Monthly Archives: October 2014

It’s Conference Season, and that means It’s Travel Season!

And this means it’s time to get your T&E under control.

Since what gets measured gets managed, this also means that the first thing your Supply Management organization should be doing is measuring the spend. Then, when it has measured the spend, it should be evaluating the spend. If the spend is too high relative to industry norms, then it needs to get the spend under management as soon as possible. However, one thing it should not be doing is questioning the validity of the spend.

What do I mean by this? Simply put, neither Finance nor Supply Management should be attempting to judge the ROI of business travel by function, as suggested in this post over on CPO Rising, and they definitely should not be trying to measure it with a quantitative metric.


Simply put, outside of their respective domains, these organizations have no clue how valuable or invaluable a sales meeting, training session, or conference was, and sometimes even the VP who approved the spend doesn’t know, because the value from the travel typically cannot be measured in the short term. And there definitely isn’t any way to predict the value beforehand! In the CPO Rising post, the author gives the example of Sales and says you should ask if the sales team closed a deal as a result of an expensive trip or if IT has improved its processes by attending specific conferences. These are both WRONG questions.

In the Sales example, in traditional enterprise sales with traditional executives (who have been in their roles for 20+ years), not every trip is going to close a deal, or even have a directly measurable impact. Sometimes multiple trips are required by personnel to build a relationship, which must be built before a deal can even be negotiated as relationships in many South American and Asian cultures must precede a business deal. With this metric, the salespeople would never take a trip, never meet new potential clients or business partners, and never close any deals!

And the author of this CPO Rising post, who has obviously never been an IT guy*, needs to understand that sometimes where conferences are concerned, process improvement is not the point. Sometimes the whole point is to give key members of the development team who have been working their asses off for months straight on a key project a reward and a break (for burning the midnight oil on a regular basis and doing whatever it takes to make an unreasonable deadline set by Maury the Management Moron). The whole point is to keep the key team members happy, boost morale, and expose these team members to new ideas that will help them identify the technologies and processes they should be researching on their return. Because, where IT is concerned, it’s not how many warm bodies you have in front of computers, it’s how skilled those bodies are. In a discipline where your top coder can be as much as 20 times as productive as your average coder (because you have too many poor performers and not enough superstars), quantitatively measured in bug-free lines of code, and where top talent is rare, the organization has to keep its top talent, and low-cost tokens of appreciation, like conferences (that will also open the developers’ minds and embark them on a journey towards even more productivity in the future) is a great way to do it. If you’re going to cut the travel budget just because there’s no immediate return, then you might as well lay off the top 20% of performers in your organization, get a shotgun, blow a hole in the server, and see how you fare. Because that’s effectively what you’re doing if you don’t have another way to keep morale high in IT.

So what should an organization be measuring, evaluating, and managing in terms of T&E spend?

Come back tomorrow for Part II to find out.
* Unlike the doctor who has a PhD in CS and who has been a senior algorithm developer, enterprise software architect, research scientist, and CTO …

Procurement Trend #27: Inter-Departmental Collaboration

Twenty-four trends remain
Together they bring disdain
We’re trapped in the mundane
They are Lucifer’s bane
… and we cannot rest until they are slain!

We cannot give up. We cannot give in. We must shed light on the darkness that each and every false prophecy brings. Only then can we move forward.

The journey is long and hard, but at the end of this thirty part series, you should not only understand why so many historians are still talking about the false trends we debunked in our Future of Procurement series, what you need to do to prevent staying in the past with your organizational “peers”, but what you need to do to not only stay in the present but start marching towards the future, which is coming faster than you think.

So why do so many historians keep pegging this as a future trend? There are a number of reasons, but among the top three today are:

  • Stakeholders are multiplying
    as Supply Management spreads
  • Stakeholder review and participation is increasing in importance
    as more knowledge work is being outsourced
  • Fiefdoms still exist in large(r) corporations
    as many organizations still measure your worth by the number of people under you or the budget you control and not the value you bring to the organization.

Multiplication of Stakeholders

Team management skills are now at a premium. A Supply Management leader not only has to manage a cross-functional team to be successful, but a team where each department being represented is typically at odds with each other and itching for a full-contact rugby match. (It wouldn’t be unrealistic to suggest that your organization might want to start by bringing in a career kindergarten teacher.)

Project Management skills are also becoming more important by the day, as the Supply Management team will need to maintain appropriate focus in each of the cross-functional team members to insure that things get done when they need to get done to keep each sourcing event and procurement project on schedule.

The Knowledge Economy

While often overlooked, knowledge management and collaboration portals will soon become a key part of your organization’s technology infrastructure. Your organization needs to capture all input and organizational knowledge (before it walks out the door), track all relevant issues, and make sure all of the relevant information not only gets in the hands of who needs it, but when external parties are involved, capture their knowledge, decisions, and processes (and not just output) as well in case it needs to be reconstructed or redeployed later on.


Off with their heads! Well, figuratively at least. If your organization has one or more fiefdoms, then your organization has someone unwilling to relinquish control, even if that is what is required for the greater good. In this case, your organization has to fight the urge to try and fix the problem with more training or yet another reorganization (which is typically very, very disruptive) and simply do what the kings of old did when they had problems with the dukes — and take off their heads!

If, and only if, the leader can be reformed, give her another management position within the company (and possibly initiate some inter-departmental collaboration at the same time as she will more than likely be more than willing to work with her old department). But if he’s stuck in his ways and can’t be reformed, bite the bullet, give him a fair severance package, and push him out into the outside world. Just like a ship that’s dropped anchor can’t sail, a company with a lead filled sandbag can’t rise above the clouds, no matter how much hot air that individual puts out on a daily basis!

Procurement Trend #28: Supply Chain Risk

Twenty-five trends are left
Together they are quite heft
Depriving us of deft
So let’s make another cleft
… and shred them one-by-one!

We won’t give up. We won’t surrender. We will plow through to the end. We shall expose the half-truths and the lies. We shall tackle the issue head-on and with growing confidence and clarity, we shall spread the truth, whatever the toll may be.

The goal is that, at the end of this thirty part series, you will not only understand why so many historians are still talking about the false trends we debunked in our Future of Procurement series, what you need to do to prevent staying in the past with your organizational “peers”, but what you need to do to not only stay in the present but start marching towards the future, which is coming faster than you think.

So why do so many historians keep pegging this as a future trend? There are a number of reasons, but among the top three today are:

  • Natural & man-made disasters are on the rise and will increase five-fold in next 50 years
    In Combating Supply Chain Disruptions: Lessons Learned from Japan published in
    THINK Executive, Nov 2011, the authors state that is predicted that both natural and man-made disasters will increase five times in the next 50 years! (page 18)
  • Specialization means lengthening supply chains
    as more and more companies focus on components or pieces of a solution and not the whole product or solution
  • Trade and security agreements mean more trade and economic risk
    as these agreements multiply faster than Fibonacci’s rabbits around the world

So what does this mean?

Natural Disasters are on the rise

Even more supply chain interruptions are on their way, and if your organization designed its supply chain around the ring of fire*, expect to get burned! Many organizations have not yet realized that they need to move manufacturing and storage away from the hot zones to the greatest extent possible, that they need to make sure that their facilities have multiple access routes (as one road is easily blocked by a huge sinkhole, earthquake, landslide, etc.), and that they need to have backup facilities in other locations and plans to quickly bring those backup locations online in an emergency. If the organization designed its supply chain around JIT (Just In Time), it needs to make sure that it has enough buffer stock of critical inventory to account for the expected time delay between production and shipment from a primary location and production and shipment from a secondary backup location if the switch needs to be made.


The longer the supply chain, the longer it takes for material and product to flow though the chain to the end consumer. The organization needs to focus on collaboration and technology to make sure the chain flows smoothly. (The longer the chain, the greater the chance the order will NOT be perfect.) All parties will need to work together closely and disclose issues as they arrive so all parties can provide options for resolution. Data will have to flow quickly as well, and hence the need for new technology platforms and networks.

Trade and Security Agreements

Your organization needs to keep a watchful eye on trade agreements being negotiated and on the lobby groups pushing for those agreements, since many negotiations are now, despite being led by free countries, going on behind closed doors. If something is going to drastically change the terms of trade, your organization needs to know what the potential impacts will be and have a plan in place to deal with them. If your organization doesn’t, chances are it will miss opportunities to increase market share in the best case and be locked out of the market entirely in the worst. Sad, but true.

* Not Johnny Cash’s Ring of Fire, which burned brightest with Dilana.

Procurement Trend #29: More Outsourcing

Twenty-six trends to go,
twenty-six trends to go,
so many things we need to know,
so onward we will go.

We’re in the midst of discussing in detail each and every trend we debunked in our Future of Procurement series so that you understand not only why the historians are still talking about these trends, but why they are still relevant to many Procurement organizations that are stuck in the past with the historians.

The goal is that, at the end of this thirty part series, you will not only know what you need to do to prevent staying in the past with your organizational “peers”, but what you need to do to not only stay in the present but start marching towards the future, which is coming faster than you think.

So why do so many historians keep pegging it as a future trend? There are a number of reasons, but among the top three today are:

  • Because outsourcing is not just manufacturing anymore, it is design
    as more and more companies outsource bigger and bigger pieces of their product’s lifecycle
  • Because outsourcing is not just tech support anymore,it’s software development
    as more and more companies outsource custom software development, implementation, and integration
  • Because outsourcing is not just back-office functions anymore, but front-office functions as well
    as even functions like Public Relations, Advertising, and Legal are thrown over the wall … all the way to India!

So what does this mean?


Procurement needs to work closely with Engineering and the Supplier and foster an atmosphere of collaboration as close working relationships will be required to insure that the vision of Engineering is reached in the best way possible. With competition so fierce in just about every industry, the design of a product is critical to buyer acceptance and a company’s success, so Procurement needs to put on its SRM (Supplier Relationship Management) hat and make sure there are no bumps in the relationship.

Software Development

Procurement needs to work closely with whatever department is commissioning the work to make sure detailed functional specifications, that include a description of core business processes is produced; that regular quality assurance and acceptance testing takes place; and that regular checkpoints are put into the process and adhered to. Serious issues need to be identified before they prevent product delivery or result in significant cost overruns, which currently happens in the majority of software development projects. Many industries have proven time-and-time again that you can’t just throw a software development project over the wall and expect success. Software project failures have been responsible for many of the biggest supply chain failures in history (and if you do not believe the doctor, go check out Supply Chain Digest’s Top Supply Chain Disasters of All Time), so Supply Management knows all to well the disaster that can happen with an IT project that is not appropriately managed.

Front-Office Functions

Soon, outsourcing of Legal, Public Relations, and Marketing Support will be as common as outsourcing of Finance, Accounting and tactical Procurement functions are today. Procurement needs to work with key stakeholders to define core requirements, goals, frameworks, knowledge capture, and reporting structures to make sure that the third parties represent the business the way it wants to be represented and that everything is captured and communicated. This may not be an easy task, but it is a critical one.