Daily Archives: February 1, 2024

The Prophet‘s 2024 Procurement Prediction Number 6

Get Ready to Make BIG Supply Chain Decisions A

The Prophet says we will make far more BIG decisions in 2024 in Procurement and Supply Chain and possibly more than we have ever done.

the doctor will actually go one step further here — there will be NO little decisions. Every decision you make will lead you down further down a path that will inevitably branch or disappear in an unexpected way and you’ll need to make a BIG decision, and that decision will be limited by prior decisions, which are actually the starting points of the BIG decisions you might not even see coming!

And, as The Prophet says,

1) you need better data than your competitors. Let’s be clear here. That is data that you should have had yesterday! This means you need to clean up your data and enrich it. And this is an effort. But more on this in the next article in our discussion of Prediction #7.

2) you need frameworks for decision making and framing — what do you even need to consider, and who needs to be consulted before the decision is made and included in the decision making team

3a) you need tech for planning and forecasting as well as
b) tech to identify confidence, or lack thereof, in data, models, and predictions
c) tech to support a deep dive into models and predictions with high confidence when the answers are unexpected so that an explanation, or root cause, can be identified and addressed (because sometimes the right response to a situation will be completely unexpected; and you can’t risk brushing off a right response that feels false)

4) you need the scenario analysis and [multi-objective] optimization that should have been in use since the day it became available! [the doctor hasn’t been publicly promoting multi-objective strategic sourcing decision optimization [SSDO] since SI started in 2006 just because he’s a contrarian!] Not only has the lack of use contributed to a consistent loss year after year after year (as companies paid as much as 10% more on total COGS than needed), but it contributed to lack of balance in decisions (as these models allow you to balance cost and risk, cost and carbon, cost and carbon and risk, etc; if you can quantify it, these tools can help you balance it), which is becoming more and more critical. There’s no savings if there’s no purchase … and without supply, who cases what the spend was supposed to be?

5) you need the best “decisioning” team, which MUST be multi-disciplinary and multi-departmental; with so much hitting you from so many angles, it’s virtually impossible for one person to see everything

but you have to go beyond this and

6) a) identify the short-term results expected from your decisions which can be monitored and tracked,
b) implement solutions that allow you to monitor and track toward measurable results, and
c) track progress against those expected short-term results

7) if the actual results start to diverge significantly in the short-term, be prepared to bring the team back together, revisit the data, frameworks, technology, models, and decision factors; find the assumptions, etc. that are no longer valid; and make a new decision, even if there is a short-term drawback (or contract penalty).