SIG Speaks Blog

National Change, Local Challenges: Part I

As I write this, the UK is continuing to gear up for its forthcoming (June 8th) General Election, called by Prime Minister Theresa May only two years after the last one, purportedly to enable the British electorate to give the government a clear mandate for its Brexit strategy.  Purportedly this is because many observers believe May's real motive is her hopes of being able to take advantage of the woeful situation in which the opposition Labour Party currently finds itself.

Regardless of the drivers behind the election decision, however, it's true that voters and the country in general continue to wrestle with significant uncertainty regarding Brexit. With Article 50 now having been triggered, there may now be no doubt that Brexit is indeed happening. The UK is leaving the EU in March 2019, but the terms of that departure are still very much up in the air, and the real consequences - economic, political, social, diplomatic - for the nation remain, frankly, anyone's guess.

I recently attended an event in London featuring representatives of local government from across the UK, intended to foster discussion around what Brexit will mean at a local level - and it was immediately clear that at that level as at every other, confusion continues to reign. Again, we have at least the certainty of departure - and the knowledge that a 'Great Repeal Bill' will be drawn up which will ensure that the state doesn't immediately collapse into lawless chaos on Brexit Day by transposing existing EU legislation onto UK law so that the government can then begin to modify that legislation to suit the country's own purposes and desires (rather than having to draw up, ratify and implement thousands of new laws all at once).

Jamie Liddell, Editor, Outsource

RPA: A Brave New World

As I sit here at my desk listening to the glorious whirl of robotic process automation taking place at my feet (my Roomba is vacuuming diligently), I think back to SIG's last Global Summit in Amelia Island and how RPA was at the forefront of our discussions.  

Now, of course not everyone is as fond of certain types of automation.  My dogs for instance, who are getting old, a little deaf, a little blind and a little senile, get spooked occasionally by this little disruptive digitalization in their lives.  And my 4 year-old daughter thinks it's cool, (calls it her puppy) but if it gets too loud or in her way, its process quickly becomes terminated prematurely. 

As I write this my Roomba signals with its happy little tune that it has completed cleaning the room and silence almost ensues, except for the faint hum of my newly installed ceiling fan (it’s a truly glorious sleek modern contraption) and it occurs to me that this too, a more common example of process automation, also brings me great joy, convenience and comfort.  At one point both these items were the newest technology and people doubted their need and also questioned how many jobs would be lost at their hands.  Not unfortunately, these days you do not find too many personal fanners (picture Cleopatra being fed grapes and giant palm fronds), but in its stead fan designers, engineers, installers, repair servicemen and salesmen. And whereas only a small minority of the population could afford a professional fanner back in those days, ceiling fans are common place and found in abundance due to technology and manufacturing improvements, making them less expensive and more easily accessible. 

Liz Mantovani, Sourcing Intelligence Manager

Into the wind…

It was recently announced that full tests of driverless cars will take place on UK roads (including motorways) within the next two years. The UK is lagging in this area behind some other countries, especially the USA, where the likes of Google have been taking automated cars out on public highways for several years. However, it's another landmark for technology which looks set to utterly transform human transportation over the next couple of decades.

At the same time, as I walk along my local High Street the windows of employment agencies are plastered with signs calling for drivers - of vans, minibuses, HGVs; indeed, one agency has only these jobs on display. 

Obviously, any transition to automated vehicles (especially the large ones on which the logistics industry relies) will take time (how much time has yet to be seen, and many issues remain to be decided before the shift can fully take place); however, it seems both interesting and unsettling that anyone approaching an employment office wondering which roles might be most in demand would come away with his or her thoughts pointed towards an industry on the verge of radical transformation involving the eventual removal of exactly those roles currently being yelled for.

A couple of weeks ago, I published a blog entitled ‘Automation and the Human Touch’, looking at some of the challenges the automation revolution is set to throw our way regarding future employment opportunities and the education and training of our next generation(s). That blog provoked some very interesting thoughts from readers:

Jamie Liddell, Editor, Outsource

When Public Sector Outsourcing Doesn't Work…

Over the Easter weekend I had what ended up being a rather disturbing conversation with an old friend, which I thought sufficiently relevant to this space to share with you. This friend has very recently started a new job, working in an outsourced contact center providing advice to, and processing applications by, users of local (public sector) health and social services (I need to be relatively vague here, for obvious reasons...).

One of the main tasks she has to perform is vetting people who call looking to get access to one particular healthcare-related service. Due to the nature of this service, applicants are invariably over pensionable age (65, more or less, here in the UK) and suffering from illnesses or disabilities that restrict mobility - this is an important point: we're dealing with some pretty vulnerable people in (often serious) need. My friend has to take them through a survey and, at the end of the call, inform them whether or not they've qualified to receive this service.

The problem - one of the problems - is that certain responses to some of the survey questions can disqualify applicants outright. My friend explained some of these to me and, frankly, it's an outrageous situation. For example, applicants who say they're using certain medical apparatuses which haven't been prescribed by their General Practitioners (GP) won't qualify, even though these specific items are the kind of thing one might buy oneself, be given by relatives/friends/charities or procure in some other way simply because they're useful, rather than even considering going to the GP to be prescribed them.

Jamie Liddell, Editor, Outsource

Is There a Huge Hidden Cost to Retail Innovation?

The mini-supermarket at the bottom of my road is closed for a couple of weeks for refurbishments (this may seem like an incredibly mundane topic with which to start a blog, but bear with me). The signs announcing this closure were only put up a couple of days beforehand, and somewhat surprised I asked the cashier - with whom, like many in my neighborhood, I have a friendly relationship – what was behind the chain. The shop is part of a very large national chain, but has a "local" atmosphere unlike, in my experience, most such establishments. She replied that the shop is being redesigned to include several self-serve tills - and was, of course, unwilling or unable to answer when I inquired if that means job losses amongst the current staff.

An elderly man being served next to me then said something which got me thinking: "It's computers, isn't it? Everything will be run by computers soon, and there'll be nobody left to talk to." In this particular instance, at least in the short term, that gentleman was of course being premature - that shop will still have a complement of human staff, and won't be entirely based around self-serve points of sale (POS) - but there as everywhere else in the country, technology is driving vast change in the retail sector, with ramifications that go far beyond that industry and which have the potential to affect the whole fabric of society.

Jamie Liddell, Editor, Outsource

Mexico: Top Destination for Engineers?

Over the years, Mexico has had its fair share of negative headlines due to drug trafficking, violence and more recently because of the recent elections. Mexico is painted as a dangerous country that should be avoided. Unfortunately, this outdated, negative view is one that many Americans, as well as others around the world, still hold on to despite the fact that it doesn’t come close to matching the reality. Don’t believe me? Keep reading and I’ll see if I can change your mind.           

It may be surprising to many that when it comes to producing talent in engineering, manufacturing and construction, Mexico ranks as the 8th highest in the world. When interviewed in June, former president Bill Clinton weighed in on the issue, “All we read about is the violence and the drug war,” said President Clinton. “The truth is that the previous president built 140 tuition-free universities. Two years ago, the Mexicans produced 113,000 engineers. We produced 120,000. They’ve had very brisk growth.” This growth that the former president mentions doesn’t seem to be slowing down any time soon either. From 2005 to 2012, the percentage of students graduating with degrees in engineering increased from 15.5% to 21.3% and is still continuing to grow steadily.

Brittany Miller, Marketing Analyst, SIG

Part II - Does Outsourcing Really Need Better PR?

Last week I posed the question of whether or not outsourcing needs better PR. In this follow-up, I continue the dialogue.

Because we're not short of positive perspectives on outsourcing: again, anyone attending even one SIG Summit would come away with plenty of evidence for its value, and the outsourcing community and media such as Outsource have more than enough material to make an overwhelming case for why the model has been a good - a great - one for organizations right across the size spectrum. But the benefits aren't confined to individual companies: a wealth of scholarly work has been carried out to demonstrate how, in direct opposition to the assertions of its detractors, outsourcing (even offshoring) is good for those very economies it is supposedly corroding.

A 2006 Harvard University study entitled 'The Politics and Economics of Offshore Outsourcing' articulates the truth of this superficially counter-intuitive position very nicely. Authors Gregory Mankiw and Phillip Swagel found that "outsourcing appears to be connected to increased US employment and investment rather than to overall job loss. Some US jobs are certainly lost to other countries. On the whole, however, firms involved with offshore outsourcing are not shifting net jobs overseas but instead are creating jobs both in the United States and in other countries... Outsourcing will create winners and losers, and the pain of dislocation will be real for workers and their families. Taken together, however, these conclusions suggest that offshore outsourcing is likely to be beneficial for the United States as a whole."

Jamie Liddell, Editor, Outsource

Part I - Does Outsourcing Really Need Better PR?

A recent episode of 60 Minutes investigating outsourcing and the increasingly under-fire H-1B visa program in the USA has prompted a good degree of debate on social media and elsewhere, about this always-controversial practice. As readers of SIG blogs (and indeed members of the sourcing and outsourcing community globally) will need little reminding, outsourcing and its practitioners present an easy target for anyone with an economic axe to grind looking for someone or something to blame for the perceived ailments of the American (or any other) economy, especially unemployment: those giving voice to the old lament that outsourcing (conflated, of course, with offshoring) "sends our jobs overseas" now also point to the H-1B visa and charge those companies not "guilty" of exporting jobs with the equally heinous crime of keeping them onshore but giving them to foreign workers instead. 

Yet despite decades of such negative PR the model continues to prove an indispensable tool for organizations large and small. Earlier this month, to take just one recent example, Lloyds Banking Group in the UK announced plans for a £1.3bn ($1.6 bn) ITO deal with IBM which will see over 1,900 jobs transferred to the latter; the deal is intended to save approximately £760m ($948 bn) in costs, according to the Financial Times  (which, incidentally, quoted the Lloyds Trade Union - "which is no longer recognized by the bank" - as writing to its members that "staff transferred to IBM will be kept on for a year but most would be laid off within four years and replaced by cheaper, offshore workers").

Jamie Liddell, Editor, Outsource

Can you speak the language of sourcing?

I have always valued the power of communication. When I entered college, I didn’t know exactly what I wanted to study. I realized that although I was “good” at many things in school, there was one thing I excelled at – communication. I was a strong writer, and an even stronger speaker. I saw that when most of my classmates dreaded speaking in front of others, that I always enjoyed the experience, and was excited by it. This was the turning point when I decided to focus my career in communications and marketing.

The power of effective communication cannot be underestimated. It is a critical component of life. I’ve seen the impact of effective and ineffective communication in many types of businesses. Ineffective communication has the ability to break businesses. If you can’t communicate effectively with your customers, your intended messages won’t be received or understood – it’s like you’re speaking an entirely different language from them.

So how can you speak the same language as your sourcing clients?

I’ve worked with many companies that provide services and solutions to sourcing and procurement professionals. It’s very clear what separates the successful providers from the rest of the pack – effective communication with their clients. In order to serve and advise sourcing clients in the best way possible, your team must be able to communicate to them through a common language of sourcing. It’s not just about being highly knowledgeable and educated on all things sourcing, it’s about effectively communicating by speaking their language.

Here’s how you can grow your business and better serve your clients through effective communication:

Heather Young, Senior Marketing Manager, SIG

Equivalent Revenue: “Added Value” By Another Name

Traditionally, one of the inherently daunting challenges in Procurement and Sourcing is to quantify and report on cost savings, cost avoidance and/or cost reductions, which can be collectively referred to as "added value."  One very effective way that I have been able to successfully communicate added value and metrics to many C-suite members is by positioning it in a different way. I have found that by using the terminology and calculation for “Equivalent Revenue,” it is generally better received. Since it is a much more common business term and quantification, the C-suite can relate to it and it can be directly measured against the company’s overall revenue. As such, it is more widely accepted than trying to describe such value as only cost reductions or savings. 

Perhaps most importantly, it is really as simple as taking the actual quantified “added value” and dividing that figure by the company’s overall net profit. A quick example: If the total aggregate added value amount is agreed to be $10 million, and the company’s overall net profit margin is 8%, the Equivalent Revenue needed to generate the same amount of that net profit would be $10 million divided by 8%, which equals $125M.  By representing the figures in this light, C-suite members can readily identify and appreciate how much time, effort and expense would be needed to generate the same amount of sales revenue, and therefore clearly recognize the importance of an efficient and effective Procurement and Sourcing organization. 

Guest Blogger, Dave Gallaer, Head of Procurement and Sourcing, NatWest Markets/Royal Bank of Scotland Securities, Inc.

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