Daily Archives: May 13, 2011

Selected Insights from the Hackett Best Practices Conference

Despite talking to Hackett personnel for years, including the one and only Pierre Mitchell, it was the first time I made The Hackett Best Practices Conference. It was interesting, to say the least. I took lots of notes and will probably write a number of posts over the next few weeks, but for those of you who missed it and are anxious to find out what you missed, here are a few takeaways until Thomas* (who is the new Analyst at Spend Matters) and I have a chance to collect our thoughts and publish a more detailed analysis on our respective platforms. (We’re still waiting for a deep dive into the new Hackett Peformance Exchange.)

Do more with less and grow at the same time (or at least add more value)
is the new mantra for Procurement and (Shared) Service Organizations.

Despite the uncertainty and volatility of the market, many organizations believe now is the time for growth while simultaneously believing that they still need to conserve (or is that hoard) cash. As a result, they are tasking every organization to achieve growth without an increase in budget or headcount.

Talent is on everyone’s mind.

The leaders / world class organizations can’t find talent. The average performers / Hackett “peer group” can’t afford talent. And the laggards / those below the median can’t get their cost of temporary / contract labour low enough.

Strategic Sourcing / Procurement has become so complex at the leaders that they can’t find anyone that fulfills the job description, regardless of what they are willing to pay. The average performer, where sourcing and/or procurement is moderately complex and can be done by someone who worked for a leading organization, as a result of the budget crunch brought on by the downtown, can’t lure the talent they need away from the leaders who will, literally, pay whatever it takes to keep the talent they have. And laggards, with rising cost of oursourced labor in “emerging” economies that, in many ways, have “emerged” in their own right, can’t keep costs down (as they haven’t moved to an appropriate global services model and learned how to be more cost effective with more higher paid workforces who are more skilled and can realize exponential efficiency gains with automation).

Transitioning to Global Services Model is a Journey.

And it will take you longer to realize sustainable value than just throwing work over the wall to a GPO or outsourcing to India. If you’re a large organization, you’re generally looking at a minimum of two years to realize any sustainable value and five years to maximize value from efficiency and effectiveness if you’re doing it right.

While everyone likes to talk about their success, few will talk about their failures.

Not a single speaker didn’t tout the success of the finance / services / procurement organization over the last X years, due at least partly (if not largely) to Hackett’s help and expertise in benchmarking and best practices. However, not every speaker would openly discuss lessons learned (as that would imply some roadblocks / failures). Only a few would talk about mishaps or false steps along the way (and a shout out to Rick Wertsching of Disney for wlling to be candid in this regard) and only one speaker (of the presentations I attended) was willing to not only admit that they weren’t world class, but show exactly how they compared to world class (even though they aren’t yet anywhere close to where they need to be). (And major kudos to Thomson Reuters for being completely honest about the fact that while they have made great progress in the last 4 years, they still have a journey of at least 4 years ahead of them.)

If you want Spend Matters to attend and cover your event,
the surest way to get their involvement is to make sure Sourcing Innovation has already committed.

*I’m thrilled that Jason added Thomas to the Spend Matters team. His technical prowess is a great complement to Jason’s business savvy and provides a solid foundation for Spend Matters to become the next great Analyst 2.0 firm.

Do You Know What Disaster Will Strike You Next?

Of course you don’t, but you can calculate the risks of one disaster vs. another and one site vs. another with some simple research into natural disasters.

Earthquakes are more likely near the edges of tectonic plates than they are in the interior, especially if the plates are moving together and pushing on each other (and there is a history of earthquakes and activity). You can quickly identify areas at high risk by looking at a tectonic map, such as the one over on ThinkQuest. One quickly sees that high risk areas are the west coast of North and South America, South East Asia, Japan, and the island domains north of Australia, as per the Global Seismic Hazard Map over on Countdown.org.

You can get a list of volcano activity reports from the Smithsonian Institute which maintains a USGS Weekly Volcanic Activity Report. Most are usually in the Ring of Fire, which encompasses the high-risk earthquake zone around the Pacific. GeoCodeZip.com Google maps them for easy viewing.

Coastal areas near sesimic hazard (earthquake) zones in the oceans are at the greatest risk of Tsunamis, which tend to build up in power and force as they approach shallow water and land. This says that some of the riskiest araes are on the Ring of Fire in western North and South America, Japan, and south-east Eurasia in the island domains North of Australia. More information on Tsunami Risk Zones can be found over on the International Tsunami Information Center.

The greatest risk centers for hurricanes are coastal areas near the equator where hurricanes are normally a problem. The east coast of the US is particularly susceptible to hurricanes. The Global Weather Oscillations site specializes in in hurricane risk probability zone forecasts for the US and the risk zones for the coming year can be found on the Global Weather Cycles web site. The National Weather Service tracks the 10 global hot zones over on the National Hurricane Center site and a review of historical data will tell you how risky a certain area is.

Tornados can occur anywhere in the world (including Antarctica, although this is the one continent where a tornado has not been documented) when the atmospheric conditions are exactly right. However, the most at risk zones are the middle latitudes between about 30 degrees and 50 degrees North or South where cold polar air meets warmer subtropical air and generats convective precipitation along the collission boundaries. As a result, taking weather patterns into account, the most at risk areas are the United States, western Europe, South Africa, the eastern and western coasts of Australia, New Zealand, the eastern and western borders of China, the estern coast of Argentina, Japan, South Korea, and the Philippines. Good information on tornado climatology as well as a great map of global risk zones is found over on the National Climatic Data Center site.

Ice Storms
Blizzards can be bad, but generally don’t do much in the way of lasting damage. Ice storms, on the other hand, can do severe damage to infrastructure on a wide scale by downing power lines, and grids, damaging structures from the sheer weight of the ice, and even taking down trees. The most at risk areas tend to be Canada, the US, the UK, and most of Northern Europe and Russia.

Floods are not limited to the coastal variety, and can happen anytime the water level rises too quickly. Thus, in addition to worrying about flooding in coastal areas as a result of a tropical storm, hurricane, tsunami, or storm surge (tropical cyclone), flooding inland can occur from intense thunderstorms, sustained rainfall, or rapid snow melt. Thus, all of the coastal areas identified in your hurricane and tsunami risk lists are at risk at flooding plus any area with a history of flash floods, sustained rainfall (like they get in India during Monsoon season), or rapid snow melt (in Northern Canada) are at risk of floods.

Wild Fires
Wild Fires can occur on any continent at any time whenever the conditions are right and are likely to follow heat waves, droughts, and cyclical climate changes (such as El Nino) and high-pressure ridges. They are most common in climates that are sufficiently moist to allow regular vegegation growth but where extended dry, hot periods are also present. This keep parts of Africa, South America, South Eastern Eurasia, and Eastern Eurpe at high risk, but parts of the Southern US, Mexico, India, and Australia also enter the high risk zone on a regular basis.

In other words, there’s no excuse for not knowing which suppliers are at risk of which natural disasters and how great that risk is. (Some historical research will give you frequency of disasters in the area and a local climate institute likely has probabilities of occurence for the event, such as once every twenty years.) So while it may be hard to say how risky your supply chain is from a holistic perspective (as some financial or political risks may not be identifiable until the last minute), it should not be hard to say how risky it is from a natural disaster perspective.