One Hundred and Ten Years Ago Today …

Kinemacolor, the first successful color motion picture process, is first shown to the general public at the Palace Theatre in London by way of an eight-minute short filmed in Brighton titled A Visit to the Seaside.

This revolutionary technology was invented by George Albert Smith and launched by Urban Trading Co. of London and used commercially for 6 years. It was a two-colour additive colour process that involved photographing and projecting a black and white film behind alternating red and green filters at a rate of thirty-two images per second on panchromatic film.

Motion was a bit blurry, and color was a bit off, but it gave color to a world without any. It was revolutionary. And a mere 110 years later we can scan in Colortrac and capture 281,474,976,710,656 different colors (using 48-bit deep color), process it through ATI FireGL 3D Workstation Graphics Accelerators which can process 48-bit color, and display it on a HDR*1-enabled LCD*2 flat-screen display.

But still, a mere 110 years ago, this image of a 1911 Kinimacolor recreated from original materials, and found on Wikipedia, was revolutionary!

*1 High Dynamic Range
*2 Liquid Crystal Display

Five Years Ago We Told You to Blame the Bankers …

… for the biggest risks in your supply chain, as per our classic post where we told you don’t blame the lawyers, blame the bankers because they were ultimately responsible for three of the top four most likely risks to disrupt your supply chain.

(Even though the doctor can sympathize with William Shakespeare when he said the first thing we do, let’s kill all the lawyers, the lawyers are not responsible for the current state of the global economy, the bankers are. And while it’s true that the lawyers are not innocent, happily taking the bankers money to do things that disrupt entire economies, it is the bankers that were the ringleaders here.)

But do we still blame all the bankers? Well, yes, we blame them for the economic risks that continue to persist to this day. But we no longer blame them for the top three risks in our global supply chains.

That honour goes to … The United States of America. Yes, that’s right. The root cause of the three biggest risks in your supply chain is the United States of America. (And not China, although there is a massive risk there as well. And if we wait a few more years, they might get their turn on top.)

How can it be? How can the United States be the single cause of the three biggest risks in your supply chain?

To explain that, we’ll start by repeating them for those of you that have not read The Global Risks Report 2019, 14th Edition, from the World Economic Forum.

According to this report, produced in partnership with Marsh & McLennan Companies and Zurich Insurance Group, the three biggest risks are:

  1. Extreme Weather Events
  2. Failure of Climate Change Mitigation and Adaptation
  3. Natural Disasters

and, as should be obvious, these are all interconnected.

Many (if not the majority of) natural disasters are the result of extreme weather events, and many (if not the majority of) extreme weather events are, whether your choose to believe facts or not, the result of the failure of climate change mitigation and adaptation.

And why has climate change mitigation and adaptation failed? Because it hasn’t happened. And why hasn’t it happened? Because countries aren’t aggressively working toward it. And why is that not the case? Because only 175 parties, of 197, have ratified The Paris Agreement (the UN Convention on Climate Change) … and one party that initially accepted has withdrawn (and done so in a very public manner). Guess what that country is? You guessed it!

The United States of America has withdrawn from the Paris Agreement. If the country that is responsible for approximately 25% of global GDP refuses to support the most important initiative in the world (which still falls short of where we need to be to truly mitigate climate change, but would make a substantial impact on slowing climate change down), especially when it comes to preventing the three biggest risks in your supply chain, then that country is unilaterally responsible for those risks.

So next time a typhoon sinks the freighter carrying all your goods, don’t blame God, Poseidon, or Mother Earth. Blame the United States of America. Or, if you really want to, blame Trump. But don’t blame God or nature because, with the current rate of increase in the number of natural disasters annually, there will soon be a 90% chance that it the natural disaster is 100% the result of climate change brought on by the United States inaction to do anything about it.

The Value of Market Intelligence in a Down Economy

A decade ago we ran a piece on The Value of Market Intelligence in a Down Economy because it was a down economy near the end of last decade and many organizations were overlooking the importance of market intelligence at a time when it was needed most. (Because, when times get tough, organizations always cut the training budget first and the intelligence / consulting budget second, even though the only thing that will get the organizations though the tough times is their talent — which needs to be as educated and informed as possible to do the jobs that need to be done.)

But now that depression era economics are about to make a come back, SI believes its time to repeat the message in the hopes that you will do the right thing and make sure that, under no condition, do the limited market intelligence and training budget get cut when they are needed most.

Remembering that success in a down economy stems from smart sourcing, and that smart sourcing stems from intelligence, it should be pretty obvious how critical market intelligence is, but just in case it is not, let’s remind you that:

  • market cost data is market intelligence
    and without it, you don’t have enough data to know how much you should be paying (even if you have extensive should cost models because, guess what, those component costs need to come from the market)
  • expected supplier performance is market intelligence
    even if you have lots of historical performance data across your supply base, that doesn’t tell you how good a supplier should perform, just what would be better performance for your organization
  • expected product quality, lifespan, and consumer usage levels is market intelligence
    and you are only going to get so much data from your customer base, and none for a new product line under development

Plus, when you look at the big picture:

  • it’s not as expensive as you think it is
    since a lot of the data or information you need to spot trends and focus on the core issues and data points is low cost, and even expert advice at 5K a day is nothing if it saves you 50K of internal research or steers you toward a solution that helps the organization generate a 500K return
  • it enables supplier performance, and relationship, management
    which is key in difficult times — just look at the auto industry. When times get tough, the American automakers (that score dismal on the OEM-Supplier Working Relations Index [OEM-WRI]) all fail while the Japanese (and Korean), who cooperate and collaborate with their suppliers (and rock the OEM-WRI) always pull through
  • intelligence gathering is an iterative process
    not “one-and-done” and if you stop, especially when market conditions are changing constantly and could change drastically at some point in the near future, you can be blindsided by an event that could grind the entire organization to a halt

Market Intelligence is critical for good decision making – in good times, and bad. Especially in bad. It identifies risks before they materialize and insures that your contracts have appropriate risk mitigation clauses built in. It leads to savings and cost avoidance that would never be identified without it. And while it doesn’t always require multiple high six-figure subscriptions to analyst firms … it does require some spending to keep up with what you need, when you need it. But if you choose wisely, it will save you 5X to 10X what you spend or help you increase your value proposition by that amount.

So get the intelligence you need. Today.

It’s 2019. This is What QuickStart Sourcing Should Look Like!

As we mentioned in yesterday’s post, a decade ago the Oompa Loompas at Coupa announced the availability of Coupa QuickStart which was simply a setup wizard that visually guides purchasing mangers through the setup process for users, approval rules, payment and shipping terms, billing information, chart of accounts, suppliers, and other basic information that was required to get a purchasing system up and running in less than an hour.

But just being able to order a product from a catalogue or send out a simple RFP is not very strategic, especially for 2019. And these days, any event that is not strategic is not going to generate much value when savings are drying up, brands are falling, and spending is falling as GDP growth stagnates and we return to depression era economics.

Needless to say, not only should every system have the capabilities that Coupa had 10 years ago, and the capabilities that we outlined in yesterday’s post on what QuickStart Procurement should look like, but that’s not enough. Not for 2019. Ten years ago we were promised semi-cognitive systems, and most systems can’t even automate basic invoice processing. It’s sad, sad, sad.

So, what should a modern system have? One built this decade?

  • smart RFI creation
    that, as per yesterday’s article, can be generated purpose built for the products in question using templates and organizational data in the ERP
  • smart RFI monitoring
    that can monitor the event, send out reminders, automatically check inputs against public data, organizational data, and expected data, and send out alerts to buyers when suppliers are late, inputs are off, or bids are outliers
  • smart bid analysis
    that can compare bids to past bids, market averages, and expected costs from reasonable should cost models
  • smart award recommendations
    based on bids, delivery times, availability, and supplier preferences
  • automatic auctions
    that can auto-populate from RFIs, auto-run, auto-monitor, auto-enforce rules, and auto-award and notify winners when the auction is over (as they won’t be invited to the auction if they don’t agree to the necessary terms and conditions to be offered an award beforehand)
  • automatic default contract creation
    that uses the organizational boilerplate, terms and conditions, default category clauses, awards, and associated obligations to generate a default contract
  • automatic document comparison and change tracking
    even if the supplier sends back a signed PDF that looks like the one you sent, every character will be analyzed
  • automatic performance monitoring plan generation
    that will track, based on the contract, when orders should go out, when goods should be received, when documents should be received, when reports should be received, when other deliverables should be received, when assessments should occur, etc.
  • real-time performance monitoring
    that monitors a plan, sends out alerts to buyers when deliverables are missed, sends out alerts to suppliers when they have not submitted a document or a shipment notification on time, automatically sends out pre-defined performance assessment surveys, etc.

Quick Setup is more than a wizard, it’s an assisted intelligence platform backed by sophisticated algorithms community and market data, and all organizational data and processes to mitigate the need for the buyer to do pointless tactical data processing in the first place and focus purely on the strategic analysis of RFX responses, when the relevant data and insights have already been generated by the platform.

But how many platforms have that today? The same umber of platforms that have assisted intelligence for Procurement. Zero.

In other words, just like Procurement Leaders are stuck in 2009 (as per yesterday’s article, but so are the vast majority of technology providers. So when looking for a new solution, find one of the few technology providers on this path. Otherwise, your solution capability will be nought, and that’s the decade you will return to. Not something anyone wants.