Industry news

Call it clean, hard, dirty or red, white and blue, Brexit means Brexit. That vague statement, used so frequently by the government in the months after the crucial referendum on Britain’s future position in the EU, is finally getting a bit of clarity. It increasingly looks as if the UK government will sacrifice the free trade agreement with the customs union to protect its borders.

This is not really what the sourcing industry wants, over 80% of Global Sourcing Association (GSA) members were supporting the remain option. This editor voted remain, but in the spirit of uniting to make the best possible Brexit (and to avoid being labelled a ‘re-moaner’) sourcingfocus will be considering what would make the best possible Brexit for the sourcing industry.

The sourcing industry has thrived thanks to a connected world with supply chains linking economies through trade. Therefore, an industry tied up so tightly with the success of globalisation, supports free trade and low tariffs. The importance of keeping good trade links with the EU is therefore paramount to Brexit negotiations, if tariffs were to creep in between the UK and the rest of Europe, UK industry would lose competitiveness on the continent.

But wait, the UK government says that by leaving the EU, we can negotiate our own trade deals with the rest of the world on our own terms, becoming a ‘global Britain’. It is probably worth pointing out that the UK economy is considered by many to be one of the most open and free in the world with lax rules on foreign takeovers and investment (Softbank of Japan bought ARM in 2016, a move that many countries would have been sceptical about).

“The UK will have to renegotiate 53 trade agreements with countries around the world, many of which we currently trade with under the terms of the EU trade agreement as part of our membership” notes Amelia Bishop of Weenie Business Solutions, a business consultancy firm for small to medium size businesses. This is a gargantuan task, especially for a country that lacks trade negotiators.

It would be best if the government worked on a transition deal with the EU and set about improving global trade links, hence lessening the initial blow of Brexit and complementing it with new deals with other economies. This means negotiation and diplomacy, something the British government is sadly short of. The hope remains that the UK government is true to the wishes of the people and negotiates the best possible trading deals it can with the EU and elsewhere” says Milan Panchmatia, Managing Partner of 4C Associates, a leading procurement consultancy.

Although trade is crucial to the sourcing in the short term, in the long-term immigration matters just as much. By closing our borders to bright, skilled and hardworking Europeans (or the great unwashed in the eyes of UKIP) the UK is losing out to more open nations. Innovation and productivity growth is greatest in areas of diverse population, such as London.

The UK desperately needs to attract professionals to its economy, thanks to a skills gap in computer technology and areas such as engineering and scientific research. Increasingly in a digital economy, these areas will provide innovation and growth, attracting investment to an economy. Robert Barbus, Operations Director of Soitron Group said “Brexit has brought upon many uncertainties, and the potential IT skills gap is a very important one.

Ultimately, it depends on what trade and immigration agreements are made between the UK and other EU countries.” Increasingly, developed nations need young workers to replace those who are leaving the work force and into retirement. Bringing up the drawbridge has serious ramifications for the future of the UK budget.

The final section of debate is regulation and investment from the EU in areas such as production, wages and scientific research. Many of the EU laws that are in place will stay after the UK leaves Brexit although the investment in science and redevelopment will inevitably go leaving the UK desperately short of innovation and training in deprived areas, look to South Wales for evidence of the support the EU gives to communities.

If we are to get the best Brexit for the sourcing industry, trade would be paramount and immigration supported, watering Brexit down to minor regulatory change, encouraging trade outside the common market and using any savings from contribution to invest in digital infrastructure and training of skills to boost the domestic employment market.

By James Tate, Editor of Sourcingfocus.com

This is an abridged version of 'Best of Brexit', click here for the full article.

Denmark's Novo Nordisk is to invest £115m in a science research centre in Oxford, providing resilience for the pharmaceutical industry after Brexit. The centre will hopefully employ around 100 academics researching new drugs, however manufacture and profit resulting from success will remain in Denmark. The European Medicines Agency currently based in London, is likely to move to the continent along with around 900 jobs. Click here to find out more.

Vodafone is to merge with rival Idea Cellular in India to combat the volatile telecoms market in the country. A new operator (Jio Infocomm) is causing ruptures in the industry by offering customers new packages to include more free features. Vodafone’s stock rose on the news but analysts warn that the company may have to face extra costs after a write-down of its Indian business last year. Click here to learn more.

In Computerweekly.com, there is an interesting article on artificial intelligence and its effect on productivity. Increasingly, businesses must find the right balance of AI and human brain power as different roles require a mix of the two. The FuturaCorp: Artificial Intelligence & the Freedom to be Human report outlines the future workplace where humans and machines together increase output. The GSA is hosting a workshop, Making Robotic Process Automation (RPA) and AI Work in February, click here to learn more,

The Global Sourcing Association (GSA) and D/SRUPTION have announced a partnership that will focus on dispelling the myths surrounding technology, disruption and innovation and their impact on evolving business models. The partnership agreement sees the two organisations come together to deliver a programme of knowledge-sharing initiatives and dissemination of thought-leadership content to benefit members and subscribers alike throughout 2017. Click here to read the full press release.

Digital technologies provide amazing ways for us to communicate with each other and engage with brands. But we all know that physical experiences are more engaging and memorable than digital ones - after all, major life events rarely involve us staring at a smartphone.

‘Phygital’ experiences (those that combine the physical and digital worlds) create immediacy, immersion and interaction. 2017 will an increase of the number of these projects, and the outsourcing community has the ability - through their successful delivery - to enhance customer lives and add brand value.

Why it’s important to think phygital

The communications landscape is becoming increasingly complicated for brands. How do you reach your customers, when they are operating beyond the predictable places?

The new ‘phygital’ shopper was born in the 1990s and doesn’t see a difference between the physical and the digital. They use their mobile phones to browse stock levels in the shop they’re already standing in.

So e-commerce brands need to think in the same way. It’s no longer enough to be simply ‘digital’. In fact, for savvy brands, there is no ‘digital’.

After all, the very best ‘digital’ experiences don’t occur on screen – they can now happen instore. Think of Charlotte Tilbury’s VR pods in Selfridges or YSL Beauty’s Google Glass makeup tutorials, which merge the best of the physical and the real. Augmented and virtual realities have transformed the instore experience arguably more than an extra sales assistant ever could.

And likewise, we’re now realizing the age-old brand ambition of recreating the in-store experience online. Virtual experiences like Ted Baker’s shoppable videos give customers the level of immersive experience and customer service they could expect in the real world.

Today, customers are not loyal to any channel and they expect a seamless experience – online or offline.

Navigating the traps

So, should brands be encouraged to attempt phygital experiences, no matter what their platform bias? Absolutely - but only with proper planning in place.

That’s because there are lots of pitfalls involved when you navigate the phygital. Scatter gun messaging is an obvious no-go. Instead, brands should work to understand the strengths of each platform. Mobile is the medium of convenience and browsing, for example, but more people make purchases on laptop - not forgetting that people can start journeys digitally, but finish them in-store too.

With such an inherently complicated purchase journey, marketers should embrace fluidity in their customer experience. It must be easy to move between platforms without interruption or worse, disruption. Anything that jolts the customer out of their seamless perception of the phygital will be damaging.

To do this, brands need to consider the details. Low stock levels in the real world need to be reflected quickly in the online world in order to manage disappointment and maximize customer experience, for example. What starts out as an advantage can quickly turn sour without proper connections in place.

Getting it right

But working through these issues can yield untold rewards. As the lines continue to blur between platforms, fearless brands won’t hesitate to tap into the collective power of ‘online’ and ‘instore’ to create the ultimate, uninterrupted customer experience. The old adage of a sum being greater than its collective parts holds very true here.

And fortune will favour the brave; it’s those brands who admit that traditional channel marketing may have had its day can win the e-commerce sector. Those who talk about ‘digital’ or ‘in-store’ will most likely lose.

It’s time to say goodbye to one-dimensional experience forever.

By Alastair Cole, Chief Innovation Officer at Partners Andrews Aldridge

Join the GSA and Alastair Cole at Excellence at Customer Experience on Thursday 16th February 2017

Tesco has agreed a deal to buy wholesale food supplier, Booker in a £3.7 billion deal. Booker supplies restaurants, pubs and convenience stores with a range of food items and also owns the Premier, Budgens and Londis convenience-store brands. Tesco is expanding beyond its traditional food retailing business and making strides into the restaurant and takeaway food sectors. Markets have reacted favourably to the deal, as Tesco acts to adapt to a food market with fewer weekly shops and more cash and dash consumerism. To read more, click here.

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A spokesman for an elite club of some 50 European industry bosses said the new industrial plan announced by Mrs May this week will do little to dampen the effect of leaving the EU. Kurt Bock, head of German chemicals giant BASF who speaks for the European industry chiefs, said, "If we're talking about an industrial policy that aims to control what should grow and what should shrink, I can't really see that having been successful in any open society." Bock said tax cuts would do little to lure investments and jobs to Britain. British finance minister Philip Hammond this month hinted at this option should Britain be denied a comprehensive trading deal with the EU after Brexit. Read more here.

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After the result yesterday in the supreme court, sourcingfocus.com is looking again at the impact of Brexit on the sourcing industry. John Keppel, partner and President of ISG says “While it is too soon to predict the full impact of the UK’s vote to leave the European Union, it has had minimal impact on contracting to date. The emergence of As-A-Service sourcing has given a huge boost to the UK market, with 2016 seeing a significant uplift in contract values for this type of activity, and we expect even stronger growth in this area going forward. This means that Britain is in a healthy place to deal with any macro-economic turbulence in 2017. One area that could be boosted by Brexit is public sector contracting, as governments departments address new challenges outside of Europe and look for more efficient ways to improve public services.”

UBS AG, the Swiss global financial services company, renewed its Finance Operations services contract with HCL Technologies, a leading global IT services company, announced HCL. HCL will continue to deliver key Finance Operations services to UBS AG, supporting cost transparency and continuous improvements to the operating model of its finance department for the next three and half years. HCL will further invest in developing Proof of Concepts (POC) for robotics use cases to deliver efficiency gains through the automation of mutually selected business processes within UBS AG’s Finance department. To read the full press release, click here.