The Series
Bonus
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.
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.
and the situation in the UK where
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.
The only other reason that needs to be mentioned in the doctor‘s view is
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!)
SaaS Management Solutions Start to Eat Services Procurement Tech A+
More specifically “vendor management systems” (VMS) that are all about the billable hour.
As The Prophet asks, what happens when that billable hour becomes an SOW (either to skirt worker classification requirements or because it really is a complex SOW) especially when consultants, managed services or outsourcing providers need to blend and leverage AI, tech, data and other capabilities to deliver an outcome? You get joint SaaS/[IT] Category (management) solutions that become the new new norm of solutions for taking on certain business functions. And they won’t look anything like today’s VMS or SOW solutions, and will, as The Prophet notes, likely be new generation of todays SaaS/IT Category solutions which will either blend in more services or merge with / be acquired by new-age MSPs that build the offering around the new tech, and not the old tech.
But what will these solutions look like? Good question (that The Prophet did not answer).
More importantly, as The Prophet notes, this convergence will raise a ton of questions.
These answers may or may not dictate what the blended deliverable looks like, as the developments are just as, or more likely, to be developed taking into account whatever regulations currently exist or get introduced around the services, data, technology, and/or AI utilized. Plus, the smaller players will likely try to build off of whatever is getting traction from the big players but in a more innovative, effective, and cost effective fashion. (Remember, the big players like to charge you way more than a service can be profitably delivered for. Case in point: spend analysis. Large engagements, which usually start with a massive data cleansing effort, require a lot of analysis and reports, and modern solutions, will usually get quotes starting in the 7 figure ranges when there are a number of mid-sized, niche, consultancies, that can usually do the same work, faster and better, for 250K or less. [Remember, analytics is one of the the doctor‘s area of expertise, he knows the vast majority of vendors, and talks with the best regularly. Solutions 10X better than anything a Billion Dollar Suite or ERP will throw your way cost 1/10 of what they did a decade ago — but we’ll save this rant for another day.] The point is, they’ll let the big players create a market around a new offering, and then swoop in with a better, more cost effective, alternative.
the doctor has to admit this is one area where the answer has not yet revealed itself, one of the few areas where he’s not sure what the first solutions will look like (beyond a blend of current SaaS tools pre-integrated with third-party data feeds, semi-dedicated personnel performing regular tasks, account managers monitoring progress, and consultants doing quarterly checkups and advisory), and how long it will be before new workforce regulations get passed that change how such services can be offered (or how workers must be paid).
It will be an area to watch, and the doctor bets that Andrew Karpie will be watching it closely, so be sure to read anything he writes about it. It will be the first shakeup the VMS industry has had in decades.
A couple of months ago we published an article on how ‘Tis the season … to bring an end to seasonality! (And JIT!) because, while consumer shopping may be seasonal, supply chains no longer support seasonality. The pandemic finally broke globally over-stretched supply chains and with the continued issues (lack of ships, due to scrapping; containers; due to trade imbalances; lack of capacity, due to extended shipping times now that the two major canals are not available and ships have to sail around both capes), the situation is not going to be fixed anytime soon.
In the article we noted that if you didn’t want to seasonally stock out, you needed to stop trying to stock seasonally and start planning for sustained stock up over time. Stock at the rate products are normally produced and able to be shipped. And stock to what you forecast.
But don’t stop there. If, even spacing out the orders and shipments, you can’t reasonably stock to demand, or, if the demand may not be high enough to minimize your logistics costs (via full container shipments), then you need to work on demand shaping as well as demand forecasting. Don’t over market / promote / sell a product you’ll have trouble delivering, and don’t maintain a product that isn’t going to optimize your economic order quantity.
Not everyone needs the newest product, or the top of the line product, some just need a product that works, which can be last year’s product, or the mid-line product. If you shape demand properly, through targeted marketing, targeted selling, or proper account management, you can make sure that you can meet all of your demand and keep each product line you should be maintaining profitable. And while we admit demand shaping can be harder than forecasting, sometimes it needs to be done. But it needs a lot of advance planning, so it’s critical that Procurement work hand in hand with Marketing and Sales to help identify the demands it can safely meet, when, and what demand levels are optimal for each product line. But if you integrate your planning, marketing, forecasting, sales, and supply chain planning, then maybe the holiday season will, in 2024, be the most wonderful time of the year.