Category Archives: Best Practices

Myth-busting 2025 2015 Procurement Predictions and Trends! Part 8

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 “Data”.

Data

There were 4 predictions across the eight articles which basically revolved around “data-driven decision making” with some sideline focus on the need for “data governance”. 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 as no Procurement tech works without good data (although some work even worse with bad data), and unlikely to get more attention now that a certain analyst firm has latched onto a new buzzword to hide the importance of good data. Before we discuss further, as is our custom, we will list the four predictions.

  • Data-Driven Decision Making
  • Data-Driven Decision Making
  • Data-Driven Decision Making Will Become More Critical
  • Data Governance and Data-Driven Decision Making

All strategic decisions should be, and more importantly, should have been, data driven for the last four decades in any organization (given that the first IBM PC hit the market in 1981, making computer-based data analysis affordable for any mid-sized or larger organization. And while it wasn’t possible to give every office worker a computer and internet access until about 25 years ago, limiting “data analysis” decision support to only the most important strategic decisions, once everyone had a computer and internet access, every strategic decision should have been supported by data to some extent).

And with the emergence of web-based data services, it’s never been easier to get data. Moreover, most organizations are swimming in data. In fact, some organizations have so much data that the problem is not the lack of data, but the lack of good, appropriate, data. In most organizations, there are drives bursting with data, where the quality ranges from reasonably good to completely wrong, and if you use that wrong data, you’ll have a wrong analysis and make wrong inferences. Also, not all data is appropriate for all types of analysis, so there’s no guarantee the feeds you have are the right ones. Moreover, most users in most organizations don’t know how to judge the quality of the data, or how to do a proper cleansing and correction if the data quality is poor.

Good decisions only come from a proper analysis on good data, so while there will continue to be pushes for data-driven decision making, because that’s the age we are in, there needs to be a continued push for good data! But that will only occur if an organization has good data governance, which is what the majority of these predictions and trends are missing.

The organization needs to ensure that, before any data is stored, there are processes in place to make sure that any data stored in an organization’s system is correct, complete, in a standardized format, and linked to any associated records using unique ids. That no record is stored unless these requirements are met. And that all records are verified on at least an annual basis to ensure they are still complete and correct. In particular, any time a record is updated, the data should be (automatically) verified again, and any time a record is touched for use, critical data should be verified. A lot of this can be automated if the organization has identified masters for all types of data and trusted external feeds for new data verifications and annual rechecks. And if it’s not, the organization can’t really do data-backed decision making because that relies on good data.

What Should Happen? (But Won’t!)

E-MDMA. The adoption of an Enterprise Master Data Management Administration strategy. Since data is so fundamental to good decisions across the organization, enterprises should not only be proactively managing their data but managing it in a manner that ensures it is actively maintained, highly accurate, and available to use by any system that needs it. This requires identifying, for each piece of data, a (master) system of record, verification rules, (third party) data sources for corroboration and verification, and access rules. All boring stuff … that has to be done enterprise wide … but absolutely necessary for data-based decision making. Especially if you want to use AI.

Now, we know it sounds very boring, but it’s critical. But we also know that no one will want to do it. So don’t call it Enterprise Master Data Management Administration … just call it E-MDMA and tell your employees its going to bring ecstasy to their job. Let them think its a new drug, and maybe they’ll buy in.

Seven down, three to go.

Myth-busting 2025 2015 Procurement Predictions and Trends! Part 7

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 “Risk & Compliance”.

Risk and Compliance

There were 10 predictions across the eight articles which basically revolved around “risk management strategies” with some sideline focus on the need for “resilience”, “cybersecurity”, and “compliance”. 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 get any more attention until a major event happens that significantly disrupts the organization, a disruption that could have been prevented with better risk management systems and processes. Before we discuss further, as is our custom, we will list the ten predictions.

  • Blockchain
  • Cybersecurity and Data Privacy
  • Cybersecurity in Procurement
  • Compliance
  • Enhanced Risk Management Strategies
  • Expansion of Risk Management Strategies
  • Geopolitical Instability Shapes Risk Management
  • Resilient Supply Chains
  • Risk Management and Resilience will continue to be a Priority
  • Risk Management

Risk has been increasing year over year for over two decades. It should be front and center in every organization, especially given the facts that very few organizations that have been around for any length of time haven’t been impact to some degree by a disruption event and the chance of an organization of any size not experiencing a disruption in the next year is close to zero. And it does make the top of the charts in the board room, but, unfortunately, it’s still not making the top of the charts in the priorities when it comes to new solution acquisition and new process introduction. In most organizations, it’s just being pushed down to the tactical personnel who execute daily tasks. Personnel who may not have enough of a big picture understanding to manage risk properly in their decisions.

However, given the need for resilience in the age of constant supply chain uncertainty and disruption (due to epidemics and pandemics; border closings and sanctions; strikes and port shutdowns; reduced cargo capacity from perfectly good transport ships being junked during COVID, Houthis in the Red Sea, and Panamanian droughts, trade wars, reduced/cut-off rare-earth/raw material supply etc.), risk should be even more prominent and more actively addressed. Leading organizations will double down on resilience and supply assurance strategy and survive the disruptions relatively unscathed, and those who don’t double down on resilience and supply assurance won’t. It’s that simple.

Given that almost 3/4 organizations were hit with a cyberattack in 2023, which was an all time high and which was only projected to increase in 2024, cybersecurity concerns should also be at an all time high, but given that most organizations relegate that to IT, we know it’s not going to get much better in Procurement. It needs to, considering how much organizational finance flows through Procurement, but it won’t change much.

Finally, organizations know they need to comply with regulation, so compliance is always at the edge of the Procurement mindset, but beyond minimal requirements, it never gets much attention, regardless of how much a few analyst firms or vendors try to push it.

What Should Happen? (But Won’t!)

Organizations need to prioritize the acquisition of a Risk360 solution, or the closest thing it can find, implement it, and monitor it regularly to make sure they detect risks that can impact their supply chain or operation as soon as such a risk occurs. Not after the supply has been cut, not after the organization has been locked out of all their organizational systems, not after key customers have failed and orders evaporated, not after signing a contract with a sanctioned party, and so on. Today, every decision made has to be made risk aware. And without a centralized risk management system, that will not happen.

Six down, four to go!

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.