Daily Archives: September 18, 2014

The “Future” of Procurement: Old News Part II

In yesterday’s post, after noting that conference season is around the corner and, with it, plenty of talks on Future of Procurement, we noted that the doctor is beginning to really despise this because it’s repetitive, unnecessarily stressful (with the false sense of urgency for the wrong solution), and, most importantly, focussed on the wrong question. It’s not what the analysts and vendors think the future is, it’s what the future needs to be for your organization to be successful (and solvent) and what you need to do to get it there. These are not one in the same.

We then explained that it was repetitive because the doctor reviewed dozens of “future” studies, papers, articles, and posts written in the last year and compiled a list of 33 commonly identified “future states” that Procurement is supposedly going to have and explained that the majority of these states have been “future states” for years and provide a reader with absolutely no insight on what the future of Procurement is and, more importantly, what it needs to be for your organization. But, unfortunately, just telling you this doesn’t help you. So we have to discuss all 33 of these “future trends” and illustrate how only a small minority are relevant to the conversation while the rest are the same old trends that have been recycled and repackaged by the junket jaunters for the past decade. However, having to spend over a week dispelling deceit does not delight the doctor in the least, and, as a result, makes him even more likely to call a duck a duck, a spade a spade, and a donkey a jackass. While the doctor will keep the language Safe for Work, unless you mention a trigger word, he’s not pulling any punches in this series so if you want something more along the lines of kittens and unicorns*, head on over to Spend Matters for the next week. I’m sure their pieces will be friendlier than SI’s.

Since we still have 30 to plough through, let’s dive back in!

30. Continued Margin Pressure

Every since the beginning of the modern industrial age and the introduction of the first mass production factories, customers have wanted lower prices. And when efficiencies gave customers these lower prices, they wanted the prices to be lowered even more. With end customers putting continued pressure on retailers to lower prices, these retailers are putting continued pressure on manufacturers to lower prices, and these manufacturers are, in turn, putting pressure on raw material providers to lower their prices. Margin pressure has always been with us and it’s not going away any time soon. This prediction is akin to predicting that fish will continue to swim in the ocean and if someone expects the doctor to take this as intelligent foresight, he has to wonder if they think they are speaking to a complete idiot on the classical Binet Scale. He knows the business world has its share of mentally deficient and somewhat incompetent buffoons, but no one with an IQ at or below the level of moron is going to be given the ability to make serious business decisions (which would include buying whatever product or service you’re selling) regardless of how much money his daddy has to waste**.

29. More Outsourcing

Ever since the wannabe used car salesmen in their plaid suits, gawdy striped ties, and bright red pants convinced gullible CEOs that the answer to all their money problems was outsource, outsource, outsource, the outsourcing craze has gripped the business world and now you can find a service provider for almost everything you can think of. (Human) Dog Food Tester to make sure little bow-wow won’t refuse to eat his Caesar’s? Check. Phone Psychic to help your dumb boss figure out just what he’s thinking? Check. Multimedia Foley Artist (because you need just the right sound effect for your PowerPoint)? Check. Telephone Sanitizer? Well, not yet. But soon. Very soon.***

28. Supply Chain Risk

Natural Disasters. Economic Disruptions. Geopolitical Interference. Societal Swings. Technological Advances and Breakdowns. These are the major categories of supply chain risk and all of these have been with us since the beginning of trade. Ancient societies had to deal with earthquakes, floods, locust swarms, and poor Pompei had one of the most devastating Volcanic eruptions in recorded history. Plus, wars between nation states have been around as long as the nation states themselves, and each war caused an economic disruption. Good luck doing any significant amount of trading in many ancient and medieval societies without permission of the Pharaoh, Emperor, or King. Societal swings have always emerged in the presence of a great orator or onerous monarch. And even the ancients made great technological innovations. The Egyptians built pyramids. The Chinese discovered gunpowder. The Vikings, and maybe even their forefathers, conquered the Atlantic. And each of these carried great risks for those merchants engaging in trade. A storm could sink a ship. A war could cripple an economy and it’s desire for luxury goods. The disfavour of the king could put you out of business. A societal swing could close the border. And if the marauders suddenly acquire better weapons, good luck getting your goods safely to their destination. Yes, supply chain risk is increasing, and the rate of natural disasters is expected to increase five-fold over the next fifty (50) years. And yes, economic disasters, thanks to greedy Wall Street bankers, are coming even more fast and furious than the over-the-top movie sequels rushed out by hollywood movie studios as fast as the hi-tech Korean sweatshops can pump out the special effects. Yes, governments, even those that are supposed to be representing the people who elected them and not their own interests, are interfering on a global scale and, even worse, doing it in secret. Yes, the modern media is great at stirring people up into a frenzy over minutia to distract from the real issues at hand, and, possibly, turn them against your business based on your beliefs. And yes every technological innovation could be a Tomahawk headed straight for your head. But what’s new? NOTHING! You just need to prepare for it, watch for it, and deal with it.

For even more ranting and raving, come back tomorrow. Or, if you’re in the mood for something a little closer to kitties and unicorns, as the doctor indicated at the top of this post, you can check out Spend Matters and come back next week. the doctor should have worked his way through most of the sheer lunacy by then. Still no guarantees, but that’s still his goal!

* No guarantees!

** OK. Maybe in the Southwest US or the state of Florida, which has its own FARK tag for a reason. But that’s the exception, not the rule! (At least for now …)

*** And if the doctor knew exactly when, he’d be counting the days because he’s anxiously waiting for what comes next. 😉