The “Future” of Procurement: Ongoing Blues Part I

Wow. One week and fifteen (15) “future” trends later we’re finally getting to trends that are recent enough to be classified as “we should be mastering this” as opposed to “we should have mastered this (a) decade(s) ago”. You’d think this was good news, but considering that it’s going to be eleven (11) more trends and three (3) more days before we get to a “future” trend that’s actually recent enough to classify as “like new remanufactured shoes”, it’s not. It’s sad and almost pathetic when you think about it.

So here we go again. Or should the doctor say here I go again because, like David Coverdale, it seems, from the doctor‘s point of view, that here I go again on my own, going down the only road, and, like a drifter, apparently walking it alone. You see, instead of taking the easy way and walking the well-trodden, down-beaten path, the doctor is opting to forge a new road to see what lies on the other side of the unexplored territory, because tried-and-true doesn’t mean best-for-you.

(the doctor knows it’s harsh, but the reality is just because you’ve been doing it that way for thirty years doesn’t mean you’ve been doing it right. And if you’ve been preaching the same end-game for thirty years in the consulting world, you definitely aren’t doing it right. The world evolves and your playbook should evolve with it.)

But maybe we should get back at it as we still have a long ways to go, but before we continue, let us reiterate that these posts are categorized as rant for a reason. Just like the doctor has no restraint when it comes to rubbish, he has literally no patience for puff-pieces, which he has recently read a lot of while researching this series. As a result, the doctor is letting loose and not pulling any punches. So if you have a habit of reading, sharing, or promoting these pieces, unless you’re still up for a rumble, you might want to go hop over to Spend Matters for a few more days (and come back Thursday when we get to trends meaningful enough to at least be mentioned). The fact of the matter is that the doctor is going to continue to call a duck a duck, a spade a spade, and a poser a poser. the doctor will continue to do his very best to continue keep the language Safe for Work, but the bile will bleed through where it is well deserved, and we have to cover a couple of very hot topics that make the doctor go cuckoo for cocoa puffs. You have been warned repeatedly. You continue to read at your own discretion.

18. Improved Supply Management Skill Set & Skill Specialization

The need for improved skill sets and improved skill set specialization has been around at least since the invention of the hammer, but has probably been around longer than that. After all, the early hunters had to learn to use their spears. Every time technology or business processes have progressed, new skills were required to appropriately use the new technology or business processes. And every time new processes or technology were introduced in Supply Management, new skills and skill set specialization were required. This is really, really, really old news but has been promoted to the ongoing blues category only because, last decade, progress came fast and furious and, for the most part, the professional associations, training companies, and big consulting co’s just didn’t keep up (or come anywhere close to keeping up) — so how could you? The ISM only upgraded to the CPSM in 2008 — almost five years after Next Level Purchasing introduced the SPSM! (Hmmm … wonder where the ISM got that idea, eh?) Plus, the later half of this decade could see a few more innovations that rock the Supply Management world, decimators* permitting.)

17. Talent

Due to the steady increase in the size of the skill set required to excel in Supply Management, we’re at the point where, as SI has been stating for years, you have to be a jack of all trades and master of one. There’s a reason the traditional saying is “jack of all trades and master of none” because it’s hard to do everything and yet be good at anything. But that is what’s required to excel at Supply Management. You have to be good at dozens of different things, and good enough to combine them more effectively than your peers from the perspective of designing and managing global supply chains. This is going to be an issue for decades to come. It’s not only going to be a constant challenge to find appropriate talent, but to design and deliver training programs that elevate that talent to the top of their game and keep them there.

16. Stronger Supplier Relationships

Now that we’ve went from buying pre-manufactured third party products to outsourced manufacturing to outsourced product design, we need much stronger supplier relationships than we used to require. And when you add the constantly increasing risk of supply chain disruption, dwindling raw material supplies, and ever decreasing product life cycles, the importance of strong supplier relationships is skyrocketing. But this has been the situation since the outsourcing craze began in the 1980s. Nothing new here, except the strength of the relationship, and the frequency of interaction, has to keep increasing, and even more visibility is required.

That’s 3 more down and only 15 to go. And, most importantly, only 3 more days until we get to remanufactured shoes! We might just make it!

* The innovations will happen. Some are already in progress. It all comes down to two things. One: whether there are any VCs forward thinking enough to invest, as true innovation takes years, not quarters, and the short-term thinking of Wall Street has conditioned us that it’s all about next quarter, not next year, or, more importantly, next decade (and this has resulted in the end of long term strategic plans and put a big damper on ground-breaking innovation). Two: whether the patent trolls will let it happen. There are a number of 800 lb gorillas that haven’t invented anything in almost a decade and their only chance at maintaining superiority in the space will depend on squashing the competition and putting them out of business. In order to support this anti-progress strategy, these companies have built up war chests of patents (which, even if garbage, can be used to get multi-year injunctions until the case is decided) and big bank accounts (to buy, and subsequently bury, the willing).

The “Future” of Procurement: Old News Part V

We know that we have already pushed out four full posts since we started discussing old news, and that we should be done, but we’re still not done! Not even close! So if you were wondering why the doctor is still ranting and raving like a mad man, it’s because he is still very mad. So far we’ve exposed 12 “future trends” that are so outdated that Astroturf is revolutionary. And we’re not done! Not even close! We have three (3) more to cover today. It’s beyond insane! There’s no word for it! I’m betting, if he were still alive, even Einstein would have difficulty comprehending how so many hog manure “future trends” still see the light of day. And that’s why, once and for all, we have to bust them up — one by one — until they all fall down.

21. Increased Raw Material Scarcity

We’ve been dealing with raw material scarcity issues for centuries. Some as a result of unfettered demand. Some as a result of limited production. Some as a result of gross incompetence. For example, take the oil crises of 1973 and the rapid rise of oil prices in the 1990s. Or the gold price spikes between 1933 and 1948, 1973 and 1977, 1979 and 1981, and the almost unparalleled rise between 2001 and 2011 (somewhat balanced by the myriad of gold rushes between 1800 and 2000 around the world that, eventually, caused the price to drop significantly because of the influx of gold). Or the plethora of famines that have occurred around the world over the last few millennia since the first famine was recorded in the history books in Rome in 441 BC*. The only difference is now, thanks to computer, laptop, tablet, and cell phone proliferation, the scarcity has shifted to rare earth minerals. And when you consider that the Earth’s population is rapidly increasing, as it is now four (4) times what it was 100 years ago, and that the planet, and the resources it contains, is finite — it doesn’t take an Einstein to put 2 and 2 together and come to the conclusion that, as time goes by, more and more raw materials are going to be in scarce supply.**

20. Increased Strategic Focus

Isn’t this essentially what Drucker preached for the entire course of his academic and business career? When you get right down to it, strategy is not about numbers, it is about using what the numbers are telling you to do something right. And that something right is something that is done by your people. Drucker was all about building relationships, bringing out the best in your people, and making them an integral, happy, productive part of your community so that together they could do something better than each individual could do on their own. In other words, helping your people help you do something right, and grand, and wonderful. If this isn’t one of the best pieces of strategic advice ever, the doctor doesn’t know what is. So don’t tell me strategic focus is new. Drucker was preaching better management (which is key to organizational success) since he started working with IBM in the 1940s. That’s before most of us were even born!

19. Service Providers Excel (and surpass in-house ability)

No one in their right mind*** outsources a back-office function to an outsource provider without a reasonably strong belief that the outsource service provider can do the function at least as well as the company can at a cost that’s at most what the company is currently paying to get the job done in house. In the early days when the outsourcing craze hit full tilt back in the 1980s, this wasn’t always the case, and some providers did so bad they actually flopped. But many didn’t, and some of these got very good at what they did. Very good. And in the 1990′s you had a large number of providers who could do back office functions at least as good as their clients, if not better. And then with the introduction of e-Sourcing and e-Procurement systems in the noughts, a few of these outsource service providers really took off and became so good at transactional procurement or sourcing of select categories that they can run circles around their clients. Depending on the function, there have been service providers that have been better than the majority of their clients for at least 10, if not 20 years, in Supply Management and related functions. So, like the fourteen (14) “future trends” that precedes it, this prediction is really old news. And the doctor, for one, is tired of reading about it.

* There is biological and recorded evidence (in the form of hieroglyphs and hieratic) of famine in Egypt around 2200 BC during the collapse of the old Kingdom, but as the remaining records are few and the biological evidence minimal, it’s hard to precisely date the famine, which was a relatively rare occurrence in Egyptian history. The Egyptians were the agricultural masters of their time and only on rare occasions where the Nile flooding was considerably more or less extensive than usual was food limited and famine a real possibility (if over or under-flooding of the Nile happened multiple years in a row).

** Maybe we should be more forgiving considering that less than 1 in 7 American adults are “proficient” at math? Hell no! When we lose basic logic and reasoning skills and care only about whether or not Kim Kardashian has the same look twice in one week, the world will go to hell in a handbasket so fast that we won’t even have time to blink — so you will get no lenience or forgiveness from me. [We didn't make this up! A headline on Daily Mail, yes, Daily Mail, was That's unlike you! Kim Kardashian wears the same look for the THIRD time in a week ....]

*** the doctor knows being in one’s right mind is not a pre-requisite for an executive job in some countries, including the United States, but we’re going to assume it should be and move on.

The “Future” of Procurement: Old News Part IV

We know it’s been three full posts since we started discussing old news, but we’re still not done! Not even close! So if you were wondering why the doctor is ranting and raving like a mad man, it’s because he is mad. So far we’ve exposed 9 “future trends” that are so outdated that original bell bottoms seem new. And we’re not done! Not even close! We are going to cover three (3) more today. It’s insane! Even with a genius IQ it’s hard for the doctor to comprehend that so many hog manure “future trends” still see the light of day. And that’s why, once and for all, we have to bust them up — one by one.

24. Better Governance Models

Either you’re a vertical, horizontal, or hybrid organization structure with centralized, decentralized, or some form of hybrid governance. That’s it. the doctor doesn’t care what sort of new-fangled buzzword you come up with to describe your organizational structure or governance, those are your options. No more, no less. And Big 5/6 Consulting Co’s have been preaching better governance since well before what was supposed to be Indiana Jones’ Last Crusade was revealed to the world (even though it was during the 1980s that these same consulting companies started shouting the need for better governance from whatever rooftop they weren’t locked out of). In fact, these companies have been preaching better governance in some shape or form since their founding and AA (the LLP, not the sobriety help group) was founded over 100 years ago; the partnerships that evolved into KPMG over 140 years ago; and Deloitte & Touche, the partnerships that merged into E&Y, and the partnerships that merged to form PWC were each founded over 150 years ago.

23. e-Procurement System Adoption

To again be fair, e-Procurement System Adoption is still limited to the top half of enterprises that should be adopting systems and there’s still plenty of room at the top, but the reality is that ever since Coupa came onto the scene, and revolutionized the e-Procurement space, the availability and affordability of e-Procurement solutions increased dramatically over the coming years and now every business, large or small can afford an e-Procurement solution, not just ones with a Million dollars in their bank account. So, even though more businesses need to adopt e-Procurement, adoption has been steadily rising since Procurement Independence Day eight years ago. As a result, this has been a front and center issue for the last five years and is last decade’s future trend. Not this decade’s!

22. Business Process Convergence into Supply Management

While technically this belongs in ongoing blues, because, depending on which business process we are talking about, convergence into Supply Management might still be in the early stages, the reality is that once you go beyond buying office supplies, you are talking about the integration of other business processes into supply management because, in many companies, the procurement guy was the office manager and, besides buying office supplies, his whole responsibility was simply doing the paperwork. He’d negotiate for whatever part manufacturing wanted, cut the paperwork, and then deal with the invoice when it was received. He had no authority or control. He was on the bottom rung of the corporate ladder and if there was too much work for him to do, he was promoted to leader of the Island of Misfit Toys and assigned a disparate team of misfits who weren’t performing in the job they were hired to do but yet couldn’t (easily) be let go from the company. As soon as Procurement achieved responsibility for buying direct materials, hiring temporary services, and, more recently, print campaigns for marketing, there was even more business process convergence into supply management. And while it will continue, it’s an automatic consequence of supply management gaining traction, and a simple application of basic logic determines this, just like globalization implies increased competition. Chalk another one up to Mr. Obvious!

The “Future” of Procurement: Old News Part III

In yesterday’s post we again reiterated that it’s not what the analysts and vendors think the future of Procurement is, it’s what the future needs to be for your organization to be successful (and solvent) and what you need to do to get it there. And these are not one in the same. Furthermore, all of these “Future Trend” talks are getting repetitive because the vast majority of “predictions” in the doctor‘s recently compiled list of of 33 commonly identified “future states” that Procurement is supposedly going to have contains well over two dozen “future states” that Procurement has already had for years (and years) and provides a reader with absolutely no insight on what the future of Procurement is and, more importantly, what it needs to be for your organization. But, unfortunately, just telling you this doesn’t help you. So we have to discuss all 33 of these “future trends” and illustrate how only a small minority are relevant to the conversation while the rest are the same old trends that have been recycled and repackaged by the junket jaunters for the past decade. But having to spend over a week dispelling deceit does not delight the doctor in the least, and, as a result, makes him even more likely to call a duck a duck, a spade a spade, and a well dressed presenter the snake-oil salesman he really is. While he will continue keep the language Safe for Work, unless you mention a trigger word, the doctor‘s not pulling any punches in this series so if you want something more along the lines of cookies and sundaes*, head on over to Spend Matters for about the next week. I’m sure their pieces will continue to be friendlier, or at least more politically correct, than SI’s.

Since we still have 27 to slog through, we’re going to dive back in!

27. Inter-Departmental Collaboration

To be fair, with a lot of effort, one could put forward a decent argument that this belongs in the ongoing blues category because there are still many companies where departments pit themselves against each other like two old-time big-league rivals, often with the throw-downs to match, but the whole point of the enterprise software movement, which has been ongoing for more than three decades, has been to provide organizations the tools with which to increase their collaboration. Furthermore, as soon as the CFO or CEO of any organization sees the financial benefit of collaboration, if collaboration doesn’t happen naturally, it is mandated. C’est l’entreprise.

26. Increased Accuracy in Demand Planning

Before best-of-breed Sourcing, Procurement, and Supply Management systems we had ERP (Enterprise Resource Planning) systems (and, to be fair, most organizations still run on outdated ERP systems). Before ERP systems we had MRP systems. MRP, which is now known as Manufacturing Resource Planning, and which originally stood for Material Requirements Planning, was focussed on production and inventory control, regardless of what you choose to call it. And good inventory control came from … that’s right … good demand planning. So better demand planning has been at the forefront of needs and wants for … wait for it … wait for it … fifty (50) years. That’s right. FIFTY FREAKIN’ YEARS! MRP has been in production since 1964, when it was first implemented by Black & Decker. And 11 years later the founder (who developed MRP in response to TPS — Toyota Manufacturing Program) published the book on MRP, which, coincidentally, was published in the same year that Brooks published the classic tome on Software Engineering and Project Management (The Mythical Man Month). So to say this is new is like saying acrylic paint is new. (It’s not. It’s also 50 years old for those who are interested.)

25. More Stakeholder Collaboration

Thanks to the passage of the Small Business Investment Act of 1958, “Small Business Investment Companies” (SBICs) were licensed to help the financing and management of the small entrepreneurial business and, in the 1960s and 1970s, the first VCs formed and invested in companies like Digital Equipment Corporation (DEC), Apple Inc., and Genentech and struck modern gold. This led to the rapid rise in VC corporations, and VC investment, and these VCs, who were major stakeholders, were interested in protecting their investments and got actively involved. This not only paved the way for stakeholder collaboration across the board but made it an important part of any serious** business discussion for the last three decades. Again, old news (that the VCs might not want you to know if they’ve invested in the competition, but old news).

Do you agree Mr. LOLCat?

* Still no guarantees!

** Yes, the doctor has much higher standards than the average person. Deal with it.