Daily Archives: June 20, 2011

Is Piracy About to Become Standard Operating Practice in Somali Government?

As per this article over on MSNBC which headlined that a US pilot [was] jailed for 15 years over pirate ransoms, six foreigners have been jailed on charges of illegally bringing money into the country (to pay ransoms for the release of vessels held by pirates), carrying cash intended to pay ransoms, and landing in Mogadishu without the correct papers. Their sentence is a 15 year imprisonment and a $15,000 fine each, as reported by the Mogadishu’s court judge Hashi Elmi.

However, according to the article, Elmi said the six might be able to buy their freedom. “The men can appeal and if they ask to pay more instead of (remaining in) prison then we shall see and take our decision”, Elmi said.

Hmmm. Allow pirates to flourish in the north, knowing that they are demanding multi-million dollar ransoms. Wait for foreigners to send in millions of dollars of cash in an effort to free their ships and their people without the right papers. When they do, seize the plane, the cash inside, and the pilots and then charge them for not having the right papers, for illegally bringing money into the country, and for attempting to pay bribes. Then convict the pilots to ridiculous sentences and give them petty fines in comparison. Then say they might be able to reduce their sentence or even buy their freedom in exchange for a bigger fine. Almost sounds to me like the government has figured out they can cash in on the rampant piracy in their country too by passing laws to make bribes illegal, insuring planes suspected of carrying cash never have the right papers, ordering customs officials to deem large cash imports illegal, and ordering the courts to hand down ridiculously harsh sentences in hopes that the foreigners will buy their freedom. Then, they not only get millions of dollars in seized ransom money, but hundreds of thousands, or millions more, in fines.

So what does this mean for your supply chain? Even if it costs more logistics wise, avoid the Somali coast at all costs. Take a longer route. It’ll be cheaper than air dropping a ransom when your vessel gets commandeered, and much cheaper than buying the freedom of your people if they get caught trying to deliver the ransom. Given that piracy attacks are on track to more than double this year, it won’t be long before your ship is next. Unless you’re prepared to hire your own private militia to defend the ship in international waters, don’t take the risk.

Ariba Vision 2020: Tomorrow’s Shoes (Part II)

This is the second of two posts that address the fourteen predictions that were dead on in Ariba’s Vision 2020 – The Future of Procurement report. Any Supply Management organization that recognizes the truth of these predictions is well on its way to formulating a plan to be a leading Supply Management organization in the decade ahead.

18. Offensive line takes the field

Supply Management professionals will increasingly use online communties and networks to discover, connect to, and collaborate with suppliers in a relentless pursuit of growth and expansion in line with the strategic goals of the company. Furthermore, the collaboration will be much more intensive and innovation focussed than it is today.

23. Buyer-seller lines blur

The focus will shift from the effective utilization of supplier functions to the effective integration of supplier functions to the point that integrated supplier functions will be almost indistinguishable from buyer functions. In leading organizations, the line will blur to the point where it is essentially nonexistent.

24. Innovation comes from without

As the paper says, the supply management role will be less about “person-who-brings-innovation-in” and more about “person-who-assembles-innovation-communities-and-gets-out-of-the-way”. Even at most companies that use innovation networks today, the innovation is still driven by the supply management professional that posts a problem in need of a solution. In the future, the networks will identify the problems and the solutions and then bring them to the supply management professional. Next generation web-based technology will bring the democratization of technology to new heights.

26. (Key) Suppliers gain power

Increasing reliance upon (key) suppliers is going to give them substantially more leverage in buyer-seller relationships, which is going to result in the supply management organization having to sell itself to the supplier as a customer of choice instead of the supplier having to sell itself to the supply management organization as the supplier of choice. And the more innovative the supplier, the harder the sell the Supply Management organization will have before it.

27. Firms share risks and rewards

The leading supply management organizations, that are incorporating incentives into their contracts today, will move to a shared risk and reward model where both parties share the rewards of a successful venture as well as the risks of the undertaking. No longer will contracts be lopsided in favor of the buyer that will be as reliant on the supplier as the supplier is on the buyer.

30. Risk info catches up

Risk management will take prominence in an average Supply Management organization which will have more access to readily available third party information (from networked communities where participants pool data for operational risk assessment) and be better poised to mesaure risk and formulate appropriate mitigations. Risk management will be embedded in every sourcing and contracting process and a key component in the calculation of expected value.

31. Profits replace cost savings

The shift in focus from cost to value will see most Supply Management organizations retire cost savings and instead institute profit generation as a primary measure of organizational success. Top line growth will be just as important as bottom line impact in an organization that wants to improve business outcomes overall.

The next post will address the predictions that came close to the mark, but did not hit it.

You Can’t Hire 100 People At a Time (Bonus NPX Take Away 1)

One of the things I heard at the NPX exchange put on by The Mpower Group is that there are companies out there looking to hire 50, 100, and even 200 Supply Management professionals — right now. What, what, what? I can’t believe I just heard that. While I’m sure most of you are saying that’s great news because, in your opinion, that means jobs are returning and/or faith in Supply Management is finally getting to what it needs to be, I can assure you this is not great news.

What this really signifies is that there is a deep fundamental problem in the organization in question. A well-run company should not suddenly need 200 people in its Supply Management organization. The first thing one has to ask when hearing that a company needs that many people is why. And “we’re centralizing operations” or “we’re expanding our global footprint” are not good reasons.

A company doesn’t have to hire more people to centralize operations, even if it is moving Supply Management headquarters. It simply has to relocate some staff on location and everyone else can work wherever they are. Now that most people have affordable video conferencing on their desktop, and it’s quick and easy to get just about anywhere in the world within two days, there’s no excuse for not letting people work where they are. (And any HR professional worth their salt will tell you that it’s much cheaper to relocate talent than to hire new talent and get them up to speed.) If the organization needs new people because it just got rid of a bunch, one needs to ask why. Did it really have that many people who couldn’t cut it and, more importantly, couldn’t be trained to cut it? If so, there is something fundamentally wrong with its hiring practices and talent management and it’s probably not somewhere anyone would want to work.

A company doesn’t have to hire that many more people to expand its global footprint either. It just has to hire a few local resources in the region and open an office. That’s 20 people, tops, not 200. If it needs more, then it’s expansion plans are too agressive. There’s no way you can parachute 50 to 200 people into an organization and not expect everything to come to a screeching halt for 6 months. Even if you can figure out where to put 200 people, you need to get them equipment, train them on general organizational processes, assign them specific jobs, train them on the appropriate technology and specific processes, hold their hands until they know how to do their daily jobs, and have mentors readily available to answer questions for up to two years as they learn the ins and outs of the more complex aspects of their assignment.

In short, jobs returning to Supply Management are a good thing, but only if they are added in moderation.