Daily Archives: June 23, 2011

Vision 20/30 — The Future Of Procurement Needs a Course Correction

The last six posts in the series have explored in detail Ariba’s recently released Vision 2020 – The Future of Procurement report, which was intended to define what the Procurement function is going to look like in 2020. While a valiant effort, the report doesn’t live up to SI’s expecations, which only gives it a B-*. Next Generation Supply Management is going to be a lot more intensive than most Supply Management professionals are predicting and many of the realites are going to be substantially different than they are today in but a few short years.

As SI will make clear in the months ahead, both on this blog and in an upcoming white-paper, a leading Supply Management organization will have to make significant improvements in sourcing process, organization, finance, IT, product management, risk management, asset management, relationships, and metrics, in addition to adopting a value focus, in order to reach the next level of Supply Management. It will have to go well beyond a realization that more automation, financial sophistication, strategy, supplier integration, and risk management is needed. Even the leaders will have to revolutionize their approach to Supply Management and take their talent to the next level. It’s fortunate that 2020 is still 9 years away as an average Supply Management organization still has a long way to go.

SI calculated the final grade of B- as follows. It assigned each entry a score from 1 (for effort) to 5 (for being on the mark) depending upon where it ranked on the scale of I Hope It’s Just a Ruse to Tomorrow’s Shoes. The precise calculation is as follows:

Category Entries Entry Value Score
Tomorrow’s Shoes 14 5 70
Close, But No Cigar 4 4 16
Today’s Blues 6 3 18
Yesterday’s News 3 2 6
I Hope It’s Just a Ruse 4 1 4
    Score 114
    Maximum 155
    Percentage 73.5%
    Final Grade B-

PPT isn’t enough, you need EAI as well (NPX Deep Dive #1)

As many of you are well aware by now, a few weeks ago I attended The Mpower Group‘s Next Practices Xchange. A gathering of some of the top supply management personnel from a select group of Fortune 500 companies who met to discuss how to get to the next level of supply management, the NPX participants are leaders in their fields. On average, NPX members beat the field at the macro level at supply chain visibility, risk management, strategy execution, and value creation (at least according to a recent joint survey undertaken with the IACCM that will be explored in a future post).

But today’s best is not enough to sustain value in an increasingly competitive and economically challenging global marketplace, and the best of the best know it. The supply management leaders are already working hard to figure out how they are going to maintain their edge in tomorrow’s supply chain landscape. While there are still a number of questions to be answered, they know that the first step is to understand value, that the second step is to get to value, the third step is to capture value, and the fourth, and most critical step, is to step is to execute.

But execution is tricky. It’s more than just People, Process, and Technology (PPT) that consultants have been talking about for decades. It’s more than just the following framework, which isn’t enough.

Tools and Templates
supported by  

It’s Exploration, Alignment, and Information. It’s the Adoption, Execution, Implementation, Optimization, and Utilization of the People, Process, and Technology to their fullest potential, as illustrated by the following framework:

Metrics and Reporting
Knowledge Management
Decision Process
Business Strategy
Change Management
by way of  
Coaching &Mentoring

Technology enables the processing of information which is used by good processes that support organizational alignment with the business by people who explore next generation supply management practices and techniques and take the business to the next level. PPT goes hand in hand with EAI and neither on their own will deliver EBR (Exceptional Business Results).

The importance of the vowels in next generation supply management, and the EAI framework they define, will be explored further in future posts. The reality is that best (PPT) framework in the world is useless if you don’t execute. So master the vowels and see your organization advance to the next level of supply management.