Archive: July, 2014

Doing the sums on opportunistic behaviour

I was recently invited to write an article for Outsourcing magazine. It is a resource that provides news, views, analysis and thought-leadership for a global outsourcing community of 50,000 people. Given the long and complicated relationships that are a feature of outsourced contracts, I chose to explain some of the behaviour that occurs by referencing game theory. The article was published yesterday and is called “Doing the sums on opportunistic behaviour

Sustainability

I attended a very interesting series of presentation on sustainability last week as part of the CIPS Fellows’ Summer Dinner.  The presentations highlighted three trends that are forcing sustainability to the top of procurement’s agenda.

Firstly, rapid population growth is putting increasing pressure on resources. The global population growth rate is 1.1% per year (which equates to a net gain of 75 million). The global population has grown from 1 billion in 1800 to 7 billion in 2012. It is expected to keep growing to reach 10 billion by the end of the century.

Secondly, globalisation has given rise to extended supply chains. These are more risky because they are more difficult to manage and suppliers are increasingly likely to be located in areas affected by climate change. For example, crops are increasing grown in areas that used to be covered by forest. Deforestation changes the weather patterns leading to long periods of drought followed by short period of heavy rainfall. Both of these make the supply chain more vulnerable by damaging the crop yields.

And finally, the growth of social media has enabled people to communicate much more effectively. As the Supreme Court Justice Louis Brandeis said in 1913 “sunlight is said to be the best of disinfectants”. Social media is used to topple governments such as Egypt. It is also used to damage the reputation of brands.

Steve Kenzie from the Sustainability Hub talked about the UN Global Compact’s ten principles. They cover the areas of human rights, labour, the environment and anti-corruption. This provides a useful framework we can use to think about sustainability. The Compact is not without its critics, for example, you don’t have to look far to find out how Nike and Nestle, to name but 2, have used the Compact to cover up poor business practices. The Compact does, however,  encourage businesses worldwide to adopt sustainable policies and to report on their implementation.  As a result it has become the world’s largest corporate citizenship initiative.

On a more practical note, Martin Chilcott from 2Degrees explained how his platform enables buyers and suppliers to share ideas. 2Degrees claims to be the world largest community for sustainable business with 41,000 professionals working together to solve sustainability issues.

Some sectors are starting to look seriously at sustainability. Agriculture, FMCG and retail are the most exposed and therefore appear to have done the most. Airlines and pension funds are also stepping up. Sustainability is one of the more complex areas for procurement to manage and we have only just started to think about it.

http://www.unglobalcompact.org/

https://www.2degreesnetwork.com/