Daily Archives: February 17, 2009

(More Than Ever) You Need Experts (if You Want Cost Reductions)

In his Friday Rant, Mr. Busch asked if kicking out consultants was a smart cost cutting strategy. I promptly answered, Hell, No and pointed out my posts on why Consultants are Cheap, it’s easy to get maximum value from consultants, and that any we don’t need no consultants here logic is flawed. (I also pointed out that there are better ways to cut costs, as I chronicled in my recent posts on ways to avoid the graveyard, more ways to avoid the graveyard, and even more ways to avoid the graveyard, and that if a company is seriously looking to trim labor costs, it should consider firing its overpaid, under-performing executives. [And if you’re wondering, I fully support Obama’s desire to limit executive pay. There’s no way you should get 20 Million for running a company into the ground. If it was up to me, I’d limit base pay to 1 Million and additional compensation to performance based awards as a percentage of total profit or revenue improvement. I’d still allow for unlimited pay with unlimited performance improvement, but you’d have to earn every penny.])

Let’s face it … with your head down in day to day operations, you’re not going to be up on the latest cost savings strategies, market conditions, or technology improvements … whereas an expert will be breathing the latest strategies and technologies for improving performance and cutting costs day in and day out. Furthermore, as pointed out in this recent article from Chief Executive, using external expertise is in harmony with the modern approach to business which is all about [staying] lean & agile, [being] virtual, and outsourcing. Furthermore, as the author astutely points out, economic turmoil creates unusual problems which might need extraordinary solutions … which are only going to come from an expert.

Cross Blog Challenge: (Supply Chain) Anti-Trends for 2009

A week and a half ago I alerted you to Vince Kellen’s Technology Duds for 2009 which highlighted five “anti-trends” for 2009 that stand out as a brilliant counterpoint to the rose-colored predictions of the laissez-fair wannabe analysts that tend to dominate the technology landscape.

After writing the post I started thinking about how great it would be if there were more voices like Vince’s that spoke the truth and opened our eyes to reality and not marketing fantasy. Thus, I have decided to make anti-trends the focus of the next Sourcing Innovation Cross-Blog series, which I will kick-off with this post.

My first two and a half trends echo Vince Kellen’s. My last two and a half diverge into the space.

1. Social Networking Will Unravel
As Kellen says, “at the risk of offending Web 2.0 enthusiasts, most firms, especially those hardest hit in this recession, consider social networking speculative and in some cases frivolous. And as I said in my last post, there’s a reason why “facebooked” has become an urban slang slam, “myspaced” has become a synonym for a late-night booty call, and why the blogger elite (including the doctor and Loren Feldman of 1938 Media) slam Twitter on a regular basis (as the only thing you can do with it is say nothing in only 140 characters). There’s no real value in these technologies, and no commercial value to a productive business. Businesses will drop these efforts to focus on projects with value.

2. Web 2.0 will soon be Web 2.Done
Similarly, mash-ups, fancy portals, and other web 2.0 projects are going to be axed because speculative ROIs or projects not directly assisting with significant savings are going to be difficult for IT leaders to advance. While mashups can be a useful component of B2B 3.0 platforms if they focus on enhancing content, community, and connectivity, on their own they are just useless eye-candy.

3. Traditional “Spend Analysis” will Lose Luster
Although a sound spend analytics package (you know the one) in the hands of a true expert (you know who they are) will find you limitless savings opportunities, the reality is that most of the offerings on the market are just static data warehouses with static reports in the hands of recent grads with little real-world experience and almost no training. As a result, as early adopters come to the end of their maintenance agreements, which came with six figure (plus) maintenance fees, you’ll see a lot of movement towards modern low-cost B2B 3.0 data analysis packages or spend analysis as-a service offerings.

4. Home Country Sourcing finally comes back in vogue
Regular readers will know that I’ve been pushing not just for best-cost, but home-cost country sourcing for a while now. Giving the skyrocketing transportation costs from mid 2007 to mid 2008, the repeated product safety scandals with imported products, the current recessionary environment, the low dollar, and fears of protectionism with the new US administration, more companies will finally start looking for strategic sourcing opportunities close to home — which will also come with more predictable costs, and savings, over the long term.

5. Sustainable green catches on, despite the recessionary environment
Although green initiatives that cost more than they return will be scrapped faster than unburied copper cable, as my fellow bloggers on Supply Excellence and 2 Sustain are pointing out, more and more companies will be looking at sustainable initiatives to save them money, and those green initiatives that save money as well as improve the corporate social responsibility image will catch on.

Now it’s time for my fellow bloggers to join in with their anti-trends in and help you understand where supply and spend management is headed.