As noted in our initial damnation post, trends are the foundation of forecasting, but they are also the foundation of disruption when they change unexpectedly. When it comes to Procurement, the relevant trends may be consumer demand trends, inventory trends, market trends, or any other trend that Supply Management believes will impact its operation. Trends are damming because they are truly can’t live without them, can’t live with them events. Sort of. And we’ll discuss shortly.
First we need to point out that, when it comes to trends, there are two types of trends. Macro-Trends and Mini-Trends. A macro-trend is a large-scale, sustained shift in whatever is being measured. It could be a sustained consumer shift away from landlines to mobile phones as the primary means of voice telecommunication. It could be a sustained shift from overstocked warehouses to just-in-time delivery across retail chains. Or it could be a sustained shift upwards in the value of cotton, rice, coffee, or other staples where demand, and reserves are shrinking.
Mini-trends are emerging trends, often not yet acknowledged by the media or market, that may or may not culminate in large-scale, sustained shifts in the marketplace like their macro-trend counterparts, but are still likely to have a sustained impact over a period of time long enough to be significant and have the potential, in the future, to become, or replace, an existing macro-trend. Good examples of mini-trends that do not culminate in large-scale, sustained shifts are fashion trends — such as bell bottoms, balloon pants, hip huggers, long waistcoats, or any other fashion garment that is here today, gone tomorrow. Examples of mini-trends that became macro-tends are walkmans (that helped the cassette tape industry take off), cell phones (which have migrated from business phone to home phone), and gluten-free food products. Initially, these were all small markets but all are now global.
Both can make, or break, a company, and the ability to deal with these trends is what makes, or breaks, a great Procurement organization. But how does Procurement use trends to its advantage?
1. Identify marco-trends early in their lifecycle.
The sooner the organization is aware of a macro-spend, the sooner the organization can begin to insure products are appropriately designed, sourced, and inventoried to support marketing and sales through the macro-trend. The Procurement leader will have to work with the Chief Strategy Officer to select an appropriate market research firm to help the organization identify the appropriate emerging macro-trends, so that Procurement can figure out how the organization will be prepared to deal with the macro-trends when they hit their peak.
2. Identify potential mini-trends in the incubator stages.
Min-trends rise fast, and disappear faster. An organization has to identify micro-trends that could become mini-trends as soon as possible, select those it is in the best position to deal with, and prepare ready-to-go mini-trend product/sourcing plans the same way it would prepare risk mitigation plans, so that as soon as a micro-trend (which can be thought of as a small-scale, localize, mini-trend) starts to expand (virally) into a mini-trend, the organization can put the plan into action. When a mini-trend springs up, an organization that wants to take advantage of it has to be ready to source at a moments notice. It can only do that if it knows what it needs, what suppliers could meet the need, what transportation options can get the products to market quick enough, and how it can maintain just-in-time capability for surges as long as Sales needs it too.
3. Enable Marketing to Influence the Trends.
If the market research identifies two potential mini-trends that could arise, help marketing find the right advertising agencies with the ability to create campaigns to influence consumers towards the mini-trend the organization can best support. And make sure marketing minimizes its spend so it always has the budget it needs when it needs it. This is a book on its own (and the reader should check out SI’s post on marketing procurement as well as the doctor‘s joint series with the anarchist over on Spend Matters Plus [membership required] on how to Master the Marketing Way [Part I, Part II, Part III, Part IV, Part V, and Part VI]), but the importance of the organization influencing spend, and Procurement supporting that cannot be underestimated.