Economic Damnation #10: Mini-Trends vs. Macro-Trends

Trends are the foundation of forecasting, but they are also the foundation of disruption when they change unexpectedly. When it comes to Procurement, the relevant trends may be consumer demand trends, inventory trends, market trends, or any other trend that Supply Management believes will impact its operation. Trends are damming because they are truly can’t live without them, can’t live with them. Sort of.

When it comes to trends, there are two types of trends. Macro-Trends and Mini-Trends. A macro-trend is a large-scale, sustained shift in whatever is being measured. It could be a sustained consumer shift away from landlines to mobile phones as the primary means of voice telecommunication. It could be a sustained shift from overstocked warehouses to just-in-time delivery across retail chains. Or it could be a sustained shift upwards in the value of cotton, rice, coffee, or other staples where demand, and reserves are shrinking.

Mini-trends are emerging trends, often not yet acknowledged by the media or market, that may or may not culminate in large-scale, sustained shifts in the marketplace like their macro-trend counterparts, but are still likely to have a sustained impact over a period of time long enough to be significant and have the potential, in the future, to become, or replace, an existing macro-trend. Good examples of mini-trends that do not culminate in large-scale, sustained shifts are fashion trends – such as bell bottoms, balloon pants, hip huggers, long waistcoats, or any other fashion garment that is here today, gone tomorrow. Examples of mini-trends that became macro-tends are walkmans (that helped the cassette tape industry take off), cell phones (which have migrated from business phone to home phone), and gluten-free food products. Initially, these were all small markets but all are now global.

They are at opposite ends of the trend spectrum and have opposite interpretations to the average, traditional organization. For an average organization, macro-trends can’t be lived without as they provide a foundation for operational planning, associated annual budgets, and monthly reporting. On the other hand, mini-trends can’t be lived with as they disrupt forecasts, shatter plans, and blast budgets to bits. And while mini-trends often provide the greatest opportunity to a non-traditional company that survives by identifying, preparing for, and riding out mini-trends before the competition, for a company of a more traditional mindset they are the gremlins in the supply chain that need to be electrocuted.

For an organization to to truly thrive, it needs to be able to identify, and occasionally capitalize on both — and understand the relationships between them. For example, as pointed out in a soon-to-be-classic SI post that highlighted a great article on the World Future Society site, mega-trends often drive mini-trends just as mini-trends drive future mega-trends. For example, as the aging work force remains more active, there will be a great demand for senior housing where there are nurses and support staff on site, but where the seniors still live relatively independently. Also, there will be more demand for vacation and leisure activities that are not overly strenuous to a senior — like golf, water sports, cruises, etc.

While the authors of Minitrends: How Innovators & Entrepreneurs Discover & Profit from Business & Technology Trends believe the key to success in identifying mini-trends and capitalizing on those that will be beneficial to the company starts with the following strategies:

  • Follow the Money
  • Follow the Leaders
  • Examine Limits
  • Understand Human Nature
  • Watch Demographics
  • Analyze Frustrations
  • Search for Convergence

the doctor believes that it’s not quite this easy. Just identifying a mini-trend is the first step. The next step is to figure out how likely it is to become a significant mega-trend, and, if so, how long that will take. Short-lived mini-trends can often be safely ignored by a company with an appropriate counter-strategy, but mini-trends destined to become mega-trends that will affect or displace a mega-trend the organization is relying on are a disaster waiting to happen until appropriately addressed.

For example, if a clothing company identifies that a mini-trend will be bell-bottom resurgence, they could choose to produce that product, but if they also identify that many of their competitors will be fighting for that market, that a significant number of people will still want straight cut, and only one other company will be promoting that product, they might continue to sell almost as much with no additional investment at a higher profit margin by staying focussed on their core product. But if they detect a large scale migration from nylon and rayon back to cotton in consumer preferences as a coming mega-trend, and most of the company’s line is rayon or nylon based, then there is a need to identify new designs and production houses that will use cotton as soon as possible.

Regardless of your views, where trends are consumed, you are damned with them (especially if they are mini), and damned without them (especially if they are mega) as most of your forecasts and plans depend on them.

Geopolitical Damnation 30: The TPP Poison Pill

Sourcing Innovation first brought this up back in late 2013 when it pointed out the great post by Nathan Lee that provided a simple guide to the Trans-Pacific Partnership Trade Agreement “benefits” which is an agreement being negotiated in secret that is lopsided towards the corporation and essentially gives them more rights then individuals, communities, and in some cases, entire governments. Proposals even include giving corporations the right to sue governments if laws put citizens or the environment above corporate rights. The piracy laws are so draconian that you can be criminally charged if copyrighted material ends up on your computer without your knowledge or consent. (For example, if you visit a website that was hacked and malware on that site uses your computer as part of a bittorrent network without your consent and stores part of a copyrighted file, the owner, with the backing of the RIAA or MPA, can have you charged criminally even if you didn’t ever access the file — not the hacker that created the malware and forced copyrighted content onto your computer without your knowledge or consent).

For those of you who do not yet know what this is, it’s a proposed regional and investment treaty between twelve countries: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam that is being conducted almost entirely in secret despite the far reaching implications that are being discussed and the considerable impact it could have on every citizen of every country participating as it covers a broad range of issues including, but not limited to, agriculture, industrial goods, intellectual property, investments, labour, services, and telecommunications.

As a result, everyone, and every supply chain, has a reason to dread, if not fear, this act. The Electronic Frontier Foundation (EFF) has a good summary of the issues corresponding to intellectual property on their What Is TPP page as the act would rewrite global rules on intellectual property enforcement. The IATP does a good job of overviewing some of the agricultural issues in its article Whose Century is it? where it notes that nearly every country involved has food safety regulations on the chopping block as the TPP proponents are arguing that free-trade and cheap food is the best thing for a country, regardless of economic or health consequences. Every year there is a new salmonella, e-Coli, mad-cow, or similar outbreak of a deadly food-borne infection — do we really want to weaken safety standards? With respect to labour, while some US negotiators are apparently demanding meaningful and enforceable worker protections, many of the other countries are not and, more importantly, most of the developed countries are claiming that increased worker mobility will encourage a disruptive inflow of low-skill workers from developing countries and pushing for less worker mobility in our globally connected world (while the less developed countries want to level the playing field).

Regardless of what gets agreed to, the sheer fact that this trade agreement will override existing law presents every Procurement organization with a minefield just waiting to be activated. Will your supplier still be able to afford its current pricing? Will it even be able to supply you? Will you be able to expect the same quality and safety standards? Will new sources suddenly become available? How will they change the supply-demand balance? Will new tariffs materialize? Will you be forced to abandon your “Buy American” policy? Will you be forced to consider suppliers you don’t want to? All of these questions and dozens of others become valid the minute this act, negotiated in secret where it is pumped full of poison pills, gets signed into law.

If the (wiki)leaks are even remotely reflective of what’s in the act, it might make the controversial, scary Orwellian provisions of the Patriot Act look like a cuddly bunny in comparison!

Happy 65th, EU!

I know you’re probably thinking the doctor is being a little loose with his own prescription pad, as the EU officially came into being on November 1, 1993 under the Maastricht Treaty, but this was just the evolution of the European Economic Community (EEC) that was formed by the Inner Six countries on January 1, 1958 under the Treaty of Rome. But before then came the European Coal and Steel Community (ECSC) which was formally established by the Treaty of Paris on April 18, 1951 by the same Inner Six countries, and this was the net result of the Schuman Declaration, made 65 years ago today, by the French Foreign Minister Robert Schuman to create a new form of organization of states in Europe called a supranational community which was the real beginning of the modern EU.

So if you think about it, the EU isn’t the 22 year old new kid on the block (not to be confused with the new kids on the block that formed in 1984 to unleash boy band hysteria on the world, presumably to usher in the Orwellian era through omni-present pop), but the freshly minted senior who’s been around through three generations.

What do you have to say, señor LOLCat?

I guess the current economic crises in Greece, exacerbated by the slow recovery of Cyprus, has made LOLCat a little cranky.

Talent IS the Biggest Issue Facing Procurement Today.

the doctor follows a wide-range of Procurement topics and channels. There’s a lot of noise. There’s a lot of repeat messaging. But sometimes there’s not enough repeat messaging. One area where there’s not enough repeat messaging is with respect to talent: the lack of talent, the difficulty in retaining talent, and, most importantly, the lack of necessary investment in talent by companies that need it the most.

A recent post over on the Argentus Talent Acquisition site on what are the biggest issues facing Procurement today correctly pointed out that there are two main issues: the shortage of attracting talent, and the shortage of retaining talent. But, to be fair, that’s not the biggest issue.

The biggest issue is the lack of training for emerging and existing talent. For years, talent has made the top three issues on Procurement survey after Procurement survey and for years, the investment in talent has been minimal or non-existent. The average university does not have a Supply Chain Management / Procurement program, the average individual looking for a career and funding her own continuing education doesn’t even consider Procurement, and the average subject matter expert (SME) hired into, or transferred into, Procurement barely understands basic Purchasing policy.

So where does an organization expect to get the talent it needs if it is not willing to invest to create that talent? And how does it expect to retain the ration of talent it gets if it does not continually invest in that talent to give it a reason to stay?

Talent is the issue. And will be the issue for years. It’s not a prediction. It’s not even an observation. It’s just reality.