Have You Mastered the 4th T of Tracery Yet?

Regular readers will know that the time of PPT — People, Process, Technology — has long passed. In today’s fast paced world where product life-cycles are sometimes over as soon as they hit the market, and where your competitors are constantly striving to outpace you in both sales and supply management, you can’t live on processes anymore — they go stale almost as soon as you’ve got them figured out. And in a knowledge economy, just having a butt in a seat or a worker at an assembly line isn’t enough to succeed — you need a worker who, at the very least, is smarter than the average worker and, preferably, smarter than the worker employed by your competitor. And your technology cannot get out of date.

That’s why SI has been promoting the 3 T’s for years — Technology, Talent, and Transition. You need a solid, regularly updated, technology foundation upon which to build your modern Supply Management Organization. You need talent to put together good operating procedures, properly use the technology, and to constantly identify new opportunities for cost reduction or value generation. And you need great transition management as even best six sigma process today won’t cut it tomorrow when you need to upgrade your product offering, switch suppliers, change distribution methods, and make sure your product is Designed for Recycling from the get-go as new regulations are forcing you to take back your product at end of life and recycle it as you are using chemicals and / or rare earth minerals that are heavily regulated.

But while these are necessary conditions for Supply Management success, they are not necessarily sufficient. As we noted five years ago when we first asked if you have mastered the 4th T of Tracery, while it is true you will not succeed without a mastery of technology, talent, and transition management, as per our first post on Project Assurance many years ago, organizational success also depends on selecting a superior strategy and seeing it through until the desired results are achieved (or the organization changes its strategy, which hopefully wasn’t done arbitrarily on the whim of a CXO after talking to a buddy on the golf course).

However, in order to properly implement a strategy, you have to not only see it through from start to finish, but you have to make sure all of the process streams necessary for success are both completed and properly synched. Just like the key to a good weave, as one might find in Egyptian Cotton, is a skillful interleaving of the thread, the key to a good strategy, is a skillful interleaving of the process strands into an effective transition plan from where you are to where you need to be.

And this, dear readers, is Tracery — the “delicate, interlacing, work of lines as in an embroidery”, or, more modernly, “a network” — the glue that not only binds the Technology, Talent, and Transition Management that your Supply Management organization needs to succeed, but that interleaves these threads in a way that causes each of them to reinforce each other and make a stronger whole.

And, hopefully, monitors them through a common network-enabled platform that can not only bring your internal stakeholders together on one platform, with appropriate views and collaboration features for each function, but also your partners and suppliers who have the data and best practice insights you need to actually get your supply chain in shape. Because it’s not something you can do alone, and it’s definitely not something that will never happen unless carefully monitored, as it’s always easier to “do it the old way”, even if the old way is unsustainable and will lead your down a path to organizational oblivion (through bankruptcy).

You Need To Get Sustainable On Your Own Because Customers Still Won’t Pay …

A recent survey by Accenture, summarized on their newsroom in June (Source found the same thing the Trade Extensions survey found five years ago — while customers say they want sustainable, the most important factors are quality and price, with 89% and 84% of customers, respectively citing those as their most important considerations … with environmental impact only cited by 37% of respondents.

So, even though slightly more than half of consumers indicated they would be willing to pay more for sustainable products designed to be re-used or recycled, you can bet that the premium is still limited to 5% or less (which is the maximum amount of cost increase an average consumer would tolerate, as per Trade Extensions’ 2014 survey as reported here on SI in do as I say, don’t do as I do).

So even though the inclination of your senior buyers might be to forego sustainability and ethics when sourcing on the go for the supplier that provides the best value for money, quality, or price, especially since that’s what the average buyer wants, this approach is, now more than ever, the exact opposite of what you should be doing as you need to be quadrupling down on sustainability efforts.

Inflation is here to stay, raw materials are getting scarce and increasing at multiples of the inflation rate, and with Trump inciting the trade-wars to new heights, if you’re not sustainable to the full extent possible, you can expect costs to skyrocket much faster than you can increase prices (as average salaries aren’t going up as fast as cost, and with GDP growth slowing globally, you can expect salaries to stagnate due to lack of market exuberance).

And when we say raw materials are getting scarce, we mean it. Let’s remind you as to what the average consumer wants to buy. Fashion. Electronics. Media. Now consider what these items are made of. Cotton. Rare earth Minerals. Paper. All of these items are in limited, decreasing, supply. Increased drought and increased need of limited farmland for food production are causing cotton prices to increase. (If even leading global clothing brands are starting to invest in recycling programs to try and harvest back cotton, you know scarcity is real and project cost increases significant.( Rare earth minerals are decreasing but demand in modern electronics gadgets is steadily increasing. And paper, well, there are only so many trees and some take decades to grow.

In other words, costs are going to go way up — and, at some point, costs are going to go up to the point the product becomes unaffordable to produce (as it won’t be able to be sold at a profitable price point … and then what does the organization do?). At that point in time, the best strategic sourcing and negotiation skills in the world aren’t going to be worth a dime because you can’t source for less than cost, and if costs skyrocket because there is (much) more demand for the materials than there is supply, your costs skyrocket and your consumers go elsewhere.

But if you quadruple down on sustainability, and source products that use alternative, more readily available, and if possible, renewable materials, from suppliers that focus on recycling and material recovery, then your costs will stay down while your competitors’ costs go up. That’s why, despite your inclination to follow your customers, you have to do a 180 in the other direction to make sure that you keep those customers as time moves on.

And if you design your products for reuse and recycling, even better!

Twenty Years, and Nothing’s Changed. It’s still all about the Pentiums!

Today they might be called Xeon Ws or something similar, and power Mac Pros, but at the core, they are still, more or less, Pentiums!

Rock on, Al Yankovic, Rock on!

Because It’s All About The Pentiums (Original Video!)

Al may have been Running with Scissor, but no one did a better job of predicting the future of the IT industry.

     
My new computer’s got the clocks, it rocks
But it was obsolete before I opened the box
You say you’ve had your desktop for over a week?
Throw that junk away, man, it’s an antique
Your laptop is a month old? Well that’s great
If you could use a nice, heavy paperweight

  It’s All About the Pentiums
    by “Weird Al” Yankovic (@alyankovic)

I Am the Twitter! (Repost)

I am he as you are he as you are me and we are all together.
See how they run like fish from a whale, see the bird fly.
I’m crying.

Sitting on a hashtag, waiting for the tweet to come.
Corporation tee-shirt, stupid bloody tuesday.
Man, you been a naughty boy, you let your tweet grow long.
I am the poster, they are the posters.
I am the twitter, goo goo g’joob.

Mister celebrity ranting,
Pretty little celebrities in a row.
See the tweets fly like texts from a teen, see how they stream.
I’m crying, I’m crying.
I’m crying, I’m crying.

Random insane drivel, dripping from a newbie’s feed.
A desperate housewife, pornographic priestess,
Now you been a naughty girl you let your secrets out.
I am the poster, they are the posters.
I am the twitter, goo goo g’joob.

Standing in an airport Starbucks … waiting for the brew.
If the brew runs out, you get your fix
From candybars at the news stand.
I am the poster, they are the posters.
I am the twitter, goo goo g’joob.

Expert textpert channel blasters,
Don’t you think the joker laughs at you?
See how they smile like whales in the sky,
See how they snied.
I’m crying.

Internet Spinal Tap, cranking up the dial to eleven.
Gary William Brolsma syncing Numa Numa.
Man, you have to see them kicking that Mark Zuckerberg.
I am the poster, they are the posters.
I am the twitter, goo goo g’joob.
goo goo g’joob goo goo g’joob.
Goo goo g’joob goo

Reposted in recognition of the doctor‘s 3000th tweet!

And remember, if you’re not following the doctor on Twitter, what aren’t you missing?

The Category Sourcing Scorecard – Still An Essential Tool for Category Sourcing

As we noted when we discussed this topic seven years ago, if you want a successful event that generates significant savings, you have to select the right category — and the best way to do that was often to evaluating them with the right scorecards that could predict savings opportunity.

But success requires more than just selecting the right category, it also requires executing a successful event, and this requires:

  • selecting the right sourcing event and
  • adapting quickly if market conditions change

However, today, to be successful, a sourcing scorecard is more than just a point-in-time snapshot of market factors, buying factors, supplier factors, internal factors, and category-specific factors. It’s historical data, even if anonymized, on past events with respect to size, savings, geography thereof, relevant market conditions, and event type.

This way a buyer not only knows the potential savings associated with a category at a particular time, but what type of event will be needed, and what market conditions need to hold throughout the event to maximize the chance of success. And if there are good projections as to how long conditions will hold, the buyer knows how long he or she has, or doesn’t have, to complete the event to maximize chances of success. And if conditions change unexpectedly, the buyer can halt the event and decide what to do next.

Plus, sometimes you can’t just select the category with the greatest sourcing potential, you have to select the category where the contract is going to expire in 60 days and you can’t be without a contract or risk a production line shutdown. Even if the market conditions are the opposite of what you’d need for best results, you still have to proceed — so having the best information possible on the option likely to give the least unsatisfactory outcome is still a positive. And having a platform that can use a modern category sourcing scorecard to enable the right workflows to drive the right events is most likely to minimize a less-than-ideal event as well as maximize an ideal event when it comes.