Category Archives: Technology

Procurement Trend #13. The Cloud

Ten time tripping trends from the eighth dimension still remain, and as much as we’d like to assume that string theorists aren’t right and that those dimensions don’t all curl up and trap LOLCat in a box, we can’t. Thus, we must continue to follow the lead of the MythBusters and attack each claim made by the futurists, who are so deeply despised by LOLCat, one by one.

So why do so many historians identify The Cloud, which, to be blunt, has to be the single biggest piece of marketing malarkey of the past decade, as a future trend? Is it because they are dumb enough to believe that anything repeated enough times must be true? I don’t know, but I do know that:

  • computing is becoming ubiquitous

    and just about anything that can have a microprocessor shoved into it has one

  • on-demand computing can be bought with a credit card

    and can be bought from the same online store that you buy your books, clothes, and groceries from

  • cloud marketing is ubiquitous

    and even Oracle was crushed under the weight of the cloud craze and eventually buckled to the trend

So what does this mean?

Computing is not the Problem, Modelling is

These days, the average person has more computing power in her smartphone than she knows what to do with. Because so much computing power is wasted on unnecessary graphics and very poor algorithms, she may not know it, but the dual-core 1.4 GHz Apple A8 processor in your iPhone 6 with over 2 billion transistors can process hundreds of billions of instructions per second. This is 100 times faster than the first Pentium that revolutionized Procurement!

Computing is not expensive, Mindsets are

Computing used to be expensive, but it’s not anymore. You don’t need expensive Sun, IBM, or HP racks for most day-to-day business processing, and you certainly don’t need expensive machines for high-power computing. Remember, analysis and optimization is running data sets and models over and over again until you find a result. If you burn out a core, you can just buy a new one. The only place you really need to invest in redundancy and reliability is in the SAN (Storage Area Network) — you need multiple backups of raw data — not of temporary data sets.

Many Marketers are Morons, or, at the very least, think we are

The cloud is as vacuous as the real thing. It’s all about access to the software you need when you need it, not what you call it or where the application is hosted (and whomever is cutting the cheque should know where it is hosted). If you want to buy infrastructure as a service, with all the pros and cons, go for it. But it’s the applications and what you need to do with them that matters.

Procurement Trend #14. Shorter and More Complex Product Life-Cycles

Eleven anti-trends from the pre-internet pundits still remain, and as much as we’d like to not give yet another reason for LOLCat to hate futurists, we must continue to make sure that no good deed goes unpunished and since the futurists’ advice is still as good as it gets, we must break it all down until you can look past the shiny new paint job and realize that it’s still a twenty year old Skoda you are being sold.

So why do so many historians keep pegging shorter and more complex product life-cycles as a future trend? I honestly can’t fathom this as the video console, cellphone, and apparel industries have been in this mindset for over two decades, but maybe it is because the futurists, who finally realized that the internet has given everyone a need for speed, are finally catching on or because:

  • consumers in some verticals, like electronics, expect major new releases each year
    because they’ve been conditioned by the manufacturers and the marketers to, and
  • they expect every release to contain more new and exciting features than the last one
    even though they don’t even use half of the current features, and
  • they also expect each new product to be smaller, lighter, faster, and more powerful than the one before …
    even though they’ll then complain about lack of battery life, screen resolution, or something else when you have are faced with an impossible choice between two incompatible feature requests.

So what does this mean?

Annual Release Cycles

No matter how good Procurement is doing, it has to do it better, faster, cheaper and keep doing it better, faster, and cheaper (relatively speaking) every year. To do this, it’s going to have to institutionalize its knowledge and process in a workflow driven sourcing suite with integrated analysis and optimization that will tell it if its method is still appropriate, the market is ripe for the preferred event structure, and the costs are optimized.

Constant Innovation

The product has to keep improving, which means the organization and its suppliers have to keep innovating and Procurement needs to manage that innovation. Knowledge management, team management, and project management is just the beginning. When the team hits a dead end, Procurement is going to have to bring an innovation methodology like TRIZ, FORTH, or Design Thinking to the table to help it get past the finish line.

New Market Identification

At some point the incremental improvement in the new product is going to be so minimal that it’s going to lose value to the market and if the organization doesn’t phase the product out, the market will. So the organization not only has to constantly identify potential new versions of its products, but new markets for which it can design new products for. Preferably blue oceans, but open seas are a good start.

One Hundred and Twenty Five Years Ago Today

And over 60 years before they would line the walls of diners everywhere (and become staples in hundreds, if not thousands, of movies about the swinging ’50s), the first jukebox, built by the Pacific Phonograph Company, went into operation at the Palais Royale Saloon in San Francisco and launched the Music-on-Demand revolution. (See the Wired obituary.) Unlike a modern jukebox, which blasted music though built in speakers, this early version required the listener to use a stethoscope-like tube that was attached to an Edison Class M electric phonograph to hear the recording.

And then a mere sixty-five years later, as chronicled in our post last month, TI would launch the mobile music revolution. Forget Apple. Forget Sony. Forget RCA. The real revolutionaries that made music on demand are long out of the music business.

Procurement Trend #15. System Integration with Partners

A dozen anti-trends from those wild and crazy guys still remain, and as much as we’d like to find some entertainment value in what they have to offer, we must agree with LOLCat who is bored with our continuing anti-trend coverage and, like the foxes the wild and crazy guys like to chase, instead flee from the obnoxious diatribe they thrust upon us.

So why do so many historians keep pegging system integration with partners as a future trend? I honestly can’t fathom this as Big Blue has been pushing integration projects for decades, but maybe it is because they’ve been living in the corporate cave (as Procurement is still relegated to the basement in many organizations) and:

  • e-Procurement benefits like invoice Automation require some system integration

    because invoices come from suppliers and often have to get into AP systems on the way through the e-Procurement system

  • supply chain visibility is critical for risk mitigation

    because you cannot take action to protect against a disruption if you do not know that a disruptive event occurred

  • strategic planning is improved with good data

    because even though you can make great strategic plans without data, it’s just a theoretical exercise if the plan depends on postulated conditions that do not actually exist in the real world

So what does this mean?

System integration

Not only do you need to brush up on your IT skills, but you have to brush up on your IT project management skills too. System integration projects have been responsible for some of the worst supply chain disasters in history. Don’t believe me? Review Supply Chain Digest’s top supply chain disasters and notice that 9 of the 11 top failures were as a result of technology, and all but one of these technology failures was at least partly, if not entirely, IT technology!

Supply Chain Visibility

You need to implement a multi-tier supply chain visibility. Knowing your supplier’s status is not good enough, you need to know your supplier’s supplier status and sometimes even the status of the supplier of your supplier’s supplier — especially if raw materials acquisition is the weakest link in the chain. Leave no stone unturned that could be covering a ticking time-bomb.

Good Data

When we say good data, we mean good data. Not just data because not all data is good. If it has a lot of holes, is inaccurate, or is too old, it’s bad data, and all analysis on bad data leads to is bad information that results in bad decisions. But good data can lead to good information and then good decisions, and, in an appropriate model, it can lead to actionable intelligence that can power great decisions.

Procurement Trend #18. Improved Supply Management Skill Set

Fifteen anti-trends still remain but today we can take solace in the fact that we have finally finished with the “old news” anti-trends and have reached the “ongoing” blues anti-trends. While these anti-trends are still “old news”, most are only a few decades old, as opposed to some of the earlier trends we debunked which described situations encountered by many business centuries ago (which is when globalization really began).

So why do the modern historians continue to peg an improved supply management skill set as a future trend? Maybe it’s because they’ve only recently been expelled from an old-school Procurement organization into this brave new world, and this is as far as they’ve made it in their readings, but three likely reasons are:

  • technology is progressing rapidly

    and much faster than the average person can be reasonably expected to keep up with

  • the breadth of supply management continues to expand

    and new categories and responsibilities are often added to Supply Management’s (shared) purview on a regular basis

  • processes aren’t keeping up

    and Supply Managers are getting buried under an avalanche of tactical demands

So what does this mean?

Rapid Technology Progression

Your organization, and in particular, your talent, needs to keep up. Regular training is going to be required for your talent, and thus your organization to keep up. You will have to fight for this though, because despite the fact that it has been among the top three or top five concerns of most CPOs and CXOs for the past five years, the training budget is always the first budget to get cut.

Expanding Supply Management Breadth

This is a good thing, but you your Supply Management organization needs to keep up, not fall behind. The tech progression is a good starting point, the training is a good continuation, but you need to also learn other areas of the business – their language, processes, and goals so that you can collaborate with them, learn their wisdom, and, if possible, share the workload.

Processes Need to Move Out of the Past

Processes need to continually progress forward — that’s why SI is all about Transition management and not just focussed on the classic people-product-technology triangle (as it’s actually talent-technology-transition management). You will have to conduct process reviews not only on all Procurement processes, but on all related operational processes to determine if they can be made more efficient, reliable, or better, identify what new processes would look like, determine if the current technology platforms can support these new processes or if new platforms are needed, and create, and then execute on, appropriate transition plans.