Transform Your Procurement Process
Procurement has become something of a hot topic in the current economic climate; whether that be public sector procurement or e-procurement. Companies...
Procurement has become something of a hot topic in the current economic climate; whether that be public sector procurement or e-procurement. Companies and governments have been focused on finding savings in the supply chain process where they can, and procurement is often the solution.
With that in mind, Supply Chain Digital has researched the best advice for companies looking to transform their procurement process. These tips should help guide businesses that are new to procurement, and also those who simply want to refine their existing procurement operations.
Zycus, which specializes in spend management technology, recently published a white paper entitled A 4 Step Guide to Procurement Transformation. The paper identifies the four key areas of transformation:
1. Ensure seamless integration between your spend management systems to ensure maximized savings.
2. Integrate and automate the entire supplier management process from supplier discovery to supplier performance management.
3. Entail central level management support and utilize automation to ensure alignment of procurement goals and organizational goals.
4. Ensure easy to use solutions and easy to adhere processes to get employee buy-in and guarantee transformation.
Automation not only streamlines business operations but can help companies to make significant cost savings. In its white paper, Zycus continued: “An integrated spend management system can create a continuous cycle of savings. The automation of processes will help identify, realize and negotiate on the identified savings as well as enforce process compliance.”
The Local Government Task Force Guide Ten Top Tips for a Successful Procurement Process (www.bipsolutions.com/pdf/tentoptips.pdf) takes companies step-by-step through what can be a complex process to navigate. Its tips are:
1. Spend plenty of time planning
2. Establish roles and responsibilities
3. Ensure transparency of proceedings
4. Observe legalities
5. Accommodate innovation and secure Best Value
6. Prepare sound and complete tender documents
7. Consider monitoring and payment arrangements at the outset
8. Ensure procedures provide for probity and accountability
9. Think before you act
10. Learn from the process
The same advice applies to procurement on a local, national and international level. Observing legalities and regional laws and regulations is vital for companies that choose to procure from other countries. All too often, the process fails where organizations have ignored or just have not recognized local business practices.
Mark Masterson, Capgemini Procurement Services’ (formerly IBX) UK Director, told Supply Chain Digital that procurement should be all about creating value and driving up overall value specifically.
So if you are planning to refine your company’s procurement process, start by breaking the process down into manageable parts. That way, you can map out the exact route to achieving your overall target, whether that be increasing value, reducing costs or streamlining operations. As the saying goes: Fail to plan, plan to fail.
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.”