Ivalua: procurement teams impacted by lack of digitisation
The research, conducted by Vanson Bourne on behalf of Ivalua, reveals that procurement, supply chain and finance professionals are spending 31% of their time dealing with inefficient and outdated paper-based and manual procurement processes which restricts procurement department’s time to provide greater strategic value. It was also found that 66% of all businesses surveyed believed its operations still relied on paper-based processes as part of their respective procurement strategies. These figures cost UK businesses on average approximately £1.9mn (US$2.3mn) annually.
“Against the backdrop of an increasingly dynamic market, featuring Brexit and growing trade friction between the US and China, the role of procurement is becoming increasingly important,” said Alex Saric, smart procurement expert at Ivalua. “Procurement is perfectly placed to help manage this growing risk landscape, support innovation and create sustainable cost savings. However, the lack of digitisation is holding procurement teams back. Whilst functions such as accounting and marketing have embraced digitisation and made great strides over time, procurement at most organisations has remained a digital laggard, leaving many businesses unprepared to face today’s rapidly shifting business landscape.”
Considered a leader by Gartner, Ivalua’s Source-to-Pay suite is utilised by more than 300 companies worldwide. With Ivalua’s findings showing that significant work still needs to be done in the area of digital transformation in the supply chain space, there has been progress made to rectify these figures. The survey showed that 97% of businesses surveyed are investing in technology to further accelerate digitisation, with the key focus areas being: data analytics with 67%, cloud-based platforms experiencing 62% and artificial intelligence (AI) featuring 40%. The data also found that purchasing, invoicing and budget management are considered the top three digitised processes, however, organisations have only managed to digitise 45% of their total procurement processes so far. Supplier onboarding, sourcing and contract management are currently believed to be the three least digitised processes. With 85% of all respondents believing that procurement and supplier management are less digitally mature in comparison to other business functions, Ivalua’s report believes that there is still a way to go until businesses become fully digitised.
EU and US agree end to Airbus-Boeing supply chain tariffs
The EU and US have agreed to resolve a 17-year dispute over aircraft subsidies, suspending tariffs on billions of dollars' worth of goods that have plagued procurement leaders on both sides of the Atlantic.
Under an agreement reached by European Commission Executive Vice-President Valdis Dombrovskis and US Trade Representative Katherine Tai on Tuesday, the tariffs will be halted for a period of at least five years.
It will bring an end to punitive and disruptive levies on supply chains that have little to do with the argument, which became embroiled in the trade battle. Businesses on both sides of the dispute have been hit with more than $3.3bn in duties since they were first imposed by the US in October 2019, according the EC.
The US imposed charges on goods upto $7.5bn in response to a World Trade Organisation ruling that judged the EU’s support of Airbus, its biggest aircraft manufacturer, unlawful. A year later in November 2020, the EU hit back. The WTO found the US had violated trade rules in its favourable treatment of Boeing, and was hit with EU duties worth $4bn.
In all the tariffs affected $11.5bn worth of goods, including French cheese, Scotch whisky, aircraft and machinery in Europe, and sugarcane products, handbags and tobacco in America. Procurement leaders on both sides of the fence were forced to wrestle with tariffs of 15% on aircraft and components, and 25% on non-aircraft related products.
Boeing-Airbus dispute by the numbers
- The dispute began in 2004
- Tariffs suspended for 5 years
- $11.5bn worth of goods affected by tariffs
- $3.3bn in duties paid by businesses to date
- 15% levy on aircraft and 25% on non-aircraft goods suspended
Both sides welcome end to tariffs
European Commission President Ursula von der Leyen branded the truce a “major step” in ending what is the longest running dispute in WTO history. It began in 2004.
“I am happy to see that after intensive work between the European Commission and the US administration, our transatlantic partnership is on its way to reaching cruising speed. This shows the new spirit of cooperation between the EU and the US and that we can solve the other issues to our mutual benefit,” she added.
Both aircraft manufacturers have welcomed the news. Airbus said in a statement that it will hopefully bring to an end the “lose-lose tariffs” that are affecting industries already facing “many challenges”. Boeing added that it will “fully support the U.S. Government’s efforts to ensure that the principles in this understanding are respected”.
The US aerospace firm added: "The understanding reached today commits the EU to addressing launch aid, and leaves in place the necessary rules to ensure that the EU and United States live up to that commitment, without requiring further WTO action."
This week’s decision expands upon a short-term tariff truce announced in March this year. The EC says it will work closely with the US to try and further resolve the dispute, establishing a Working Group on Large Civil Aircraft led by each side’s trade minister.
Airbus last month signalled to suppliers that post-pandemic recovery was on the horizon, telling them to scale up to meet a return to pre-COVID manufacturing levels. “The aviation sector is beginning to recover from the COVID-19 crisis,” said Airbus chief executive Guillaume Faury, adding that suppliers should prepare for a period of intensive production “when market conditions call for it.”