Wal-Mart’s ethical sourcing – Green does not mean ethical. Despite what Wal-Mart says are some marked improvements at its supplier factories, the retailer’s recent ethical sourcing report is being met with scepticism

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The retailer’s cancelling of contracts, after allegations of exploitation, highlights monitoring issues, writes Roland Gribben of the Telegraph

“Supply chain issues have moved higher up the boardroom agenda as the credit crisis bites deeper amid fears that the economic slowdown will accelerate into a full-blown recession. The conventional safety kit in the shape of belt-tightening and cost-cutting is being rolled out but the uncertainties about the depth and length of economic turbulence leaves most businesses facing a considerable dilemma.

The procurement function has a higher priority and suppliers are under intense pressure to cut costs and accept tougher contract terms at a time when supply chain strategy is assuming new dimensions and the Primark case - contracts were cancelled with an Indian supplier after allegations of labour exploitation - highlights the ethical and monitoring issues and dangers tied to outsourcing in low-cost countries. “I can hear other companies saying ‘there but for the grace of God go I’,” said an industry executive.”

Horses for Sources speaks to Gianni Giacommelli about technology as a business driver for Procurement BPO

“I was recently engaged in an excellent conversation witn Gianni Giacommelli, who leads marketing strategy for SAP’s BPO division, on the way forward for the Procurement BPO market. One of the aspects about SAP that has impressed me, is their strong view of BPO as a opportunity, as opposed to a threat, to their business.”

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A fascinating post by Jason @ Spend Matters on China sourcing and some of the cross cultural issues involved

“I recently came across an interview with an expert from BCG in China Sourcing (the sixth in a series) with some great insights to help understand the Chinese mindset. Among other issues, the story introduces and explains the concept of cheng bao. According to the interview, many Chinese companies like to operate with “arm’s length” contracts that may incorporate multiple parties without the end-customer knowing about all of the parties taking part in the sausage making. The word for this is cheng bao. Here is a great example to explain it (taken verbatim from the piece).”

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Six months after taking up the role as editor of Procurement Leaders magazine, I took a few minutes to catchup with David Rae to talk about some of the key challenges for procurement executives and to compare the profession to that of finance.

This video interview was streamed directly from my phone via Qik, so please excuse the video and sound quality(will use an external mic next time). The great thing about these interview is they are live, uncut and accessed instantly. I am leaving the Hi Definition video to team over at Procurement Leaders. Going forward I will post the date, time and topics of planned interviews so you can join in and ask questions live.

I look forward to hearing your thoughts on the this type of live streaming video and any suggested topics or people to interview.

Whilst searching through the Ariba Spend Management Learning Center , I stumbled upon a very interesting Aberdeen report entitled CPO Rising: The CPO’s Agenda for 2008.

“The CPO on the rise is based upon demonstrated competence: Best-in-Class companies have placed 70% or more of their spend under management. CPOs and procurement departments can adopt and expand technologies and sustainable practices, such as improving internal collaboration and systems sharing; improving supplier relationships; adopting a center-led procurement strategy; and considering Low-Cost Country Sourcing (LCCS). This report addresses many more issues facing the contemporary CPO.”

What interested me the most about this report was the section on Procurement Key Performance Indicators. The report highlights that the ‘Best-in-Class’ enterprises put a greater significance on implemented / realised cost reduction savings and supplier performance (price, delivery, quality, service, etc.), whilst the Procurement ROI (savings / operating costs) and spend under management rank higher with ‘Average’ and ‘Laggards’.

The report goes on to say

“Procurement ROI, defined as annual savings generated by the procurement department divided by the total annual investment in procurement operations, is an interesting measure and one that deserves a discussion given its recent promotion by “consultants” in the marketplace. The measure misses the larger goal of business operations since CPOs, like the enterprises that employ them, should be focused on generating the largest total net return from their department. While Aberdeen views the metric as a decent relative indicator of procurement department performance (when used in context with other KPIs on the list below), it should not be a primary goal for the CPO to maximize this number. Beyond savings and efficiency metrics, 79% of procurement”

Top 10 Procurement Key Performance Indicators (KPIs)

Source: Aberdeen Group, February 2008

Procurement KPI’s is a topic is always passionately debated at the Procurement Leaders Roundtables, Aberdeen’s view seems to make sense but I love to hear, what your thoughts are on this topic. Would there be scope to agree and industry standard?

Picture Copyright: Marcela Barsse

Fieldglass and IQNavigator have been leading the market in the Services Procurement space for the last 6-8 years. However it seems like Jai and his team at Fieldglass have made a very clever move bringing permanent and direct hire functionality to their platform. Previously both solutions focused on providing functionality to manage contract/contingent labour within blue chip companies, streamlining their processes, managing risk and realising substantial costs savings. But in almost all cases their customers would require another system (ATS - applicant tracking system eg. Taleo or Vurv) to manage their permanent recruitment needs. Thus there was no single view of their human capital - both permanent and contract, with hiring managers requiring two interfaces to manage their full time and short resourcing needs.

With the new Insite 5.0 platform, corporates and the recruitment process outsourcing (RPO) providers have a single tool to manage both permanent and contingent recruitment processes. The Services Procurement space always lay between HR and Procurement, so the move to offer them one solution for all their recruiting should be a big positive for the corporates. Procurement in most blue chips is deeply entrenched in the negotiating of agreements with the recruitment agencies and also managing the relationship on an ongoing basis. But permanent recruitment spend is an area where procurement does not have so much input. Thus for first time the unified system should now give the business a single view of its spend of it human capital spend and also manage direct hires.

I presume this change of direction was driven by the needs of the RPO providers in the first instance, as they look to implement one solution to manage new customers human capital spend.  Interesting IQNavigator have taken a slightly different direction by offering their own managed service platform, which would potentially compete with that of the RPO and BPO players. I guess only time will tell which business case will be more successful.

Fieldglass (www.fieldglass.com) - Fieldglass is committed to providing intelligent solutions that help companies successfully acquire contingent workers, services and direct hires. An industry-leader, Fieldglass recognizes the changing organizational landscape and complex challenges that global enterprises face today. With that in mind, coupled with years of technology expertise, Fieldglass delivers award-winning InSite software to meet client needs and exceed their expectations.

IQNavigator (www.iqnavigator.com) - IQNavigator, a global company headquartered in Denver, Colorado and with offices throughout North America, Europe and Asia-Pacific, is the leading provider of managed service programs and on-demand services procurement software. Since its inception in 1999, IQNavigator has become recognized as the vendor-neutral market leader in the highly dynamic and fast-growing services procurement and spend management sector, as measured by new customer wins, global deployments, revenue growth, and customer successes.

So it’s been six months since I stepped down as editor of Procurement Leaders and I have finally succumbed to my need to share my thoughts with the world on the topics which interest my business and personal life.

So what are those topics that interest me?

Procurement - funny enough after spending the last four years facilitating one of the most influential buying communities in the Europe, the focus of Sourcing Excellence will around the procurement and sourcing.  My day job continues to be strategically drive the Procurement Leaders Network forward, by extending the reach of the membership in Europe and into new regions.

Technology - as a self confessed techy geek, technology is going to another key area that I will be regularly writing about. I am a sucker for all the new shiny technology, whether it is new web app that promises going to save me time managing my email or new type of phone to read my email.

Collaboration - this is a really exciting area for me. Over the last few years technology has provided an endless array of ways for individuals and groups to work together and moving forward it is only going to get more engrained into out day to day lives. Whether it is open sourced software like Wordpress (which this blog is running on) or the Wikipedia it astounds me what the collective group can achieve. With this in mind I am going to use the crowd at much a possible to drive sourcing excellence forward.

Sustainability - whether it’s the fact that I am new father, or my back ground in biology or the growing awareness of society as a whole about what we are doing to our planet, sustainability in all its guises is another area that I am passionate about. My day job obviously gives a lot of insight into corporate buying decisions, so sustainable procurement topic area that I will cover regularly.