Author Archives: thedoctor

Primary ProcureTech Concern: CSR/ESG/Sustainability

Today we start our coverage on the primary concerns of Procurement leaders, starting with CSR, ESG, and Sustainability. We will discuss the why, the impact potential, the major challenges and risks, and leave you with some final words of insight.

Why?

Corporate Social Responsibility is becoming paramount because many consumers are becoming conscious of their spending impact and spending power and don’t want to buy from companies that don’t take care of their workers, corporations that pollute the requirements, brands managed by executives who endorse fascist authoritarian regimes, and so on. Unless your corporation has a (local) monopoly, being a bad brand can be harmful to your bottom line. That’s the last thing any executive response, even a psychopathic sociopathic one (because a boycott inflicts major damage to the bank account).

Environmental and Social Governance is becoming top of mind because, in most first world countries, laws have been continually introduced to protect the environment over the last three decades. Moreover, you have to comply with those laws while simultaneously pretending not to give a rat’s ass about the environment in the United States which, as we pointed out in our post on how in the corporate world, sustainability/ESG is not a priority, is attempting to roll environmental regulation back to the Early Modern Era (i.e. pre-World War II), and any corporation not on board with that mission gets on the administration’s bad side.

Finally, sustainability is becoming important because many organizations are reliant on diminishing natural resources; crops are increasingly being wiped out by natural/climate disasters; and consistent, large, energy and water requirements necessitate sustainability to stay in business. Even if they don’t really care about CSR or ESG, they still need sustainability.

Impact Potential

Let’s face it.

  • We’re in an age where boycotts can cost Billions — and that’s exactly what could happen if your brand is perceived to be particularly heinous with respect to human rights in the supply chain, egregious with respect to its environmental damage, spine-chilling with respect to its sustainability, or reprehensible with respect to its far-right organizational ties.
  • Violating one of the many regulations, especially in the EU, can be quite costly. There can be massive fines, seizure and destruction of goods, and if you attempt to import hazardous or banned substances, even criminal charges.
  • Not minimizing energy, fresh water, or non-renewable material requirements can greatly increase costs and decrease supply assurance — neither is good for profit.

Major Challenges/Risks

Regulations: There are dozens of major regulations in Europe alone that you need to be aware of. Violating any single one of them can be disastrous, as per our regulatory compliance risk post.

Investment Requirements: Sustainable, affordable, clean energy and water often requires a lot of up front investment if there are no renewable energy plants or water desalination plants in the area. It also costs a lot of money to upgrade designs to use less non-renewable materials or alternative requirements, especially if there are a lot of redesign and testing iteration cycles that will need to be undertaken.

Supply Assurance: while you attempt to transition to a more socially responsible and environmentally aware organization. This is a top barrier for a reason!

Final Words

Whether or not you believe in climate change is irrelevant. Natural disasters have increased five fold over the last five decades, a pace that has not been equalled in recorded history. We’re running out of fresh water and struggling to produce enough energy, especially in the age of AI where a single model requires a multi-billion dollar centre to support it! Even without natural disasters, some regions struggle to produce enough food. Thus, sustainability is a major concern because the sustainability of the business is at stake.

Primary Concerns for Procurement Leaders

In our last two series we noted that Deloitte recently released their annual latest and greatest CPO Survey with the help of Spend Matters, that was designed to highlight, among other things, the latest and greatest “observations, challenges, and trends” in Procurement, but that, in reality, just highlights the same problems, priorities, and barriers it found in the past 9 editions, just like every other annual survey in Procurement.

There’s no embellishment here. We mean every other study that has come before for years because:

  1. the doctor has been reading them.
  2. the doctor went back through 15 studies in detail that were released in the past five years and a few other related papers published in the same timeframe.

As part of this in-depth review, the doctor pulled out, for each of these 20 papers (which included papers from the usual suspects like Kearney, CapGemini, E&Y, PWC, and Everest), the

After doing so, the results were that, for the Deloitte study, analyzing the:

  • top barriers, of the 10 quoted in 2 or more of the papers, 7 are in the Deloitte study,
  • major procurement risks, of the 7 quoted in 2 or more of the papers, 5 are in the Deloitte study, and
  • primary concerns, of the 13 quoted in 2 or more of the papers, 8 are in the Deloitte study.

Moreover, if we were to abstract the barriers, risks, and concerns one level and start looking at the underlying systems or processes that would need to be addressed, the similarities would be even more significant.

More importantly, they aren’t changing much year to year, and aren’t going to change much for the next decade at least.

A year ago I penned a post where I pointed out that before you get all excited to learn about trends for fall conference season, with the exception of:

  • Gen-AI being the new fluffy magic cloud
  • Fake-take (sorry, intake) being the new dangerous and dysfunctional dashboards

the majority of trends that have been discussed for the past year are the same trends that were discussed ten years ago (and SI has the blog history to prove it, especially since it doesn’t purge over half of the blog history on a site upgrade and/or migration).

This is because the core purpose, and thus the core priorities, challenges, and risks, of Procurement haven’t changed in decades. The systems have evolved, the processes have become more complicated, and the global supply challenges haven’t been this bad since the nineties, but the core HAS NOT changed (and, to be fair, has NOT changed since the first manual was published in 1887 and has NOT changed much since cross-continental trade began thousands [and thousands] of years ago).

Which means we don’t need any more annual surveys on these issues (every 5 years would be more than enough, and even then you might find that the only movement is related to the hot tech of today vs. the hot tech 5 years ago, as SI did when it did its trend analysis last year).

In our last two series, we also noted that we weren’t going to bore you by digging up two decades of studies and showing the same issue lists again and again, because that’s not the problem. The real problem is that these core issues still aren’t adequately addressed after decades of these “studies” being published, even though it’s the same issues again and again that come back year after year after year, sometimes with a vengeance when an unexpected natural disaster or pandemic strikes, a war breaks out, or a fan of the Gilded Age believes that tariffs are the cure-all and starts global trade wars.

However, before you can solve these problems, or anyone can put forth a solution, you need to understand what these issues are, why they keep coming back, and acquire some insight into how you might deal with them once and for all and finally move the needle forward.

In our last two series we focussed on the barriers to success and the risks. This time we are going to focus on the thirteen (13) concerns that consistently stay front and center in these surveys and reports, of which eight of them are among the top concerns in the Deloitte survey.

  • CSR/ESG/Sustainability ([01], [03], [04], [06], [08], [09], [16], [17], [19])
  • Cost Control ([01], [08], [10], [11], [16], [17], [19])
  • Talent Acquisition/Upskilling ([00], [01], [03], [08], [10], [16], [17])
  • Compliance ([01], [04], [06], [12], [19])
  • High Inflation Pressure ([00], [04], [11], [19])
  • Supplier/Supply Chain Resiliency/Continuity ([00], [04], [08], [11])
  • Tech Transformation Delays/Obsolescence ([12], [16], [17], [19])
  • Geopolitical Uncertainty ([00], [12], [19])
  • Economic Downturn & Deflation/Recession ([00], [12], [19])
  • Managing Digital Fragmentation / Digital Transformation ([00], [01], [11])
  • Tightening Credit Conditions ([00], [12], [19])
  • (Gen-)AI Integration/Impact ([03], [04], [19])
  • Weakness & Volatility in Emerging Markets / Trade Wars ([00], [12])

It is hoped that you enjoy the continuing coverage!

Finally, remember to review our article on why You Don’t Need To Read Another State of Procurement Study for the Next 5 Years! if you want to dig up the referenced papers.

CEOs are hugely expensive. Why not automate them?

As per Will Dunn, as published on The New Statesman

Especially when hiring a CEO who doesn’t understand what makes the business profitable loses Billions:

Starbucks Loses 30 Billion

and doesn’t understand what is critical to the company product to the point costs can never be cut no matter how high those costs may look on the spreadsheet because the net result is not only product failure, but grounding/banning of your product and expensive lawsuits that costs Billions:

Boeing lost 11.8 Billion in 2024

After all, if we’re hiring CEOs without any relevant experience, actual business intelligence, or even logic, then why not use Artificial Idiocy? It’s not like the occasional hallucinations will be any worse that an average CEO’s these days (who believes investing Billions on empty promises is a good idea) … and the actual compute costs, even if in the six figures, will still be a tenth (or [much {much}] less) of what a CEO salary and benefit package actually costs!

So if you insist on creating fictional “AI Employees”, why not kick off 2026 by starting with a job that, sadly, Gen-AI agents can actually do?

Here’s why you DO NOT want Agentic Buying and you DEFINITELY DO NOT want AI Employees

buying for you!

An AI Vending Machine lost hundreds of dollars!

Just imagine what AI is gonna lose on your multi-million dollar categories?!

And when you demand a certain savings that’s unachievable, it’s going to find a loss that equals the savings amount, multiply it by -1, and tell you that’s the savings.

< Stanford, Anthropic, Redwood, Meta, etc. studies on negotiation games, competitive scenarios, and goal-seeking behaviours, etc. >

So unless you’re looking to LOSE money …

Stick with classic automation and point-based AI where the automation runs everything for you, does all the verifications and data checks that can be automated, does all the standard analysis for raking and recommendations, and gets rid of 90%+ of the tactical time-consuming work, freeing you up for the manual review, safety checks, and strategic decisions where you, as a human, can check and find obvious supplier misunderstandings, frauds, and bad decisions for the long term because the system does the grunt work and pre-does all the standard analytics, freeing up 80% of your time to do more sourcing, more relationship management (to prevent problems and loss), and more decision making (when it’s hard to make the right decisions on numbers alone or its impossible to satisfy all the goals and choices must be made).

Breaking Down the Risks: Corruption/Fraud

Since we have had corporations, we have had corruption. This is another risk that’s not going away. Plus, fraud is rising rapidly!

Expounding the Pounding

There’s a huge amount of potential corruption and fraud that you need to worry about. It’s not something that anyone wants to talk about but it is something that needs to be talked about a lot more than it is considering that global corporate losses to fraud were estimated at 5 Trillion in 2024, or about 5% of global revenue! Fraud, for now, is the only risk more costly than natural and climate disasters.

When it comes to corruption and fraud, there are three places it can come from: inside (corruption), outside (fraud), and, the hardest to detect, internal and external partnerships (collusion).

Internally, you need to worry about situations like the following:

  • disguised procurements to bypass processes (such as split purchases)
  • false evaluations / awards
  • false expense claims

Externally, you need to worry about situations like:

  • supplier impersonation / false supplier
  • partial delivery (but full invoice)
  • bid rigging and collusion

And when you have parties on the inside and outside collaborating, you might get:

  • conflicts of interest
  • credit card / p-card fraud
  • kickbacks and bribery

And, we’re sad to say, this is just scratching the surface. The reality is that there are at least 15 major types of fraud you need to worry about in Procurement, and some are pretty hard to catch. Properly documenting these and the proper steps you can take to minimize your chances of falling victim isn’t an article, it’s a white paper. I know, I wrote an unpublished one a year ago. But we will give you a few tidbits to get you thinking in the right directions.

Reducing the Risk

In order to truly minimize the risks and reduce your fraud losses to minimal, vs the more-or-less industry average of 5% of revenue, you need to take a lot of precautions. Some of the most important ones are:

TP(C/R)M:Third Party Compliance/Relationship Management and Vetting
You need to ensure that all suppliers, carriers, and other third parties you plan to do business with are real, legitimate, vetted entities and that you have also vetted their owners/directors and vetted with the owners/directors the people you are signing the contracts with and accepting payment instructions from are employees.

CyberSecurity & CyberTracking
You need to install and maintain state of the art cybersecurity and cybetracking and make sure the source of every electronic communication is traced back to its source and the originating domain ALWAYS confirmed. Very smart cybercriminals can not only mask from and reply to fields on emails requesting a change in payment details, but they will register / hack and steal domains that are extremely similar to the company being impersonated. If the company is McDonalds.com, then, guess what, they will acquire (control of) MacDonalds.com and a quick scan of the email headers might be enough to convince even a moderately astute individual the request is genuine.

e-Procurement/Invoice-to-Pay/Accounts Payable
With mandatory minimum 3-way match before ANY payment is approved – NO EXCEPTIONS. The purchase order must match the goods receipt which must match the invoice.

There’s more that must be done, but this is where you start. It will prevent a lot of the common and easily prevented fraud.