Category Archives: Best Practices

Sustainable Supply Chains Sacrifice China! (Most of the Time.)

Last Friday we posted China is the Enemy because, especially where your supply chain is concerned, China has just demonstrated what SI has known for over a decade — it is the enemy. (This isn’t the only situation where China or the CCP is the enemy, but those are different rants. Note that we do NOT equate China or CCP with Chinese people. Most Chinese are NOT the enemy of your supply chain or democracy just like most Americans are NOT the enemy of intelligence and common sense.)

Long time readers will know that in the naughts, SI spent a lot of bandwidth telling your deaf ears that you should be investing heavily in nearshoring and home country sourcing because of the dangers of outsourcing in general, and, the dangers of oversourcing to a specific country, like China, in particular — which have finally become very apparent. It’s too bad it took a freakin’ pandemic to make clear how dangerous it is to outsource so many critical products and JIT materials to a country halfway around the globe, especially when such sourcing in bulk across the industry leads to the lack of capacity close to home due to factory closures and talent evaporation.

There’s a reason the doctor told you two weeks ago to remember the 80’s (and the early 80s in particular) … and that’s because that’s the last time most multi-national corporations in the Americas got outsourcing right … when they were near-sourcing to Mexico (who should build the wall just to keep Trump out, but that’s yet another rant for another day).

Let’s face it, some stuff just shouldn’t be sourced from home. Stuff that’s not critical, stuff that’s very expensive to make at home (but easily trucked across a single border) for various reasons (which can go beyond labour to energy costs if there are no affordable renewable sources nearby, transportation costs for raw or unprocessed materials are ridiculous otherwise, etc.), or stuff where most of the raw materials or necessary environmental conditions (for growing, mining, etc.) are just not present at, or near, home.

But when you consider a typical organization, how much stuff really falls into this category? First of all, you have to exclude any product for (re)sale that’s a primary profit line. Then you need to exclude any raw material or component critical to production unless you just can’t get it nearby. Then any product necessary for security or safety. And so on. At the end of the day, you don’t have much left, and if you’re doing the analysis right, you’re going to be left with:


  • raw materials and products just not available nearby (because you need certain growing conditions, large deposits of a mineral only found in certain geographies, etc.)
  • processed materials or chemicals where the raw materials are very expensive or dangerous to transport
  • products unique to a culture or region
  • novelty or other items not critical to your business

which (before the short-sighted wall-street loving common sense hating clueless and unskilled consultants of the late 80’s and early 90’s, like Steve Castle, put everything into the outsourcing bandwagon and blinged it out beyond belief) were the only products a company would outsource halfway around the world and still the only products a company should be sourcing from halfway around the world. Everything else should be near-sourced, and if really critical or the cost differential is small, home-sourced.

This also means that just shifting everything to another country in the BRIC, and India (which is ruled by a more open, transparent, and dependable democracy) in particular, is also NOT the answer. (They may not be the enemy, but they are still NOT the answer.)

So, unless you want your Supply Chain to completely collapse after the next global disaster, go back to basics, remember the smart outsourcing decision from the 80s, reopen those Mexican factories, and start near-sourcing again. And then, where you can, bring it back (close to) home.

CoronaVirus Response: Dear Procurement, AI won’t save you!

In the last few years, a number of vendors have been pushing artificial intelligence. Some vendors have even been pushing AI-based suites as the future of sourcing and procurement. And for a time they had a great argument. There are too many low-value, straight-forward, simple and/or tail-spend categories that are not getting appropriately sourced in an average organization that doesn’t have enough people power or hours in a day to properly address all organizational spend in a strategic manner and identify the range of savings and opportunities available to the organization. So why not let technology take over some of this spend, especially where it can’t do any worse than what is being done now?

After all, while there is no true AI, and we won’t have anything close for at least a decade, given the computational power of modern machines, intelligently coded and applied software with advanced analytics, machine learning, and evolving model paradigms can do quite a lot for us, and with respect to some specific tasks where intensive amounts of calculation are required, computer can do it better. Where some insight and intelligence is required, computers can still use advanced analysis and probabilities to get it 95% right 95% of the time and if the right outlier rules are coded, kick it out to a human when it’s likely the computer will get it wrong.

So, given the coronavirus-related chaos going on now, and your inability to deal with the majority of day-to-day tactical tasks and regular category sourcing as you have to constantly deal with new sources of supply interruptions, new challenges of working remote, and, in most industries, declining demands or revenues for the foreseeable, you’re probably thinking now would be the perfect time to invest in AI technologies to get a few workload monkeys off your back as you’re overwhelmed. Something that can take low-value, non-strategic, or commodity category management off your plate sounds like a dream come true.

However, now that you need it the most, I’m sorry to say that now is not the time to try AI. Moreover, adopting AI now would simply result in more catastrophic failures across the organization.

Why? How? Read the doctor‘s unlocked PRO on how AI won’t save you, but rules-based automation might! over on Spend Matters. There’s no miracle cure* for the damage caused by COVID-19, and now would be the worst time to try and adopt what would simply amount to silicon snake oil in these tumultuous times.

* But there was ample opportunity for prevention, and had you listened to the doctor a decade ago when he gave you the answer, you wouldn’t be in this mess right now. But that’s a rant for another day.

Surviving the coronavirus crisis for physical small businesses: Take a lesson from creators! (Part 1)

Two general categories of businesses have been hit hard by the coronavirus shutdown: services and non-essential products.

In the first case, while it’s regrettably the case that some small businesses might not survive, many services professionals can weather the storm if they get creative. In the second case, your storefront may be gone, but your business doesn’t have to be. Chances are, your business is already online to some degree. Now’s the time to go all in on e-commerce.

How can you survive, you ask? Simple. Take a lesson from creators.

A third industry that has been hit very hard is entertainment. Performers who make the majority of their income from productions and performances are, on the surface, totally screwed. Think about it. If you depend on a bunch of people crowding into a bar, concert hall, theater, studio or arena, what do you do?

You get creative, or you starve!

So let’s take a look at what creators are doing.

Musicians, especially independent musicians, are doing live-streaming, direct selling of digital content and Patreon-based (or similar) fundraising with special perks. And they’re also creating new content and recording at home. Thanks to modern technology, at least if you live in a relatively quiet building or house, you can produce near studio quality for a fraction of what studio recordings used to cost, and you can definitely do recordings with a “live” feeling.

Comedians are doing online comedy or talk shows, for free, to engage with a fan base (that might in turn buy merchandise), or through third party ad-supported channels (and, when possible, taking a cut of the advertising revenue or getting a small commission from the platform). All they need to engage their audience is a laptop with a decent quality camera and mic and a web-sharing tool with recording capability.

Actors and performers are doing podcasts to stay relevant with their fan base, and some are using that to promote books or merchandise they have for sale. Post offices and delivery companies are still delivering.
In other words, while they have all lost their major income streams and often must perform from home, they haven’t given up — and neither should you!

If you can’t keep your small business going through the shutdown, you can at least keep going and maintain your relevance and be ready to be the first to recover when you can re-open and get back on track to normalcy.

So how do you do that?

Read the full article over on Spend Matters to find out!

Dear Procurement, No Excuses! Carpe Diem Laetus!

We’ve said twice now that cloud-based solutions — and not just video conferencing applications like Zoom — can help turn your sofa or kitchen table into a mobile procurement command center, we meant it, and we’ve given you eight great examples of activities normally done (mostly) in person that you can do just as well (or better) from your home office, desk, sofa, or even bed.

And, as you guessed, it doesn’t stop there — because the capabilities of modern procurement platforms don’t stop there. However, today we’re going to focus on how to use everyday Procurement tools in creative ways to accomplish more tasks and increase your distributed, virtual productivity. If you examine each and every tool in your software arsenal, we guarantee you can find creative ways to put them to good use to not only maintain, but possibly even increase, overall levels of efficiency in this crisis.

More specifically, with creative application of tools that likely already exist in your Source-to-Contract arsenal, you can:

  • find out what your team is doing and what they want to do
  • manage and track processes and their efficiency to identify bottlenecks
  • track distributed assets AND skillsets
  • identify relevant information resources you didn’t know you have

How?

Check out the doctor‘s latest piece over on Spend Matters on how to apply traditional procurement technology in non-traditional, socially distanced ways over on Spend Matters.

Dear Procurement, No Excuses! Carpe Diem Rursus!

When we said that cloud-based solutions — and not just video conferencing applications like Zoom — can help turn your sofa or kitchen table into a mobile procurement command center, we meant it, and gave you four great examples of activities normally done (mostly) in person that you could do just as well (or better) from your home office desk, sofa, or even bed!

But it doesn’t stop there. Today we’re going to review a few more activities that still have a large face-to-face component but that can be done as required while working from home. (And, in a couple of cases, maybe should be done from home as the surroundings, or the approach that needs to be taken, adds relevance!)

Yesterday we described in detail how you could tackle, and conquer:

  • Category Planning
  • Vendor Site Audits
  • User Groups and Workshops
  • Internal Category, Supplier, and Market Intelligence

while working remote. And all you needed to do was embrace modern technology (including modern Source-to-Pay solutions) and think, and work, different. But don’t stop there. With a little thought, creativity, and willingness, you can also effectively tackle:

  • Contract Negotiations
  • End-User Product Qualification
  • Inventory and Asset Management
  • Project Post Mortems

from home as well and get it done. And while you’re probably wondering if all this self-isolation is causing at least some of us, including the doctor, to lose it (we admit we are, to some degree). But the doctor assures you he is not, nor is he a stranger to remote work and having to devise ways to get things done remotely. In fact, he has been working remotely to some extent since the early days of the internet more than two decades ago, and that extent has grown over time (to being 100% remote thanks to COVID-19).

And you can be sure that when he says you can do this, you can. How?

Check out the full details in this CoronaVirus Response Part II post the doctor wrote that published today over on Spend Matters main site.

In other words, don’t look at this crisis as a huge challenge and a stop to business, but instead as an opportunity to do business better than ever and lead your organizations out of this troubled time.