Monthly Archives: November 2014

Procurement Trend #21. Increased Raw Material Scarcity

Eighteen anti-trends from the bush country still remain. As much as we’d like this series to be nearing the end of its run so that LOLCat can come out of the bag and once again explore the world, this lunacy has to stop. We have to shine the light on all these half-truths and lies and put an end to them once and for all. We will continue until each one is laid bare in the hopes that the boondock futurists run back into the bush lands from once they sprang and leave us alone to push forward.

So why do so many historians keep pegging increased raw material scarcity as a future trend? Besides their inability to recognize the twenty first century, there are a few reasons, but among the top three are:

  • We’re burning fossil fuels like there’s an endless supply
    and there isn’t. New drilling technology might allow us to tap more reserves then we thought we could, but this only gives us two or three extra decades before we run out. Since most of our current fossil fuel reserves formed over hundreds of millions of years, and are from plant remains before the time of the dinosaurs, it should be obvious that they are not renewable.
  • We’re using rare earth minerals as fast as we can mine them
    and demand is still increasing as mobile mania hits the world!
  • Global food reserves recently hit an all time low
    back in 2009 and with population steadily increasing, the situation is not going to improve.

So what does this mean?

Fossil Fuel being burned like there’s no tomorrow might mean there is no tomorrow

Non-renewable energy reserves are running out, pollution is on the rise, and if you aren’t already being hit with rapidly increasing energy costs, expect to be taxed to the hilt by way of carbon credits. At some point, where fossil fuels is concerned, there will be no tomorrow. Thus, you have to start moving towards renewable energy resources — wind, solar, water — as soon as possible and make sure that you are only using fossil fuels for transport, at least until such time as there are suitable hybrid bio-fuel/battery-powered transport options for you to choose from.

Rare Earth Minerals are on the verge of extinction

They are called rare earth minerals for a reason — they are few and far between compared to regular earth minerals and in a very limited supply. You need to find alternate designs that, at the very least, require less of these materials if you can’t eliminate the need for them completely. And you definitely need to start designing for recycle and reclamation.

Food Reserves at an all time low

Food costs are going to increase through the roof, and severely impact your bottom line, unless you do whatever you can to eliminate waste through the supply chain end-to-end. In many countries, a third of food is needlessly wasted. Not only can we do much better than this, but we need to. Even though there are now almost 7.3 Billion people in the world, we are still able to produce enough food to feed everyone, but yet over 870 Million people are chronically undernourished. Simple math says that if 2/3rds of global food production feeds about 6 Billion people, then we can easily feed 7.5 Billion people with sufficient nourishment. However, it also says that as the population grows, our ability to produce more than we need decreases substantially and any natural disaster that wipes out a major crop will have huge repercussions if we cannot eliminate waste. So you need to review all of your transportation, storage, and production processes to make sure you get total supply chain waste as low as possible as soon as possible.

Procurement Trend #22. Process Convergence into Supply Management

Nineteen anti-trends from the hinterlands still remain. As much as we’d like this series to be nearing its end so that LOLCat can come out of hiding, this delirium has to stop. We have to shine the light on all these half-truths and lies and put an end to them once and for all. We will continue until each one is laid bare in the hopes that the outback futurists crawl back into the sand caves from once they sprang and leave us alone to push forward.

So why do so many historians keep pegging process convergence into supply management as a future trend? Besides their inability to remove the blinders, there are a few reasons, but among the top three are:

  • Supply Management used to be office supplies and pushing manufacturing POs
    and the most sophisticated process was getting quotes from three office supplies vendor and selecting the lowest but
  • Now its product, services, marketing and legal
    each with their own needs, own processes, own languages, and own regulations and
  • Processes and talent haven’t kept up
    as change management and training wasn’t a priority as not much was needed when all you were doing was buying office supplies or cutting POs for a contact signed by another department

But, as we all know, it’s not that way anymore! So what does this mean for you?

Supply Management is the New Heart of the Organization
and needs to be structured and positioned as such.

All of the functions of the company are, to different degrees, becoming dependent on Supply Management. Supply Management must now be a leader in collaboration, supplier relationship management, and transition management, among other modern processes and technologies, that will be discussed in an upcoming series.

Back-Office and Front-Office are Converging

Its not just AP (Accounts Payable) merging with AR (Accounts Receivables) or Sales merging with Marketing, its the CRM (Customer Relationship Management) and SRM (Supplier Relationship Management) processes merging and Sales, Finance, and Supply Management getting an end-to-end view.

Transition Management to a new operational paradigm is required

And processes like ADKAR, as we discussed in our recent post #25 on More Stakeholder Collaboration, are going to be required. More on this in an upcoming series as well.

Procurement Trend #23. e-Procurement System Adoption

Twenty anti-trends still remain. As much as we’d like this series to end so that LOLCat can come out of hiding, this insanity has to stop. We have to shine the light on all these half-truths and lies and put an end to them once and for all. We will continue until each one is laid bare in the hopes that the backwater futurists crawl back into the muck from once they sprang and leave us alone to push forward.

So why do so many historians keep pegging e-Procurement System Adoption as a future trend? Besides brain cell inactivity, there are a few reasons, but among the top three are:

  • e-Procurement is still “new” in business software terms
    it’s only been around for approximately 15 years, and the sad reality is that, to many of these self-proclaimed futurists who just crawled out of the MRP cave, it’s new to them (so it must be new to you, right?)
  • most systems are limited to catalogs or punch-outs
    and users can only buy from a fixed, limited set of products that exist in the organizations catalogs or on sites that support the proper punch out technology
  • most systems are limited to a select group of users in the organization
    when they should be in the hands of everyone who needs to make a requisition or purchase on behalf of the organization

e-Procurement is Still “New”

Fifteen (15) years might be new in business terms, but given the rate of change we are all accustomed with as a result of the internet age, it’s not new at all. In fact, it’s ancient! With this metric, you’re still calling on analog cell phones while the rest of the world is on digital smart phones that can call, text, and video conference. Get the picture? (Oh, wait, you don’t have picture capability. Sorry!)

Catalogs or Punch-Outs are the Norm

Catalogs are good, punch-outs are better, but as SI explained in its B2B 3.0 Series way back in 2008, virtual, integrated marketplaces, which were available then, are better still! Read the classic series for more info:

Usage is Limited

This is usually because poor processes and policies limited rollout to “key” individuals, but often because people didn’t want to use ugly, clumsy systems that didn’t even accomplish their basic function. The answer is a modern e-Procurement system that is easy to roll-out organization wide, easier to use, and does what it is supposed to do. There might have been only two options 15 years ago. But now you probably have a dozen that would work. So get one!

CPOs Deserve to be in the C-Suite

And the general belief is that because Supply Management is so important to organizational success, CPOs should report to the CEO. And while this should be the case in theory, should it be the case in practice?

According to a recent study by A.T. Kearney (as highlighted over on S&DC Exec) conducted in association with CIPS and the ISM, only 10% of procurement functions have established recognition with their CFOs regarding how procurement contributes value and that the benefits are real and measurable. Ouch! Reading this make one wonder if maybe the CPO should be reporting to the CFO.

Why? Because if the CPO is a direct report, it might convince more CFOs to spend more time trying to understand the ways of Procurement and convince more CPOs to spend more time trying to understand the ways of Finance. The joint effort might result in more CFOs and CPOs coming to a joint understanding, which might result in more CFOs understanding the true value of Procurement.

Right now, as per a recent Cap Gemini Survey (available at this link), 20% of CPOs report to Finance. It’s unfortunate that we don’t know how many of these CFOs are among the 10% of those that understand the value of Procurement. Because if the majority of CFOs who understand the value of Procurement were those who had the CPO as a direct report, then the answer would be simple. Have the CPO sit at the table but report through the CFO on a daily basis until such time that Finance understands the true worth of Procurement. However, if the percentage of CFOs with direct CPO reports who understand the value Procurement brings is only in the 20% range, then having the CPO report to the CFO makes no difference.

Any thoughts on the issue?

BYODD is the Norm, But What Should This Tell Us?

According to a recent post on Spend Matters, BYODD (Bring Your Own Damaged Device) is Now the Norm, and the doctor has to agree. Not only are mobile devices ubiquitous in today’s workplace and home-life, but so are damaged ones. With essentially one in two mobile devices in use being damaged in some way, this means that at least one in two employees are using a damaged mobile device.

According to the author, the solution is to follow the advice in the referenced 2014 ZAGG Device Damage Study. Specifically, if companies are encouraging employees to bring their own devices to work, then those companies should be buying screen protectors, cases, and other damage defense products for their employees to make sure that these employees not only have damage free products to work on but to represent the company.

That is sound advice, and a precaution that should be taken, but that’s not the solution. That’s a fix. The solution to the problem is to address the root cause, and the cause is the proliferation of devices that are, simply put, way too brittle. While the doctor is not suggesting that we all need to be carrying around military-grade tech that can withstand blows, high-impact falls, and desert terrain, we should not be carrying around phones that bend in our pockets.

In other words, the real problem is the proliferation of devices that are being made flimsier and flimsier in a ridiculous effort to make a device that is not only lighter than the predecessor, but, as far as the doctor can tell, lighter than (compressed) air. And while 23.6 pounds (which was the weight of the first portable computer) is a bit heavy for a laptop, we can easily lug around a laptop that weighs 10 pounds considering we used to carry around textbooks that weighed 5 to 7 pounds each. We don’t need a 3 pound laptop (which is the rounded weight of a Macbook air), especially when a gust of wind can shred it! The same goes for phones. We used to lug around cell phones that weighed almost 2 pounds. We can certainly handle a pound if that’s what it takes to make it resilient and reliable. At 4 ounces, it can blow away with the wind!

So just like we need to avoid developers who insist on putting look before feel and functionality, we need to avoid manufacturers who focus more on making devices featherweight then on making devices resilient and support those manufacturers who take a more balanced approach to device production. When the money stops rolling in, this will quickly convince all manufacturers to kick their obsession with making featherweight devices and get back to reality.