Procure4Peace formed to support Ukraine
Procurement professionals worldwide are being invited to provide supplies and their time to help Ukraine following Russia’s invasion.
With the aim of providing sourcing support to the war-torn region, two digital procurement software companies – the UK’s ProcureTech and Finland’s Sievo – are spearheading the volunteer-based not-for-profit campaign Procure4Peace. A LinkedIn page and website have been set up to connect organisations in Ukraine with procurement professionals outside the country who can provide help.
The initiative follows a recent webinar organised to rally support for Ukraine that attracted around 100 buyers, with people offering category expertise on a range of goods and services. Procure4Peace is asking procurement professionals globally to join the groups to share their supplier contacts, process expertise and volunteer their time.
Kseniya Valieva, VP for membership at the Council of Supply Chain Management Professionals (CSCMP) in Ukraine, told the webinar: “We have united to defend our supply chains that have been disrupted by war.”
Sammeli Sammalkorpi, co-founder and CEO at Sievo, said: “The procurement community is well positioned to help Ukraine. There are a lot of global procurement professionals who want to help. Procurement people in Ukraine have limited time because there is a war to be fought.”
Those attending the webinar were told that Ukraine needs medical equipment, pharmaceuticals, personal care products and security equipment for firefighting, the police and defence, including helmets and bulletproof vests.
The newly formed organisation’s website states: “Procure4Peace.org believes that procurement is in a unique position to leverage their own network and sourcing skills to get the necessary goods to Ukraine. Together with procurement professionals from Ukraine, we try to bridge the global procurement community to source and supply the needed help to Ukraine.
“At the same time, we also want to help the procurement community navigate through the supply chain challenges around the situation of Ukraine, we do this by sharing information such as whitepapers and hosting webinars.”
Ukraine’s Infrastructure Minister Oleksander Kubrakov has said that his country has already suffered about US$10 billion in damage to its infrastructure since Russian troops invaded on 24 February.
Commenting on the Procure4Peace campaign Malcolm Harrison, group CEO of the Chartered Institute of Purchasing and Supply (CIPS), said: “The horror that is unfolding before us in Ukraine renders all of us speechless. As communities across the world rally to do what they can to support displaced men, women and children, the procurement community can also play its part.
“We must ensure supply lines remain open, new networks are developed ensuring vital items continue to reach those in need and do what we can to keep that supply chain infrastructure moving.
“This will be a collective effort amongst procurement and supply professionals and we must pull together to pool our knowledge, expertise and our ability to help. We are a powerful profession and I have no doubt we will stand up to offer our support when it is needed most. Please get involved if you can.”
Building material shortages to intensify
Russia’s invasion of Ukraine threatens to cause critical building material shortages and price rises that will have a knock-on effect on the global supply chain, reports the construction news website pbctoday
Global supply chains have already experienced disruptions over the 12 months prior to the war in Ukraine, raising concerns over prolonged building material shortages and price rises, according to a report published by the building suppliers and buyers network Achilles Information.
The shortage of raw building materials such as tin – a key component of circuit boards – molybdenum, a trace mineral used in energy creation, defence products, and new applications powering electric vehicles, alongside other materials such as nickel, zinc, copper, oil and gas, are expected to impact downstream global supply chains and hamper global trade.
Lithium – a material essential to the production of batteries for electric vehicles and electrical storage – is particularly scarce and could see up to 20 million electric vehicles taken out of production between 2022 and 2029, reports pbctoday.
In the short term, competition for lithium is likely to see the global transition to a renewable energy system come under pressure as car manufacturers and battery producers compete for a limited supply.
Katie Tamblin, author of the Achilles report and the group’s Chief Product Officer, commented: “Supply chain data emerging from Q4 2021 was already indicating that 2022 would be a rocky road for global supply chains, and now with the additional conflict in Ukraine, the outlook is extremely concerning.
“The Achilles Supply Chain Resilience Index (ASCRI) has, throughout the whole of 2021, flagged commodity prices and energy supply as bellwethers for global supply chains.
“Pummelled by so many challenges over the last two years, supply chains have not had time to recover, and we now face a critical tipping point that could have both supply and cost ramifications rippling through industrial and consumer markets for years to come.
“Now is the time to practice the lessons of the pandemic, and as we emerge into a new world order, use data to inform purchasing decisions. Our data shows that to weather this crisis, organisations need visibility across their supply chains to identify vulnerabilities and alternative sources of supply.”
Shell the latest to join Russia exodus
Shell has announced plans to withdraw from Russian oil and gas and close all its service stations in the country, days after deciding to exit its joint venture with Russian state energy firm Gazprom.
The gas and oil multinational said that it will immediately stop buying Russian crude oil on the spot market and not renew term contracts. It will also change its crude oil supply chain to remove Russian supplies but added that this could take weeks to complete and would lead to reduced throughput at some of its refineries.
Shell will also close its service stations, aviation fuels and lubricants operations in Russia, and initiate a phased withdrawal from Russian petroleum products, pipeline gas and liquefied natural gas. “This is a complex challenge,” a statement from the group said. “Changing this part of the energy system will require concerted action by governments, energy suppliers and customers, and a transition to other energy supplies will take much longer.”
Chief executive, Ben van Beurden, added: “We are acutely aware that our decision last week to purchase a cargo of Russian crude oil to be refined into products like petrol and diesel – despite being made with security of supplies at the forefront of our thinking – was not the right one and we are sorry.
“As we have already said, we will commit profits from the limited, remaining amounts of Russian oil we will process to a dedicated fund. We will work with aid partners and humanitarian agencies over the coming days and weeks to determine where the monies from this fund are best placed to alleviate the terrible consequences that this war is having on the people of Ukraine.”
The move comes after the big four accountancy firms confirmed they are all cutting off businesses in Russia and Belarus as EY and Deloitte followed the lead of KPMG and PwC. Although the businesses will not necessarily close down they will be legally separated as they join the exodus of multinational firms responding to the invasion of Ukraine by pulling out of Russia.
KPMG has more than 4,500 workers and partners in Russia and Belarus, while PwC has 3,700, EY has 4,700, and Deloitte has 3,000. KPMG and PwC confirmed that the businesses would no longer be able to use their brands or name once separated.
Other services companies including accountants, consultants and law firms have large Russian operations that had served big businesses but are now pulling out. Information technology consultancy Accenture announced on 3 March that its 2,300-person business in Russia would close, while McKinsey and Boston Consulting Group said they would suspend client work there. Global law firm Linklaters, which has carried out work for Russian state-owned companies, said on 4 March that it plans to wind down its Russia operations and close its Moscow office.
Announcing its departure, EY said Russia’s invasion of Ukraine was “shocking and abhorrent”. The EY Russian operation would be legally separated and EY would not serve “Russian government clients, state-owned enterprises or sanctioned entities and individuals anywhere in the world,” it said.
“This is not something we take lightly. This is heartbreaking as we have over 4,700 colleagues in Russia, who have been a part of our global network for over 30 years and worked side by side with our global, eastern European and Ukrainian colleagues.”
Deloitte’s statement read: “We will separate our practice in Russia and Belarus from the global network of member firms. Deloitte will no longer operate in Russia and Belarus.
“Like others, we know our colleagues in Russia and Belarus have no voice in the actions of their government. We will support all impacted colleagues during this transition and do all we can to assist them during this extremely difficult time.”
Jon Holt, the chief executive of KPMG UK, said in a social media post on 6 March that the firm had decided to “terminate the small number of contracts that KPMG UK has that are related to individuals or entities that are controlled by the Russian state, or closely connected with the Russian regime”.
A spokesperson for KPMG International said: “We believe we have a responsibility, along with other global businesses, to respond to the Russian government’s ongoing military attack on Ukraine.”
The decision to leave behind the Russia and Belarus networks was “incredibly difficult” but is “a consequence of the actions of the Russian government”, the statement said.
Bob Moritz, PwC’s global chair, said he was “shocked and horrified by the senseless war that the Russian government is inflicting on Ukraine and its people”.
PwC said: “As a result of the Russian government’s invasion of Ukraine we have decided that, under the circumstances, PwC should not have a member firm in Russia and consequently PwC Russia will leave the network.”
Ratings agencies Moody’s and Fitch have both downgraded Russia’s sovereign rating to ‘junk’ grade following the growing regime of sanctions imposed by western countries, The downgraded ratings signify that even through financial commitments are currently being met, the country is vulnerable to high credit risk.
According to theUK's Association of Corporate Treasurers, a credit rating is a formal, independent opinion of a borrower’s ability to service its debt obligations. Investors may only lend money to companies or countries that meet a certain ratings standard. Those that do not may not be able to raise finance, or may only be able to do so with punitive payback conditions.
Moody’s Analytics launches supply chain management solution
Moody’s Analytics has announced the launch of Supply Chain Catalyst, a data and analytics platform for monitoring and managing supply chain risk. The Moody’s Corp subsidiary says that the solution helps organisations identify structural vulnerabilities and anticipate potential disruptions across their supply chain by providing a 360-degree view of suppliers across financial, sustainability, reputational and operational risk factors.
The firm adds that the Covid-19 pandemic has exposed the fragility of global supply chains, which are still in a state of disrepair. Recent events related to the Omicron variant and Russia’s invasion of Ukraine have created further bottlenecks in both production and logistics.
“There are significant downside risks to the near-term outlook for global supply chains, and while companies are increasingly building resiliency through adequate inventory and alternative sourcing, they should be prepared for headwinds,” says Tim Uy, Economist at Moody’s Analytics.
The firm notes that as supply chains and distribution networks become more complex, it becomes harder to identify financial and reputational exposures. Reacting to evidence of vulnerabilities is also fraught as organisations need to find alternative providers quickly to minimise business disruptions. This rapid substitution often exposes a supply chain to the risk of new suppliers with dubious credentials or high-risk profiles.
Supply Chain Catalyst is “a second-generation solution, integrating risk data on over 400 million entities globally from the award-winning Orbis database, with industry-leading risk assessment capabilities, which have long been valued by Moody’s customers,” it adds. “The combination enables a multi-faceted, robust, and efficient supplier screening and monitoring process so organisations can make data-driven procurement transformation decisions.”
Mashreq Bank launches supplier finance programme for SMEs
Mashreq Bank, the oldest privately owned bank in the United Arab Emirates, has launched a Supplier Finance programme to facilitate easy access to working capital for SMEs in the region.
Dubai-based Mashreq, founded in 1967 as the Bank of Oman, said that the new initiative leverages the credit worthiness of larger buyers to provide a more cost-effective early payment to their smaller suppliers, thereby reducing the overall cost of financing the supply chain.
The programme complements Mashreq’s existing receivable finance solutions which offers a one stop for client end-to-end supply chain finance needs.
Mashreq commented that globally, SMEs play a pivotal role in shaping economies. According to figures cited by the World Bank, in the Arab world alone, SMEs make up around 97% of businesses, employing half of the workforce – about 150 million people – and accounting for about 40% of gross domestic product. It is therefore critical that SME businesses, otherwise sparingly catered for by the financial services sector, have ready and uninterrupted access to adequate capital if they are to thrive and make a positive impact on their ecosystem.
A pre-pandemic report from the International Monetary Fund noted that increasing SMEs’ access to finance in the Middle East and North Africa (MENA) region to one comparable with the average level of emerging and developing economies would raise annual growth by 1% potentially creating up to eight million jobs in the Arab world by 2025.
“In addition, socially responsible organisations have recognised the strength of ‘Supplier Finance’ programmes as a potent tool towards solving the inherent problem the financing gap facing SMEs,” Mashreq notes. “No surprise that supply chain finance has outpaced traditional trade finance in terms of market revenue in recent years.”
Victor Penna, Co-Head of Global Transaction Banking at Mashreq Bank, commented: “Increasing the financial and environment sustainability of supply chains is becoming more and more important to corporate players in the Middle East. We are pleased to be delivering programmes that support these goals whilst helping close financing gaps for SMEs.”
Mashreq says that its supplier finance programmes are intended to benefit suppliers in several ways; other than ensuring a steady source of cost-effective working capital it improves the collection process and reduces overhead costs. In turn the buyers can improve their working capital cycle, increase the efficiency of payment management and most importantly strengthen the supply chain network, driving business growth.
“Aligned with Mashreq’s vision of maintaining environmental sustainability, the initiative encourages buyers to support supplier groups who are contributing to sustainability initiatives,” it adds. “A state-of-the-art 24x7 digital delivery channel available to both buyers and suppliers provides end-to-end transaction visibility and remote, easy access to transactions without the need to physically visit branches.”
Qantas warns of higher fares despite hedging
Australia’s Qantas Airways expects airfares will need to rise to cover the cost of higher fuel prices as its oil hedging contracts expire.
The airline’s Chief Executive, Alan Joyce said that Qantas has hedged 90% of its fuel needs through the end of June and 50% in the following quarter.
“(Hedging) gives us time to react to that higher fuel price,” he said at a conference hosted by The Australian Financial Review. “If we stay at these levels, airfares are going to have to go up.”
Oil prices began this week at 14-year highs as the United States considered acting alone to ban Russian oil imports rather than teaming up with allies in Europe.
Joyce said based on current oil prices, Qantas would need to raise revenue per available seat kilometre – an industry measure mixing fares and the percentage of seats filled – by 7%.
“Seven percent is not massive but it will have an impact on some levels of travel out there,” he added.
Joyce said domestic leisure travel demand had recovered to pre-pandemic levels, but business travel demand was lagging. Demand for international flights was strong in key destinations, with demand for tickets between Australia and London and Australia and Los Angeles higher than before the pandemic.
Payoneer partners with ThetaRay to monitor cross-border payments
Commerce tech company Payoneer will collaborate with AI-powered cyber security and big data analysis specialist ThetaRay to monitor global cross-border payments on Payoneer's platform. ThetaRay's SONAR SaaS solution will be used to monitor millions of transactions per year.
The partners said that their long-term agreement marks ThetaRay's expansion into the fintech payments market with its cloud-based SaaS solution following years of success in the banking industry. It is expected to go into production in early Q2 2022, when ThetaRay will begin monitoring digital payments and other services that Payoneer offers to its customers. SONAR is promoted as “the industry's most advanced financial crime prevention solution for cross-border payments.”
“With regulations becoming increasingly stringent, we needed to find a more efficient, AI-based transaction monitoring system that doesn't require the time and expense of on-prem development,” said Jani Gode, Chief Compliance Officer, Payoneer. “ThetaRay's cloud-based solution is fully scalable to grow with our business, as we expand relationships with payment providers and banks globally to give more value to our customers.”
Pakistan woos expats to boost retail banking sector
Pakistan’s retail banking sector is tapping into demand for Islamic consumer finance from religious-minded Pakistani expatriates via a government-backed digital accounts facility, according to the website salaamgateway.com
It reports that Islamabad is tapping the country’s 8.6 million expats to finance housing and vehicle loans, and to bolster savings accounts. The initiative has attracted US$3.44 billion in deposits from expat Pakistanis, according to the State Bank of Pakistan (SBP).
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