Tackling the Supply Chain – Rugby World Cup 2015

On Friday night, the eighth Rugby World Cup kicked off with a hard fought win for tournament hosts England over Fiji at Twickenham. With over £1bn expected to be added to the UK economy over the next 6 weeks, how will supply chains cope with, and ultimately benefit from, increased demand?

Over the course of 44 days, 48 matches will be played out in front of a global television audience expected to surpass 4 billion people across 207 countries. It is also estimated that over 466,000 international fans will visit one or more of the 14 cities where matches are staged or fan zones are in operation.

Investment, Jobs and Opportunities

In preparation for the tournament, over £85m has been invested in infrastructure around the UK, with further investment expected in creating a ‘legacy’ for rugby around the country. Over 41,000 jobs will be created, including 16,000 related to the tournament and over 12,000 along the supply chain. In total, outputs are expected to surpass all previous tournaments at £2.2bn.

UK businesses will also see a legacy from the tournament. At the 2011 tournament in New Zealand, 52 per cent of businesses increased their international networks, and the same is expected this year in the UK.

The British Beer and Pub Association (BBPA) anticipates an additional 25 million pints will be drunk during the tournament, bringing over £86m into an industry that has been struggling in recent years.

However, it’s not good news for all companies. Thanks to a £20 million pound sponsorship deal for Heineken, Guinness has been removed from all 13 host stadia. No small matter, given that Guinness accounts for half of all pints sold at Twickenham in recent years.

Procurement and Supply Chain Matters

With the increased tourism to the host cities, there is a positive knock-on effect for supply chains across the UK too. Businesses have been encouraged to work directly with organisers and tourist boards in order to ensure that they are ready for the influx of extra customers.

As might also be expected, there have been a considerable number of opportunities for businesses to get involved with supplying the tournament itself, as well as the teams. A dedicated tender portal was set up for all official opportunities and advice given to businesses to enable them to boost their chances of winning business.

England Rugby 2015 Chief Executive Debbie Jevans was quoted in 2014 as saying that companies need to be aware of the attributes England Rugby 2015 look for when deciding on procurement options.

“Awards will generally be given to companies that are suitably qualified and can provide a competitive commercial proposal, as well as a compelling service proposition,” she said.

And with awards made for all manner of things, including security, fleet management and medal making, there is huge potential for UK business to take advantage of this great opportunity and get their slice of the pie.

And We’re Off

So, with the tournament firmly up and running, and team Procurious collectively supporting Scotland, England and Australia (or if you are like this writer, hoping Scotland don’t perform as abjectly as in 2011), it’s either time to kick back and watch some matches, or avoid them at all costs.

Just don’t be one of the anticipated 4.4 million workers who will skip work just to take in a match…

Is your business benefitting from the Rugby World Cup? What does the tournament mean for you? Let us know and tell us your stories of this, and past, World Cups.

For those of you needing something other than rugby to talk about this week, here are the big headlines in procurement and supply chain…

Plunging oil prices put question mark over $1.5tn of projects

• Plunging oil prices have rendered more than a trillion dollars of future spending on energy projects uneconomic, according to a study that suggests that the impact on industry operators is worsening.
• A report published Monday says $1.5tn of potential investment globally — including in North America’s shale-producing heartlands — is “out of the money” at current oil prices close to $50 a barrel and unlikely to go ahead.
• Industry operators expect capital spending on new projects to decline by between 20 and 30 per cent on average in the wake of the price slide, says Wood Mackenzie, the energy consultancy. It calculates that $220bn of investment has been cut so far, about $20bn more than it estimated two months ago and much of it the result of projects being deferred.
• Such a decline in spending means that the price crash since last summer — the result of weaker Chinese demand, record US production and Saudi Arabia’s decision not to cut output — could resemble the savage downturn of the mid-1980s.

Read more at the Financial Times

Target supply chain woes get serious

• Target is now taking its supply chain problems seriously. The major retailer has been struggling with running out of stock and even having empty shelves in stores. But last week, John Mulligan, the newly appointed chief operating officer, called the company’s woes “unacceptable.”
• “We’ve been asking our supply chain to move well beyond its original design and become more flexible in the way we serve our guests,” Mulligan said. “However, while we understand the reasons, the simple fact is that our current performance is unacceptable.”
• Target’s online ordering and in-store pickup options have reportedly magnified the retailer’s supply chain problems. The growth in online ordering could have more widespread impacts in the retail sector, where other companies’ supply chains might not be up to the task.

Read more at Spend Matters

European auditors warn over public procurement errors

• The European Commission and member states must do more to address problems with public procurement in EU cohesion spending. The European Court of Auditors said failure to comply with public procurement rules has been a “perennial and significant source of error in EU cohesion expenditure”.
• It also recommended payments to member states should be suspended if shortcomings on public procurement were not rectified.
• €349 billion (£395 billion) was allocated in the area of cohesion policy through the European Regional Development Fund (ERDF), the Cohesion Fund (CF) and the European Social Fund (ESF), between 2007 and 2013. A significant part of this money was spent through public procurement, which is governed by the EU purchasing regulations.
• The auditors’ Special Report assessed whether the European Commission and member states were taking steps to address the problem of public procurement errors in the area of cohesion policy. It examined more than 1,400 transactions between 2009 and 2013 and detected errors relating to public procurement in around 40 per cent of all projects.

Read more at Supply Management

Canada’s biggest-ever military procurement at ‘very high risk’

• Documents obtained by CTV News suggest that the Conservative government’s plan to overhaul the Royal Canadian Navy with a multi-billion dollar procurement to replace frigates and destroyers may be in trouble.
• According to internal documents obtained by CTV News’ Mercedes Stephenson, the “Canadian Surface Combatant” program is at “very high risk” of running over budget, behind schedule, lacking skilled manpower, and producing inadequate capabilities.
• The documents warn there is a risk the project, “may be unable to deliver the optimal number of ships with the capabilities necessary to meet operational requirements” and that may, in turn, lead to the navy’s “inability to deliver operational effect and/or a failed procurement.”
• Sources tell CTV News that a fixed budget, combined with increasing costs and procurement delays, mean the navy has likely already lost one or two of the promised 15 ships.

Read more at CTV News

Chill, China’s economy isn’t collapsing: China Beige Book

• Current market perceptions of China are “thoroughly divorced” from the reality on the ground, according to the latest China Beige Book (CCB) survey, which has found that while the economy slowed in the third quarter, there are no signs of an impending growth collapse.
• “In the aftermath of the stock market collapse and a surprise currency action in August, global sentiment on China has veered sharply bearish—too bearish,” Leland Miller, president of CBB said. “While we have long cautioned clients against relying on rosy official views of the Chinese economy, we believe sentiment has swung substantially too far in the opposite direction,” he said.
• Corporate revenue growth, although weaker than the second quarter, actually improved over the first quarter, and was stable in on-year terms, according to CBB.
• While manufacturing saw its weakest performance in two years, as indicated by recent purchasing managers’ index (PMI) surveys, other sectors buoyed the economy.

Read more at CNBC