Daily Archives: December 29, 2010

GSP going away January 1, 2011

Editor’s Note: Today’s post is from Dick Locke, Sourcing Innovation’s resident expert on International Sourcing and Procurement. (His previous contributions are still archived.)

The U.S. Congress recessed without passing the legislation required to
continue the GSP program beyond January 1, 2011.

You do know what the GSP program is, don’t you? If not, you might
consider acquiring some training. It’s a program called the Generalized System of Preferences (guide) under which imports from about 135 developing countries have been given duty free treatment by the US. Due to congressional
inaction, US importers will now be facing higher duties on many goods. Goods
that were now eligible for duty free treatment will jump to the level
that would be paid for goods from developed countries starting January
1st. Among the 135 countries, the most notable are India, Thailand,
Turkey, Indonesia and the Philippines. There is probably a lot of
material already in the pipeline.

This is the third time within my memory that this has happened. The last
two times, Congress passed enabling legislation quickly after returning
from recess. The made the legislation retroactive so people who paid
high duties got them refunded. However, the next Congress is a bit
unpredictable, with a lot of new members who are likely to be
anti-import. Stay tuned.

Dick Locke, Global Procurement Group.

Who’s Going to Upset the Market in 2011?

The best predictor of a paradigm shift’s success long-term is how upset it makes people.
     Stephen Wolfram, Interview with Christopher Meyer

I just realized something. A whole year has gone by and there has been nothing upsetting in the space. It’s been (well) over a year since I’ve seen anything that made me say “this is going to change things”. Sure, a lot of platforms have gotten better this year. For example, a number of e-Procurement and Supplier Relationship Management platforms have improved greatly in term of features, usability, or both, but there’s nothing fundamentally new on the market. And while a couple of platforms have embraced mobile computing, the functionality offered is minimal and not much beyond the information that can be sent in e-mail alerts (or approvals).

I shouldn’t be surprised, because many companies cranked back on R&D, or put it on hold, when the recession hit full swing. As a result, many companies haven’t been doing much R&D. However, some companies were smart enough to realize that a recession is an opportunity to be great, and kept going full steam ahead, but when you look at what they did, they just improved upon what they had. I really haven’t seen any new ideas in almost two years. As a result, there’s not much for me to be excited about, or much for the market to get upset about.

Now that the recovery, albeit a jobless one, is in full swing, hopefully things will turn around. But we also have to contend with the reality that some companies released great products and platforms in 2008/2009 that still haven’t reached their potential because many companies just stopped buying. In fact, in a few cases, at the current rate of market adoption, these companies are still about five years ahead. While I know a few of them will keep improving and keep innovating, what incentive do they have to release something entirely new if the market still hasn’t understood and adopted the powerful solutions they still have? One area where this is the case is decision optimization. Many companies still have not even tried this technology, even though it’s one of only two technologies repeatedly found to deliver double-digit percentage returns (with the other being spend analysis). And many companies who have are still not using it at its full potential. This is probably why, of the six true providers of strategic-sourcing decision optimization, only three appear to be moving forward with the technology, and, in my view, only two appear to be making real progress. What’s the incentive to move forward if the market won’t keep up with you?

But if 2011 doesn’t bring some new offerings that upset the market, I fear that the market will start to languish. And considering only half of CPOs have a seat at the table, we can’t afford this. So who’s going to upset the market in 2011?

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