Data, Data, Data A

The Prophet has said that data will be your best friend in procurement and supply chain in 2024 if you give it chance.

And then asked Is 2024 the year you final opt to invest in [data] at the level you should?

Because it should be. As The Prophet also said, if for nothing else, do it to avoid being made the business function where fingers point when things go wrong, which they most definitely will if you don’t take every step you can make sure they don’t (and they still will, but you can be prepared for it and ensure that the disruption that happens is as minimized as possible). However, as I noted in a comment on the original article:

It’s not just better data analysis systems, it’s better data … chances are, if you haven’t been applying proper data governance, and let’s face it, there’s a 99%+ chance you haven’t, you need cleaner, richer, better organized data.

Also remember that’s not as easy as just buying some AI-based auto classifier / enrichment tool that will enrich your brake shoe database with the latest Girotti Oxfords and Montcler runners or take your incorrect supplier abbreviation and classify a denied party as perfectly safe when they are known to source from organizations that use slave labour and supply to militant groups and terrorists. (Don’t think it won’t happen if you fully trust an AI-based auto-classifer/recommender engine. It will. It has!)

Trusted data sources, such as those you get from data enrichers like Tealbook or validators like Apex Analytix will go a long way, but you will still have to manually review and fix those that can’t be auto-matched with very high accuracy (high accuracy is good enough for spend analysis, it’s not good enough for regulatory compliance or risk prevention).

And remember, have fun fishing the data lake you’ve neglected since you literally installed your first database. You never know what you’ll catch. While you’ll hook a lot of old rubber boots on your lines, you may also haul up a solid gold bar! Remember, you never dredged the lake, and there will be some priceless relics mixed in with the rancid pile of garbage.

Moreover, without great data, and the insight that comes from great data, the downside risk of the visibility, insight, predictive and actionable capability you lack today is immense and likely incalculable.

Once you have the data, you can easily install the right compliance, risk, and visibility platforms and achieve the intended results. (But without the right data, those solutions will be worse than expensive shelf-ware because if they are used, they will give the wrong results and insights that will lead to worse decisions than if they weren’t installed at all!)

Get Ready to Make BIG Supply Chain Decisions A

The Prophet says we will make far more BIG decisions in 2024 in Procurement and Supply Chain and possibly more than we have ever done.

the doctor will actually go one step further here — there will be NO little decisions. Every decision you make will lead you down further down a path that will inevitably branch or disappear in an unexpected way and you’ll need to make a BIG decision, and that decision will be limited by prior decisions, which are actually the starting points of the BIG decisions you might not even see coming!

And, as The Prophet says,

1) you need better data than your competitors. Let’s be clear here. That is data that you should have had yesterday! This means you need to clean up your data and enrich it. And this is an effort. But more on this in the next article in our discussion of Prediction #7.

2) you need frameworks for decision making and framing — what do you even need to consider, and who needs to be consulted before the decision is made and included in the decision making team

3a) you need tech for planning and forecasting as well as
b) tech to identify confidence, or lack thereof, in data, models, and predictions
c) tech to support a deep dive into models and predictions with high confidence when the answers are unexpected so that an explanation, or root cause, can be identified and addressed (because sometimes the right response to a situation will be completely unexpected; and you can’t risk brushing off a right response that feels false)

4) you need the scenario analysis and [multi-objective] optimization that should have been in use since the day it became available! [the doctor hasn’t been publicly promoting multi-objective strategic sourcing decision optimization [SSDO] since SI started in 2006 just because he’s a contrarian!] Not only has the lack of use contributed to a consistent loss year after year after year (as companies paid as much as 10% more on total COGS than needed), but it contributed to lack of balance in decisions (as these models allow you to balance cost and risk, cost and carbon, cost and carbon and risk, etc; if you can quantify it, these tools can help you balance it), which is becoming more and more critical. There’s no savings if there’s no purchase … and without supply, who cases what the spend was supposed to be?

5) you need the best “decisioning” team, which MUST be multi-disciplinary and multi-departmental; with so much hitting you from so many angles, it’s virtually impossible for one person to see everything

but you have to go beyond this and

6) a) identify the short-term results expected from your decisions which can be monitored and tracked,
b) implement solutions that allow you to monitor and track toward measurable results, and
c) track progress against those expected short-term results

7) if the actual results start to diverge significantly in the short-term, be prepared to bring the team back together, revisit the data, frameworks, technology, models, and decision factors; find the assumptions, etc. that are no longer valid; and make a new decision, even if there is a short-term drawback (or contract penalty).

The Suites, ERP and Big Tech Strike Back A

When everyone writes you off in favour of the new, new thing, there is one thing to do to prove the young turks wrong: thrive.

Never write off the Turks! A lot of people are these days, but remember they are one of the oldest known civilizations on the planet, with continuous settlement dating back to circa 7,500 BCE (at Çatalhöyük). But I digress. (Even though I should note one of the next powerhouse S2P suites is likely to come out of Istanbul … see the recent archives for more information on a rich caffeinated Turkish Punch.)

Back to The Prophet‘s prediction that 2024 will be the year where procurement and supply chain suites reclaim mindshare (and more) in the market. (More specifically, S2P [Source-to-Pay] suites, supply chain suites, and ERP providers.)

Which will happen. The only unknowns are how fast and in what areas.

As you get older, you get wiser, and the big corporations have not only learned how to make themselves indispensable, or at least irreplaceable, and how to identify, and attack the shortcomings / risk posed by smaller players and, even if they lose some new business in the short term, reclaim it in the long term.

According to The Prophet, this is firstly because suites and big tech have the capital to fund innovation (through acquisition) in lieu of Series B and C venture rounds.

While big players have, more or less, lost their ability to innovate internally (as their risk and audit departments quash innovation faster than a minnow can swim a dipper), they didn’t suffer^* during the COVID years, or the recovery, because those subscription payments kept coming, and now, especially with the drop in available VC and PE capital, they alone have the money to spend to buy whatever they need. And, as The Prophet has indicated, they will.

Moreover, where they can’t, or won’t, buy, they’ll “exclusively” partner with small specialist providers in Direct that make their interfaces more user-friendly and integrate with related applications, use those partners as lead-ins, and pretty much lead the partner down a development path that props up their suite (because they make it more financially lucrative for the smaller partner to do so).

This is also secondly because of the backlash of SaaS proliferation.

While Procurement wants best-of-breed, they can only deal with so many application providers because each new throat-to-choke is yet another provider they have to manage. So unless they truly need something unique or best-of-breed offering wise, an 80% suite solution will do for many departments.

It is thirdly because no one has cracked the direct materials procurement code at scale, especially in the smaller providers. Direct more or less requires a deep, sophisticated, integrated suite of capabilities that cross multiple stand-alone modules in indirect. It’s hard for a smaller player to attack. (And that’s why, as The Prophet notes, Direct is still owned by ERP and Excel!)

Finally, as cash again becomes king, it is because we will see the SaaS Office of the CFO.

Which is true, and which will be discussed again in Part 8, we’ll also see an upsurge is the acquisition of SaaS management tools, which will hopefully lead to a crackdown on Sales and Marketing that have an average of 20 tools each, which do, at most, 2 different things. (And maybe, finally, free up some budget for the CPO for the tools the organization ACTUALLY needs.) (So it’s going to be a good year for those SaaS [Subscription Cost] Management tools!)

So keep an eye on your current suite/ERP provider as well as the competitor suites targeting their market (who may soon bring back the offers of free data transfer/migration services and configuration replication to lock in a multi-year deal).

^* Sure they had to tighten the belt and stop having their corporate Christmas parties in penthouse suites while telling the CEO his expense account was no longer unlimited and he couldn’t upgrade the corporate jet, but that’s not exactly suffering.

Supply Chains Get (Remain?) Political A

The Trump era ushered in a sober reminder to the world (primarily China and the EU) that mercantilism and one-sided trade policy will eventually have to face the music in the face of a sleeping giant who awakens (finally) to a new trade era.

And now the world is responding, and supply Chains are getting extremely political.

The Prophet has five big predictions here … and most are on the money (as you can probably deduce given that the doctor has given the prediction an A).

1) All major US Presidential candidates and parties march in unison on trade. And you won’t hear a peep about it — since they’re all too busy trying to rip each other apart for sinful ideas and acts, including many they didn’t even do. (But this is not a political site, so you can do your own research here.)

2) The US deepens ties with those regions (trade-wise) which are necessary to eventually operate supply chains independently of China. This could actually be 1b) as it’s a fallout from flawed trade policy and practices of the past two decades.

3a) Technology transfer, favorable trade terms and investment deals become the price Israel pays to “finish the job”.

Nope. Since Hamas achieved it’s goal of triggering other militant and terror groups to both attack trade ships and increase their (terror group) resentment, and hate, of the US, Israel doesn’t need to do anything to “finish the job” — they will get what they need regardless of what Congress or the Senate wants throughout this year as Biden actually said “Israel could get into a fistfight with this country and we’d still defend” it — so now that US trade is being actively attacked, Biden will make sure the US is there doing whatever is needed pro-bono (including bombing Yemen and [future] Israeli targets on behalf of Israel).

3b) Saudi and the UAE quietly deepen ties with Israel to create a broader trading block powerhouse in the Middle East (outside of the headlines, at least for now).

The Prophet hit the bullseye here. Saudi and the UAE are going to work with Israel to create the trading block powerhouse in the backroom to become the preferred trading block of the US and UK in the middle east (as Iran is pushed out due to their [perceived] lack of willingness to help contain the Houthis and other Islamist terrorist groups).

4) China continues its mercantilist march to fight for the natural resources it needs (to import) around the world as its trade imbalance declines. (Note that, in 2022, China Imports to the US were 563B and its total trade surplus was 877 B US dollars, vs 230 B US in 2012. If it lost half of US exports, it would lose 33% of it’s trade surplus and if the EU followed suit, who imports 626 B Euros, it would be down 72% of its trade surplus, and be back to 2012 trade surplus level.)

5) The EU becomes increasingly irrelevant … as a trading block and single economic group as backlash to central policies, country policies, and failed energy policy distract from collaboration.

The backlash to Brussels is becoming quite significant, especially in Poland and neighbouring countries where Ukranian grain and is being dumped and the removal of restrictions mean that the local truckers are losing their jobs (at a time when most of the world doesn’t have enough truckers). There’s the massive protests in Germany due to subsidy cuts for diesel and vehicle taxes for farm equipment. There’s also discontent in the Nordics with the number of Islamic migrants/refugees being let in without verification (which is allowing the terrorists to exploit the system and slip into the EU — as evidenced by the 2022 Oslo shooting). Etc. As a result, trading turmoil is going to increase significantly, even as the EU bands together in spirit (if not in action) on climate change.

You need to identify where the political winds are shifting, or doubling down, and start working on compliant (re)sourcing strategies now before your current source gets cut off, triple tariffed, or unusable due to extended, and still unreliable, delivery times.

Supply Chains Cope By Developing a Sense of Humour A+

You have two choices. Laugh or cry. Crying didn’t work in Covid and certainly won’t now. It’s literally the only choice for Supply Chains that want to survive.

Moreover, with so much going on, as The Prophet notes, how does one predict what supply chain and procurement show is next to drop? And will it be:

• frenetic commodity and input costs rendering sourcing strategies all but impossible to get right
• wrong demand signals resulting with you being stuck with all the wrong inventory
• supplier bankruptcies disrupting production and essential services
• a global scale terrorism event, as per The Prophet‘s 2024 Procurement Prediction Number 1
• the whiplash of DEI-led HR procurement/supply chain strategies which walked experience and expertise out the door in favour of inexperienced and uneducated minorities to fulfill an agenda

as well as (which were not mentioned by The Prophet in his list)

• massive, coordinated, labour strikes across multiple ports
• acts of war that result in massive sanctions against an entire country that effectively eliminate them from the sourcing equation entirely
• escalated global boycotts of your products simply due to state (country) affiliation that create a rampant drop in demand (when you have perishable goods and contracted deliveries in transit)
• more countries undergo rapid massive economic decline (like Venezuala, Ukraine, and South Africa, which are all in the top 30 for economic decline); e.g. Iran, a home of the Houthi rebels, is a top 40 fragile state and a large global producer of Petroleum)
• the double whammy of long-term double-canal shutdowns as we enter Panamanian dry season and an increased escalation of attacks in the Red Sea

… and about a dozen more risks of slightly less severity and probably three or four major risks we haven’t thought about yet! (Many of which, as we noted in part one, are going to hit us one by one as the black swans break flight formation and barrel roll directly at our supply chains.)

So if you huddle in the tub and cry, not only will you either permanently damage your tear-ducts or drown, but you won’t solve anything. So it’s time to develop, possibly a very dark, sense of humour, laugh when you can, and get yourself mentally ready for black-swan defense and disaster mitigation.