Author Archives: thedoctor

Finally! A “Think Tank” Article that Gets It Right!

the doctor has been reading a lot of “think tank” and “thought leader” articles lately that are completely off the mark. Some are so bad that he’s wondering if the publications are paying interns who know nothing about the space to use “chat j’ai pété” (Chat-GPT) to hallucinate content for them. (And, as you’ve seen, some are so bad and/or make him so angry that he just has to rant about them. Our space don’t get no regard at all as it is. The last thing we should be doing is providing anyone who takes the time to read about it with misleading or wrong information).

All that being said, Supply Chain Brain recently published an article on 2024 Predictions: A New Era of Strategic Supply Chain Design by Donald Hicks, the CEO of Optilogic. In it, he makes six predictions for the new era of strategic supply chain design in 2024.

The first five predictions were good.

1. A shift from short-term to strategic thinking.

COVID demonstrated that we’ve reached the end of short-term JIT thinking, and the recent geopolitical turmoil since has only heightened that reality. Any company that wants to survive has to go back to focus on mid-to-long term strategic thinking that will help it mitigate the plethora of risks it is being hit with and assure supply.

2. An end of the age of unlimited cheap suppliers.

Especially since the majority of these were based in China. As the author notes, China-US relations are deteriorating fast and the Chinese economy is underperforming. Moreover, as a result of COVID, logistics are uncertain and considerably more expensive from China (due to less carrier space, as many ships were scrapped during COVID for insurance settlements, and the need to sail around the capes, due to the Red Sea situation and the prolonged Panamanian drought). So, companies need to start looking elsewhere, and since they let their best suppliers in Mexico and South America wither and die, there aren’t many good options at the moment.

3. Demand for vendor transparency.

In addition to customers becoming more discerning, as the author notes, there are more supply chain regulations that need to be adhered to globally, more sustainability regulations, more denied party regulations, and so on. Companies need to know who they’re dealing with; that all supply chain, sustainability, and regulatory requirements are met; and that any desires of its customers can be met.

4. Market turmoil and the rise of new leaders.

This year is projected to witness down rounds, market turmoil, and a reassessment of strategies. Most definitely. VC went too hot and heavy before COVID trying to force unicorns where the foals weren’t even breeding stock, and then lost heavy in the SVB failure; and PE, trying to get a piece of the payments, online collaboration, and/or FinTech market during COVID paid ridiculous multiples for rather basic offerings that weren’t even complete — and that would never demand the price tag the investors expected. As a result, these PE firms are now looking at payback timeframes of a decade or more, if they’re lucky. This means that cash is sparse, investments will be sparser, and some companies (that overspent and can’t get the valuation) will not survive.

5. Digital Twin Skepticism.

Every supply chain technology vendor is clamouring to tell you about their digital twin capability, but the term “digital twin” is a marketing creation that can’t live up to its ambitious name. Companies don’t always have all the data (or quality data) relating to supplier orders and timelines, inventory levels and factory production in separate operational systems, much less a single location.

There’s no digital twin without complete data, and there’s no complete data. Modern manufacturing companies and direct buyers are figuring this out and not falling for outlandish claims anymore.

The sixth prediction was absolutely fantastic!

6. Artificial intelligence exhaustion, and a return to old-school evaluation.

Hear, hear! Smart companies are getting fed up of the ridiculous claims made by new Open/Gen-AI companies and the paltry results that were delivered, if any. They’re also fed up of the high-price tags relative to the limited value they’re received from “AI” so far.

Thus, rather than relying on the mere claim of being AI-enabled, companies should be expected to showcase their capabilities, substantiate their claims with proof, and provide clear reasons for belief, signalling the return to a more traditional approach to purchasing decisions.

Hear, hear!

Another “think tank” article on digitizing procurement that’s off-the-mark!

A recent article in Supply Chain Brain noted that you should be seizing the opportunity for digitizing procurement and the doctor completely agrees. Nothing should be paper based in Procurement today. There’s no excuse for it.

And yes, multiple developments in supply chain are converging to create an unprecedented digital opportunity for procurement professionals. Furthermore, if you work on mastering and combining emerging and maturing technologies in strategic ways since procurement teams are in a position to reshape how they work, and create value across the supply chain, you can revolutionize Procurement and business performance.

But digitizing, by definition, means moving processes from scrolls to systems, from the dark basement to the illuminated screens. It DOES NOT mean that:

you use Gen-AI or even machine learning
there may be tasks where you apply point-based ML, but that comes after the digitization of an appropriate process
you use cognification to illuminate (concealed) processes
especially when it could illuminate you should never have digitized the process in the first place
you accelerate workflow through automation
you automate what you can, and while that includes the acceleration of tactical paperwork processing and thunking, sometimes humans have to step back and think about the data received, insights produced, and options available before making a decision … you don’t accelerate whatever amount of time it takes a human to make a good decision (and, instead, focus on automating and accelerating any non-strategic tactical “thunking” tasks that prevent them from focussing their brain power where it’s really needed)
you go straight to content personalization
when the users might not even know how to use the baseline systems (and, in the process, create a nightmare for the support personnel)

Digitizing Procurement starts by:

understanding what processes you are using now
understanding if they are appropriate or they should be optimized
identifying off-the-shelf best-of-breed modules, mini-suites, suites, and/or
intake-to-orchestrate platforms and implementing them
identifying key points where RPA, ML, or other advanced techs can make the process even more efficient
then identifying the right advanced tech to use

Not starting with it. You should never try to run a race before you can walk. The only “impactful opportunity” identified in the article you should start with is

adopting ecosystem thinking to enhance data

At the end of the day, nothing works well without good data. So get the data right, and everyone aligned to get the data right, and that will get you further, and help you do better, than any piece of modern tech you can try to throw at the problem.

We Need Integrated Business Planning (IBP); But it Won’t Work Without Proper Organizational Structure and Roles – And Definitely Won’t Work Without a CRO and CPO!!!

There’s been a number of articles lately, which we’ll likely discuss in later articles, about the need to move to integrated business planning (IBP) as a means to combat, and minimize, supply chain disruptions. While those articles have a point, there are two things they are missing, at least so far. One, while IBP can minimize certain types of preventable disruptions, it doesn’t help much in mitigating disruptions that are unexpected. Two, it requires end-to-end modelling of, and monitoring of, overall business processes, and without the right representation of the right stakeholders in the process, this never happens.

And the right representation usually doesn’t happen because, as we kind of hinted at in our last article on why You Need A CPO, most organizations don’t have the right C-Suite, and, thus, the right people aren’t included, or at least properly represented, in integrated business planning (IBP), and, as a result, the right processes, or at least the right assumptions and data, aren’t included, and the planning fails.

If you look at the goals of Integrated Business Planning, which include, but are not limited to:

aligning strategic objectives with operational and financial goals
aligning product strategy, R&D, and manufacturing with objectives and supply chain
ensuring demand forecasting is influenced by market research and historical sales data and connected to procurement
ensuring procurement strategy aligns with demand forecasting, risk management, and the organization’s current supply chain network
ensuring network and logistics changes and optimization takes into account procurement, risk, regulatory compliance, and ESG goals
ensuring marketing and sales focusses on current product availability and aligns with the product strategy dictated by market research
creating an all-inclusive profitability analysis that takes into account true end-to-end lifecycle costs
ensuring inventory is balanced with logistics times and disruption risk so that overall cost (balanced between inventory cost and losses from stockout) is the most appropriate for the organization
creating a cash-flow analysis that considers not only all inflows and outflows but the timings so the organization can balance debt/loans, on-time payments, early payments, and investments to maximize the return on every dollar

and the expected results which include, but are not limited to:

enhanced revenue growth
faster and better (data-informed) decision making
improved customer satisfaction
better product lifecycle management
faster supply chain disruption responses
increased target ownership and the ability to rapidly revise, and commit to, plans
better planning efficiency

you cannot

align objectives with goals unless you have the owners of all objectives, impacted operations, and finance involved … and this dictates a complete C-Suite with all the key parties, including, but not limited to the CEO, CFO, CPO, CRO, and, if present, COO, CTO, and any other CXO role NOT fully owned by another CXO
align strategy without the marketing & sales perspective (CRO), the market research (CRO or COO), the R&D/Manufacturing owner (COO or CSCO), and the procurement perspective (CPO)
you need the CRO, COO, and CPO to agree on the demand forecast as all parties need to deliver
… and the CPO needs input from the Risk Officer and the CSCO to finalize the strategy
the CSCO cannot optimize the supply chain network without the CPO, Risk Officer, Compliance Lead, and ESG Expert
the CRO needs to continually monitor input from the CPO and CSCO to ensure that products are marketed and sold at the right time as manufacturing challenges, logistics delays, inventory hiccups can change product availability daily
profitability needs to take into account all organizational costs, which means you need to look at procurement costs (CPO), operational costs (COO), HR costs (CFO, COO, or Head of HR), logistics and tariffs (CSCO), etc. it’s way more than revenue minus COGS minus overhead
and, while the cashflow belongs with the CFO, the CFO needs insight into organizational wide costs and commitments to figure it all out

and you will not

reliably enhance revenue without a CRO;
be able to make better data-informed decisions with missing data;
improve customer satisfaction without market research, procurement input, manufacturing quality;
better manage lifecycles without integrated input from market research to warranty repair and all steps in between;
respond quickly to a disruption without all of the integrated data to make an alternative decision as a mitigation response;
have all of the target, and task, owners in the same system; or
plan better with partial data. Never.

So you need all of the key roles, including the CRO and CPO that the majority of organizations are missing and, most importantly, you need the right structure — CRO and CPO at the top with the CFO and (if not done by the CEO) COO — with the other C-Suite roles reporting to the CRO, CPO, CFO, and COO as appropriate. For example, the CMO and VP sales under the CRO, CSCO and Risk/Compliance under the CPO, HR and R&D under the COO, etc.

In other words, all this push towards IBP is great, but you need a fleshed out, well oiled organizational structure, with all key roles filled, to support the processes with a collective holistic data view, or it just won’t work.

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