Subscribe via E-mail

Your email:

Contributors

Some of the key contributors to this blog will include (but not limited to):

  • Matthew Eatough, CEO
  • Guy Strafford, Chief Client Officer
  • Tom Lawrence, Chief Communications Officer
  • Vinod (Vinny) Patel, Commercial Director
  • Chris Gayner, Head of Marketing

Latest Posts

Recommended Reading

Posts by category

Connect with us

Proxima Blog

Current Articles | RSS Feed RSS Feed

In the News | Clippings from the Week

Posted by Guy Strafford on Fri, Jun 10, 2011 @ 07:54 AM
  
  
  
  
  
Guy Strafford - buyingTeam

I thought it worth sharing some comments on a few clippings that landed on my desk over the past week.

Labour Arbitrage Losing its Lustre?
The latest BCG Press Release highlights some critical trends in the outsourcing world. First and foremost, the shift towards outsourcing for business effectiveness rather than purely efficiency gains.

The press release discusses China’s continually growing labour costs with expectations that by 2015 labour costs in the US and China will have converged. Over the next 5 years we can expect to see global businesses, who have traditionally capitalized on these low labour costs, to instead turn their sites towards right-sourcing and near-shoring, focusing on delivering their offering better than their competitors rather than cheaper.

Original Press Release: Made in the USA, Again: Manufacturing Is Expected to Return to America as China’s Rising Labor Costs Erase Most Savings from Offshoring



Centralisation of “Bonkers” Whitehall Procurement
Francis Maude has recently announced “a compulsory centralisation of Whitehall procurement” and that the government will open up its market to SMEs, scrapping the ‘onerous’ pre-qualification process which has locked out many SMEs to date.

Overall this is a long overdue decision which will no doubt enable the Public Sector to work more effectively with the Private Sector. Francis Maude made the comment “better procurement is a way of saving money that doesn’t cost jobs and does protect frontline services”. However, speculation around the need to change the very core behaviours rooted in years of legacy may make or break this project – does the government have the right skill sets internally to get the job done?

Original Article: Procurement rethink to save £3bn



Retail Woes Continue
It seems that UK retailer’s woes continue to plague the front pages of press week after week. This week, within the FTSE 100, M&S, Home Retail Group (Argos) and JD Sports Fashion are among the latest to post a sharp decline in sales (profits).

With little sign of positive change to consumer spending behaviours, forecasted rising inflation and continually fluctuating commodity prices, how actively are UK retailers looking for alternatives to impact bottom-line figures? Surely it is insane to think that closing stores, reducing headcount and pushing out more promotions to drive footfall is enough to wade through these murky economic waters.

Michael Douglas’, in Wall Street, eloquently defined insanity as “when you do something wrong repeatedly and expect a different result”* - I think this definition applies in this instance.

* this quote was actually coined by a well known chap by the name of Albert Einstein.

Original Article: London Open: Retailers slide as sales decline

Tags: , , , ,

Comments

Labour Arbitrage has not been a sufficient business case for the last 3 years, in fact today its it cost neutral , and the best case study ive seen is that you can near shore from the UK to Ireland cheaper than offshore to India / china. Might as well keep it on shore in the UK or US , save your £$ & headaches.
Posted @ Monday, June 13, 2011 10:48 AM by John Vasili
Very interesting to see these things come back or swing back to the middle. Big question however, is... Are Americans ready to do this sort of work for those sort of wages again. To many seem to be staying on unemployment b/c it makes them more money.
Posted @ Monday, June 13, 2011 12:47 PM by Ted Weyn
Public procurement has for many years been dogged by unnecessary administration and paperwork. If you consider selling anything to the NHS it is amazing how many documents are required to make a simple purchase. If we assume that every document must have a home somewhere it does look very much as though we are creating a paper trail to create more employment. Whilst you can expect that in low cost labour markets such as China where they seem to have administration down to a fine art, having the same in a "developed" part of the world simply adds significantly to cost. If private companies worked as inefficiently they would soon be out of business 
Many SME's just simply do not have the will to jump through all the hoops. Don't forget that additional administration costs them margin
Posted @ Monday, June 13, 2011 1:11 PM by Adrian Allen
Like anything else in the public sector, this change will take a long time to take effect. People generally don't like change and have a tendency to stay within their comfort zones. The OJEU process, like it or not, provides this comfort blanket and I believe, as a result, it will take a great deal of pressure from above to enact the changes that Maude is looking for.  
 
Whether centralisation is the key remains to be seen. This does tend to conflict with the localism/ SME agenda. Interesting time ahead!
Posted @ Tuesday, June 14, 2011 3:36 AM by Tony Lockwood
Ted, I agree, will locals do the type of work required to make their country great???
Posted @ Tuesday, June 14, 2011 3:39 AM by John Vasili
I suppose UK centric and with invisible barriers for other EU country suppliers?  
 
The civil servant mentality is tough to change.
Posted @ Tuesday, June 14, 2011 10:41 AM by Alexander Kopriwa
Alexander - that's a very jaundiced and in my opinion, inaccurate, view of British civil servants. What evidence of 'invisible barriers' do you have?
Posted @ Thursday, June 16, 2011 2:44 AM by Bernard vanHaeften
Well not much to be honest - but I see this all over the world so why should British civil servants be better than the French, Germans or Swedish?
Posted @ Thursday, June 16, 2011 2:45 AM by Alexander Kopriwa
I will not comment about other nationalities as I have not worked with their civil service, but I did spend 4 years providing procurement advice to the UK Public Sector.  
 
While I had reservations about the purchasing competencies of some of the people I met, the systems and governance processes in place would prevent any contract being awarded on the grounds of local content as such a decision would contravene UK Law, EU Procurement Directives and World Trade Organisation commitments.  
 
This isn't just hype, the OGC & in-house lawyers review major contracts to ensure that they are awarded fairly and transparently. I believe that there may be a 'National Interest' opt-out for certain MOD contracts, but generally the UK's civil servants abide by the regulations.  
 
In the last days of Gordon Brown's government, he made an unfortunate comment, "British Jobs for British Workers" which threw Whitehall in to disarray as his observation suggested that the country of origin should be taken into account. While the popular press loved the Protectionism, the Government quickly distanced itself from the remarks spelling out that contracts were awarded on the basis of Value for Money.
Posted @ Thursday, June 16, 2011 2:46 AM by Bernard vanHaeften
And about time too...  
 
Having worked with public sector organisations as a consultant and interim it is clear there are legacy behaviours and mind sets that will have to change...and change quickly...if this project is to be successful.  
 
With John Collington on board there is a great opportunity for this to succeed. His private sector background, coupled with his energy, drive, and determination, give the project an enormous boost.  
 
Saying goodbye to PQQ's will be a boost to smaller organisations. They are typically quicker, smarter, and in many ways can deliver better value than larger organisations, but have never been able to compete on a level playing field.  
 
Guy, to anwer your question on whether the right skill sets exist internally I am sure that 'procurement process' skills are there...but do they have the right behavioural skills to take risks, the in-depth category knowlege to deliver real value, the ability to bring about change, and the ability to deliver fast? We will see...  
 
All power to Francis Maude and John Collington to make this work.  
 
I wish them every success.
Posted @ Thursday, June 16, 2011 2:49 AM by Robert Daykin
Sounds excellent news for everyone except those suppliers who have monopolised central govt expenditure in recent years. And as most of those are already in long term and lucrative contracts with depts and councils I don't feel too sorry for them...
Posted @ Thursday, June 16, 2011 2:51 AM by Chris Puttick
Thanks for the article, Chris. I agree with you the pure labor arbritrage is the story of the past. Currently outsourcing companies are focussing on mix shore model and business transformation as a value addition when they sell the outshourcing model. Still a long way to go before the labor arbitrage fades away. Also question to ask "if home shores are ready to take back the amount of work which has gone in terms of the capacity and skill"
Posted @ Thursday, June 16, 2011 2:53 AM by Rahul Jaiswal
I think that indeed the market is moving from delivering cheaper to delivering more added value. But one thing I cannot imagine is that the labor costs will get equal in such a short time span. Maybe if you look at the total costs of ownership, you might end up spending somewhat the same as locally (but usually companies compare internal staff with offshore staff which is actually a wrong comparison).  
There are 1.3 billion people in China and 1.1 in India. In 20 years, India will have 1.6 billion. I believe there will be such a big supply of labor, that the salaries will stay much lower than in the Western World.
Posted @ Tuesday, June 21, 2011 2:47 AM by Ted Weyn
I would be very surprised if this compulsory centralised procurement manages to work at all let alone benefit SMEs. My guess is that it will establish, slowly, a bureaucratic monolith which will play safe for the major contracts because of the scale of delivery resource required and won't have the knowledge base to understand the delivery capabilities of SMEs on a local or regional basis.
Posted @ Friday, June 24, 2011 3:05 AM by Ian Burdon
The creation of super contracts tends to favour very few large suppliers with little or any benefit to SMEs. In my experience the business simply does not trickle down to SMEs. A recurring experience of a pubic sector procurement officer is (legitimate) hearing complaints from SMEs that public sector business is becoming increasingly difficult to win.
Posted @ Friday, June 24, 2011 3:05 AM by Peter Cameron
Regarding Mr Ted Weyn's degrading boiler plate statement about "people preferring unemployment" in lieu of work is ridicule, insulting and lacks maturity as well as a humanistic attitude. 
 
Maybe applicable to "lazy UK" folks only? 
 
About time for Mr Wayne to grow up (wake-up) realizing we have a confused world which must adapt to unstable economic environment.  
 
Knowing the metrics to make good decisions in a "sea of data" is the first step to reduce the confusion. 
 
Most SME/SMB managers are working themselves to death and do not have the data intelligence (insight) to optimize decisions because too expensive and too complex to use. 
 
 
Posted @ Friday, June 24, 2011 3:53 AM by Alexander Kopriwa
Alex, 
 
Seeing that I have 25 years of experience in the HR related industry, I hardly call my response "degrading" or "boilerplate". Stafging firms around the US are struggling to fill the lower spectrum skilled jobs. Many state that the majority of this with workers not answering the employment opportunities for fear of losing their UE. Why do many retail and other similar pay grade SMB struggling to find quality staff? 
 
Posted @ Saturday, June 25, 2011 4:50 PM by Ted Weyn
There once was Crown Supplies and Buying Solutions so the new iteration would have to avoid risks Ian and Peter mention. eProcurement and eSourcing collaboration helps. 
 
Sharing services is a great idea and collaboration in procurement does work very well.  
Key is to get a core of leaders with shared goals and visions - not to micro-manage it.  
Large suppliers are already offering unfavourable terms to some less organised buyers. 
 
This can be coordinated if a common strategy as to the supply markets is developed.  
SMEs can do business there if there is standard documentation and appropriate lotting.  
I wish the new organisation well - changing mindsets is first - and is a big challenge!
Posted @ Wednesday, July 13, 2011 1:37 PM by Karen Bowman
You'll get no argument from me there Karen, but I don't think it will happen in in "Whitehall procurement"...
Posted @ Wednesday, July 20, 2011 3:28 AM by Ian Burdon
Post Comment
Name
 *
Email
 *
Website (optional)
Comment
 *

Allowed tags: <a> link, <b> bold, <i> italics