2021 and all that

 Merry Christmas and let's hope for a much better new year.

Roll on 2021.

See you on the other side.

2021 IChemE What Engineers Need to Know about Contracts

 This course seems to be increasingly popular, and we have 2 dates in the diary already for 2021.  More may be added if there is enough demand (and possibly some other courses that I shall present).

Dates are 3/4 March 2021 (online - 2x 1/2 days)

and 9/10 August 2021 - which might (just might) even be face to face in Rugby.  But don't hold your breath.

Full details are here.

Merry Christmas folks.

Another PPN - UK Public Policy Notice PPN11/20 - Reserving Below Threshold Procurements

 One that I missed but Eddie Regan at BIP Solutions didnt...

We know something of the possible future for UK Public Procurement thanks to the Green Paper.  One element of that is being adopted from 1/1/21 - which is that procurements below the thresholds ;

● Reserve the procurement by supplier location, AND/OR

● Reserve the procurement for Small and Medium sized Enterprises (SMEs) / Voluntary, Community and Social Enterprises (VCSEs) -

Thresholds are ;

Supplies & Services - £122,976 

Works - £4,733,252

The second one of these extends the provision in the PCR 2015 for VCSEs to include SMEs and I have few problems with that.  The provisions are currently for central government only, but will surely be extended to Local Authorities who will welcome it.

The first provision though worries me.  In several ways.

Firstly, there is the effect on the Union - this is UK legislation and expressly stops the location being based on the four nations (and procurement is a devolved authority, so Scotland, Wales and particularly Northern Ireland will presumably create their own rules based on the UK ones).  But you can see the problems with Scottish contracts for Scotland, English contracts for England etc.

Secondly, the region should be based on a county.  Now Yorkshire is big.  But Rutland and the Isle of Wight are small.  I can see the sense in restricting IoW contracts to the island.  But Rutland?  Surely there is value to be had in sourcing from Leicestershire or Northamptonshire?  But a political advantage in drawing only from Rutland companies....  (I know nothing about the Rutland apart from the TV comedy programme, so I hope that people there do not think I am suggesting they are particularly likely to have problems.  It just happens to be the smallest county)

Thirdly, the geographical restriction will be loved by councils and councillors who want to spend money in their own constituencies.  There are obvious worries about Value for Money, and of course unethical buying behaviour (much in the news at the moment).

So, I remain to be convinced.

Thoughts on the new UK Green Paper on Public Procurement

 A few passing thoughts on the new Green paper (which I will try to add to as it sinks in).

The Paper is here.

First, the ability to limit contracts below threshold to SMEs is a consequence of being outside the EU procurement directive, and reflects the fact that the WTO GPA (World Trade Organisation Government Procurement Agreement) only applies above the relevant threshold.  (note that thresholds will remain).

Is this a good idea?  Well it depends on whether it is used.  Central Government already has a target of 1/3 spend with SMEs, (a target that is fudged, but that is another issue) and this should help.  I suspect that it will be of use for Local Authorities who strongly prefer to spend their money locally, and it will help to overcome the advantage the "big players" have by using strong bid writing teams.  I do suspect though that the SMEs will end up being the bigger firms (near the 250 person limit) rather than micro-businesses (fewer than 10 employees).

• Allowing buyers to include wider social benefits of the supplier, such as economic, social and environmental factors, when assessing who to award a contract to, while also still considering value for money

Again, I suspect Local Authorities will love this and look for it to be a charter to award contracts to local business - regardless of other constraints.  Could be good, could lead to local buying leading to poor value for money.

• Giving buyers the power to properly take account of a bidder’s past performance, allowing them to exclude suppliers who have failed to deliver in the past

This builds on the existing discretionary exclusion, and could be a good "whip" to complement the "Carrots" of further contracts.  We do need to address the way that the make money is to win the contract, regardless of whether you do a good or poor job.  It creates an incentive to invest in bid writing not delivery.

• A new unit to oversee public procurement with powers to improve commercial skills of public sector contractors

OK, UK Government - you know where I am.  Happy and willing to run help improve commercial skills.  It is my job.  Give me a call.  

Flippancy aside this has long been an unmet need, and the new regulations will make it urgent.

• A single digital platform for registering contracts, improving transparency and making life significantly simpler for business

This makes sense and I could not understand the previous desire to have 2 platforms.  Though I do wonder how it will fit in with the developed procurement powers in Scotland, Wales and Northern Ireland who all have their own platforms and rules.

We propose enshrining in law, the principles of public procurement: value for money, the public good, transparency, integrity, efficiency, fair treatment of suppliers and non-discrimination.

This is actually more principles than we have at the moment, but I don't see anything to object to here with the possible exception of the "public good" - who determines that?  How do we measure it objectively?

 We propose establishing a single digital platform for supplier registration that ensures they only have to submit their data once to qualify for any public sector procurement.

This is a good idea, and was the basis of the ESPD (European Single Procurement Document) that the government previously and ostentatiously refused to apply in England (preferring to stick to the Selection Questionnaire SQ) though Scotland and Wales used it.

We propose legislating for a new Dynamic Purchasing System (DPS+)

Colour me not convinced.

New UK Government Green paper on Public Procurement after Brexit

 The paper is here.

Not had time to comment here, but there is already good relevant commentary to read alongside from Prof. Sue Arrowsmith (whose views informed the Green Paper) and Prof Albert Sanchez-Graellis.

No doubt there will be tweaks on the way to legislation, but it is useful to be able to know what the government is thinking and therefore what we will all have to do in the future.

I shall develop some training materials if people think that it is worthwhile, and there is sufficient demand for training courses.

In the meantime, Merry Christmas and a Happy New Year to all.

NAO - PPE Procurement: the threat for Public Procurement

There are many things going on at the moment, and so the procurement of PPE is not making as much of a splash as it should.  Though there is still a lot of coverage in the media;

ITV

Guardian

even Dentistry online!

And this should be a big issue.  At a time of national emergency procurement has to move fast, and decisions have to be made quickly.  But this is also the time when unscrupulous suppliers (and even conmen) can take advantage of the situation for gain.  So we have to temper the need for results with a little prudence.

The idea of having "fast track" suppliers is no doubt meant with the best intentions by senior figures in the government, who want to speed up the process - but this approach is fraught with opportunities for graft, corruption and fraud.  None of which have necessarily taken place, but it is a vulnerability.  

If you don't lock your car doors but it isn't stolen, that is not an indication that you were doing the right thing.  It means you got a way with it.  Time will tell if that is the case for PPE procurement.

What IS clear though is that public confidence in public procurement has been further eroded by the failure to deliver, the failure to ensure value for money and the perception of contracts for "mates".  The government should act quickly to restore its reputation.

Sad to say, I'm not holding my breath.

Public Procurement: Award of contracts by UK government

 You might be aware that there is growing concern about the award of contracts by the UK government during the Covid-19 pandemic without going through the usual tender processes.

This is of great concern, because of course the usual processes (mostly tenders) are there to ensure that our taxpayers money is spent in ways that are both effective and fair.  You can argue about the effectiveness, but the "fairness" should not be an issue.

The government's argument is of course that the current crisis requires a different approach.  Research by They Buy For You suggests that the UK government is taking a different line to other European countries who have mostly followed the existing procedures.  In the UK we have directly awarded 99%, resulting in the UK accounting for more than half of the Covid-19 direct awards across Europe.

Now taking such a different approach (one that risks fairness, openness and transparency) can be justified if it produces significantly better results.  

Your opinion may differ, but I don't see our UK Covid-19 response as significantly better than the rest of Europe.

What we have done is justified the award of large contracts (£100m upwards) to people known to the government without a competitive process.  I am sure that the government will say that the contracts went to good people.  But of course they cannot prove that they went to the best people.  Therefore the country risks being damaged by award of contracts on the basis of contacts and personal relationships rather than objective criteria.  No matter the intentions, this is how corruption, fraud and cronyism get into public sector procurement.

Pedro Telles points out that the Public Accounts Committee has been very critical of the government's approach.  

In a time of national crisis we deserve better than this.

IChemE - What Engineers need to know about Contracts 23/24 November 2020

 

We are now confirmed to go ahead with the scheduled course in November.  This is 2 half days were we try to cover the content we do in 2 full days face to face.  We run it as 2 separate dates because we think that attention spans shrink a bit when online.  I know mine does.

Full details from IChemE here.

We are also getting an increasing number of requests to run this in-house, and of course we are able to do that (online at the moment, and face to face in future). This can be the full 2 day course or the 2 half days (including both on a single day, but that is not our preference.

BTW, there should be a short article from me in the Chemical Engineer soon (probably next year now) explaining why Engineers need to understand Contracts.

IChemE What Engineers need to know about Contracts - 7/8 September 2020 - online

 We've had a couple of last minute drop outs, so if you are interested there are spaces which can be booked at IChemE - here.

Avoiding collusion

 some useful thoughts and comments on avoiding collusion between companies - pretty relevant at the moment.  In fact nearly always relevant.

Article is here.

Update to website

 I've made some minor changes to the website to bring some of the references and testimonials more up to date.  You probably won't spot anything different but feel free to have a look.

www.pawa.co.uk

More about current poor government procurement

Peter Smith over at badbuying.com is laying out some of the problems with the government's current approach to procurement.

Over at telles.eu Pedro Telles (always worth a read) is laying out some more.  He goes as far as to use the C-word; Corruption.  

This is not something we think about in the UK, but the whole of the EU (and current) UK procurement rules are based around trying to reduce the potential for corruption.  It is the elephant in the room.  The mechanisms chosen are competition and transparency - competition so that unless whole industries are colluding (and it does happen) we will get reasonable offers, and transparency so that everyone (suppliers and public alike) can see what is happening and complain if we see inappropriate behaviour.

Of course you can argue about how effective it is in practice, and whether there are other ways to avoid corruption, but that is the intention.

The Covid-19 pandemic has given an excuse (sometimes justified) to circumvent the usual processes. Sometimes this has happened even when existing frameworks could have been used.  It has become common to have very large direct awards without competition, and limited or no transparency at the time (or limited transparency at a later time when it is too late to do anything about it).

Now, there is a case that government is selecting good quality suppliers without having to go through red tape.  And that is usually the argument made - it is efficient.  Which may be true, but it is also the way you would choose to do things if you were wanting to corruptly appoint suppliers in return for backhanders or favours.  I'm not saying that is going on, I have no idea.  But the rules are there to try and reduce the potential for that sort of crime.

Criminals always seek to exploit difficult situations. We should be very careful, and recognise that the procurement regulations are not "bureaucracy" or "red tape" but a mechanism (however imperfect) for protecting the taxpayer.  That organisations such as The Taxpayer's Alliance are quiet about this, but not about wages for public servants, shows that they are not genuine about their purported purpose but are simply pushing a political agenda. (Which in itself would be fine if they were honest about it)

Bad Buying by Peter Smith

That's a book by Peter Smith, not examples of bad buying he has carried out!

 Not out till October, but it looks very interesting and I know I shall be first in line.  He promises it will cover Brandenburg airport in Berlin, which is one of my favourites (just because it is nice to have an example where we can compare with a British project that was mostly very successful - Heathrow Terminal 5).

In the meantime there is a website and Peter is promoting it on twitter at @gpetersmith.  

Peter is finding lots of things for the sequel in current government practices during the pandemic.

I only wish I had thought to write it first - but I am sure Peter will do a better job than I will.  

(I also expect lots of music tips)

Full disclosure - I've only ever met Peter once, when he asked me to write a brief article about tendering tips - which I never did! 

IChemE - Restarting Supply Chains - 5th August 2020

Whatever we think about the current pandemic  - whether concerns are overblown, whether it will be over soon, or whether it is serious and we are stuck with it for months - it is clear that there has been major disruption to supply chains.   We can hope that everything will very quickly get back to normal - but there is an element of wishful thinking there.

You might think that this is a great chance to restructure your supply chains - or that things will quickly revert to exactly what they were before.

With IChemE we are running an online seminar that helps to cover all of these topics, and will help you to think through your options and choices.  And we hope to cover the possible disruptions caused by the UK leaving the EU REACH regime a bit too.

As with any disruption, you can wish and hope - or you can plan and organise.  We hope to help you with your planning.

There is a guest speaker that we are not quite able to announce - watch this space.

Full details and booking arrangements are here.

New dates for summer online courses

Somehow these online courses seem to be more fluid than face to face courses - partly because we don't have to book a venue.  And partly because we are all still working it all out.

Anyway, new dates for online courses;

EuroMaTech - Restarting your International Supply Chains - 22/23 July 2020

EuroMaTech - Advanced Purchasing Management - 26/27 July 2020

Both courses to be run on Dubai time.  Details on www.euromatech.com

CIPS Exam Preparation & Revision Tips - CIPS Yorkshire branch 26th June 2020

I've been invited to run an online seminar for CIPS students at lunchtime on Friday 26th June 2020 (12 till 1:30pm).  It is being organised by CIPS Yorkshire Branch (my home branch), but as far as I know is open to any and all CIPS members studying for exams.

I am running a number of exam training programmes at the moment for The Procurement Academy , so I recognise how worrying the prospect of exams can be - especially if you haven't had to sit one for a number of years.

I don't want to give away too much of what I am going to say (translation: I haven't written it yet) but one thing I will say is "Don't panic".  The stress of exams can turn your mind to jelly as we get a surge of adrenaline that triggers a fight or flight mode, and sometimes just paralyses you into inaction.

It's easy to say relax, but harder to do.  I know.  But breathing helps.  (oh, and revision too)

Booking for this free webinar is here.

Additional date for IChemE What every Engineer needs to know about Contracts 7/8 September 2020

Just finished running this course today, which was great fun apart from Microsoft deciding to install a new version of Windows10 this morning.  Every trainer's worst nightmare. Running around I got my third laptop (the second spare) to avoid installing the new system and get on with running the event.  Though I was a little flustered at the start...

Anyway, interest has been high enough that we have decided to run another session on 7/8 September rather than wait till November 23/24.  As long as interest is high enough we shall run both courses, so if you are interested you will have a choice of dates.  

The new date is not on the website yet, but I shall let you know when you can start booking.  

EuroMaTech Restarting International Supply Chains - date change to 19/20 July 2020

Just to let you know that the date of this seminar has been moved because delegates have asked us to change the date to July.

The link on the EuroMaTech website still says Sunday 14th June, but on that day I shall instead be taking part in a webinar on Crisis Management with four of our other tutors.  I may have mentioned it before - we have just had the run through.  It is a free seminar and you can register here.

EuroMaTech webinar Crisis Managment 14th June 2020 - 9:30UK

I shall be one of the hosts for an online webinar from my colleagues EuroMaTech in Dubai.

This free of charge event gives an opportunity to think about the challenges and opportunities created by the current pandemic, and to see in action some of the trainers you might meet on our courses.  Details here.

I shall of course be talking about Supply Chains and the crisis.

You might note that this is due to be running at the same time as I was due to be running Restarting International Supply Chains.  Well, I am afraid that in this time we are having to be flexible and we have decided to reschedule that course.  (This is why I say I have the easier job in training - I just have to write and present.  I don't have to do all the admin) I'll let you know the new date asap.

IChemE What Engineer's need to know about contracts - 10/11 June 2020

Well, there has been a big response to this course.  Which is nice, and also raises questions.  Is the topic particularly relevant at the moment? Or do people have time on their hands.

Hope to find out tomorrow.

We can squeeze more people on - but you would have to book right this minute.  Booking here.

You might be better off waiting until the next running (and it is a live event so it is a real run through not a recording) on 23/24 November 2020.

Online Training courses

I have run quite a few online training courses recently, and now feel happy enough about the process to offer online training programmes to in-house clients.

Topics are of course for mutual agreement (the advantage of bespoke rather than off the shelf training), but training courses more or less ready to go are;

Reconnecting your Supply Chain
Public Sector Procurement
Procurement and Supply Chain Management
Managing Procurement Teams
Introduction to Contracts

If any are of interest, get in touch and we can have a chat.

Webinar: Advanced Purchasing Management and Restarting your Supply Chain

The webinar I recorded for EuroMaTech is now online if you are interested.  It lasts about an hour an includes material from two courses, which I have melded together into something I hope is useful. The attendees seemed to like it.

The webinar is available here.

You will see that there are more webinars planned, which you can sign up to in the same place.

The Courses are;
Advanced Purchasing Management 21/22 June 2020
and Restarting International Supply Chains on 14/15 June 2020
http://www.euromatech.com/seminars/restarting-international-supply-chains

(Yes, I know that seems the wrong way round.  I can assure you it will work fine).

I hope to see you then.

Webinar - Advanced Purchasing and Covid-19 27 May 2020

I am running a webinar for EuroMaTech on Wednesday 27th May 2020, at 9:30am UK (12:30 Dubai).  Details are here.  This is a brief taster for two courses we are running in June - Restarting your Supply Chain, and Advanced Purchasing Management.  I have re-worked some of the sample content so that it works as a standalone (I hope).

I may be biased but having tried the webinar software today, I like it.  Same sort of flexibility as Adobe Connect, but much simpler to use.

Hope you can join us.

cash

One thing that just occurred to me is that thanks to the Covid-19 crisis, I haven't touched a coin for maybe two months.  When I shop I use contactless cards (my wife uses Applepay and is quite annoyed when stores don't accept it).  I DO use bank notes - these are handed to my son to go and buy odds and ends from the shops.  Oddly enough there never seems to be any change...

So, we have been getting used to the concept of a cashless society for half a decade.  Sweden is often seen as being at the front of that trend (see picture).  I just wonder if this crisis is going to accelerate that process?  

Now there are advantages and disadvantages of a cashless society (is it a good or bad thing that all of your spending can be tracked?), but as is often the case - there may be no going back.

Advanced Purchasing Management - EuroMaTech online 18/19 May 2020

We have scheduled one of our most popular courses for the EuroMaTech group as an on-line programme on 18/19 May 2020.  This has been running and been continually adapted for a decade.

The face to face programme is 5 days of content, and obviously we are having to trim a few bits of content and move fast to get it done in 2 days.  But on the positive side, it is available wherever you are, and we will cover most of the material - but not with many exercises or breakout sessions which I know are appreciated by delegates.  As indeed are our excellent training facilities around the world.  But at least you will be able to guarantee your favourite beverages and snacks if you are providing them yourself.  And it is cheaper.

The course will run from 8:30 am Dubai time (5:30am UK time).  I'm getting up early, so I hope that you will join us.

Full details and booking form are here.

a final post on oil

The folks at @tankertrackers (who ever they are) provide the above illustration of where the full oil tankers are at the end of April 2020.  Not quite as many as some illustrations have shown.  It is pretty nice though to be able to SEE the supply chains.  All of those ships are going somewhere - or hanging around storing oil until it is worth selling.

They also provide a nice illustration gif of who the major oil producing nations are.  Many people immediately think of the Kingdom of Saudi Arabia.  Actually, they are third.  Second is Russia, and top of the list is the USA.

https://twitter.com/i/status/1252265633674399744

Oh, and WTI is now round about $ 20/barrel.  Low but not negative.

Quality and Price are not necessarily linked.

The School of Life is basically about the philosophy of living.  Now, you might think that many of us are too busy to even think about that - they have thoughts on that too.

I just came across an article of theirs that touches on that old problem for procurement - things that are more expensive are not necessarily better than things that are cheap.  My wittering about oil the past few days is a good example - the "free" oil is not inferior to the oil that was being sold for $70/barrel earlier in the year.

We do tend though to imbue more expensive things with more value, and value of course is often subjective rather than objective.

It is often difficult to work with our colleagues and make sure that we are getting the right specification, and not just using price as a proxy for Quality.

Anyway, the article is here - part of a much longer series.

Possible future course on Re-starting supply chains.

We are already running some courses online, and probably about to start re-working some for the middle east market.  Looking at the courses made me wonder if there might be interest in a new course....

When things do start getting back to "normal", it will not be like flicking a switch.  A lot will have changed in the supply market, and particularly in the demand market.  Supply chains take a lot of work to make them Efficient, i.e. Lean.  Which means that they will not be Resilient.  So, our lovely smooth Lean supply chains are going to splutter into life rather than spring back perfectly formed.  There will be lots of blockages, broken links and delays.
Some businesses will be out of business - others will have changed their mode of operation.
Should we still buy from China?  Or should we develop local suppliers (who may be more expensive at first).
What did our contracts say about Force Majeure and what should they say for the future?

If you think there would be interest in such as course, please do let me know.  I am particularly interested in what you think should be covered, and whether we can do it in 1 day or will need 2.

Take care of you and yours.

Wow 2!

Further to yesterday's blog about Canadian oil, during the evening the price of WTI plummeted well into negative figures.  Most of this is actually a technical issue - yesterday was the day for completion of futures contracts and when people had to take actual possession of the oil (rather than just trading it).  The problem is that there is not sufficient oil storage, and so people with a contract where they had agreed to take oil had nowhere to put it - so they needed to dump it on people who could take it.  At any price.

Hence the collapse.  And why Brent crude did not collapse in the same manner - people have sufficient storage.  For now.

The market is still in Contago - where the price for future product is higher than the price for immediate delivery.  Normally this leads to people buying ahead of need and storing - which both drives up the price today, and lowers the price in future.  For now the future oil price still seems to be somewhere in the $20s.  Storage is getting very full.  We don't have any real clarity on when things will get back to "normal".

So, expect more fun and games in future.  Realistically, expect oil producers to start shuttering facilities that they think can be (more) easily shut down and then re-started.  I expect that to mean shale oil and fracking rather than offshore, but I'm not an expert.

CIPS Qualifications training and the Procurement Academy

CIPS are tentatively looking to restart the examination process in July, and then September.  Obviously there are a lot of hoops to jump through before then, but it means students can at least think about studying with purpose.  We do recognise that it is tricky (if useful) to study when you do not know when you will be tested - there is always the worry that you will forget everything.

So, we have started running our CIPS qualification training programmes using Zoom.  It seems to be working OK so far, but not so brilliantly that we won't go back to meeting face to face when we can.  I am working with a L4 group and an L5 group, nominally out of Leeds.  I have adapted to running half day sessions rather than full day sessions, so it takes 2 sessions to cover what we might have done in a single day.  We have other tutors who are still following the full day model - so you have a choice.

We are looking at when the exams are scheduled, and will be looking to support students with additional revision sessions for courses that were postponed in March (it is easy to forget...).  And one advantage of being online is that we can record each session and make them for delegates who would like to review them at leisure.

So, if you do have time on your hands and want to get something out of this lockdown, and are thinking that this is the year you finally tackle CIPS - then check out the Procurement Academy.  We will be delighted if you can join us.

Canadian oil price is negative!

Wow!
https://oilprice.com/Energy/Oil-Prices/0-Oil-Forces-Canada-To-Shut-Down-Crude-Production.html

Ok, so Brent Crude is still $26, WTI is $10.  Those are amazingly low prices as it is.
But negative?  Oil they will pay you to take away?  Wow.

The last time it was that low?  About 25 years ago, 1998.  But of course that doesn't take account of inflation, and $11 in 1998 is $19 now. (details here)  In real money it is the lowest since 1946 - maybe ever (here).

If you are a Brit of course, this matters because we are still an oil producing nation, and in fact it is our 5th biggest export (after equipment, cars, pharmaceuticals, electrical equipment - and we aren't exporting many cars at the moment either).  Not good for our economy in that sense - but obviously cheaper fuel has other benefits.  Fuel is our 3rd biggest import, so the imports will be cheaper.  And we import more than we export - so it is a net gain on our trade balance.  But the low price may make some fields less profitable, and indeed unstainable if the price stays low for long - which will hasten the end of the UK oil industry, leaving us with a gap in our exports.

IChemE online - What Engineers Need to Know about Contracts - 10/11 June 2020

We hope to run the in person (face to face) event in Rugby 22/23 October 2020.

But additionally we are looking to run an online version 10/11 June 2020 - details here.

The online session will be shorter, as we find that people prefer shorter sessions.  The face to face event obviously gives more opportunity for people to interact and share there experiences, but we shall try to replicate the content as much as possible.  The material is being developed now, and will cover the same ground but in slightly different form.

This is different from the webinar content that IChemE present - those are recorded and available to purchase at any time.  This will be an actual online seminar and so questions will be welcomed (and answered I hope!)

I hope that you will join us.

Covid-19 and the economy - it could be worse

Ok, I admit I might just be trying to keep my own spirits up, but the OBR (Office of Budget Responsibility) scenario review that says that the UK economy will shrink by 35% in Q2 (compared to Q2 last year) could be worse.

Think about it - it means that nearly two thirds of the economy is still functioning.  Now, in economic terms a 2% change is seen as significant and 10% is huge, but let's try and be positive.  The impact is of course very different in different industry sectors.  There seems to be a 90% reduction in Education (which I suppose we should expect given schools and universities are closed).  Similarly for hotels.
But manufacturing is only down 55% (only!) and utilities by 20%.  There is still some activity going on during lockdown.

So, what will it mean for procurement when lockdown ends?  Well, obviously there will still be considerable disruption to supply chains - there will be shortages, and delays - but also temporary gluts.  There will be an opportunity for some suppliers to temporarily charge premium prices until the market normalises.  There will also be opportunities for some canny buyers to get some bargain prices - but we shall have to be careful that we do not force too many suppliers out of business by insisting on prices that allow them only to liquidate stock and not to rebuild.

Being selfish, I hope that the crisis does lead to people having greater awareness and consideration of their supply chains.  Beyond that, I just want to try and keep my spirits up.  Hope you can too.

HS2, Covid-19 and complexity

The news is that the government has given the go-ahead for construction work on Highspeed 2 to start, even though much of the country is still in lockdown.  There are a lot of people quite vociferous that this is not a good time to start, and some arguing that this is a good time to drop the whole HS2 project.

Well there is an argument for HS2 that it will free up more space for rail freight, which is a good thing.  And I'm more of a fan of HS3 (which if it ever happens, will be at such a future date that it will do me personally no good).  But those are discussions for another day.

What I wanted to do is discuss is why one factor in this decision is rather unexpected, and an example of the interconnectedness and complexity of our economy.  Yes, starting work keeps some people in jobs and keeps some money flowing in the economy and it is probably better to get some building done for that money rather than pay people 80% to be furloughed.  And yes, it is a big project so might as well get started.  And yes, having started people will be reluctant to stop because of the sunk cost fallacy.  But I'm not thinking of any of those.

Not starting HS2 now might have an impact on the NHS and our fight against Covid-19.  How so?
Well, when we start the construction work we will need concrete - which means that the cement kilns need to be kept going when otherwise they might shut down because of low demand.  And if you know about cement kilns, they are not as quick and easy to shut down and start up as a gas fire.  But we need to look further down the supply chain.  Cement kilns use a lot of fuel.  Where do they get it from?  They use a variety of sources, but one of them is re-processed chemicals that where originally used in the pharmaceutical industry as solvents.  These can be reprocessed to some extent but they can also be blended up as fuel for cement kilns.  What do we do with them if they aren't sent there?  There are only 3 choices - storage, incineration, and shutting the pharmaceutical production.  Storage capacity is not huge, there isn't enough incineration capacity, and it has to go somewhere if you produce it.  So, you say - build more storage.  Why?  We don't need it when the virus is over.  Burn it - well we'd love to have more incinerators, because we are already at maximum capacity, but do you want one in your backyard?  And building incinerators is quick and easy compared to the process for getting permits.  So, if there is nowhere to dispose of the waste (short term), the option left is to close pharmaceutical production - which is obviously not ideal during a pandemic.

So, starting work on HS2 keeps the kilns fired up using fuel from the pharmaceutical industries, which helps the NHS.  A complex web... isn't it?

COVID-19 and the complexity of supply chains.

It is a rather unpopular point of view these days, but the world is rather complex.  Things seem very simple on the surface, but rather like a swimming swan, there is a lot going on under the water line.

Our supply chains - basically - just work.  It no longer seems miraculous to us that we have strawberries in January, and can order a coffee spoon from around the world for 90p  (I did.  It came from China via Guadalcanal).

The current lockdown has made us all more aware - many of us can barely remember shortages, let alone for multiple products at the same time (toilet paper, pasta, flour....)  Our supermarket supply chains are so optimised that a relatively small increase in demand (from both panic buying, and an increased demand now that more of us are eating 3 meals per day at home instead of only 2 or even 1) has meant empty shelves.  In classic Inventory Bullwhip fashion, this has lead to people increasing order quantities (as we supply chain folk like to call panic buying) and increased stockholding (aka hording) leading to even more shortages.

The supply chain IS reacting.  But having optimised for efficiency it is difficult to reformulate for effectiveness.  So we have people like the wholesale suppliers (no longer able to supply restaurants) being willing to supply the public - but only providing flour in 12kg sacks.  It will get there.  And may be people may be just a little bit more aware of what a miracle it is.

But a word of warning - you can hardly buy a webcam for love nor money.  And they mostly come from China, and are not likely to be the number one priority as things normalise there.  So, some shortages will continue for quite some time.  Sorry if you intended starting a podcast.

some links on Force Majeure

Force Majeure is a pretty common discussion point at the moment thanks to Covid19.
The folks over at Supply Management magazine, the magazine for CIPS members, has run a number of useful articles that may be helpful.  In particular they point out that the doctrine of frustration may apply if you don't have a Force Majeure clause - or don't have a clause in it that specifically applies to Pandemics.

https://www.cips.org/supply-management/analysis/2020/march/coronavirus-what-you-need-to-know-about-force-majeure/

https://www.cips.org/supply-management/analysis/2020/march/coronavirus-ending-contracts-without-force-majeure/

If in doubt, have a look at your contracts - then talk to your Procurement Manager and lawyer  (I'd suggest that way round - it might be cheaper).

online training updates

Well, to be honest update is a little bit optimistic.  What I can tell you is that I shall be running two new online courses - one for CIPS, and one for IChemE - if all goes well in the development.  What I cannot tell you yet is the titles and timings, though we are hoping to run the IChemE course in early June.

More details as things develop - stay in, and stay safe.

Force Majeure and Covid-19

One of the things that I say in my courses on contracts is that it is only when things we go wrong that we actually look at the fine print in the contract.  Well the Corvid 19 situation is definitely a time when people go and look up what their contract actually says, particularly the Force Majeure clause - if there is one.

Force Majeure is a well known phrase that means different things to different people.  In fact some legal commentators state that there is really no such thing as a Force Majeure clause, and that everything could be covered by the doctrine of frustration or other legal principles.

The general idea of Force Majeure is a clause to deal with events that are outside the control of the relevant party, were irresistible (an Act of God) and unforeseeable.  Now that seems easy to understand, until you start delving into it.  The recent floods were irresistible, but were they unforeseeable? If they were now, would they be unforeseeable if they happened in the same places next year?

In standard contracts we may have a Force Majeure clause (or may not) which states what is covered.  Surely the Covid 19 epidemic is the sort of event that is covered?  Well, I was recently comparing standard Force Majeure clauses from standard forms of contract from IChemE and LOGIC.  One explicitly identified pandemic as covered - the other didn't.  Which was which?  And what do your contracts say?  Well this is the point where I suggest you go and have a look for yourself and check.  Hopefully, before it is too late.


Lawyer and legal commentator David Allen Green had a useful analysis on his twitter feed, here.

Procurement webinars and on line training

With in person training off the agenda for the foreseeable future then I am looking at running some on-line webinars and training programmes.

Anyone interested please let me know what you are interested in, and what would best meet your needs.

Thanks.  Now I'll go back to looking at all the technology (simple) and hosting options (not so much)

Procurex - delayed

Looks like the excellent Procurex events are being delayed to the autumn because of the Coronavirus.

Long way to go, but hope to be there.

BIP Solutions webinar on Use of Reg 32 for Public Procurement

My good friends at BIP Solutions are running some useful webinars in the next week.
The next one is Thursday 26th March 2020 at 11am, and covers the use of Regulation 32 (Use of Negotiated Procedure without prior publication) in light of the current Corvid-19 epidemic.

I don't know exactly what they will say, but it is bound to be useful.

Booking details are here.

Covid-19 and UK Public Procurement regulations

The UK Government has issued a new PPN (Procurement Policy Note) about public procurement in the time of the Coronavirus.  Information is here.

Some commentary can be found at Telles.eu