The following six predictions from Vision 2020 – The Future of Procurement, which would have been good if made before 2005 for 2010, are outdated and clearly come from Procurement professionals in organizations that are still in the laggard category as they define situtations that should either now be, or be in the process of becoming, standard modus operandi for a leading Supply Management organization.
04. Communities collaborate
Not only have we had virtual communities since 1996 when Geocities (which launched as BHI in 1995) hit the scene, but we have had collaborating communities in the enterprise for over 10 years now. Even Innocentive has been around since 2001! And while it’s true that communities haven’t been around nearly as long in Supply Chain, with the help of Ariba (and the Ariba Exchange), Kinaxis (and the Supply Chain Expert Community), RollStream (and its social supply chain solution that was recently acquired by GXS), communities are now normal operating procedure in leading Supply Managment organizations.
17. Talent competition heats up
The Talent Competition is already at the boiling point. Now that the economy is recovering, the last of the baby boomers are about to recover in droves at a time when there aren’t enough Supply Management professionals to begin with (as there are no programs out there that mint new Supply Management professionals for your organization to hire, as per SI’s post on the derth of Supply Chain Education). In fact, by 2014, the problem will be so bad that it will be #1 on every CPO list. And any organization that is struggling that does not address the problem now will not be around by 2020 to deal with it.
19. Enter the extended enterprise
For many global multi-nationals and leading Supply Management organizations that have outsourced, offshored, and rightshored over the last few years, the extended enterprise is already here and part of daily operational life. And this holds true for a number of product and service companies in the Global 3000.
22. Bye products, hello solutions
The crunch of the last few years resulted in many suppliers adopting a solution focus as they attempted to retain what little business their was. They went beyond simply providing a product to providing a solution around that product, including repair and warranty services, training services, and, in some cases, even consulting services. They embraced not only VMI (Vendor Managed Inventory) but VMS (Vendor Managed Services) in an effort to make themselves indispensible to their clients.
28. Contracts motivate
Well designed contracts that offer the right incentives and allocate the risks appropriately already motivate top tier suppliers to perform better to get a larger slice of the pie. If a contract offers a supplier a 10% reward for a 3% increase in service level, then, as long as it doesn’t increase the supplier’s costs by 10% to achieve a 3% increase in service level, it happens. It might take a while, but motivated suppliers get the job done when monetary rewards are involved.
29. Firms wake up to supply risk
The recent volcanic eruptions of Eyjafjallajökull and Puyehue that have grounded flights across the better part of a continent, the recent tsunami that devastated Japan and resulted in nuclear disasters in addition to long term supply disruptions, and the recent increase in droughts, fires, and hurricanes (thanks to global warming) that have resulted in decreased crop levels and huge spikes in basic food commodity costs have already woken up any supply management professional that is still breathing to supply risk and the need to address it. And even though most firms may not yet have the answers, they know they need them.
The next post will address Tomorrow’s Shoes.