Social value, procurement and a smart city vision

“Smart cities are cities that utilise the Internet and Digital Technology to enhance the quality of life, performance of services and reduce costs by optimising energy consumption. The focus is on creating a framework with good connectivity and access to real time information for setting up an efficient management system that establishes a relationship between citizens, service providers and administrators.

It ensures that citizens actively engage in improving the overall productivity and sustainability of services by equipping cities with basic infrastructure” (Aakash, 2017). Smart Cities market is projected to grow from $ 386.55 billion (€311.28 billion) in 2014 to $ 1,386.56 billion (€1116.57 billion) in 2020, at a CAGR of 20.48% over the forecast period (Aakash, 2017).

In summary:

The application of a wide range of electronic and digital technologies to communities and cities.
The use of ICT to transform life and working environments within the region.
The embedding of such ICTs in government systems.
The territorialisation of practices that brings ICTs and people together, to enhance the innovation and knowledge that they offer (Aakash, 2017).

The smart city model can focus on a variety of areas: public transport, green spaces, waste collection and social sustainability, says Brian Bishop, CEO, Data Performance Consultancy Limited.

London is driving smart innovation in areas such as public transport through working with start-up companies like CityMapper (CityMapper, 2017).

Bristol created the Smart Energy City Collaboration to capture, analyse and act on smart energy data for the benefit of people and businesses across the city (Cse, 2017). Manchester has established a “smart quarter” (Triangulum) to pursue the objective of becoming one of the largest knowledge driven low carbon districts in Europe (Triangulum, 2017).

It is important to realise the relevance of the community and therefore not isolate or create “silos of data” as has been the practices over decades of government services. The word “Interoperability” must now be the focus of delivery and this should run through to all services across a region.

Through the introduction of a Smart City infrastructure the ability to strategically manage city wide services becomes more sustainable, “Information is a source of learning. But unless it is organised, processed, and available to the right people in a format for decision making, it is a burden, not a benefit.” (Pollard)

By facilitating this you could then deliver any future potential devolution plans. This will also allow for continual improvement strategies and build the world’s first true Smart City and the benchmark for all cities to follow. Procurement needs to be the central pillar that you build this around.

ONS (2016) report the public sector spends approximately £268 billion (€303.96 billion) per year, equivalent to 14% of GDP. Taking a strategic approach to government procurement presents the opportunity to support investment in innovation and skills, strengthen UK supply chains, and increase competition – by creating more opportunities for SMEs. This means creating the right conditions to put UK supply chains in the strongest possible position to compete for contracts based on best value for the taxpayer.

The public sector can use its demand – particularly when its needs are novel or complex […]

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Sustainable Procurement Requires Perseverance

Your CEO just made a major announcement: From now on, your company will purchase only goods and services from sustainable suppliers. The announcement was not a surprise. The CEO recently signed the company’s first sustainable procurement policy, modeled in part on the guidance from the new ISO 20400 standard. Support for the policy is high throughout the company. But, as the chief sustainability officer, you know there’s a problem: None of your suppliers are sustainable.

Some of your suppliers are deeply committed to protecting the environment. Others provide an excellent working environment for their employees. Still others offer low prices. However, none of them meet all of the minimum economic, environmental, and social performance requirements your organization has carefully developed. Of course, your business needs to purchase from someone; your CEO isn’t about to shut it down.

Overall, your CEO has the right idea: Sustainability requires thinking and action that go beyond your own company. But building a base of sustainable suppliers will take time: Sustainability requires a long-term strategy with strong, sustained senior-level commitment. This was made clear in the recent report “Corporate Sustainability at a Crossroads.” Good intentions are commendable, but they’re not enough.

There are, however, ways you can prepare to engage more sustainable suppliers and assess your current ones.

Accept the need for trade-offs. Real-world sustainable procurement initiatives must begin by acknowledging your company’s current situation. Sustainability is often framed in “win-win” terms. For example, your company believes it can lower costs while reducing its environmental impact and improving its working environment. That’s certainly the goal and it is possible. But, in practice, there are often conflicts between economic, environmental, and social objectives. You may need to compromise in one area to obtain benefits in another. This is particularly true in the short term.

Like all established companies, you will have supplier relationships you cannot simply discard. In some cases, alternatives may not even exist. There may be no sustainable options. Clearly, your company wants to get to the point where trade-offs between economic, environmental, and social objectives are less pronounced and, ultimately, eliminated. Unfortunately, this is not easy.

Develop a trade-off hierarchy. If you accept that trade-offs can occur, you must decide how to systematically identify and assess them. This will force you to articulate what you value most. You might, for example, decide to employ an ecologically dominant logic, where “environmental and social criteria supersede economic interests.” That could be a tough sell within the company, but it will help drive sustainability over the long term. Trade-offs are about difficult choices.

Articulate a transition pathway. Clearly, the focus of your sustainable procurement initiative will be to source from suppliers that are sustainable. This, however, is likely to require a long-term focus. You will need guideposts to let you know how you are doing along the way. Interim trajectory targets will let you know if you are getting better or worse, but they are a means, not an end. Sustainable procurement is not about supplier effort; it must be performance oriented.

Build supplier capacity. Sustainable procurement is also not about telling suppliers where they fall short. Where practical, your company should help its key suppliers strengthen their sustainability performance. You may even consider collaborating with your competitors. Collaboration is particularly attractive for issues that are not competitive differentiators or that your company cannot address alone. For example, many companies have banded together to improve working conditions in their supply chains. The Electronic Industry Citizenship Coalition is just one example.

Lastly, don’t get too comfortable. You may be sourcing from recognized industry leaders. But, remember: That doesn’t mean they are sustainable. They may be the best of a bad lot. Don’t be satisfied with acceptable performance in some, but not all, areas. Excellent performance on some criteria does not substitute for poor performance in others. Sustainable procurement is difficult to achieve, but it is possible over the long term. Stick with the goals you’ve set and keep looking for better ways to meet them.

Sustainability ultimately requires that your company, and its supply chain, “operate within the thresholds imposed by nature and society.” That is the basis on which your procurement criteria must be built. Win-win alternatives must be developed within those constraints. Set priorities, focus on what is truly urgent, and remember that you don’t need to address everything at once. Make improvements in procurement wherever you can. Don’t forget, though, that getting better doesn’t mean you’ve reached sustainability.

By implementing a sustainable procurement policy, your company has taken an important step. You’ve recognized that you can’t build a sustainable company if none of your suppliers are sustainable. But make sure everyone understands that it’s going to be a long road. There’s no perfect way to start. The important thing is that you get going, make improvements when you can, and keep at it.

MIT Sloan Management Review

Predictive Procurement Gets Real

The physical and digital worlds have officially collided. In the old days, we’d have the morning paper delivered to our doorsteps and read it on the way to work while sipping coffee we made at home. Today, the news stories we care about are automatically delivered to our mobile devices, and we scan them while enjoying the beverage that was ready and waiting for us at the local coffee shop after we ordered it via mobile app. In years past, we attended events after work to expand our professional networks. Now we link to our peers — and their peers — around the world, online in real time.

Connecting the dots

As a society, we are more connected than ever. Thanks to the Internet of Things (IoT), we can see and be seen like never before. We can learn about the future and use this information to shape it to our advantage.

There are plenty of examples of this in the consumer world—for example, refrigerators that predict when you’re about to run out of milk and automatically order and have it delivered before you even notice, and devices that know you’re on your way home and turn on the lights before you get there.

It’s happening in procurement as well, and transforming the function as we know it. Procurement is complex and involves lots of moving parts, from sourcing and manufacturing to transportation and logistics. It’s an intricate web of systems, processes, and relationships that must be coordinated and managed, both internally and externally, to ensure that goods and services get delivered on budget and on time.

Predicting the future

Over the years, procurement has made great strides, leveraging disruptive forces such as business networks and cloud technologies to evolve from a tactical manual process to a strategic digital one. Paper orders and invoices are all but dead. Electronic payments are taking hold. Buyers and sellers are meeting and collaborating online.

Yet the transformation has only begun. Aided by Big Data and the IoT, procurement is becoming smarter and more predictive than ever.

Data is the lifeblood of any organization. From structured information on production, marketing, sales, HR, finance, facilities, and operations to transaction-level data on suppliers, customers, and partners, it tells the story of a business. For years, companies have been mining data simply to figure out what it all means—essentially, to learn from the past and perform better in the present.

Now they are leveraging advances in technology such as in-memory computing, real-time analytics, and the IoT to create assumptions about what will happen in the future and take actions that drive optimal outcomes.

Eliminating risk

Supply chains are more global than ever, and as a result, fraught with more risk. Many companies are turning to the IoT to anticipate and mitigate this risk before it disrupts their business. Consider the mining industry. Trucks are the critical link to transport raw materials to either further process or sell them on the market. If one of these trucks stands still due to maintenance issues, losses to the company could run into the millions, as they only can sell what they get out of a mine and deliver.

With the help of sensors, companies can continually monitor their fleets and receive notifications on upcoming maintenance needs to prevent breakdowns before they occur. Critical components such as engines and braking systems, for example, can be connected by small IoT sensors that monitor their temperature, hydraulic pressure, container angle, position, and vibrations. The sensors transmit all data to a live dashboard, and if a key parameter such as temperature changes, it will trigger an alert for the radiator. This information is then automatically routed to the procurement system, where a replacement order for radiator hose and radiator cleaner is automatically processed in line with the company’s procedures and policies. Related maintenance service is scheduled with a qualified technician who will arrive as soon as the material arrives and perform the work before a fatal defect of the radiator causes the truck to literally stop in its tracks. Risk avoided.

Delivering value

Supply chains are no doubt complex — and the data within them even more so. But data is the new global currency. And the IoT holds the key to unlocking its value. With the IoT, companies can not only spot patterns and trends in their business but anticipate risk and changes and adapt their businesses to gain advantage.

For more on how data analysis is transforming business, see Living The Live Supply Chain: Why You Need Data Scientists.

The article originally appeared in Spend Matters. It is republished by permission.

Internet of Things – Digitalist Magazine

Procurement Meets The Jetsons

Fifty years ago, George Jetson and his cartoon family painted a vision for the future that technologists have been chasing ever since. And it is closer to becoming a reality than you might think.

We may not have flying cars, but driverless vehicles are on the streets around the globe, transporting passengers in places like Pittsburgh and Singapore. And Rosie the Robot may not be managing our lives, but we have Siri and Alexa.

Artificial intelligence and machine learning – along with the Internet of Things (IoT) – are fundamentally changing the way we live. And they are beginning to alter the way we work. Take procurement. Paper orders and invoices are all but dead. Electronic payments are taking hold. Buyers and sellers are meeting and collaborating online.

But we’ve only scratched the surface of what is possible. Driven by business networks and advances in the technologies underlying them, procurement will continue to digitize and transform. Here are three things you can expect in the year ahead:

1. Predictive requisitioning will become a reality

Stock-outs will become a thing of the past as bots controlled by artificial intelligence mine historical transaction data to identify items that need to be ordered and, unless directed otherwise, automatically purchase them in line with company policies before supply gets low. Think of it as a Rosie for procurement.

2. Procurement will get smarter

Machines will analyze billions of financial transactions alongside historical and real-time purchasing data and within minutes identify changes in buying patterns or pricing trends. Or scour intelligence from hundreds of global government, business, and other data sources to detect and mitigate forced labor in the supply chain. Armed with this intelligence, buyers will make more informed decisions faster than ever.

3. IoT will revolutionize risk management

Far from your father’s Internet, the IoT is rife with a host of data. And procurement will use it to manage risk in completely new ways. Delivery vehicles, for instance, will be connected and monitored in real time to proactively predict maintenance needs and prevent accidents or breakdowns.

If all of this seems a little far-fetched, just remember the Jetsons. Like the jet packs that propelled them, modern technology will lift procurement to new heights. And organizations that embrace the trends will will soar ahead of the competition.

Learn more about how robots are becoming human collaborators when you Bring Your Robot to Work.

Image: Ludie Cochrane via Flickr.

Internet of Things – Digitalist Magazine