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.

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.

From the start of next year, most public procurement processes are set to be governed by a 120-day deadline. 

Supply Management reported that Cabinet Office minister Francis Maude called for the changes in response to the revelation that the average government procurement currently takes around 200 days to complete. 

The government aims to achieve the target by encouraging closer and earlier engagement with suppliers and markets which should enable more clear and concise invitations to tender, it is hoped that publishing the data will expose failings in the system and encourage greater clarity in government procurements.

eProcurement software is proven to cut costs and shorten the buying cycle by providing transparency through the buying process as well as substantially reducing the processing time. Could eProcurement prove to be the key in helping the government adhere to the strict EU public procurement rules and meet the 120 day deadline?

According to a report published in Food Manufacture, the food and drink manufacturing sector has seen a fall in orders since the start of this year and with festive food prices set to soar in the weeks leading to Christmas, it could be a difficult season for the industry.

The turkey is already the dearest food on the traditional Christmas menu, but the cost per unit is set to rise even further, with the average price of a 12lb turkey increasing from £40 to £50 in just one year.

The Food & Drink Innovation Network reported that the rapidly expanding middle classes of China and India have had a big part to play in the price increase. Because there is a higher demand for meat, turkey feed costs have doubled since the same time last year and this has had a direct impact on the price of fresh meat.

With feed prices increasing substantially, it is inevitable that the price of meat will carry on rising. At times like this it is crucial that buyers dig deeper in to their supply chains to get the best deals on products to ensure that it isn’t the consumer who is left with an empty plate. 

Suppliers have been asked to contribute a per cent of their income from retail giant Marks and Spencer in an effort to revamp its 700 UK stores at a cost of over £600million.

This news first came to light back in October, but as Supply Management reported last week, M&S has now moved in to a negotiation stage with their top 60 suppliers.

The request has received a cold reception from many suppliers; one major supplier has reportedly refused to contribute, whilst others are seeing it as an opportunity to help boost Marks and Spencer’s profits, which could generate reoccurring business for the suppliers in the future.

M&S has so far kept quiet with regard to how they will enforce the request once it has been agreed. They have however suggested that the funding could come through a 1.25% levy on the annual amount that M&S spends with each of the chosen suppliers.

According to the Telegraph, suppliers want to know what they will get from the deal and so far that hasn’t been explained. With a view to providing benefits for both parties, there are other options that M&S could consider including the use of eProcurement technology such as e-sourcing software to run a series of forward and reverse auctions to achieve the same result.

Reverse auctions are particularly useful when a buyer wants to purchase a product for the best price, M&S could save money on the revamps by utilising reverse auctions for the refurbishment contracts themselves rather than levy the costs from unrelated suppliers. Refit contractors would no doubt relish the opportunity to bid for a contract to refit several hundred stores, or to even win a portion of that potential business.

Forward auctions could also be used to generate funds by inviting suppliers to bid for optimum store space in the revamped stores, which again provides a benefit to the supplier. Whilst it may not raise the entire funds needed it could reduce the amount of contributions M&S request from their remaining supply chain.

eSourcing platforms such as web3 can be used as both a strategic and tactical tool to generate savings, limit cost increases and encourage competition and transparency across the supply chain. It will be interesting to see how many of the 60 suppliers opt to support Marks and Spencer and to see how well the stores will do after the refurbishments have been completed.

Are you an M&S supplier? What is your opinion on the request? Are you a leading retailer that faces the same issue? We welcome your comments.

With the 2012 Olympic Games fast approaching, the hospitality sector is getting ready for a boom in business; tourism figures are set to rise, jobs will be created and new developments will be springing up across the country.

But there are fears that the UK economy will feel the impact once the closing ceremony draws to an end and spending revenues plummet.

Earlier this year the British Beer and Pub Association (BBPA) called on the government to drop VAT rates in the hospitality sector, arguing that it would help the sector recover from the effects of the recession and help boost economic revival.

An e-petition has since been created, encouraging the country to back the proposal to drop the VAT rate for the hotel industry to 5% and the hospitality sector to 13%. More than 3000 people have signed the petition so far and if it receives 100,000 signatures then it will have grounds to be discussed in the House of Commons.

So, is this dramatic drop in VAT even a realistic request?

21 countries in the EU have a lower VAT rate for the hotel sector and 13 for the overall hospitality sector. In France, tax was reduced from 19.65% in the hospitality sector to 5% and led to the creation of 21,700 jobs in the first year alone.

The chief executive of Merlin Entertainments Group, which owns theme parks across Europe including Alton Towers and Thorpe Park, spoke to bighospitality.co.uk. He suggested that the drop in VAT could create 80,000 jobs, predominantly for 16-24 year olds, of which one in five is currently out of work and that this in turn could help to kick-start the economy.

If the e-petition is successful it could possibly cushion the blow to the hospitality sector in the post-Olympic years, helping to create 320,000 jobs and saving pubs, restaurants and hotels from closure.

Do you think the hospitality sector will benefit from a decrease in VAT? Will more problems be caused once the inevitable happens and VAT rises again? We welcome your comments.

Click here if you would like to sign the e-petition.

Over the last twelve months the country has seen huge budget cuts and rising redundancy rates throughout the whole of the public sector, in a bid to make the savings the country so desperately needs to enable deficit repair.

One year ago Wax Digital, alongside Durham University investigated the opinions and outlooks of public sector procurement and finance professionals towards deficit repair in our report 'Doing battle with the deficit'. We received a surprisingly positive viewpoint from those leading the battle, but is that still the case?

Many public sector organisations are fighting back from the budget cuts and are reporting massive savings through procurement and updated IT systems. Chris Chant, government programme director for the cloud, recently spoke at Teacamp (a government digital networking event) and announced:

 “Government cloud aims to change outrageously expensive public sector IT by slashing system integration costs and reducing the number of back office staff.”

The government has its’ sights set on making savings of £120million per year come 2015. Unrealistic some may say, but with many public sector bodies reporting savings through IT and procurement, these optimistic predictions could well become a reality.

A recently implemented electronic marketplace and purchase to pay system for police forces in England and Wales is expected to help achieve savings of around £30 million over the next six years alone. The ‘national police procurement hub ‘will offer improved contract management through better visibility, a reduction in maverick spend and increased compliance to approved suppliers.

Procurement looks to be leading the way in fighting back from the budget cuts and as a result job losses have not been as prominent as one may have expected them to be in the fight to repair the deficit.

While some organisations seem to be bouncing back from the cuts, there are many that are struggling to implement the most savage spending cuts in a generation.

Councils across Yorkshire are facing huge overspends totalling more than £50million this year. A study of town hall spending since April reveals only four of Yorkshire’s 14 biggest councils are currently on course to meet the stringent savings targets forced upon them by the coalition government.

Stoke-on-Trent City Council is another council facing difficulties in meeting its target savings. Hundreds of jobs have already been cut and a number of key services closed or reduced as the council made savings of £27.8 million. Much-criticised procurement practices at the council could likely be the cause of the £4.5million shortfall in savings. Councillor Sarah Hill, cabinet member for finance, said:

 "We had to make a huge amount of changes at the beginning of the financial year which all came at once, we all recognise that procurement is an area we haven't done well with.”

With so many cost saving success stories in the public sector, procurement could prove to provide a real opportunity for organisations to meet their targets by addressing their current procurement issues and implementing new ways to purchase.

How have you, as procurement professionals found the past year? What have you found challenging? Where could you improve? We welcome your comments.

It’s official, Wax Digital is one of the UK’s brightest businesses! 

We’re included in the Daily Telegraph’s list of 1,000 mid-sized companies “which have weathered the economic storm and are set to be the foundation of the UK's recovery” published this week. 

Turbulent times have certainly separated the men from the boys in most industries, including technology. For Wax, the early adoption of an on-demand software model and cloud computing that allows our systems to support large and even globally dispersed buying organisations with ease has enabled us to stand out from the crowd. 

Recent major contract wins with the likes of Weetabix demonstrate the growing appetite for purchasing control and savings in organisations challenged with complex supply chains, large buyer communities and high indirect costs. 

We certainly feel that the future is bright and applaud the Telegraph for profiling so many UK businesses finding successes in the face of adversity.

With less purchasing complexity, fewer suppliers and smaller contracts to manage it would be easy to think that P2P was a luxury rather than a commodity in the mid-market. Following our consultation with leading mid-market experts we believe there is a real business case for mid-market P2P.

The financial pressures that medium sized companies are currently facing includes rising supplier costs coupled with downward customer price pressure, creating a vice that’s squeezing margins; so much so that three quarters of medium-sized UK organisations have halted their growth plans recently. These organisations must do anything possible to ensure they are buying at best value from their suppliers and without having historically invested in spend management the likelihood is that there’s much room for improvement.

Whilst we tend to think of market sectors in isolation existing as SMEs, mid-sized or large enterprises, in reality the boundaries between these divisions are quite blurred. Rather like the football leagues where the spectre of relegation and dreams of promotion linger all season, the top half of the mid-sized league share as much with large enterprises as they do with those at the other end of their own division.

Yet the biggest reason why mid-sized organisations need P2P is because they have a completely separate challenge too. Whilst their purchasing and supply complexity might not quite equal that of a giant enterprise, medium-sized companies still have a high financial processing burden with many supplier orders, invoices and payments being processed largely manually.

Finance systems in the mid-market offer cold comfort for organisations wanting to implement best-practice processes for spend control and we see thousands of man hours annually wasted in many organisations thanks to inefficient manual invoice processing with approvals after the fact.

That’s why Wax Digital has launched web3 Professional, its SaaS eProcurement platform that offers mid-sized organisations rapidly deployable, highly intuitive spend control that can automate practically all of the resource intensive accounts payable processes.

To do so we’ve distilled our decade of experience working with some of the world’s leading purchasing teams. Orders are delivered electronically to suppliers, whatever their size or technical capabilities, and electronic invoicing rates – with a guaranteed 3-way match in most cases – can be driven in excess of 90% by volume.

With web3 Professional we’re looking to make spend control and process automation accessible right across the mid market, with a return on investment case that speaks for itself.