Monthly Archives: February 2024

Less Than 1/3 of Organizations Have a CPO — How Will They Continue to Survive?

the doctor has yet to see a single study that said that more than 30% of (public) (listed) organizations have a CPO, and some have that number as low as 15%. He has to admit that he just DOES NOT get it. From a basic business point of view, if you go back to the first thing that they teach you in Business 101, it should be easy to see that it is one of the two most critical roles in an organization, and one of the four roles EVERY organization should have.

The first thing that they teach you is for a business to survive, it has to be profitable, and

Profit = Revenue – Expenses

This says that one of the two most important roles in an organization is the (acting) CRO, who is responsible for bringing the revenue in that is required for the business to operate. In a startup, the acting CRO could be the CEO who has to sell, sell, sell (or raise, raise, raise) until she has enough money to hire a CRO, but without revenue, there is no business.

This also says that the other most important role is the (acting) CPO, as the business will need products. Even a pure services business needs products to operate (equipment, software, office supplies, MRO, etc.), and those need to be obtained at a total cost that is less than the revenue available to pay for them. If the company is primarily a product company, then the majority of its spend will be on these products (and not products for operations or personnel), and the CPO is super critical. Now, in a primarily services company, this role may be fulfilled by the CEO (if the CEO is not sales oriented, but an ops or HR person), but will likely be fulfilled by the CFO or the HR Director/VP until the company is big enough, and spends enough on internal products, to hire a CPO.

Furthermore, this would imply that the third most important role is the CFO that ensures the money coming in and money going out are appropriately tracked and the budgets appropriately allocated and the financial reports and taxes appropriately filed with the government agencies. (But, if there are no funds flowing in and out, you don’t have a business, and, thus, don’t need a CFO.)

Finally, logic would dictate that the fourth most important role is the CEO that defines the strategy, direction, and enables each of these roles needs to be as successful as possible.

This also means that organizations that over-focus on the

  • CSO (Strategy): have their head in the clouds because strategy needs to be executed, and you don’t necessarily need a full time person in this role — a good exercise once every year to three (depending on your market) lead by a strategic expert could be enough
  • CMO (Marketing): are over valuing marketing because, while it’s important to get attention, you have convert leads into prospects into sales … and it’s the CRO that manages that entire process
  • C(R/C)O (Risk/Compliance): are putting the cart before the horses so they can’t leave the stables; while risk is critical, it has to be managed in a sales and procurement context
  • CTO (Technology): are not seeing the big picture; if you are a software organization, having a solid platform and infrastructure is critical, but if you are not selling the product, or you are not able to attract the talent you need to build the product (which may or may not be the CTO’s skillset), it’s suddenly less important

And, of course, this means that Head of Sales, R&D Director, VP Product, etc. also become secondary as sales is only part of the funnel, some R&D can be outsourced or acquired (since design can sometimes be one time), and without the ability to acquire the talent and goods you need, you can’t create the product.

But every organization has a CFO and CEO, the second most important positions. The majority have CMOs and CTOs, the third most important positions. And they all focus on Sales VPs, R&D, Products, etc. which are essential, but the fourth most important positions from a foundational and C-Suite perspective. But when it comes to CROs, less than 15% of organizations have them and when it comes to CPOS, less than 30% of organizations have them. It boggles the logical minds!

Now, the doctor knows he’s going to get a lot of flak for this for calling CMO, CTO, etc. third and fourth on the importance scale, because they are critical roles in many organizations, but if you go back to basics, logically they are not the most critical roles that must be filled.

Source-to-Pay+ Part 10: Over 55 Supply Chain Risk Vendors to Check Out

Last quarter, we ran a 9-part series that served as An Introduction to Supply Chain Risk where we introduced you to the risk elements not covered by traditional supplier management platforms (which we covered in our 39 Steps … err … 30 Clues … err … 39 Part Series on Source to Pay where we listed over 90 supply management companies of which over 1/3 claimed to have some degree of “risk”, which we dub supplier “Uncertainty”, management).

In our series, we focussed heavily on corporate risk, third party risk (which included ESG, Human Rights, Regulatory Compliance), supply chain risk (including transparency, traceability, and multi-tier tracking), transport risk, cyber risk, and analytics. We also noted that our next instalment would provide a starting list of vendors that you could check out to meet (some of) your supply chain risk needs.

This is that instalment. Hopefully this starting list will be useful to you. In the months that come, the hope is that some of these will be covered

Finally, a second reminder that inclusion on this list DOES NOT imply Sourcing Innovation is recommending the vendor.

Legend

 3P 3rd Party / TPRM
S/V supplier risk / verification
SCT supply chain transparency
T/L transport / logistics
 MT multi-tier
  C cyber
ESG Environmental, Social, Governance
 HR Human Rights
 RC Regulatory Compliance
BoM Bill of Materials (Direct)
 DX Discovery
 TX Traceability
Vendor LI/#Emps  3P S/V SCT T/L  MT   C ESG  HR  RC BoM  DX  TX
&wider 20 Y Y
Agora Sourcing 2 Y Y
AMLRight Source 2795 Y Y
Apex Analytix 411 Y Y Y Y
Aravo 117 Y Y Y Y
Archer 681 Y Y Y
Altana Atlas 166 Y Y Y Y Y Y
Brooklyn Solutions 24 Y Y Y
Certa 200 Y Y Y Y
Circulor 63 Y Y Y Y Y
Contingent 28 Y Y Y Y
Darkbeam (Apex Analytix) 8 Y
Diligent 2245 Y Y Y
Exiger 765 Y Y Y Y Y
Everstream Analytics 165 Y Y Y Y
Fact 360 12 Y
FairSupply 40 Y Y
FRDM 28 Y Y Y
FusionRM 275 Y
GoSupply 33 Y Y
IntegrityNext 96 Y Y Y
Interos 254 Y Y Y Y
Kharon 102 Y Y Y Y
MetricStream 1373 Y Y Y Y Y
Navex 1343 Y
NQC 104 Y Y Y Y Y
Overhaul 312 Y Y
Prevalent 161 Y Y
Prewave 150 Y Y
ProcessUnity (w/CyberGRX) 143 Y Y Y
Raad360 3 Y Y
RapidRatings 166 Y
Resilinc 299 Y Y Y Y
Resolver (Kroll) 371 Y Y
Responsibly 17 Y Y
RiskLedger 34 Y Y
Riskonnect 801 Y Y
RiskRecon 116 Y
RoboAI 57 Y Y Y
SAI360 435 Y Y Y
Sayari 180 Y Y
Sedex 442 Y Y Y
Seerist 127 Y
SourceMap 91 Y Y
Sphera 125 Y Y
Supply Risk Solutions 10 Y
SupplyShift 59 Y Y
SupplyWisdom 116 Y
Sustainabill 15 Y Y
The Smart Cube 1033 Y
ThirdPartyTrust (Bitsight) 16 Y
TraceLink 947 Y Y Y Y Y
Trademo 97 Y Y Y Y
Transparency One 23 Y
Trust Your Supplier 15 Y Y
Versed.AI 17 Y Y
VisoTrust 47 Y
Whistic 81 Y
WholeChain 10 Y

The Prophet’s 2024 Predictions [2024] (Collected Links)

The Series

Bonus

The Supply Chain of Supply Chain Talent is Not Only Broken … It’s Running On Empty!

A recent article in Forbes noted that The Supply Chain of Supply Chain Talent Is Broken, which it is, and has been for well over a decade. The problems started back with the global first world truck driver shortages back in the early 2000s, but the real problems were much deeper and hidden from view due to the fact supply chains were otherwise running smoothly and no one was looking behind the curtain or shining a light into the dark recesses of the supply chain.

Why? Because of the rampant digitization of procurement, logistics, and supply chain over the past twenty years, a time when globalization reached its peak, conflict was at a minimum, inflation was in the rear-view mirror, and natural disasters were still manageable, supply chains just worked. Predictable processes, routes, costs, and flows allowed simple systems to manage the supply chains almost automatically. Supply Chains didn’t need traditional supply chain talent to run; they needed buyers, logistics managers, inventory operations, and compliance personnel who could use systems — IT geeks ruled the day!

At the same time, seasoned supply chain professionals — negotiators, logistics professionals, and inventory/warehouse managers — were retiring in droves, and no one was replacing them. More importantly, no one was replacing them because there was no perceived need. These were the individuals who where doing supply chains in the 80s and 90s, before modern systems managed everything, when there were still lots of regulations to deal with (as the EU was still forming), when you didn’t always have container ships available (or easy container transportation to all locales), and when you would have to know, by rote, who to call when a truck wasn’t at the factory or the dock for a pick-up. When you had to do everything by phone and fax, because email was a luxury; when you had to deal with dozens of import/export regulations (and know how to create the reports by hand), and how to manage logistics scheduling on paper, especially when availability of certain carriers or personnel would change by the day. When you had to truly know how supply chain operations worked end to end, and not just push buttons on a virtual screen.

But then they retired, and no one replaced them. Even worse, no one was recruited to replace them. The organizations saw no need, since the systems did everything, the EU and harmonized regulations across regions made trade easy, and the big global carriers managed logistics for them. As long as they had negotiators, system operators, outsourced carriers, and outsourced consultants to do the rest, who cared? They certainly didn’t.

Furthermore, because there was no need in the organizations, people who studied Operations Research and might have went into Supply Chain went elsewhere, and as demand shallowed, so did students, but more importantly, so did apprenticeships. Now, with disruptions on the rise, globalization retreating, inflation resurging, supply chains breaking due to slowdowns, (port) shutdowns, and double canal slowdowns/closures (Panama and Suez), and current systems not designed for the world today, there’s no one who can handle the current situation. And that’s why supply chains are broken, talent chains are broken, and most importantly, why they are empty.

All of this happened behind the scenes because no one was watching, no one was thinking about the future, and no one was doing a risk assessment or managing the risks that were destined to come. All despite the fact that natural disasters were on the rise, political tension was on the rise, and we were being warned that a pandemic was the top global risk for over a decade.

Now we are at a point where software alone won’t fix this, consultancies who don’t have talent either (despite telling you to go to China for two decades) won’t fix this, and hope won’t fix this. The only thing that will fix this is the re-introduction of supply chain apprenticeship programs, as noted by the Forbes article, along with the return of retirees with actual knowledge to mentor the new recruits, which is missed by the article. Most organizations, or consultancies, these days barely have enough talent to manage their own operations yet alone train a batch of new recruits on the side, especially if they didn’t live through the rise in global trade in the 80s and 90s. The retirees did, and they have the knowledge the consultancies, and modern systems, don’t. Along with new recruits, it is their (temporary) return that is needed to fix the supply chains.

The Prophet‘s 2024 Procurement Prediction Number 10

A “CFA-like” Credential Emerges in Procurement and Supply Chain B+.

The Prophet says that the procurement and supply chain industries, similar to most others, excluding finance, are lacking any certifications/credentials, by those “in the know,” as a superior qualification for a job than even a top degree from a world-class or specialized university which is totally true.

The Prophet also says that organizations such as CIPS, ISM, SIG, etc., might disagree with this viewpoint which is also totally true. The Prophet does note that he supports all of these organizations, which the doctor does as well, and that he believes their training materials are highly valuable, which the doctor doesn’t across the board. (the doctor has seen some of their training materials. While some of their training materials provide a very good foundation, some of their training materials are not so good. Most of these organizations are very weak when it comes to analysis, tech-backed processes and practices, government/industry specific compliance requirements, risk management in today’s increasingly fragile global supply chains. etc. But when so many Procurement departments are struggling with the basics, understanding what their role is, and how ethics should enter the equation, we do need these organizations and that is why the doctor supports them while reminding you to do your homework when it comes to training. Use them for their strengths, not their weaknesses.)

The Prophet then suggests that in 2024, credentials will take on new meaning, and the best ones, particularly those challenging to obtain and requiring rigorous exams (which many fail), similar to the CFA in finance, will begin to take on a new significance in Procurement.

the doctor agrees with the principle, but does not agree it will happen this year, or even next year. Why? This will only happen with industry regulation, and that only happens in two situations.

  1. when an industry-led body gains enough support from the majority of professionals in an industry to make it a de-facto requirement in any employer of any size to get a high-level procurement job; no organization yet has that weight, and we’re not going to see the NLPA, SIG, APS, etc. all fold into the ISM, and definitely not into CIPS, which is pseudo-global (as it has made progress in some of the Commonwealth); this means that we’d need to see a new industry initiative that gave all parties representation and allowed them all to contribute to the standard and exam — for this to form, a certification to be adopted, and a test accepted will take years
  2. when a government forces a requirement that can only be met by a certification (and either creates their own or adopts one); governments move slow, and when we have the situation in the US where
    1. the republican focus is on ripping democrats apart for what they didn’t do, rolling back human rights to the fifties, and installing a wannabe dictator as President-for-Life
    2. the democrat focus is on shaming the republicans, selectively protecting the human rights they want, and taking up the former republican war mantle (since Trump just wants to be a dictator, which doesn’t profit the military complex) and doing everything they can to back Ukraine and Israel (including risking World War III with their Middle East bombing of Yemen vs. just destroying every Houthi vessel launched into the water)

    and the situation in the UK where

    1. the conservatives are too busy trying to keep Dishy Rishy from making them the laughing stock of the political world (as he’s so far disconnected from the common person he has no clue)
    2. the liberal (democrats) are too busy trying to counter the conservative support for the global wars and lack of focus on the situation at home by being extra woke (and we know how that fared in America) …
    3. when we look at the NHS mess and postal service mess and their apparent unwillingness to do anything meaningful about it (for longer than should be humanly possible to ignore a crisis), it seems that good procurement is the last thing on their mind

which are the two countries that would need to lead such an effort (as the EU is very focussed on climate change and AI and struggling to hold itself together now with active protests in about a third of its member states on any given day; heck it’s too focussed on attacking the farmers, already forgetting what happened when Stalin called the Farmers the enemy of the state. (See this article, for example).

Thus, while such regulation is sorely needed, it’s not likely to happen, if it happens at all, until the later part of the decade (unless, of course, The Prophet and the The Public Defender want to once again band together and take up the charge and lead the effort to bring all the necessary parties together).

The Prophet was dead on with three of the primary reasons we need it.

  • GPAs are no longer a measure of academic performance in many universities.
    The Prophet notes that, according to the Yale Daily News, “Yale College’s mean GPA was 3.70 for the 2022-23 academic year, and 78.97 percent of grades given to students were A’s or A-’s,” including the hard sciences and engineering! He also notes that the Michigan State Broad Business School (which includes the Supply Chain and Procurement degree programs) also experiences significant grade inflation, with 80% of students in 3 out of 5 undergraduate classes earning a 4.0. (Source)
    The situation is even worse in China where you don’t even get accepted to some Universities unless you are an A- or better student, and where you are under intense pressure to maintain that A, to the point where a student will drop out (or commit suicide) rather than risk being thrown out for not maintaining it. Now, this would be great except for the fact that As are often contingent on rote memorization and learning to do the work the “state way”, not always with any free thinking whatsoever. (And then graduating ONLY if they think you’ll agree to share what you learn when they allow you to go outside China for that Post-Doc/Professor position).
    The situation is better in Canada [except Quebec], but there are some Universities / Departments that are under great pressure to remain competitive to maintain grant and industry funding, and others where the professors are so overworked that they don’t even bother to confirm that a Master’s student in Engineering can manually calibrate an oscilloscope or a Master’s student in Computer Science can appropriately identify and test for all boundary cases in a simple procedure. (Remember, the doctor has been a Professor, and maintains regular contact with Professors and knows this to be truth.) How could you trust either to validate your equipment or your code? (He couldn’t!) (Regarding Quebec, the current premiere is taking Quebec’s status as a nation within a nation and essentially discriminating against anyone who is not French and willing to speak French as a first, and only, language. [See this article, for example.])
  • DEI/affirmative action preferences, which still exist (despite the supreme court ruling and their illegality if they enforce admitting or hiring a less qualified candidate), have removed objective academic criteria in both degree-based programs and industrial training programs. This has resulted in candidates who might only be a D being admitted to programs because of their minority status while non-minority candidates with Bs were excluded.
  • The best talent may no longer be pursuing traditional college or graduate programs. There needs to be an objective means of evaluating hard and learned skills for those who cannot afford or do not wish to invest time in university studies, especially those who have taken industry training programs or annex courses specific to what they need as well as obtained relevant real world experience under a mentor. (There’s a reason there used to be apprenticeships; some learning onlly happened under the guidance of a mentor.)

The only other reason that needs to be mentioned in the doctor‘s view is

  • without a certification, how can you know that any candidate, no matter how experienced and skilled they appear, knows all of the foundations you need them to know? With so many different definitions of sourcing, procurement, and purchasing; so many different thoughts on what an individual should know about analytics, supplier identification, supplier vetting/onboarding/management/development, negotiation, contracting, global trade, logistics, risk identification and management, compliance, finance / finance support, etc., how can we have a solid baseline with a (multi-level) certification program?

It would be great if 2024 is the year that we saw this certification, but while we desperately need it, the doctor believes that, unfortunately, it’s still years away. (But he will challenge The Prophet to step up and make it happen!)