Category Archives: rants

None of Us is as Dumb as All of Us! Unless, Of Course, You Include AI!

the doctor sees a lot of unsolicited pitches hit his inbox each and every day. Since SI does not cover press releases (since he just does not give a damn about your meaningless marketing sound-bites which do little to nothing to advanced education and technology) he ignores most of them. But this week he saw one of the most ridiculous headlines ever:

Can AI Harness the World’s 2 Billion Social Media Influencers?

Ignoring the fact that that the headline is factually incorrect (there are 2 Billion Users, NOT Influencers), this is one of the dumbest questions ever posed and anyone who understood anything about the state of AI today would not even want to ask it!

Generally, if you are going to train AI, you want to train AI on expertise. And where’s the last space you’d expect to find expertise? That’s right! Social Media.

But that’s just the tip of the why-you-should-not-do-this iceberg! If you include everyone, you not only include everyone of above average intelligence, but everyone of below average intelligence by very definition. So while you will have a few geniuses, you will also have morons, imbeciles, and possibly even idiots (as per the original Binet IQ scale). Do you really want them training your AI?

Moreover, what do people share on Social Media? Their most brilliant ideas? Well developed arguments? Philosophical contributions? Wisdom? Profound insights? Or pictures. Comments on politics. Viewpoints on pop culture. Their thoughts of the moment. Complaints. Rants. Digs. Manifestos. Insults. Self Praise. And so on. And most of it in blurbs, not sentences, and definitely not paragraphs. And in addition to the onslaught of bad grammar, the rate of spelling errors is atrocious.

Is this what you want to train an AI on? Really? You really want an AI that is going to make decisions like an angry dumb, self-obsessed, neurotic, troll with self-esteem issues making your decisions? And that’s likely a best-case scenario.

the doctor doesn’t know about you, but if he’s going to trust an AI, he wants that AI trained by experts for specific tasks, with performance analyzed and tweaked by other experts, since, as we know, there is no such thing as artificial intelligence, since no algorithm is intelligent, no matter how advanced, and what we really have are advanced automated reasoning algorithms. But if those algorithms were trained by the impaired, those algorithms are the last algorithms he would ever want to use. And those algorithms should NOT be on your list either.

Are You Doing Your Own Quality Spot Checks? And Should You Be?

By now, if you haven’t heard of the Kobe Steel Scandal, you’ve been living in a cave. (Which, in some organizations, is highly probably given that one of the tricks the CFO likes to do to Procurement when fiscal year end is approaching is to lock them in the basement until the mandatory savings objective is reached … hence our post yesterday on why every day is Halloween for some Procurement departments.).

This scandal is scary. Not only because the data falsification on strength could go back as far as 10 years on some batches, and who knows what bridges, high-rises, and busses that steel has gotten into (and even a .1 degradation, while not enough to jeopardize immediate safety, can impact expected life span and increase susceptibility to decay, making safety a concern down the road before inspection and maintenance schedules kick in).

But this brings up a good point? If more companies were doing more spot checks on shipped product and quality, instead of just trusting Kobe, would it have been 10 years before the scandal was exposed. Even if only a small percent of batches are affected, I highly doubt this would have been undetected for 10 years, even if only one bar or sheet in multiple shipments were tested.

This is an example of what happens when finance tries to get too greed or supply chains to lean by centralizing a function downstream. When one party is responsible for everything, one failure can reverberate up multiple chains undetected — and have potentially disasterous consequences. Now one might say this problem is solved by co-locating people on-site, but if those people never leave the site, even though you pay their salary, their work family is the people they work with day in and ay out and the existence of that company is their livelihood. Are you sure they won’t bow into the local culture and, if the culture dictates, defer to authority or collectively hide the shame?

Just like third party audits are needed, for critical materials, so are third party quality tests. Doesn’t have to be you, could be an independent organization set up between your co-opetition that does random independent quality spot-checks on 1 in 10 shipments and shares the data with everyone.

Just like a good Chef would never use an ingredient without insuring it’s quality, a good Procurement organization should never let a shipment be accepted without a high degree of confidence that it’s a quality shipment. And confidence like that only comes from organizational testing or trusted third-party independent testing. So don’t get too lean or too cheap — your organization, and the lives of its customers, could depend on it.

For Some Procurement Departments, Every Day Is Halloween!

A week from tomorrow is Halloween. While until recently meant to celebrate All Hallows’ Day, it’s common observance today is to provide an opportunity for kids to trck-or-treat, high school and college students to throw parties, and adults who miss their childhood an opportunity to play dress-up once again.

As part of this festival of tricks and treats, celebrants (regardless of religion), will carve pumpkins into jack-o’-lanterns, light bonfires, bob for apples, attempt to divine (and contact the dead), play pranks, purposefully visited haunted attractions (whether supposed to be fake or real), tell scary stories, and even watch horror films.

But for some Procurement departments, this is every day. Every day they are beaten up by the CFO and feel like they are being carved up like jack-o’-lanterns as their performance is dissected with biology lab precision. (Performance that’s not as good as it should be since the CFO won’t let them buy the best tools.)

Stakeholders, who bring (new) requirements, are constantly lighting fires under the team at the last minute, not realizing that great results takes great planning, and that doesn’t happen overnight. That sometimes strategic acquisitions take 3 to 6 months of hard work to find and unlock the hidden value, and that one cannot expect miracles when Procurement, already at 100%, is asked to (re)source a category 30 days before contract termination (and the date was known 1065 days in advance when the last contract was signed without Procurement involvement.

Senior buyers are constantly bobbing for new opportunities, checking out random whims because they don’t have a modern spend analysis system to help them identify the best possibilities for savings. At some point they will get so desperate they will go to gypsy diviners in their quest to identify savings opportunities, and even ask to speak to dead business gurus of ages past.

They will feel like they are constantly being pranked by sales people as they won’t have the insight to build true-cost models, the IT dungeons they have to go to for help normalizing market data from the free feeds they have access to will feel like haunted houses, every new request made from them is a scary request, and their entire
existence feels like a horror movie.

And the scariest part of this story, is that it’s not just a few departments, it’s a sizeable number of Procurement departments. Remember, 40% don’t have modern Supply Management tools, and of those that do, the majority have major holes in the Source to Pay to Delivery Cycle.

So, CFO, this Halloween, only you can change Procurement’s existence by giving them a treat — the budget to acquire new systems next fiscal year. Trust me, Procurement needs them.

Logistics is the new Black, but Procurement is the Rodney Dangerfield of the corporation!

the doctor recently stumbled on a piece published last year by Jeff Ashcroft over on LinkedIn where he said Logistics is the New Black where he noted that the word “logistics” has subtly worked its way further and further into the common lexicon thanks to massive marketing campaigns of courier, rail, and forwarding companies. This is making it the new black.

However, while it was never the Rodney Dangerfield of the Corporate World, as that distinction is reserved for Procurement, it was the black sheep. Needed, but kept at arms length … just in case.

However, now that savvy merchants are realizing that in their logistics function may lurk the well spring of the truly exceptional customer experience they seek, and must now deliver, logistics is taking center stage. This is good, and bad.

It’s great in that good logistics is a necessary condition for supply chain success, and if it’s not successful, the supply chain will never be, but it’s bad in that it’s only one half of the coin for supply chain success, the other being good Procurement. But, as SI has been saying for years, Procurement is the Rodney Dangerfield that don’t get no respect in the average organization (otherwise, why would almost half of Procurement organizations be without modern platforms).

When there is no easy correlation to the average consumer, when organizations like the Dairy Farmers of Canada say they are supply management, when HR organizations say they do Sourcing, and when even Apple, which has been repeatedly recognized to have the best supply chain in the world doesn’t talk about it (with the closest they come being Supplier Responsibility, probably as a result of breathing all that California smug), how is anyone to be expected to understand what a modern Purchasing, or Procurement, organization does? Especially when the term procure is often used in stories about rebels procuring supplies from the government (and this is the example of procure used on the urban dictionary, the military procuring what it needs from the private sector, or, even worse, often linked to prostitution. And purchasing, that’s what the office manager (in charge of office supplies) does.

In fact, all things considered, Procurement is probably lucky to even be the Rodney Dangerfield of the corporate world. While it might not get any respect, at least it gets recognition.

Maybe someday someone will find a way to bring sexy back to Procurement and then it will get some respect, and take the first step towards becoming the new black.

Is There an Objective Reality to Procurement?

Recently, the public defender penned a post that asked should Procurement be more specific? where he asked if we have an ‘objective reality’ of how procurement works. Are we like scientists; trying to develop more understanding, willing to be challenged, looking for objective ways of proving what works and what doesn’t? Or are we more like the journalists and politicos who express a point of view and get upset if anyone argues strongly and objectively against us?

We think, for the most part, the answer is, unfortunately, a sad no. Why do we think this? Is it because we agree with the public defender in his observations that you never hear “I don’t agree with you” or “I don’t think that’s the best way of doing that” when you go to Procurement event and that you never see an academic paper that objectively measures the success of a particular procurement approach, strategy, or process. No. It’s because, as pointed out in yesterday’s post, there’s still too much magical thinking in Procurement, born in arrogance and self-conceit. Too many people who think that just because they’ve been doing it for 20 years, they’ve been doing it right and all they need is a few more resources and a little more time.

As a result, we wholeheartedly agree with the public defender when he says:

Procurement is THE least scientific of all major business disciplines.

– and that this is the result of –

the lack of clear and objective understanding and
the lack of clear metrics that measure the success of procurement.

As the public defender points out savings are pretty much impossible to measure, and most of the “true” savings is just cost avoidance anyway, and any reduction in cost that was spend above market average can never be counted as savings. If you were paying 10% more than you would in a spot buy, a reduction to market average is not even true cost avoidance that comes from demand management or product redesign, it’s just spending what you should have been in the first place. And other common metrics are equally abhorrent.

And we are still trying to get most organizations from landed cost (which is just one step up from unit cost) to total cost of ownership, which is not the right metric — it should be total value management — the cost relative to the performance (or profit if you want to be so narrow minded) of the buy.

So, no, in the average organization, there is no objective reality to Procurement. And, as it stands now, only the true leaders (the Hackett Group 8%) are even close to getting there (or at least trying). However, like the public defender, we will continue to educate you to the best of our ability so that someday, there may be an objective reality. (But not necessarily the one that will allow a senior buyer to be replaced by a bot. Assisted by, but not replaced.)