Category Archives: Best Practices

Myth-busting 2025 2015 Procurement Predictions and Trends! Part 6

Introduction

In our first instalment, we noted that the ambitious started pumping out 2025 prediction and trend articles in late November / early December, wanting to be ahead of the pack, even though there is rarely much value in these articles. First of all, and we say this with 25 years of experience in this space, the more they proclaim things will change … Secondly, the predictions all revolve around the same topics we’ve been talking about for almost two decades. In fact, if you dug up a Procurement predictions article for 2015, there’s a good chance 9 of the top 10 topic areas would be the same. (And see the links in our first article for two “future” series with about 3 dozen trends that are more or less as relevant now as they were then.)

In our last instalment, we continued our review of the 10 core predictions (and variants) that came out of our initial review of 71 “predictions” and “trends” across the first eight articles we found, in an effort to demonstrate that most of these aren’t ground-shattering, new, or, if they actually are, not going to happen because the more they proclaim things will change …

In this instalment, we’re again continuing to work our way up the list from the bottom to the top and continuing with “Strategic Value”.

Strategic Value

There were 7 predictions across the eight articles which basically revolved around “strategic value” with some sideline focus on the need for “flexibility” and “diversification”. As with almost every “prediction” and “trend” in this series, this is yet another prediction that makes headlines every year, no more important this year than the last, and no more likely to be addressed unless a disaster occurs that, if not handed to, and solved by, Procurement, could end the business. Before we discuss further, as is our custom, we will list the seven predictions.

  • Flexibility and Agility in Procurement
  • Future of Procurement: Operational Excellence and Innovation
  • Global Sourcing and Diversification
  • Innovation
  • Procurement Diversification Strategies
  • Procurement Takes the Lead Internally
  • Procurement Will Continue to Evolve to Become More Strategic

Every function in the business should be about value creation, not just Procurement, but of all the functions, Procurement is the one that is the most likely to be viewed as a cost centre since, fundamentally, Procurement exists to acquire supply in exchange for money. As a result, all it typically does is spend, even though, when done right, it spends less than the business would spend without the function.

But we all know spending less when

  • costs are rising across the board,
  • demand is rising, and
  • production and distribution complexity is increasing

is not easy. It is only accomplished through strategic efforts, meaning that the focus needs to be on strategy for Procurement to shine. And in an age where geopolitical-based disruption is higher than it’s been in over two decades, it’s easy to see why “diversification” is coming to the forefront in strategy.

It’s also easy to see why some of this is materializing as “friend-shoring”, although it really should be “near-shoring” and, when possible, “home-shoring”, since a strategic advantage comes from not needing to depend on neutral third parties whose alliances could shift at any time, and, even worse, adversarial third parties that will take your business when they feel like it and then cut you off when the winds shift direction. Moreover, in an age when supply assurance is becoming the most critical thing, multiple sources of supply are becoming more critical than ever. As is flexibility (and innovation). Willingness to shift supplier, supply, and sometimes even product designs at a moment’s notice to maintain supply assurance and, hopefully, profitable operations.

But in the end, the focus on strategy will be no more than usual unless a major disruption or near catastrophic event occurs that thrusts Procurement back into the limelight.

What Should Happen? (But Won’t!)

Procurement should take a good hard look at its operation and separate the strategic from the tactical, and get really strategic about that which it classifies as strategic. If the organization has “strategic” suppliers, then it should have performance tracking, management, and development software (as per a previous entry in this series) to help it manage productive, collaborative relationships. If the organization takes a category strategy to Sourcing and Procurement, then it should be practicing strategic category management. If the organization has a high risk supply chain, then risk management should be a strategic function to help the organization maintain uninterrupted supply. It should be more than just something they say, it should be something they do … where doing it has meaning and returns value. Going from strategic spend to strategic value-add.

That’s five down, five to go.

Myth-busting 2025 2015 Procurement Predictions and Trends! Part 5

Introduction

In our first instalment, we noted that the ambitious started pumping out 2025 prediction and trend articles in late November / early December, wanting to be ahead of the pack, even though there is rarely much value in these articles. First of all, and we say this with 25 years of experience in this space, the more they proclaim things will change … Secondly, the predictions all revolve around the same topics we’ve been talking about for almost two decades. In fact, if you dug up a Procurement predictions article for 2015, there’s a good chance 9 of the top 10 topic areas would be the same. (And see the links in our first article for two “future” series with about 3 dozen trends that are more or less as relevant now as they were then.)

In our last instalment, we continued our review of the 10 core predictions (and variants) that came out of our initial review of 71 “predictions” and “trends” across the first eight articles we found, in an effort to demonstrate that most of these aren’t ground-shattering, new, or, if they actually are, not going to happen because the more they proclaim things will change …

In this instalment, we’re again continuing to work our way up the list from the bottom to the top and continuing with “sustainability”.

Sustainability

There were 10 predictions across the eight articles which basically revolved around “ESG” with some sideline focus on the need for “collaboration” and “balance (against profit)”. This is yet another topic that is overhyped and needs to be addressed, but, as with our last two articles, we will start by listing all of the individual predictions:

  • ESG Metrics will Increase In Importance for Procurement
  • Focus on ESG Factors
  • Increased Focus on Sustainability
  • Increased Focus on Sustainability
  • Struggle to Balance ESG Goals with Profit
  • Supplier Collaboration will become Key for Achieving Sustainable Procurement
  • Sustainability and ESG
  • Sustainability and ESG Compliance
  • Sustainability and Ethical Sourcing
  • Sustainable Procurement Practices

Has there been a year where sustainability hasn’t made the list? SI remembers running a cross-blog series on sustainability 17 years ago back in 2008! And there was just as much hullaballoo then as there is now. Nothing has changed, and as long as the first world doesn’t agree on the importance of sustainability and ESG goals (with Europe taking one stance and the USA about to take another), nothing ever will.

Sustainability is as important as ever, considering that

  • some critical raw materials, such as rare earths, are getting scarcer by the day
  • it’s getting hotter and hotter every year, with 2024 another record year for the books
  • with natural disasters increasing year-over-year, crop destruction and food shortages are becoming more common
  • not being sustainable is about to be costly in Europe, which will levy massive fines to try and prop up their struggling economy
  • being sustainable is about to become costly in the USA as the incoming administration abandons all sustainability regulations, while implementing tariffs that are going to drive up costs more than sustainability ever will
  • the last two will be at odds, so organizations will be pursuing different, localized strategies

However, it is not new, just front-and-center as it is every year. The primary reasons may change year-to-year, but the cycle stays the same. Sustainability remains on the important items list, with the importance ultimately dictated by the regulations in place.

What Should Happen? (But Won’t!)

Organizations should stop looking at sustainability as a cost to be addressed only to the event necessary, but as a strategic business advantage. This is because:

  • sustainable organizations minimize energy use …
    and with energy costs rising every year, investments in energy efficiency will pay multiples in the long run
  • sustainable organizations maximize use of renewables …
    and minimize dependence on materials in limited, dwindling, supply (which only get more expensive every year)
  • sustainable organizations optimize processes to minimize waste …
    which maximizes the value of every dollar spent
  • etc.

Sustainability isn’t just keeping the carbon and GHGs down, its optimizing operations to reduce costs (and carbon) in the long run. But as long as it’s seen as a cost, organizations will never achieve value from sustainability, which only exists in the supply chain.

That’s four down. Six to go.

Myth-busting 2025 2015 Procurement Predictions and Trends! Part 4

Introduction

In our first instalment, we noted that the ambitious started pumping out 2025 prediction and trend articles in late November / early December, wanting to be ahead of the pack, even though there is rarely much value in these articles. First of all, and we say this with 25 years of experience in this space, the more they proclaim things will change … Secondly, the predictions all revolve around the same topics we’ve been talking about for almost two decades. In fact, if you dug up a Procurement predictions article for 2015, there’s a good chance 9 of the top 10 topic areas would be the same. (And see the links in our first article for two “future” series with about 3 dozen trends that are more or less as relevant now as they were then.)

In our last instalment, we continued our review of the 10 core predictions (and variants) that came out of our initial review of 71 “predictions” and “trends” across the first eight articles we found, in an effort to demonstrate that most of these aren’t ground-shattering, new, or, if they actually are, not going to happen because the more they proclaim things will change …

In this instalment, we’re again continuing to work our way up the list from the bottom to the top and continuing with “supplier management”.

Supplier Management

There were 6 predictions across the eight articles which basically revolved around “collaboration” with some focus on “development”. This is yet another topic that is overhyped and needs to be addressed, but, as with our last two articles, we will start by listing all of the individual predictions:

  • Agile Supplier Management
  • Collaborative Platforms
  • Enhanced Supplier Collaboration
  • Enhanced Supplier Collaboration
  • Supplier Collaboration and Strategic Partnerships
  • Supplier Development and Growth

Here’s the thing. For anything not a commodity, an organization’s success ultimately depends on supplier performance. While supplier performance will be good from the start for some suppliers, it won’t be so good for others. In these cases, it won’t always improve just be rejecting shipments. Sometimes it will require collaboration, which means that collaboration has always been, and will always be, important. So it’s nothing new. The only difference is that, as disruptions become more common, products require more differentiation and rapid advancement, and supply chains need to rapidly shift as raw material sources and distribution routes become unavailable, we are in a situation where collaboration is becoming increasingly more critical.

As a result, collaboration will increase in some supply chains as it is needed, but you won’t see a sudden shift en masse for Procurement to all of a sudden become more collaborative with its suppliers unless it needs to. While there is always a lot of talk about how collaborative an organization is, especially at RFP time, the reality is, as we all know, once the contract is inked, unless the supplier is considered very strategic, the chance of actual collaboration is very low.

The best one can hope for is that the organization selects supplier management software that enables better communication and collaboration than is usually supported by such software, which will mean that, over time, collaboration may increase before a disaster scenario that requires it to do so.

The only prediction that may become true in a small number of Procurement organizations that install more modern, collaborative, agile platforms is they become more agile in supplier management, begin collaboration when potential issues are detected, see how easy it is, and actually start supplier development before major problems arise.

What Should Happen? (But Won’t!)

Organizations should acquire supplier performance management and development systems that allow them to track supplier performance, identify blips and downward trends, and immediately identity, and implement, appropriate supplier development programs … in a collaborative fashion with the suppliers. This will identify which suppliers need more collaboration, when, and help you get to the why. That’s it. It’s not giving collaboration lip service, looking for “agile” systems, creating new “partnerships”, etc. It’s just identifying which suppliers need collaboration, when, why, how, and getting it done … with straight-forward supplier performance management and development systems.

Three down, seven to go.

Myth-busting 2025 2015 Procurement Predictions and Trends! Part 3

Introduction

In our first instalment, we noted that the ambitious started pumping out 2025 prediction and trend articles in late November / early December, wanting to be ahead of the pack, even though there is rarely much value in these articles. First of all, and we say this with 25 years of experience in this space, the more they proclaim things will change … Secondly, the predictions all revolve around the same topics we’ve been talking about for almost two decades. In fact, if you dug up a Procurement predictions article for 2015, there’s a good chance 9 of the top 10 topic areas would be the same. (And see the links in our first article for two “future” series with about 3 dozen trends that are more or less as relevant now as they were then.)

In our last instalment, we started at the bottom of the list of the 10 core predictions (and variants) that came out of our initial review of 71 “predictions” and “trends” across the first eight articles we found, in an effort to demonstrate that most of these aren’t ground-shattering, new, or, if they actually are, not going to happen because the more they proclaim things will change …

In this instalment, we’re continuing to work our way up the list from the bottom to the top and continuing with “talent”.

Talent

There were 9 predictions which basically revolved around “up-skilling” and a “silver workforce”. Both of these we need to address, and myth-bust, but, as with our last article, we will start by listing all of the distinct predictions:

  • Continuous Learning and Development
  • More Time for the Human Side of Procurement
  • The “Golden Age of the Silver Worker”
  • Necessary Skills Will Continue to Evolve Alongside AI Integration
  • Procurement Workforce will Continue to Transform
  • Talent and Skills Development
  • Tipping Point for Procurement Skills Mismatch
  • Training & Up-Skilling
  • Young Talent Skill Hesitates to Enter Procurement

Every year a small minority says that this is the year that Procurement will get more skilled, but every year we don’t see much progress beyond the status quo, and that’s because, despite all of the lip-service we hear on the importance of talent, no one every allocates any significant budget to training. And if they do, it’s the first budget line to get cut. Nothing has changed much in the last two decades. Especially in North America — the belief is that you should already have all of the training for the job when you’re hired and, therefore, should NOT need any training. While necessary skills need to evolve alongside new Tech and AI integration, the skills that evolve organically won’t be much beyond what is needed to use the default workflow in the tool.

So while up-skilling is ABSOLUTELY ESSENTIAL for better performance, for the most part, it’s not going to happen (beyond what employees can learn from using better tools with embedded, human reviewed, best practice). Any continuous learning and development that happens will be due to an action of the individual to go above and beyond, on their own time, to get better at their job (and then move on to a company that appreciates them more). And there won’t be more time for the human side of Procurement until companies implement modern, best practice, digital processes; better train their people to focus on the strategic and do strategic tasks better; and realize that Procurement is more than e-paper pushing. Significant progress is needed in the majority of Procurement departments to get to the human side.

And while it is also true that Procurement is still not a top occupational choice for young talent, the prediction that we are entering “the golden age of the silver worker” and that they will stick around is really off the mark. First of all, companies are still trying to find ways to retire senior talent, who they view as too expensive (and who they think they can replace with AI and cheap young talent in a third world economy), that go beyond offering early retirement options and include restructurings (to force layoffs), forced back to work (and assumed resignations if they don’t show up in the office), hour/location/team changes that they hope the older generation will find unacceptable (and leave on their own), and so on. Secondly, the “silver workers” you would want to keep are the ones that have the education, experience, talent, and track record to perform in the new digital-first Procurement economy, and that top talent pool is the talent pool that likely did very well over the last decade or so and probably doesn’t need to work — whereas the silver workers that need to work (and are willing to stay) are not the well educated and experienced strategic thinkers, but e-paper pushers that really have no role when most of their work can be automated.

At the end of the day, it’s the same ol’, Same Ol’ Situation … not enough (senior) talent, not enough skills in the talent we have, and technology advancing faster than the average organization is able to keep up with. Until a considerable focus is made on a) showing the younger generation that being a Procurement Pro is being Someone Who’s Cool and b) giving them proper, real-world training when they enter their job (without fear that they will just take that training and jump to a competitor in a year) (because no University is going to give it to them), there’ll always be a talent shortage, and it is now holding you back more than the platforms you are using (because even second generation platforms from fifteen years ago can be efficiently used to get damn good results if you know what you’re doing — and having seen the ProcureTech revolution since the first systems hit twenty-five years ago today, we are saying that with confidence).

What Should Happen? (But Won’t!)

1. Mentorships!

For two to three years, companies need to “over”*-invest in talent by retaining top-notch experience grey-hairs (the lucky ones) and bald heads to mentor new talent in the Art of Procurement (TM) and all of the systems, category, market, and business knowledge they need to be successful (and know when the Artificial Idiocy [“AI”] systems the MBAs are relying on are wrong) and keep the business in the black. We’re not the only ones to see the urgent need for mentorships. THE PROPHET sees it as well, as per his article on apprenticeships.

2. Knowledge Management Systems (KMS)

This 80 year old idea and 50 year old system concept is one that desperately needs to be revived and employed. Designed to capture, organize, and facilitate the distribution and utilization of an organizational knowledge, these systems were never adopted in the majority of organizations’s because they were seen as an unnecessary expense. Most managers, especially those from the age of low turnover, said “our people know their jobs, they work in teams, we only lose one or two at a time, and when we replace them, the pros that are left are there to help the new hires, so why do we need this unnecessary expense” and just ignored these systems. And while this was true in the 80s and 90s, where you got a job and were there for years (if not life), this started to change rapidly in the 00s. Now a lot of people change jobs every 2-3 years and organizations struggle to retain any knowledge — because as this shift started, the managers insisted on hanging on to their old mentality, would not consider KMS, or even admit how much the pace of change was accelerating. Then, to justify their decisions, they argued that “if lots of people change jobs every 2-3 years, then after a decade, they’ve worked in 3-4 organizations before they come to us and bring better practices with them, so we don’t need that KMS”, which would be true IF those resources received any decent training or mentorship at their past jobs. However, there’s never any training budget, or enough senior people to mentor the new hires, so all they bring with them is their scars and failures and hard knock learnings, which may or may not be appropriate for your organization. So please take Knowledge Management out of cryogenics before it’s too late!

Not only do we need a revival of mentorship, but organizations need to implement KMS systems that, as the knowledge is passed on, capture it in case the new hires leave or are unable to absorb everything at once.

Anyway, that’s two “trends” down, eight to go!

* there’s no such thing as “over” investing in talent, but the idiot MBAs with no real world experience and no knowledge of what the business does (because all they did as get a BBA, then an MBA, then an internment in a Big 3 or Big 4 where they followed poorly written playbooks to write up generic advice to clients) who have a number for how much every department should spend on “human resources” believe that any amount over that number is over-investing (but we’ll remind you again, this breed of MBAs are moronic Masters of Business Annihilation and should not be listened to)

Myth-busting 2025 2015 Procurement Predictions and Trends! Part 2

Introduction

In our last instalment, we noted that the ambitious started pumping out 2025 prediction and trend articles in late November / early December, wanting to be ahead of the pack, even though there is rarely much value in these articles. First of all, and we say this with 25 years of experience in this space, the more they proclaim things will change … Secondly, the predictions all revolve around the same topics we’ve been talking about for almost two decades. In fact, if you dug up a Procurement predictions article for 2015, there’s a good chance 9 of the top 10 topic areas would be the same.

To save you the trouble of reviewing all of these articles, which are going to be 80% the same (as the 71 “predictions” and “trends” from the first 8 articles we reviewed all fell nicely into 10 “core” areas with not a lot of difference between them), we are going to discuss the 10 core predictions (and variants) that you are going to see over and over again, with some of them being the same predictions we have seen over and over again, and, where necessary, contrast the dream with the reality. Just for the heck of it, we’ll do take them in reverse alphabetical order, because, why not?

Technology & Digital Transformation

These predictions basically revolved around the rise of SaaS-based “Digital Transformation” with calls out to agility and integration. More specifically, these were the 10 predictions and trends from the first 8 articles we reviewed.

  • Cloud-Based Solutions
  • Digital Tools
  • Digital Transformation and Technology Adoption
  • Diverse Digital Transformation Technologies will Become the Norm
  • Emphasis on Digital Procurement
  • Integrated Procurement Systems
  • Proliferation of Procurement Technology Platforms
  • Rise of Agile Procurement Processes
  • Rise of Digital Procurement
  • Rise of E-Procurement

As you can see, they all revolve around SaaS/Cloud-based “Digital Transformation”, which should not be a surprise. The SaaS transition started over 15 years ago, and revved up in a big way over the last few years when COVID forced business to put more of their processes online for remote/home access. And even though a lot of big companies are forcing employees to return to work, now that they’ve realized SaaS is easier to maintain (someone else manages the data centre, does the updates, etc.), expense (you’re not paying huge one-time fees up front), replace if needed (provided you make sure, up front, in the contract, that you have the right to export all of your data at any time in an industry standard format), and mitigate you exposure in the case of a cybersecurity breach (as the provider is required to maintain agreed upon security and privacy standards and you can insist they indemnify you for their failures to honour the contract) they are going to continue to replace legacy systems with SaaS as time goes on. It’s just a continuation of what they have been doing for the past four years. Nothing new, exciting, or unexpected here.

And yes, the smarter companies, in addition to ensuring they own their data and have the right to extract all of it at any time, will look for solutions that are easy to integrate into their current/planned SaaS ecosystem as well as those that increase their agility. It’s just good practice to try and future proof your SaaS as much as possible, especially considering poorly managed SaaS subscriptions contributed significantly to 500 Billion in wasted Technology spend last year.

So, yeah, it’s a trend. But did it take any prognostication to notice it? Nope!

What Should Happen? (But Won’t!)

Companies should analyze all of their systems and plan to replace any systems that

  • are not being used / not delivering value
  • don’t integrate with their ecosystem
  • don’t support modern Sourcing & Procurement processes

And we use the word “plan” because:

  • it takes time to identify the right solution, which has to be done by YOU and not a salesperson, and then to implement that solution, which needs to be overseen by YOU and not a third party with no stake and who only cares about how many hours they can bill, and then needs to be adopted by YOU and used regularly
  • the company may be locked into the current system for another one (1) to four (4) years depending on the deal signed by your predecessor, and escaping early may be way too costly, so you might be stuck with it for a few years (and have to focus on finding solutions to make it more usable/valuable)
  • you can only replace one system at a time in any department without causing so much disruption that you risk the business (big bang projects always result in big bangs; just Google “worst supply chain disasters” and you’ll see the vast majority are caused by technology failures, and about half by ERPs alone!)

Once you have the list of systems that you need to acquire / update, prioritize them based on the value a new system can deliver and how soon you could implement / replace a current system, and then begin the to identify, select, implement, integrate, train, and use the first system (on the list) on a daily basis. You should only begin the process of identifying a second system once the first system is being used on a daily basis (and not begin implementation of a second system until you are sure all the bugs are worked out of the first system).

And always remember that your success or failure depends on you. As we have previously noted, digital procurement transformation requires strategy and design … your strategy and your design. After all, you don’t want to be the company that pushes the technology project failure rate over 90%. (It’s 88% now and climbing year-over-year.)

Anyway, that’s one trend myth down, nine to go.