Delays in payments are a common problem across many industries today and can sometimes result in disastrous consequences.

Historic Manchester-based building services company Barratt, went in to administration in November last year after several contractors withheld payments worth £3million, which resulted in job losses and eventually the demise of the company after administrators failed to find a buyer.

Suppliers and sub-contractors are often left to bear the brunt of a collapse, Barratt’s vendors are no exception-with predictions that claims will amount to almost £2million.

While late payments are frequent in business transactions; many companies now use eProcurement software to enhance supply chain visibility which can help in monitoring payments as and when they are due. Feature-rich systems can even provide detailed information about suppliers by capturing contract reviews, payment-term adherence, KPI’s and SLA’s.

Supply management reported on the Capgemini Executive Insight Survey, which found that 29 per cent of the US companies surveyed had experienced negative repercussions caused by delayed supplier payments, including damage to growth and impacts on revenue, proving that a small postponement can certainly have a dramatic knock-on effect in an organisation.

The need to stimulate cash flow has never been more important-with many businesses struggling on the back of the recession and with talk of a double-dip on the way, ensuring supplier reliability will be an important factor in successfully achieving savings and meeting targets in procurement this year.

Cost cutting is a huge priority for 2012, and with cutbacks looming, procurement teams will need to make savings wherever possible.

‘Procurement contract Lifecycle: assessing the value of contract automation’, a report conducted by research company Aberdeen Group, highlighted that organisations are missing out on making savings by ignoring the benefits of automated contract management.

The report, based on a survey of 130 organisations, found that many of those questioned are limiting their visibility of spend and contractual commitments by instead relying on old-fashioned, labour-intensive, paper processes.

Missed cost savings, poor compliance and failure to meet legal and business obligations are all implications of a poorly managed contract management system.

Automated contract management systems can deliver control for any type of business agreement by providing the functionality for buyer and supplier collaboration, leading to consistent, easy to reference documents that deliver transparency throughout the entire contract lifecycle, as well as helping in monitoring supplier performance.

Both the public and private sectors have reported benefits including cost savings, improvements in quality of services and achieving better value for money since implementing automated systems.

Aberdeen Group’s report has recommended that companies should adopt more technology to automate contract management and establish a central repository for all procurement contracts, a move which would undoubtedly help organisations in increasing visibility of agreed commitments while providing further opportunities to monitor savings across the business.

Supplier relations have always been important to buyers but it seems that in the present economic climate, it is more crucial than ever to ensure that relationships between businesses and their supply chain remain healthy and free from corruption.

The Supply Management Reader Research Survey 2011 concluded that procurement professionals will be concentrating on cost cutting and supplier relationship management as key priorities throughout 2012.

Some organisations have already started to introduce new measures to help create more transparency in their supply chains.

The notoriously secretive software company, Apple, recently published a list of its suppliers in an effort to tackle criticism over how workers are treated; proving that unsatisfactory supplier relations can certainly generate negative publicity.

The company has also announced that it will be handing over auditing power to independent, non-profit organisation, the Fair Labour Association (FLA) in an attempt to provide unbiased audits across the whole of Apple’s supply chain.

In another example of a company striving to improve supplier relations, builder’s merchants Travis Perkins recently announced that it has invited staff from key vendors to work alongside the head office team. This is a move not too uncommon, with retailers Tesco and Walmart both reporting supply chain improvements since inviting suppliers to work in-house.

With enhanced supplier relations proving to benefit businesses, more may start to look in to increasing communication across their supply-chain.  Where it is not possible to work alongside suppliers, buyers may find eProcurement, eSourcing and contract management software to be beneficial, providing online supplier portals where suppliers and buyers can collaborate and control catalogues, contracts, invoices and other supporting documents.

With cost-cutting a high priority for procurement professionals this year, it seems that improving relationships, communication and trust with suppliers will prove to be a tactical move in helping to meet those savings targets.

Outsourcing has been a common topic for discussion in the procurement industry in recent weeks- this is perhaps due to the mixed bag of opinions that arise when it comes to weighing up the positives and negatives of sourcing products, services and whole departmental functions from external suppliers.

Logistics software company Freightgate conducted a study on trends for 2012 which concluded that supply chain and logistics outsourcing are set to become increasingly popular over the course of the year, with an increasing demand for better collaborative business processes said to be at the heart of the predicted trend.

Peter Smith started the New Year with an article in the UK Spend Matters blog titled ‘Why the public sector needs more outsourcing’ which has since sparked a series of discussions on the whole issue of outsourcing in both the public and private sectors.

The economics of outsourcing have long been disputed among buyers; mostly because of the costs associated with obtaining products and services from external suppliers. But there are also ethical factors to consider - unsafe oil rigs, poor railway maintenance and sub-standard cleaning in hospitals have all been associated with the culture of outsourcing, problems which can generate bad publicity as well as preventing organisations from achieving their (often well-publicised) CSR policy.

While procedures and software can be implemented to help organisations effectively monitor and measure the standards and costs of external suppliers, it is important to ensure that the right balance across quality, efficiency, responsibility and costs is achieved for outsourcing to meet the original needs and organisational objectives.

As the country prepares to hold its first Olympic Games in over 50 years, procurement teams across the UK are gearing up for the huge challenge that lies ahead.

Accelerating costs have so far been a major source for criticism with the original budget of £3.4 billion almost trebling to reach £9 billion.

Where some industries are worrying about meeting the enormous increase in demand, the food and drink sector is confident that the games will provide a much needed boost to the economy, provided effective planning is put in to place.

Food Manufacture reported that the food and drink supply chain has already started to implement these proposals-by making preparations with logistics companies to ensure the successful transportation of goods during the predicted gridlock of traffic that will impose upon London over the summer.

In a recent interview with Supply Management, John Armitt, chairman of the Olympic Delivery Authority, described the job of the Olympic procurement team as ‘one of the biggest challenges of any project in the UK’. The fact that the project is in the public spotlight and has a large number of stakeholders means that it will be under tight scrutiny which will no doubt increase the pressure upon the procurement teams to ensure that they perform.

Supply chain disruption has also been cited as a major cost implication on the games. The Financial Times reported that 93 per cent of UK businesses are expecting the games to have a negative knock-on effect which includes experiencing problems in their supply chains. 

Purchasing teams will be looking to rely on eProcurement functionality and features such as supplier portals for rapid and effective selection and communication with suppliers and reporting and forecasting tools to help tackle the increase in demand and disruption that the games could cause.

With such an opportunity for all industries to benefit from the surge in demand and substantial increase in revenue, it is important that procurement teams are well prepared for any problems that could arise.

Over recent weeks the price of oil has been increasing at an alarming rate and with no sign of it slowing down, experts are predicting it could be a major cause of economic disturbance in 2012.

BBC News reported (03/01/2012) that Brent crude closed at $112.27 a barrel, up $4.89 on the day, while US crude was up $4.13 to $102.96.

Encouraging economic data published from the US, China, India and parts of Europe boosted hopes for global recovery and is being partially blamed for the shoot up in prices.

Another damning factor is the possible embargo on Iranian oil exports which was suggested by EU foreign ministers in an attempt to persuade Iran to halt its controversial nuclear programme. It is likely that the tensions in Iran will further increase pressure on governments and businesses to enhance fuel efficiency and seek alternative energy sources.

Supply Management reported last year that investment banking firm Goldman Sachs predicted that a barrel of oil would cost $140 by the end of 2012- the current price is worryingly, not too far from this benchmark. The implications of such a significant price increase would no doubt have a dramatic impact on the logistics sector which would then have a knock on effect for many industries across the world.

With oil costs rising at an astounding pace, money needs to be saved elsewhere –this may mean buyers reducing margins on products and services or a more likely scenario of buyers passing the rising costs on to their suppliers. Making savings wherever possible will be high on the agenda for procurement professionals in the coming months, as businesses fight to keep costs down and minimise the effect of soaring commodity prices.

As we approach this year’s festive period, the question of whether or not to offer corporate gifts is one that is on many suppliers’ minds.

The first UK Bribery Act was passed this summer, bringing with it a whole host of grey areas and confusion- just accepting a gift can now land a company with a hefty fine or even a criminal conviction. Price Waterhouse Coopers has suggested that the act will give the UK one of the most stringent anti-corruption laws in the world.

The procurement sector is one in which it is common practice for suppliers to buy gifts for their customers at Christmas, but this looks set to change now that the new law is in place.  The act was brought in to effect in an effort to bid farewell to procurement corruption and to provide a level playing field for smaller suppliers that cannot offer the extravagant gifts of their larger counterparts.

Companies have been advised to implement adequate procedures to help prevent acts of bribery; failure to do this could include penalties such as a strict liability conviction, an unlimited fine or even exclusion from participating in tender processes.  Under the Proceeds of Crime Act, a contract entered in to as a result of a bribery offence can be immediately withdrawn, a penalty which could be all too destructive to businesses in the current economic climate.

As reported in Procurement Leaders, Andrew Gordon, head of investigations at PwC Forensic Services said that buyers should proactively make vendors aware of their gift policy and noted that the onus is placed on companies for the establishment of appropriate standards.

The Bribery Act does allow for ‘reasonable and proportionate’ corporate hospitality, but the confusion comes in that these words are highly subjective and therefore open to interpretation.

Has the Bribery Act caused any problems for you as a procurement professional this Christmas? Has your company decided to adopt a gift policy? We welcome your comments.

This year has seen many eSourcing success stories, with both public sector bodies and private companies revealing huge savings following successful eAuction events.

Norfolk County Council revealed that it saved around £218,000 from just two electronic auctions for transport services and the Guardian Government Computing Network reported that an eAuction attracted around 60 operators for contracts to conduct services on 33 school run routes.

At Wax Digital, we have seen our clients drive successful sourcing savings through our on-demand web3 eSourcing platform, which can be delivered as either a managed or customer-driven event.  Oxford University and Friends Provident are amongst customers that have achieved average savings of 37% by utilising eAuctions.

As eTenders and eAuctions are now widely recognised as tactical and strategic tools to enhance savings, it is a great time for us to announce that our web3 eSourcing platform is now available in 10 different languages; Chinese, Dutch, English, French, German, Italian, Polish, Portuguese, Spanish and Turkish. Purchasing from overseas suppliers has become somewhat a necessity in many industries to source the best value products, which means that being able to transcend language barriers between buyers and suppliers is now more important than ever.

It has been an exciting year for eProcurement and eSourcing and with another dip in the sea of recession predicted, it is likely that the popularity of eTenders and eAuctions will continue to grow in 2012, providing a helping hand to businesses and helping to achieve savings when they need them most.

Helping to reduce the effects of climate change has become a huge responsibility for big businesses and in recent years companies have been looking deeper in to their supply chains to source the most eco-friendly products in an attempt to minimise their impact on global warming.

The toy manufacturer Hasbro has recently published its core list of suppliers in an effort to encourage transparency and to address corporate social responsibility principles in its supply chain. Other large companies such as Nestle and Coca-Cola are also planning ways to decrease their carbon footprint.

The Drinks Business Review reported that Coca-Cola will be investing £50million into three of its UK facilities to help reduce water consumption and to provide new machines that will help decrease the need for cardboard packaging. Nestle Waters has splashed the cash too, spending £35 million on a new eco-friendly factory in Derbyshire. The company aims to significantly reduce the site’s total energy output and to also reduce the amount of water used in manufacturing.

So many big names are making a conscious effort to ‘go green’ and it is likely that more will follow suit over the next 12 months. With energy and water consumption becoming a major concern around the globe, there is no better time for companies to focus on managing their supply chains to enable them to purchase from the most environmentally-friendly sources possible.