Daily Archives: June 12, 2009

Is Trouble Ahead for the Purchasing Profession?

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A recent report by Loudhouse, sponsored by BravoSolution and covered in Industry Week in their article on Purchasing Officers: Confident Now, But is Trouble Ahead?, found that 69% of the CPOs surveyed had not examined the impact of the last six months on their supply management strategy, which leaves them exposed to potential long-term problems.

This is problematic, especially since the research study found that many purchasing professionals are currently following short-term strategies that could lead to long term problems. As the article states, CPOs can deliver cost savings today by hard negotiation, however tomorrow’s efficiencies must be realized through evolving business strategies and addressing the top three procurement challenges of ‘cost saving,’ ‘speed,’ and ‘visibility’. But this hard negotiation can backfire. After all, as per a recent CPO Agenda study, which quantified the doom and gloom in the market today, half of the respondents have already experienced the bankruptcy of at least on key supplier since the year started, and over three quarters of CPO respondents are (very) concerned about the prospect of other key suppliers going out of business before the year is over.

So if you want to avoid trouble ahead, be sure to insure that you leave your suppliers some margin, that you pay on time, and that you monitor your suppliers health.

Far from the Twittering Crowd

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Editor’s Note: This is Kevin Brooks‘ first post as a regular contributor to Sourcing Innovation. His previous guest posts are still archived.) Kevin is an experienced marketer in the sourcing and procurement space who was an early visionary where blogging, green supply chain, and web 2.0 is concerned.

Twitter is everywhere these days, and some might be wondering whether this new communication frenzy holds any significance for spend managers. The hype is extreme and no doubt baffling to buttoned-down, serious procurement types. However, beware of dismissing it too quickly.

Twitter is significant for spend management in companies of all sizes because …

Communication Styles are A-Changin’

I was recently at a panel discussion about the future of print media. Robert Scoble, the well-known blogger and technologist noted that his young son will likely never pick up a newspaper in his life. Similarly, there is growing evidence that the younger generation views email — a 40-year old technology, mind you — as dated and irrelevant, preferring more free-form communication styles such as texting, instant messaging and Facebook status updates.

Print — and email — will be around in some form for a long time to come, but their significance and dominance is changing as new and faster ways to communicate move closer to the mainstream. This has major implications for spend management activities such as supplier discovery and assessment, contract negotiation, performance management, and even invoicing and settlement.

Unfortunately, new ways to communicate are often ridiculed or considered irrelevant by the status quo business software establishment. Not so on the consumer applications side, where bleeding edge software such as Google Wave (an intriguing, all-encompassing communications idea), mobile devices like the iPhone and the Kindle and open source blogging platforms such as WordPress are redefining communications for the younger generation. Keep in mind, these are your future employees, suppliers and consumers.

Speed is More Important Than You Realize

Fast is good. Fast is usually less expensive (which is good). Fast is increasingly what your customers, your colleagues, your CEO and your shareholders expect. Industry leaders like FedEx built their success on speed and efficiency. So did the semiconductor industry. So did the auto industry (once upon a time).

Twitter moves quickly — all those “tweets” flying by in real time can be dizzying. Rather than trying to read every “tweet” like you would email, why not consider Twitter like you would a busy stock trading floor. The trends matter more than the individual transactions. When viewed through a spend management lens, tracking “tweet” trends on key topics or suppliers can give you a unique, real-time view of the market. Free Twitter aggregators such as TweetDeck and Seesmic Desktop are two of the more popular tools that support keyword or tag-specific tracking. Admittedly, the view is rather murky and confusing today, but it isn’t a big stretch to imagine more clarity on the near horizon.

The real-time speed of Twitter and its seemingly unstoppable growth will indirectly put pressure on business processes and communications to move faster. That is a terrifying thought to some, and a golden opportunity to others.

Transparency is the New Normal

Transparency in procurement is a controversial subject. In fact, my friend Tim Minahan recently touched on this over on Supply Excellence:

“… online negotiations — what some still refer to as e-sourcing — actually brings much needed discipline and transparency to buyer-seller negotiations.”

Twitter, like blogs and all manner of social networking, is open to the world. Yes, you can send private “tweets” and have an email-like Twitter conversation if you wish, but the model is based on visibility and on Web 2.0 concepts such as the wisdom of crowds. In our new regulatory era, and at a time when nearly a quarter of the U.S. population has no problem posting information about themselves on Facebook or LinkedIn, business communications will inevitably absorb some of the more useful attributes of open models like Twitter.

What all of this bodes for the future is anyone’s guess. I think it is doubtful that Twitter will change the way we live, as Time Magazine so hyperbolically put it in their recent cover story, but I do think it is symptomatic of some larger trends that sourcing and procurement teams — and the vendors that provide solutions for them — shouldn’t ignore.

Kevin Brooks

Editor’s Note: Views of contributors are entirely their own.