Category Archives: Market Intelligence

Procurement Trend #12. BYOD Mobile Procurement

Nine trumped-up trends still haunt us, and it’s probably best that LOLCat has been trapped in a box by the Futurists as these are nine trends he doesn’t want to waste any of his nine lives thinking about. Plus, at some point we’re probably going to have to call in Scooby Doo to sniff out whatever it is that the futurists have been smoking because it’s hard to believe that anyone lucid would utter such statements.

So why do so many historians keep rambling on about BYOD (Bring Your Own Device) Mobile Procurement? Did they all upgrade their old Nokia flip phones to iPhone 6s and Sony XPerias all at once and realize that you could do more on a digital phone than just send a text? I don’t know, but I do know that:

  • everybody in the corporate world has at least one portable device
    and most people have 2 or 3 (that they carry everywhere)
  • modern smart phones and tablets have more power than early laptops
    and much higher screen resolutions to boot
  • software providers have contracted mobile fever
    and this isn’t necessarily a good thing

So what does this mean?

A plethora of portables

Go mobile where mobile makes sense and go wired where it does not. What do I mean by this? The software, and the device it runs on, should support the workflow and not the other way around. For example, inventory and procurement software should support the creation of goods receipts on a mobile device in the hands of a warehouse worker on the floor and the creation of new spend cubes by an analyst at her desk with a big screen monitor, not the other way around. Busy executives need the ability to approve requisitions and invoices on their mobile devices when they are on the go and have five minutes, but I wouldn’t let a payable clerk set up ACHs on her smartphone just because she can (for many, many reasons).

Portable power

Portables are powerful, and you can take advantage of that to allow a team member visiting a supplier to take notes on her tablet as she walks the plant, view reports that need to be discussed with the supplier, use the collaboration components of the software to message and video conference with her peers, and so on. But, as per the last paragraph, only use the power when it makes sense to do so. Just like power often drives people mad, overengineering the software just because you can leads to a maddening experience for the end user. When I want to see the shipment error rate I just want to see the $%^&* shipment error rate — I don’t want a 3-D spinning infographic that I have to twist and twirl to try and find the one number I need.

Mobile Madness

Every time your employee gets a shiny new mobile device, he’s going to want every excuse to play with his shiny new toy. Don’t give it to him. Stick to your guns and make sure the software you use only supports mobile interfaces where those interfaces make sense. Your employees aren’t paid to play on mobile devices, they’re paid to get the job done in the most efficient way possible. Sometimes that’s on the phone. Sometimes that’s on the tablet. And sometimes that’s on the old-school desktop box hardwired into the LAN that is at, of all places, the employee’s desk! Imagine that!

NewsFlash: PR Perp, I Don’t Care What You Think! (Blogger Relations Part V)

It’s no secret. the doctor doesn’t like PR pros. To be specific, the doctor does not like “professional” PR pros who work for PR Agencies who believe that all they need to know to do their jobs is “best practice” PR techniques and that subject matter knowledge is not required. This really bugs me because even the best salesman knows that you have to have both some understanding of the product and a customer’s desire if you want to sell it. Thus, in order for a PR “pro” to sell a story to publisher, would it not stand to reason that she should, at a minimum, understand the product or service she is pushing as well as the interests of the publishers she is pursuing?

Apparently not. Apparently SI wants to write about website building using glorified Facebook profiles, physical therapy, the average ball player’s salary, lipstick, reality TV, and PR agency press releases! Anyone who took fifteen seconds of time to look up SI (and scan any post in the Blogger Relations series or any entry in the FAQ) would realize that the doctor disdains social media for the sake of social media (if you want to take selfies and poke, prod, and farmville your life away, go for it, but leave me out of it), only writes about supply chain, and has a general disdain for PR agencies so the last thing the doctor wants is to write about your recent press release on how you just released a new social media tool that is going to revolutionize the business world (not), how you just ran a campaign for client X that was revolutionary (and probably had no impact on actual sales), or how you just hired more more PR “pros” to increase the number of publishers you can spam with inane, irrelevant, bullsh!t on a daily basis.

And to make matters worse, they all have outreach press release syndication engines that not only blast you with the most ludicrous story idea you can think of, but that send two to four follow-up e-mails on a scheduled basis where they remind you of how great the story idea was, in case you missed it the first time. If you’re lucky, it will include an unsubscribe link, but it won’t matter, because they set these engines up with a thousand lists, and every time they get a new e-mail address, immediately syndicate to all of the other engines in their PR network, so that way, even if you manage to unsubscribe from the Reality TV in Atlanta list, you’ll still get the same story from the Reality TV in New York list, that cross-runs all of their stories from the Reality TV in Atlanta list to make sure all stories get as wide a reach as possible. In other words, these PR pros have taken the art of spamming to a whole new level! (the doctor bets that even the Nigerians are impressed!)

But even this isn’t what’s currently driving the doctor mental. What’s currently driving the doctor crazy is how every ridiculous story (which is an accurate term because this is the word many people use to describe fiction, which is probably the most accurate term for a good portion of what SI gets pitched, which is another accurate term because this is what should be done with most of the content suggestions sent SI’s way) comes preceded by the words I think this is a great story for SI because …

PR Pro: What You Think Doesn’t Matter! Not in the least. No one gives a sh!t. All the company paying you cares about is that you promote their product or service. And all the publisher cares about is bringing quality subject matter on topic to their audience. SI isn’t being consulted by beauticians who want lipstick advice, isn’t being consulted by agents to professional athletes who want insights on how much their clients should be getting paid, and I certainly hope that SI isn’t being read by PR Pros who want insights on how to do their jobs even more annoyingly! (Although it’s possible that with this rant SI just gave a few amateurs a few ideas they shouldn’t have …)

And at least where SI is concerned, you have an archive of over 4,000 posts to search to determine whether or not SI has ever written about the topic, a detailed 20+ (or is it 30+) page FAQ that answers many of your questions, and a Blogger Relations series that, if read appropriately, makes it quite clear on how to NOT be an idiot. So if you can’t get the clue that all SI wants is Supply Management / Supply Chain related stories* and keep sending him stories about lipstick and baseball, expect him to unsubscribe to every list associated to your agency and blacklist you — permanently. (And this means that if you ever do get a great story in Supply Management, just like no one would listen to the boy who cried wolf, no one here is going to listen to you!)

So please shape the hell up and put a little intelligence and insight into your job or get lost. Seriously.

*SI is quite willing to be pitched loosely-related stories that have a 1 in 100 chance of being written about as long as there is some, clear, relation to Supply Management / Supply Chain.

It’s Conference Season, and that means It’s Travel Season! Part II

And this means it’s time to get your T&E under control.

Since what gets measured gets managed, this means that the first thing your Supply Management organization should be doing is measuring the spend. In particular, it should be measuring:

  • How much spend is under management,
  • How much spend should be under management,
  • How much spend is being spent on each T&E category,
  • How much spend should be spent on each T&E category, and
  • How does the T&E spend compare to business norms?

Why? Let’s take these one by one.

How much is under management?

Supply Management success comes from spend under management. If the majority of spend is not under management, then there is a huge untapped opportunity that comes from getting the majority of spend under management. With enough centralized spend volume, leverage can be used to negotiate better airfares, hotel rates, and car rentals — which may take the form of increasing rebate levels as spend volumes increase.

How much should be under management?

While the goal for most categories is 100% Spend Under Management, T&E is one category where the goal should never be for 100% under management. Why? Taxi and limo companies are different in every city, trains are usually localized to a given country, and while McDonald’s is doing its best, there is no truly global restaurant chain with an establishment in every country. You only want to manage those categories where there is enough spend volume to get leverage and where there are vendors that can meet a significant percentage of global T&E needs. In other words, airfare, hotel rates, and car rentals. For the rest of the spend, you want to set policies that have acceptable ranges by locale. Specifically, you want a range for each country, each state where the averages are off more than 10% from the country, and each city where the averages are off by more than 10% from the state. For example, you wouldn’t use the US average for a 3 star hotel or a dinner in New York, New York, USA or in Pueblo, Colorado, USA where the average cost of living is significantly higher than the norm and significantly lower than the norm, respectively.

How much is being spent on each T&E category?

This information will be critical to negotiating agreements with vendors that will save the organization money in the long run.

How much should be spent on each T&E category?

Before the Supply Management organization begins negotiations with prospective vendors, it needs to understand how much it should be paying. For example, before negotiating with a major airline, it needs to research average fares for its most common travel itineraries, average discounts or rebates for the spend volume it has, and other factors that make it a desirable customer for the airline in question.

How does the T&E compare to business norms?

Specifically, how much is each department spending on T&E relative to the industry norm for that department (measured as a percentage of budget or other standardized measure). If Sales is spending more on T&E relative to the industry average, then either it is traveling more than its peers (and this means it should be getting better results to warrant this travel, and this is up to the VP of Sales and the C-Suite to decide) or it is traveling the same amount and spending more, and this means that its costs are too high and Supply Management either needs to help it get better rates or implement better policies. Regardless of the situation, Supply Management needs to present the T&E spending facts to the C-Suite for every department in the organization so that it gets the authority to do what it needs to do to bring more SUM and so the C-Suite can decide whether any department spending more than industry norms (for its size) has a valid reason for doing so.

And finally, as explained in detail in Part I, despite urges to the contrary, neither Finance nor Supply Management should be attempting to judge the ROI of business travel by function, as suggested in this post over on CPO Rising, or try and measure it with a quantitative metric. It’s job is to prevent over-spending, not to question the validity of the spend. That’s for the head of each department and the C-Suite to debate.

It’s Conference Season, and that means It’s Travel Season!

And this means it’s time to get your T&E under control.

Since what gets measured gets managed, this also means that the first thing your Supply Management organization should be doing is measuring the spend. Then, when it has measured the spend, it should be evaluating the spend. If the spend is too high relative to industry norms, then it needs to get the spend under management as soon as possible. However, one thing it should not be doing is questioning the validity of the spend.

What do I mean by this? Simply put, neither Finance nor Supply Management should be attempting to judge the ROI of business travel by function, as suggested in this post over on CPO Rising, and they definitely should not be trying to measure it with a quantitative metric.

Why?

Simply put, outside of their respective domains, these organizations have no clue how valuable or invaluable a sales meeting, training session, or conference was, and sometimes even the VP who approved the spend doesn’t know, because the value from the travel typically cannot be measured in the short term. And there definitely isn’t any way to predict the value beforehand! In the CPO Rising post, the author gives the example of Sales and says you should ask if the sales team closed a deal as a result of an expensive trip or if IT has improved its processes by attending specific conferences. These are both WRONG questions.

In the Sales example, in traditional enterprise sales with traditional executives (who have been in their roles for 20+ years), not every trip is going to close a deal, or even have a directly measurable impact. Sometimes multiple trips are required by personnel to build a relationship, which must be built before a deal can even be negotiated as relationships in many South American and Asian cultures must precede a business deal. With this metric, the salespeople would never take a trip, never meet new potential clients or business partners, and never close any deals!

And the author of this CPO Rising post, who has obviously never been an IT guy*, needs to understand that sometimes where conferences are concerned, process improvement is not the point. Sometimes the whole point is to give key members of the development team who have been working their asses off for months straight on a key project a reward and a break (for burning the midnight oil on a regular basis and doing whatever it takes to make an unreasonable deadline set by Maury the Management Moron). The whole point is to keep the key team members happy, boost morale, and expose these team members to new ideas that will help them identify the technologies and processes they should be researching on their return. Because, where IT is concerned, it’s not how many warm bodies you have in front of computers, it’s how skilled those bodies are. In a discipline where your top coder can be as much as 20 times as productive as your average coder (because you have too many poor performers and not enough superstars), quantitatively measured in bug-free lines of code, and where top talent is rare, the organization has to keep its top talent, and low-cost tokens of appreciation, like conferences (that will also open the developers’ minds and embark them on a journey towards even more productivity in the future) is a great way to do it. If you’re going to cut the travel budget just because there’s no immediate return, then you might as well lay off the top 20% of performers in your organization, get a shotgun, blow a hole in the server, and see how you fare. Because that’s effectively what you’re doing if you don’t have another way to keep morale high in IT.

So what should an organization be measuring, evaluating, and managing in terms of T&E spend?

Come back tomorrow for Part II to find out.
* Unlike the doctor who has a PhD in CS and who has been a senior algorithm developer, enterprise software architect, research scientist, and CTO …

Procurement Trend #29: More Outsourcing

Twenty-six trends to go,
twenty-six trends to go,
so many things we need to know,
so onward we will go.

We’re in the midst of discussing in detail each and every trend we debunked in our Future of Procurement series so that you understand not only why the historians are still talking about these trends, but why they are still relevant to many Procurement organizations that are stuck in the past with the historians.

The goal is that, at the end of this thirty part series, you will not only know what you need to do to prevent staying in the past with your organizational “peers”, but what you need to do to not only stay in the present but start marching towards the future, which is coming faster than you think.

So why do so many historians keep pegging it as a future trend? There are a number of reasons, but among the top three today are:

  • Because outsourcing is not just manufacturing anymore, it is design
    as more and more companies outsource bigger and bigger pieces of their product’s lifecycle
  • Because outsourcing is not just tech support anymore,it’s software development
    as more and more companies outsource custom software development, implementation, and integration
  • Because outsourcing is not just back-office functions anymore, but front-office functions as well
    as even functions like Public Relations, Advertising, and Legal are thrown over the wall … all the way to India!

So what does this mean?

Design

Procurement needs to work closely with Engineering and the Supplier and foster an atmosphere of collaboration as close working relationships will be required to insure that the vision of Engineering is reached in the best way possible. With competition so fierce in just about every industry, the design of a product is critical to buyer acceptance and a company’s success, so Procurement needs to put on its SRM (Supplier Relationship Management) hat and make sure there are no bumps in the relationship.

Software Development

Procurement needs to work closely with whatever department is commissioning the work to make sure detailed functional specifications, that include a description of core business processes is produced; that regular quality assurance and acceptance testing takes place; and that regular checkpoints are put into the process and adhered to. Serious issues need to be identified before they prevent product delivery or result in significant cost overruns, which currently happens in the majority of software development projects. Many industries have proven time-and-time again that you can’t just throw a software development project over the wall and expect success. Software project failures have been responsible for many of the biggest supply chain failures in history (and if you do not believe the doctor, go check out Supply Chain Digest’s Top Supply Chain Disasters of All Time), so Supply Management knows all to well the disaster that can happen with an IT project that is not appropriately managed.

Front-Office Functions

Soon, outsourcing of Legal, Public Relations, and Marketing Support will be as common as outsourcing of Finance, Accounting and tactical Procurement functions are today. Procurement needs to work with key stakeholders to define core requirements, goals, frameworks, knowledge capture, and reporting structures to make sure that the third parties represent the business the way it wants to be represented and that everything is captured and communicated. This may not be an easy task, but it is a critical one.