet spot’. The reliance on suppliers has therefore increased exponentially. As the manager of suppliers, procurement has been pivoted into a core strategic role, responsible for sourcing, maintaining, and driving quality suppliers who are innovative, trustworthy, and add value to the company.

The ‘new frontier’ of procurement is the effective management of suppliers, building meaningful, long-lasting relationships that are win-win for both parties. As the critical link between company and supplier, procurement’s strategic role cannot be underestimated.

Strategic procurement is company strategy

In ‘What is the Future of Procurement?’, KPMG (2019) outline that CEOs are looking to the procurement function to adopt a wider set of strategic responsibilities than ever before.

Strategic procurement is built around the needs of the company and supports corporate planning and value systems. In order the company to achieve its long-term goals, corporate, business, and functional levels must have their strategies aligned. This ensures that the vision is united, as everyone is on the same page.

To use a simple example: The Apple brand’s quality design is a core element of the company’s overall strategic plan and unique value proposition. However, if procurement was not aligned with this strategic vision, cheap components could be sourced to achieve cost-savings (which many companies would applaud). However, this is not part of Apple’s long-term goals and would ultimately damage their brand image.

For procurement to be strategic it should:

  1. Be focused on potential risks and opportunities that impact strategic goals.
  2. Be involved in the strategic planning process and be measured in line with these goals.
  3. Be visible, supported, and viewed as an important function in the decision-making process.

Deloitte’s (2018) ‘Global Chief Procurement Officer Survey’ finds that procurement leaders are expanding the role of procurement in the wider supply chain by improving alignment between procurement and business strategies and priorities. Yet, only one in four procurement leaders consider themselves excellent business partners contributing significant strategic value.

The journal of Strategic Change (2016) finds that strategic misalignment results in reduced market share, missed opportunities (often seized by competitors), and lower profit margins.

By including the bargaining power of suppliers as one of his five forces, Porter (1979) laid the foundations for procurement’s strategic role as the key function responsible for conducting market research, identifying supplier opportunities, leveraging negotiations, and correctly managing suppliers.

For long-term strategic goals to be achieved, the procurement function must be included in companies strategic planning processes.

Procurement skills support strategy

Changing perceptions can be a slow and difficult task. The advent of Covid-19 has awakened the world to vulnerabilities inherent within global supply chains, displaying the key strategic role procurement plays in combatting such risks. However, some companies still adhere to the traditional view of procurement as a passive, administrative, cost savings function.

Top management support is vital in driving procurement’s ability to enhance overall company strategy. As procurement operates in a dynamic business environment, management must accommodate for upskilling to allow procurement teams adapt to this rapidly changing landscape.

Yet, Deloitte (2018) finds that 51 % of procurement leaders believe that their current teams do not have sufficient levels of skills and capabilities to deliver on their procurement strategy, with an alarming 72 % of leaders spending less than 2 % of their budgets on training and development.

Companies must change their structures and perceptions to facilitate strategic procurement, otherwise its ability to achieve competitive advantage will never be realised.

 

Written by; Marie Muckley

 

 

Key Brexit Preparations to Ensure your Business’s Resilience

Key Brexit Preparations to Ensure your Business’s Resilience

As the Brexit deadline looms and with trade negotiations in a state of turbulence, Irish businesses must prepare for the change that lies ahead. From the 1st January 2021, rules for trading with the UK will change.

IDDEA CEO and strategic sourcing specialist, Ingrid De Doncker, recently spoke with Enterprise Ireland about vital Brexit preparations, such as the necessity to “forensically examine your supply chain”.

Whatever the Brexit outcome, your business can be prepared if you act now.

Ingrid explains that “in times of disruption, thinking forward to the different scenarios is the most we can do – we know that the Brexit impact will be severe for Ireland and will not only impact trade, but the whole of society.”

Ingrid shares insights from her interview in the article below, providing trade and industry disruption forecasts, while sharing actionable advice and recommendations to help your business prepare for Brexit.UK “Brexit” Leaves IP Community With Many Questions - Intellectual Property Watch

Brexit trade impacts

Brexit has been a complex journey, and while various outcomes have been explored, it is clear that Ireland will be severely impacted and that the cost of trading will undoubtedly increase. If the negotiations of a future trade agreement cannot be reached before the end of 2020, it would mean that the UK would ‘fall off the cliff’ in 2021, into a hard Brexit scenario.

It matters greatly to the future of Irish trade how chief UK negotiator, Michel Barnier, prepares for the toughest negotiation rounds in the history of the EU. It is clear that trade costs will increase in all scenarios of outcome.

The biggest economic impacts are forecasted to be felt across the agri-food sector, the pharma-chemical sector, the electrical machinery sector, and the wholesale and retail sector.

To give you context, I must highlight how the UK has always been a very strong trading partner for Ireland and Brexit will have a severe impact on Irish businesses operations. The UK is Ireland’s largest source of imported goods, and second largest export market (behind the USA). Ireland is the UK’s 5th largest export market and the 9th largest source of our imported goods.

Our important trade relationship with the UK is clearly evident. In 2019, Ireland had a trade imbalance of £14 Billion with the UK (£38 Billion import, £24 Billion export), so it is impossible to calculate the Brexit impact for Ireland’s GDP, where so many cost criteria are interdependent.

I believe that in this politically and economically unstable environment, where supply chains are interconnected and various scenarios of an agreement are still being considered, the lack of transparency and clarity will create a bullwhip effect that might create a multiplier of costs on costs.

One thing is clear: all products and services will cost more. It is just a question of how much more.

The impact of ‘regulatory divergence’, a clear regulatory break, will have severe impacts on Irish trade. Recent research papers suggest that the long-term impact of Brexit on Ireland’s total import will be a 3 %-8 % reduction, with Irish exports facing a 3 % to 7 % reduction.

If no regulatory divergence occurs between the EU and the UK, Irish goods exported will face additional trade costs of between 4 % to 8 %. If regulatory divergence occurs in the long run, trade costs for Irish goods to the UK may increase by up to 12 % to 32 %.

The importance of supply chain resilience

Whatever the financial impacts may be, it is evident that supply chain impacts will be one of the top Brexit risks for most businesses.

I strongly advised that supply chain leaders forensically examine the trail of any product or service they buy, from farm to fork, and map the links in that chain. For every product, a full supply chain map needs to be created from source to customer.

In reality, this may not be fully possible, but we should do this for the core products and services we buy and also engage with key suppliers for which the survival of our business depends on.

IDDEA’s blog on building supply chain resilience shows you how to do this.

 

Negotiations are likely to pivot around finding the best solution to six main cost areas:

  1. Tariffs: duty may need to be paid on all products.
  2. Large quotas: if Ireland’s quotas for agricultural are not maintained, there will be a significant impact for agricultural trade.
  3. Goods crossing the border: extra costs may apply in cross-border trade.
  4. Land bridge transit: 53% of Irish goods exports are transported via the UK to other destinations. Burdensome processes and administration to transit through the UK to EU will create additional costs and waiting time.
  5. Regulatory divergence: where different regulations exist between EU and UK in areas important to Ireland, such as Beef, Dairy, Processed food, Pharma, Electrical machinery, we will have to handle the costs of complying with two regulatory systems.
  6. Barriers for service trade: as for goods, similar mechanisms would be needed for services to avoid regulatory divergences and excessive trade costs.

Industries where disruptions will be felt most

Different sectors are going to be impacted differently as well. The impact on industries will be felt throughout production and employment. However, this will have a knock-on impact on the rest of the overall economy.

My research points to five industries as key in assessing the overall economic impact of a new trade relationship with the UK after Brexit:

  1. Agri-food – this sector has been long intertwined with the UK and supply chains here have been long established. Agri-food sectors are 80- 100 per cent indigenous firms, and Brexit will be felt more in the rural parts of the country where these sectors dominate.
  2. Pharma-chemicals – the pharmaceutical sector in Ireland is vibrant and has always been a part of a European and global value chain, integrated with the UK via its supply chains. Irrespective of where the products are coming from, a quarter of pharma-chemical material is trucked through the UK. Border inspections, product standards and good manufacturing practices requirements will impact the supply chains in and out of Ireland.
  3. Electrical machinery – the sector comprises computers, radios, televisions and communication equipment, e.g. mobile phones. The impact of disruption will be most felt here by the risk of regulatory divergence and it would impact employment as it is offering attractive salaries.
  4. Wholesale and retail – the sector will face substantial challenges as the UK leaves the EU. The many retail chains operating in Irish and UK markets could be facing new costs both in their supply chain and as a result of diverging regulatory requirements. Equally important, the sector would be negatively impacted by an overall drop in consumer demand resulting from Brexit.
  5. Air transport – this is complicated. Some airlines may lose access to the intra-UK market since the UK would be unlikely to allow EU carriers to operate intra-UK flights without reciprocity from the EU. This is a lose-lose situation.
  6. Financial Services – Dublin is closely connected to the financial sector in the UK and many activities conducted out of Ireland depend on the ability to service clients across Europe from Ireland. Hence, Ireland’s financial sector is dependent on a well-functioning single market for financial services.

While detail is still limited around these issues, companies should not sit on their laurels. I must reiterate the importance of supply chain link analysis and engaging with key strategic suppliers.PREPARE | Geriatrics

 

Prepare, prepare, prepare

 

A lack of detail from negotiations is not an excuse for being underprepared when the potential change is so significant. Procurement can provide a competitive advantage by being proactive in risk identification, mitigation and cost optimisation. We expect underprepared organisations to suffer profitability consequences.

Businesses must take personal responsibility for ensuring their Brexit preparations and supply chain resilience.

By now, you should have identified and assessed your business’ critical risks and created contingency plans. However, if this hasn’t been done, there are still ways to mitigate the impact:

  1. Revisit your business goals and reconfirm your product and services.
  2. Listen to your customers.
  3. Analyse your data and prioritise key suppliers and materials.
  4. Develop full transparency of supply chain links.
  5. Identify and assess all risks and opportunities in your local supply chain and in broadening your supply base.

I believe businesses should use this time wisely, focusing time, money and effort where it matters.

We will shortly see the return of employees to work and the reopening of non-essential retail outlets. Businesses will need to develop new and innovative ways of working, both in your company and with your suppliers, that are compatible with social distancing.

The agile, innovative leadership displayed by businesses during Covid-19 restrictions has prepared us for Brexit and our ‘new normal’. We have proved to ourselves that we can, and will, adapt to change. I believe that opportunities don’t just happen, you create them.

We advise you to turn Brexit into an opportunity by reassessing your operations and examining your supply chain. As Albert Einstein once said: ‘In the midst of every crisis lies great opportunity.’

To prepare for Brexit, please make use of critical resources including:Exploring God's Love

www.prepareforbrexit.com

www.dbei.gov.ie/en/Publications/Brexit-Preparedness-Checklist.html

www.localenterprise.ie/Discover-Business-Supports/Brexit/

Brexit Online Toolkit of IBEC

 

 

Written by Ingrid De Doncker

Reflecting on the Impact of COVID-19 in Ireland. Key Points from RTE’s ‘Open for Business’

It was a privilege to appear on RTE’s ‘Open for Business’; a mini-series supporting local Irish businesses and consumers on their journey through COVID-19 recovery, helping them adjust to the new normal. At IDDEA, we help customers buy better and I was delighted to have the opportunity to make a contribution and share our expertise. Here are my key takeaways.

To fully appreciate the impact of COVID-19 in Ireland, first and foremost, we need to acknowledge four realities:

 

Distant and multi-layered supply chains are not sustainable. 

  • Over the last 30 years, many organisations made the choice to place manufacturing in low-cost economies. This created a geographic bottleneck. An interdependent global trade system became evident, but long and distant supply chains with various invisible, inflexible links were the results. Globally, we were over reliant on these low-cost manufacturing countries while supply chain links were not always clear. To give you a perspective, China accounts for 28% of global manufacturing output, compared to just 11% in the US. Therefore, over a quarter of the world’s manufacturing demand is dependent on just one country; a true bottleneck.

You need supplier options, and ideally local ones.

  • To cut costs, many businesses implemented lean production. Contextually, this means that inventory of stock was kept low and deliveries were scheduled to arrive just in time. You may now realise how this is problematic if your stock dependency lies with just one country, far away. Contingency of stock, products and supply is core to build a resilient business and, ideally, you want to have alternative suppliers within your control and closer to home.

COVID-19, the largest bullwhip effect of your lifetime. 

  • In these lean, fine-tuned supply chains, any big change in supply or demand has an immediate ripple effect throughout the whole supply chain. We call this the bullwhip effect. This occurs when inaccurate demand predictions, price fluctuations or lack of accurate communication lead to the gap between supply and demand becoming bigger and bigger up the supply chain, resulting in over or under production. In the COVID-19 scenario, the ripple started when China stopped producing and shipping to schedule. It resulted in shortages all over the world, and many invisible links in the chain become apparent and an immediate supply problem to end-consumers occurred.

We are connected and impacted by shared global economic threats.

  • While Ireland imports only around 7% directly from China, we suffered more from the bullwhip effect as we import from other countries who had been severely impacted by the restricted supply chain from China. Overall, as per the CSO, Irish imports were reduced by 23% in the last 3 months, that is 1 in every 4 Euro.

 

What does all this mean for the resilience of Ireland’s businesses?

COVID-19 came on the back of the Brexit disruptions that Irish businesses were already facing. Enterprise Ireland put in place support plans for small businesses to create contingency plans for Brexit impacts. IDDEA has been heavily involved in guiding Brexit contingency strategies for small and medium size businesses. Now local businesses have to deal with COVID-19 and its associated supply chain disruptions. It is a very testing time, but support is out there and ‘Open for Business’ highlights the main supports available.

COVID-19 has been a watershed moment for supply chains throughout the world. It has impacted Ireland greatly as we are an island nation dependent on imported raw materials from countries around the world. The risks associated with single and geographically remote suppliers highlighted the criticality of understanding how supply chains actually work. People now understand how goods and services are delivered to them, how interlinked and how dependent trade has become on world economies. Businesses are a lot more aware of the multiple risks and fragility of all the links in the supply chain.

One example illustrating the impact of this in Ireland was the shortage of PPE. PPE and other healthcare products’ life-saving properties, the importance of their quality, and how and where they’re sourced from, became a national talking-point. Hand sanitisers saw an unforeseen demand and there were few companies in Ireland producing them. PPE products ordered from China were argued to have been of inferior quality. Other industries were impacted as well. Food and drink supply chains, while robust, had to deal with moving their products with reduced air freight, ocean freight and transportation restrictions throughout all the supply chains. Well-known brands were temporarily replaced by alternative products to keep the shelves stacked. Small food producers had to close down due to resource shortages. Things were quite uncertain.

However, out of crisis came opportunity. Within weeks, factories took the decision to restructure their production lines to make hand sanitisers, gowns, masks, gloves. For example, Irish Distillers in Midleton moved from alcohol production to producing sanitising gels. Signage companies started full production on COVID-19 signs for roads and retail. Food retailers opened their kitchens to support the needs of frontline workers and local people. For example, Crust and IZZ Café delivered frequent food boxes to frontline staff in Cork city hospitals.

Businesses have looked at their supply chains and are actively seeking local suppliers or are attempting to shorten their supply chains. Smart, innovative products and services have been fast tracked, and micro, small and medium sized businesses have been the most agile to respond. For example, EcoStraws.ie, a Limerick based company, saw a gap in the market for sustainable PPE equipment and filled this niche with the world’s first plastic free PPE offering. The determination to be resilient, agile and adapt to change is a strength of local businesses that cannot be un derestimated.

 

Our advice

Still faced with so many uncertainties, companies need to take sensible steps to prepare for the effects of the COVID-19 (see our previous blog). A rigorous business approach should focus on managing risk and increase resilience for the short andhttps://iddea.ie/wp-admin/options-general.php?page=imagify long term.

For now:

  • Set up your own rapid response team and write your contingency plan. When you reach critical financial trigger points, kick start your recovery or contingency plan to mitigate the risks.
  • Review your customer base in order to set priorities, based on your sources of income.
  • Review your first tier suppliers, their suppliers (tier 2, tier 3, tier 4 etc.) and ask yourself:
  • Which suppliers are vital for the survival of your business?
  • Where are your critical products made?
  • Do you know the alternative sources and are they real alternatives?
  • Have you full visibility of the core components journey, along the supply chain, from the manufacturer to you?
  • What is the suppliers’ inventory status?
  • Review your product portfolio. If capacity or supply of your core components is reduced, then agree the rules on which products should be prioritised and which customers should be supplied first.
  • Plan to maximize cash flow rather than profits. Keep the ship afloat!
  • Keep communications clear and frequent with your employees, your customers and suppliers. Transparency and honesty is key.

It is an unprecedented time for all business around the world: it is a very scary time for 99% of Irish businesses, the micro to small and medium enterprises sector. For many, thinking inside the box will not provide the right answer. Every industry will have different risks and every business will have their own supply chain challenges . There is not one solution to the myriad of challenges we are all facing.

Focus your attention on your core competencies, your competitive advantage, and re-think your future. The world is changing, your customer will have different needs, your business will need to provide different solutions. Your perspective is key and your authenticity will make the difference in your dealings with your customers and your suppliers.

I have learnt that incredible change happens in your life when you decide to take control of what you do have power over, instead of craving control over what you don’t. Opportunities don’t just happen, you create them. Let’s take control, and together, let’s create a more sustainable future.                                                              written by Ingrid De Doncker, IDDEA

Sustainable Development Goals (SDGs): Business Responsibility & Opportunity

 What are SDGs?

The 2030 Agenda for Sustainable Development is a shared action plan for peace and prosperity, for people and the planet, now and into the future. More and more often, articles on LinkedIn are headlined with references to ‘the triple bottom line: people, planet and profit’, ‘the circular economy’, ‘sustainability’ and so on. It is important to note that all of these concepts, and their associated beliefs, are deeply rooted in the Agenda for Sustainable Development and its accompanying SDGs.

 

The agenda was adopted by all UN Member States in 2015. At its heart are 17 SDGs which are an urgent call for countries, companies and citizens to come together and work in a global, collaborative partnership for the survival and betterment of our people and planet.

COVID-19 has highlighted the fragility of humanity. Climate change will have far more reaching effects than COVID-19, it’s just moving at a slower, less forceful pace. SDG 13, ‘Climate Action’, will be the SDG I will use as a reference example throughout this blog.

 

How & Why Should My Business Make an SDG Pledge?

Each SDG has responsibilities and actions that can be aligned to your business objectives. These performance targets are actionable indicators that companies can use to build into their business goals. SDGs can be used in business plans for economic recovery post COVID-19. Companies must future proof themselves and integrate sustainable operations; SDGs provide a roadmap to achieving this necessary move to sustainability. At a country level, a reduction in greenhouse gases would be a target in line with SDG 13. However, at a business level, a move towards the circular economy or renewable energy sources would be an example.

 

You must conduct a material assessment of your own business. Who are you and what do you do? A company with large manufacturing sites may deem switching to renewable energy more impactful than a professional service provider with one small office. Look at your operations to find the impact relevant to your business. The SDG actions will help you on this journey, while also providing ideas for business opportunity. EcoStraws.ie, a Limerick based company, saw a gap in the market for sustainable PPE equipment and filled this niche with the world’s first plastic free PPE offering. They distinguished themselves in the market, seized an opportunity for competitive advantage, while still achieving SDG actions. Find what is advantageous for your business and align you chosen SDG to this. Be realistic. SMEs could have huge impacts if they adopted one action alone from SDG goal 13.

 

Case Example: SSE Airtricity & SDG 13 ‘Climate Action’

SSE Airtricity is Ireland’s leading renewable energy provider. Their company goal is to be the leading company and driving force to a net zero carbon world (a highly energy efficient world fully powered by renewable energy). The company has onshore and offshore wind farms to produce renewable energy and they provide electric charge points. When adopting SDG 13, SSE looked at what was most pertinent, relevant and achievable to their business, revised their business plan, and aligned it to the ‘Climate Action’ goal. SSE then formulated their actionable, measurable business goals, aligned with SDG 13, to be achieved by 2030:

 

  1. Cut electricity generated by carbon by 60%
  2. Treble renewable energy output
  3. Help accommodate 10 million electric vehicles

To set their intent and commitment to the goals, SSE linked performance of the goals to executive performance and remuneration, driving action.

The benefits of this SDG are already having a knock-on effect. The drive towards a low carbon economy has resulted in 80 new job opportunities at an Irish wind farm. Partnership opportunities were also availed of with Microsoft. Both companies initiated an innovative low-carbon community engagement project with Collinstown Park Community College in Clondalkin, Dublin. The project is helping the school’s energy efficiency capabilities, which included full LED lighting across campus with the installation of full roof solar panels and batteries. In addition to cost savings, data collection opportunities allowed the school to monitor their energy usage, bridging an educational programme for Transition Year students. This in turn further built awareness on the benefits and importance of sustainability. A similar project with the Laura Lynn Foundation, led to a reduction of over €10,000 per year on their energy bill through educating and empowering the foundation to monitor its energy usage.

 

The altruistic benefits of an SDG pledge are evident with SSE Airtricity. Yet, as seen in the EcoStraws.ie example, SDGs can help spark the flame of business innovation providing competitive advantage.

 

What SDG will your business sign up for?

Remember:

  1. Look at what was is important, relevant and achievable to your business. This is where you can make an impact and achieve buy-in from your employees.
  2. Remember, SDGs are local as well as global. Projects that help your local community are just as vital as large international projects in achieving the goals.
  3. Align your business plan/objectives to your chosen SDG.
  4. Use the SDG indicators/actions to help you achieve your objectives.
  5. Be realistic. We all want to make the world a better place, but let’s do it one step at a time.

 

A Brief SDG Overview with Key Actions/Indicators:

(Please find more detail here)

1.No Poverty; Eradicating poverty, in all its forms, is the greatest global challenge. Extreme poverty must be eradicated for all people, currently measured as living on less than $1.25 a day.

 

2.Zero Hunger

Hunger and undernutrition are on the rise, affecting approximately 1 in 9 people in globally in 2017. A study in 2018 found that figures were similar in Ireland with 1 in 9 children going to bed hungry. Hunger must be ended, with access to adequate, nutritious food ensured to all people, in particular the poor, the vulnerable and infants.

 

3. Good Health and Wellbeing

 

Progress has stalled in addressing major diseases, such as malaria and tuberculosis, with over half the global population not having access to essential health services; treatable disease epidemics in the developing world must end. Women’s death rates during pregnancy and childbirth, in low and middle-income countries, must be addressed (303,000 died in 2015).

4. Quality Education

 

262 million children aged 6 to 17 were not attending school in 2017. All boys and girls must have access to free, equitable and quality primary and secondary education. Technological advances provide opportunities.

5. Gender Equality

 

All forms of discrimination against women and girls must be ended, with the elimination of harmful practices such as child/forced marriage and female genital mutilation. Women must be empowered worldwide.

6. Clean Water and Sanitation

 

785 million people lacked basic drinking water services in 2017. Universal access to safe and affordable drinking water must be ensured globally.

7. Affordable and Clean Energy

 

840 million people worldwide have no access to electricity, with access to clean cooking fuels problematic. Universal access to affordable, reliable and modern energy services must be provided. In Ireland, a 2017 study found an estimated 400,000 households lived in fuel poverty, affecting the most vulnerable in our communities.

8. Decent Work and Economic Growth

 

More progress is needed to increase employment opportunities, particularly for young people; reduce informal employment and the gender pay gap and promote safe and secure working environments to create decent work for all.

9. Industry, Innovation and Infrastructure

 

Quality, reliable, sustainable and resilient infrastructure, including regional and transborder infrastructure, would support economic development and human well-being in developing countries. This, in turn, could attract industry and spur industrial development.

10. Reduced Inequalities

 

Empower and promote the social, economic and political inclusion of all, irrespective of age, sex, disability, race, ethnicity, origin, religion or economic or other status.

11. Sustainable Cities and Communities

 

Action is needed to reduce urban residents breathing poor-quality air and having limited access to transport and open public spaces.

12. Responsible Consumption and Production

 

The over-extraction of resources and the degradation of environmental resources must cease, with policies introduced that improve resource efficiency, reduce waste and mainstream sustainability practices across all sectors of the economy.

13. Climate Action

 

Climate change measures must be integrated into policies, strategies and planning. Education and awareness on climate change impact reduction and risk planning must be encouraged

14. Life Below Water

 

The adverse effects of overfishing, growing ocean acidification due to climate change and worsening coastal pollution must be addressed. Marine pollution, in particular from land based activities, must be reduced.

15. Life on Land

 

Land degradation and biodiversity loss is occurring at an alarming rate. Replanting of forests must be encouraged with the halting of deforestation. Poaching, animal trafficking and invasive (non-native) species spreading must be prevented to ensure animal conservation.

16. Peace, Justice and Strong Institutions

 

All forms of violence and related death rates everywhere must be reduced, with the abuse, exploitation, trafficking and all forms of violence against children ended.

The illicit financial and arms flows of organised crime must be prevented.

17. Partnership for the Goals

 

Strengthen the means of achieving these goals through fair and transparent taxation systems and spending of public funds. Empower developing countries by offering fair loan schemes and repayment systems.

 

A future blog will explore the SDGs that IDDEA have committed to. If your business needs help in aligning strategic processes to any of the 17 SDGs, our sustainability expert Rebecca Byrne, can help you on this journey. Find out more at our company website.

“Never doubt that a small group of thoughtful, committed people can change the world. Indeed, it is the only thing that ever has.”

 

Written By; Marie Muckley

Promoting Sustainable and Innovative Procurement Culture: Business Opportunities for Public Partnerships

What is Innovation Procurement?

Innovation procurement can deliver solutions to challenges of public interest, presenting businesses with opportunities through innovative product response. IDDEA procurement expert, Mary Ryan, provides an overview of the Innovation Procurement Brokers Project, offering valuable first-hand insight.

 

Through her involvement in Procurement Transformation Institute (PTI), Mary has had the pleasure of collaborating on the Innovation Procurement Brokers Project. The project aims to facilitate the procurement of goods and services by strengthening links between public buyers on the demand side, and innovative businesses on the supply side. Public buyers are assisted with identifying their needs and are connected with businesses able to develop innovative solutions providing for their requirements. The project provides increased opportunities for businesses, with guidance provided on public authority needs to bid for tenders.

 

The project is EU funded, where five regional schemes are being piloted in Ireland, Austria, Denmark, Germany, Ireland and Andalusia (Spain). The project will finally operate at European level, facilitating the connection of public buyers and suppliers of innovation.

 

Mary explains that “working with such a diverse group of professionals was very rewarding. All participants brought expertise and experience from their own organisations and countries. PTI is a relatively new organisation in Ireland, and through our collaboration in European projects (Innovation Procurement Brokers, Procure 2 Innovate) we can learn so much from our European counterparts.”

 

Innovation Culture and Sustainability: Sourcing Personal Protective Equipment (PPE)

Mary highlights that encouraging an innovation culture is crucial. “It is important for public buyers to look beyond existing frameworks to fit for purpose, innovative goods, that can offer benefits and improvements on what is currently available. Buyers involved in the Innovation Procurement Brokers project, are searching for an innovative solution as a replacement for an existing or new need. In Ireland, a need was identified for sustainable PPE workwear. This encouraged suppliers to think about innovation and provide sustainable solutions.

 

She continues to explain that, while there are many drivers for innovation, sustainability has become a topic of huge interest. “While interest is building in more sustainable products, buyers in the market have not yet driven the need for suppliers to provide more sustainable product solutions. In the private sector, distributors and agents are beginning to look for innovative products from manufacturers to better match sustainability requests from their end users.”

 

In many cases, an alternative solution for PPE products is already available on European markets. Sustainable clothing and equipment are something relatively new, and alternative solutions are being developed and evolving as the demand from the public and private sector is increasing. There are many examples of such innovation procurement solutions. For example, Denmark is looking at sustainable clothing for hospitals and public procurers in Belgium have written a guide for public purchasers to help them to source socially responsible work wear. As momentum grows in the area of circular and sustainable economies, the opportunities for manufacturers and suppliers to supply innovative solutions are growing.

 

Sourcing Sustainable PPE Suppliers

PTI undertook a number of research techniques to determine the best approach to source suppliers for the need identified by Irish buyers of PPE equipment. Mary explains that “we firstly held workshops to establish what the need and requirements were. I then conducted desk research on suppliers of PPE workwear in Ireland and attended supplier trade events.”

 

Mary outlines how the PTI researched recyclable options which can be applied to PPE at the end of its lifecycle. “Participants in the Innovation Procurement Brokers Project are keen to see improved product sustainability and performance. Through their search for a more sustainable solution, the public authority buyers hope to source products that will reduce carbon footprints in logistics and manufacturing. Furthermore, establishing a system which facilitates repair and recycling of products at the end of life and work towards a more sustainable solution. These measures will help to reduce waste and dependence on unsustainable resources.”

She explains that one challenge encountered was that the level of contamination at the end of life of some PPE products may not allow for them to be recycled, “however buyers are keen to understand all of the information available from the market and learn from the proposed solutions.” Mary details how she has encountered industries in the private sector who have shown great interest in recyclable PPE products.

Mary tells us that “the whole area of sustainability and circularity is a fascinating one. I developed a great understanding of these concepts and the challenges manufacturers face when developing a sustainable yet disposable product. My colleague in IDDEA, Rebecca Byrne, is an specialist in this area and her expertise was invaluable when facilitating workshop for public buyers.”

Key Takeaways

  1. Innovation procurement brokerage can provide increased opportunities for businesses to bid for tenders where they have solutions to public needs.
  2. Public authorities benefit from being connected with potential providers in the market and have access to new product innovations.
  3. By offering sustainable solutions to public problems, all stakeholders, including the environment, can experience value and success.

 

How to Learn More?

The Catalogue of Best Practices was published by the Innovation Procurement Brokers. This shows different approaches taken by partners and what was successful for them; very valuable learning for other buyers.

PTI promotes innovative solutions and is working to increase knowledge and skills in Innovation Procurement. PTI aims to improve competitiveness and the innovative mindset of Irish organisations in Europe. Please find more information here.

The ‘New Normal’ is the Triple Bottom Line: Changing Trends Emerging from COVID-19 Recovery

In 1859, Charles Darwin’s ground-breaking text, On the Origin of Species, changed the very fabric of scientific knowledge and the way we perceive the natural world. Darwin revealed to the world that ‘it is not the strongest of species that survives, but rather, that which is most adaptable to change.’ A veil had been lifted and a new period of enlightenment began.

Never before, in our modern era, has a lesson from the past held more truth. Recovery from the global COVID-19 pandemic will require the building of businesses and societies that can thrive in the face of continuous change. The lessons businesses are learning during the pandemic are profound; the cost-effective supply chain model revealed its brittle nature, digital business transformation accelerated at lightning speed, innovative agile teams problem solved complex tasks, necessity illustrated what products are truly important, and the planet, in our absence, began to heal. We are living through a turbulent period in history, with climate change, political unrest, and COVID-19 challenging our perceptions of ‘normal’. However, we decide as to whether this can be another era of lifting the veil, of revealing important natural, political, social and business truths to enlighten and improve our ways of life, or, we can revert back to ‘normal’, business as usual, with no lessons learned.

I believe that the veil has been lifted. Today, I hope to give you a look through.

Innovation and Agile Leadership

The current crisis has ignited the spark of innovation often hampered by rigid, bureaucratic structures. The businesses that most aggressively adapted their ways of working have turned the crisis into an opportunity for innovation, solving important social problems. Dyson designed a new ventilator in ten days responding to UK hospital demand, Alibaba built an unmanned store providing essential items for citizens in Wuhan, and Irish spirit distillers are collaborating with the HSE producing alcohol sanitisers for frontline medical workers.

These innovative responses weren’t part of any business plan. Instead, small teams recognised an urgent need, shunned aside unimportant activities, broke rigid bureaucratic structures and adapted their standard operations. This social innovator transformation strengthened both their businesses and society. 47% more business ‘rising stars’ are viewed during periods of turbulence rather than stability, with 89% of ‘sinking ships’ capsizing (Bain, 2020). Agile leadership and innovation appear to be key determining factors in whether businesses sink or swim, while simultaneously brining value to profits and society.

 

Building Resilient Supply Chains: ‘Going Local’

The current pandemic has shown the fragility of global supply chains and the importance of good procurement practices. Market demands for cost competitiveness have put unsustainable pressure on supply chains. This became most evident in the personal protective equipment (PPE) global bottlenecks. The brittle, inflexible, and often obscure nature of these cost-effective supply chains has been laid bare, exposing the need for change.

A Thomas Reuters’ study, on the ‘Impact of COVID-19 on Global Supply Chains’, reveals that 63.5% of businesses foresee nationalism on the supply chain rising. This has important implications for producers and service providers who can avail of this opportunity by offering sustainable, local solutions to businesses who wish to shorten their supply chains. In turn, this will satisfy shifting consumer trends. Euromonitor’s ‘Proudly Local, Going Global’ 2020 megatrend sees consumers valuing home culture and products tailored to local tastes and preferences.

As an open economy, we should avail of our position within the Eurozone and build collaborative relationships with our local European neighbours. As we are an export and import dependant country, cooperative trade relationships within our Eurozone could prove mutually beneficial; export opportunities continue, with supply chains also shortening and strengthen.

Together, businesses and consumers can support local while also availing of the value that they desire. This ‘new buying normal’ can help boost local economies, assist small businesses and start-ups, and add value to the triple bottom line by supporting people, the planet and profits.

 

Technology: The Digital Transformation

COVID-19 has highlighted the importance of digital readiness, allowing businesses to continue operations. Digital technologies are playing a crucial role in keeping our businesses and societies functional and preventing the spread of the virus.

Remote work is redefining consumers daily routines and, as they adapt to life at home longer, drives trends towards ecommerce, home entertainment and new digital experiences. This creates strategic opportunity for businesses across products and services.

Ecommerce and digital marketing must be embraced by businesses if they are to answer to shifting consumer behaviours. L’Oréal responded successfully to the crisis by quickly moving its marketing spending online, seeing e-commerce sales rises of up to 400%. L’Oréal executive, Lumboria Rochet, explains that “we are setting ourselves up for a world where half of the business is e-commerce and 80% of consumer interactions will happen online…In e-commerce, we achieved in eight weeks what would have otherwise taken us three years to do.

B2B buyers are also embracing the digital transformation. Research shows that 70% of B2B buyers believe that virtual sales calls are as effective as in person calls for complex products, with ‘virtual experts’ being presented as new service offerings (Bain, 2020). Digital transformations will be key in building sustained competitive advantage.

Sustainability with Purpose

While researching for this article, I came across an interesting misinterpretation of the Chinese word for ‘crisis’. Many motivational speakers correctly translate the first character as ‘danger’. However, the second logograph does not mean ‘opportunity’, as many believe, instead it translates as ‘a point where things change’, with the derivative being ‘chance, good timing’.

The theme of change is again evident. Now, more than ever before, we have the chance, the good timing, to get things right and recover from this period of danger.

Since the financial crisis of 2008, we have added environmental (climate change, pollution, biodiversity destruction), social (inequality and injustice), and political (Brexit and Trump) crises to our list. We now face the current COVID-19 crisis which has brought us collectively to our knees. Evidently, something is not working. Managing Director of the IMF, Kristalina Georgieva, states that “the best memorial we can build for those who lost their lives to the pandemic is a better, greener, smarter, fairer world.” Realising how past inactions have deepened global inequalities, her proposed ‘Global Reset’, promising mass investment in people, education, society and the planet, again echoes the desire and need for change.

During the pandemic, as humanity halts, nature is healing. COVID-19 is triggering the largest ever annual fall in carbon emissions from burning fossil fuels, heading for an 8% global reduction. Crude oil is close to worthless. The waters of Venice, normally choked with diesel and petrol, are now clear and frequented with dolphins. Lions roam freely on African roads that usually teem with safari jeeps. People in India now see their neighbouring Himalayan mountains for the first time, as the cloak of air pollution lifts.

The call to action is clear. We must embrace this opportunity for a global reset and build a ‘new normal’ where we live in equilibrium with our natural planet.

For too long environmental responsibility has been transferred to the individual citizen and for too long greenwashing has tainted businesses CSR policies. COVID-19 has highlighted humanity’s fragility in the face of nature’s power. We cannot allow climate change to teach us another fatal lesson. The pandemic has also taught us that no one can prosper alone and that collaboration for the common good can be achieved. We must adopt a holistic approach to our businesses, the triple bottom line, and create social, environmental and economic value for all our stakeholders, including our planet.

Ask yourself:

What kind of business do you lead?

What kind of business do you work for?

What kind of business do you buy from?

Is this business promoting the type of ‘new normal’ you want in this world? Or are they inhibiting it?

 

The secret of change is not to focus all of your energy on fighting the old, but on building the new. Together, we can build a stronger, fairer, safer, healthier, planet. Together, we can achieve anything.

 

Written by Marie Muckley

5 Critical Steps to Stop your Supply Chain Disintegrating

This global pandemic we are experiencing is the most significant economic disruption since the 1930s. Apart from the human tragedies every day, we have to consider the global disruption to business in general, and in the supply chain in particular.

In response to that the team at IDDEA are helping companies ensure they have what they need to keep delivering and keep their promises to their customers.

  • Helping a construction company source the materials it needs to build much needed homes.
  • Guiding a transport company to ensure that it can procure what it needs to keep trains on the track.
  • Partnering with a major grocery retailer to keep bread, flour and canned products on the shelves.

Supply chains are under pressure; but the winning companies have developed a Five Point Procurement Plan to increase the resilience of supply and build better relationships with key suppliers. (In many cases they have also achieved significant cost savings, by focusing on the problem.)

Step one: Where do you start? Identify your top suppliers

To assist with strengthening your supply chain, start with the information you have at hand. Look at the data which can be used within your business. Your financial data provides visibility and a window into your supply base; it is the first step in identifying your critical suppliers. This spend information will tell you the story of where you are spending most of your money. It is important to measure these suppliers by spend but also by the risk they pose to your business.

To help identify top suppliers ask yourself:

  • What would happen to my business if this supplier stopped trading?
  • Would there be an immediate impact?
  • Would you experience a supply interruption or how many weeks would it take to impact your business?
  • What are the attributes of your current critical suppliers?
  • How quickly can you change to an alternative?

Any single source supply channel, regardless of spend, may be a potential issue to your ongoing operation.

What supply criteria is key for your business? – it may be cost, quality, delivery or lead-time, service or brand reputation. Make a list of your essential requirements and reference it with your supplier base. Identify your critical suppliers and make a finalised list of who they are.

Step two: Reach out and communicate – suppliers

Once identified, it’s important to stay connected with these top suppliers even if you don’t need to buy currently.

Key questions to ask them:

  • Are they still operating? (and in what capacity?)
  • Have they new ways of working? If so, what are they?
  • Are their strategies changing? (responses to difficult times tells a lot – flexibility, determination to get ahead of competition, etc.)
  • What are they doing to minimise your risk as their customer?
  • How can they support you? (renegotiate credit terms, redistribution of stock, buy back etc.)
  • Can you work together to resolve any issues or think of better ways of working going forward?

Brainstorm to find opportunities within the conversation and ensure you continue to check in with them regularly.

Step 3: Establishing new suppliers – what’s involved?

If you feel you need to explore potential new suppliers, conducting market research will better inform you. Tools like Porter’s 5 forces, SWOT analysis and PESTLE analysis are very useful in conducting market analysis.

Think about the key questions you need to ask potential suppliers. Condition them effectively by developing an RFI (request for information) template.

This should include your important considerations and criteria such as:

  • Do you require quality standards or certifications (e.g. ISO, QS)?
  • Is the supplier financially viable?
  • Will they extend you credit terms and establish a line of credit?
  • What are the costs associated with shipping goods?
  • Is location something you need to consider?
  • What are the tiers of their raw materials?
  • What are their product specifications or technical information?

Also think about the key questions you need to ask yourself:

  • Should you change your sourcing strategies to include a more local approach?
  • How will establishing new suppliers impact your costs?
  • What is your breakeven figure?
  • Can you absorb cost increases, or will you have to increase prices?
  • Will new suppliers impact your brand?
  • What are your competitors doing? Market research into your competitors response can provide interesting insights.
  • Are there government funding schemes available to help with your capital and cash flow?

When you have answered the relevant questions above, finally ask yourself: How can you use this information to bring value to your organisation?

Step four: Reach out and communicate – key clients

Reach out to your key clients and share how you are building supply resilience with them; they will appreciate being informed and knowing that their demands can be met.

Points to discuss with clients:

  • Advise clients on the work you are doing to minimise risk.
  • Listen to their concerns and enquire as to how you can help.
  • Ask can you work collaboratively to joint measure risk and plan for future growth.
  • Inform your clients of the inventory you are holding and ask would they be interested in forward paying for this stock at a reduced cost?
  • Find out if their strategy is changing and find an opportunity for you to be involved, this will help to strengthen your relationship.

Remember, you are the vital link between your suppliers and your clients, and you must endeavour to tighten that chain of supply.

Step five: Use this time wisely

Finally, look at your existing business operations holistically. Companies rarely have time for reflection and observation, now is the perfect time!

To identify what you can improve on ask yourself:

  • What were those initiatives you felt were interesting but never had time to focus on?
  • Do you need to enhance your marketing capabilities?
  • Is there an opportunity for online trading?
  • If you’re already online, is your eCommerce platform fit for purpose?
  • Is it time to enhance your online presence?
  • Can you build specifications to future proof your business?
  • Can you avail of government grants and support to enhance your online platform?

Remember …

Use this time to improve your business and plan for the near future. We will shortly see the return of employees to work and the reopening of non-essential retail outlets. You will need to develop new and innovative ways of working, both in your company and with your suppliers, that are compatible with social distancing.

  1. Analyse your data and making note of your key suppliers and materials.
  2. Collaborate with your suppliers
  3. Communicate with your customers – remember you are their supplier.
  4. Identify risks and opportunities in your supply chain and broaden your supply base. (Look for local opportunities; we all need to help each other and the answer to your supply chain might be closer than you think.)
  5. Use this time wisely.

Finally, remember that we will emerge from this period of uncertainty. What is important now is to take the lessons we have learned to build a stronger foundation from which we will rise and rebuild our businesses. We can be changed by what happens to us, but we will refuse to be reduced by it.

Stay safe and stay strong.

At IDDEA, we are committed to empowering professional buyers to positively impact their businesses through strategic sourcing. Changing buying behaviours can prove challenging, however our strategic procurement framework is proven in bringing success and improving results for businesses. Get more info here: https://iddea.ie/

 

When ”I” is replaced by ”We”

As the Irish nation re-adjusts to life working at the kitchen table, it can be difficult to switch off after ‘’a day in the office’’.

The IDDEA team are lucky in one sense as we have been developing remote working skills over a period of time and working from home is part of our weekly routine. We have a good balance between visiting clients on site and working remotely. I would love to share our top tips for staying connected during these unprecedented times.

Top Tips:

Stay in contact: Zoom or Teams are great media platforms to connect with your colleagues. Iddea schedule a Team’s call every second day to check in with each other and we never leave without a smile on our face. It is great to connect on non-work-related topics and catch up on all the latest Netflix recommendations. If you are feeling demotivated, pick up the phone and contact one of your colleagues as it can be good to hear a friendly voice and its good to know that you are not alone during this isolation period.

Stay Active: Mary Ryan- IDDEA’s eAuction Coordinator aka our virtual fitness motivator has set up a great initiative to get the team moving. She has set up an online tracker whereby we list our weekly workouts. Whether it is the daily household chores or a 2km walk, everything counts and gets tracked. At the end of every month it is very rewarding to reflect on all the good work that you have done! Yoga is also a great way to start your working day and some Instagram handles that have come highly recommended by the Iddea team: ‘’yogawithmaura’’ and ‘’yogaandval’’ both accounts run free daily yoga classes from the comfort of your own home.

 

Come dine with me: You always have the smart (or lazy) ones who take advantage of a situation to create an opportunity. Working from home has its challenges for working moms so our CEO Ingrid proposed to her family to start a “come dine with me” competition where a rota was agreed that every day, everyone different in the household was going to show off their cooking skills. A balanced scorecard was set up to track the performance and criteria such as taste, texture, innovation and presentation were rated. So every few days, food recipes are being discussed on our zoom call and recipes have been shared. And she is happy to share that her youngest 15-year old daughter is showing amazing flavour combinations and is winning by a mile!

Party-Animals: The “Young ones” of our team have their own challenges with social distancing while keeping their social life active. Every time, the “Old ones” in the team are delighted to hear about what new social media game or virtual party was organised. Bingo Loco, which was Ireland’s, go to night out has now launched via Facebook live. Bingo Loco has the same concept as traditional bingo but with a modern twist. Stay tuned to their Facebook page for updates on their next virtual bingo party https://www.facebook.com/bingolocoie/ 

 

Meet the Fockers: We have been introducing our friends and families to one another via Zoom. In many circumstances we are away from our family during covid 19 therefore, we show photographs of our loved ones whom we miss dearly or family members that live in the household pop on the screen and give a wave. We are so close as a team and it is a nice to connect on both a personal and professional level.

Back to the Future: Making a list of future plans to offset somewhat the current feeling of loneliness, anxiety or the general feeling is a great mood-booster: when the “New Normal” starts, the top 3 things I will do is…..! Sharing the big and small things we look forward is very powerful and triggers a sense of hope, excitement and energy. The negative thoughts of cancelled holidays, festivals, foodie experience, city trips and family occasions, we turn in o future plans. Only the positive “what if” scenarios can be talked about and we all get excited about each other dreams. “The Return of Investment” of sharing each future plans is 2000:1 as that is where our hope and future self lies

Staying connected and staying true to yourself, we empower each other in good and hard times. There are 3 choices in life you can make: give in, give up or give it all you got! Finding a way together to give it all you got, will make you stronger. As they say, tough times never last, tough people do. Finding the “we “ in “I” is what we are trying to do at IDDEA. We hope some of top tips of our remote working experience, might work for you. Be well, stay safe, keep close and mind each other.