80 Years Ago Today

The foundations for faster air travel were laid when American aviator Wiley Harderman Post was credited with discovering the jet stream (in a search for the equatorial smoke stream phenomenon that was mapped by weather watchers after the 1883 eruption of Krakatoa and detected by Wasaburo Oishi in the 1920s using pilot balloons released near Mount Fuji). (History Channel)

On an experimental high-altitude flight on 7 December 1934, Wiley manoeuvred his aeroplane into a fast-moving air current, resulting in a significant increase in ground speed. The discovery proved a pivotal moment in aviation history, as it opened the door for high-altitude, ultra high-speed air travel.

As a memory refresher, jet streams are super fast flowing, narrow air currents found in the atmospheres of some planets, including Earth. (Wikipedia) While the speed is dependent upon the disparity between colliding warm and cold air systems, jet streams, which typically occur between 7 and and 16 km above the earth, have been recorded as flowing at a speed that is anywhere between 90 and 400 kph. Planes that take advantage of these streams and the force they provide can fly much faster and further than planes that don’t. For most of the year, there are two sets of distinct jet stream systems in each hemisphere of Earth: one at the pole and one at the sub-tropic, and that’s why many inter-continental flights take these routes.

Driving Stakeholder Engagement


Today’s guest post is from Diego De La Garza, a Senior Project Manager at Source One Management Services and a regularly sourced pundit for sourcing issues in Latin America. As Senior Project Manager, he leads a team of internal resources in the development of strategies to reduce costs and increase service levels for clients.

When organizations undertake new sourcing initiatives, much is said about setting clear objectives for the parties involved and establishing attainable timelines. However, stakeholder engagement is often neglected. Regardless of their business unit, stakeholders will only participate when they clearly understand the process and appreciate the value that strategic sourcing can deliver. However, unlike a timeline or objective, stakeholder engagement may be volatile and cannot just be monitored. It needs to be driven. How quick and how much all stakeholders engage will be paramount to maximize the success of the initiative.

So how, do we drive stakeholder engagement in general? First of all, the expectations need to be adequately communicated to all stakeholders, and their feedback must be requested upfront. The stakeholders’ needs, concerns, and requirements are unique and must be understood. Empathizing with the stakeholders will allow them to see the engagement as an opportunity to drive results, and a clear chance for them to add value that otherwise would be limited due to resource constraints.

The key with communicating with stakeholders is speaking their language. In other words, we cannot engage stakeholders in the finance department by speaking in the terms of the marketing team, and IT will not understand why an initiative is important to Finance. Ongoing communication is the only way a stakeholder will understand his or her requirements are being accounted for.

Stakeholders should also identify the parties involved. In cases where strategic sourcing consulting firms are employed, stakeholders can be offered information, expertise, additional resources, or access to data that will support a successful sourcing engagement. All stakeholders involve must be able to understand what this external party brings to the table, how to collaborate more effectively with that third party, and how to utilize these resources available at their disposal.

Another key ingredient for stakeholder engagement comes from the higher levels of the organization and entails strong sponsorship. Sponsorship drives stakeholder engagement because it acts as the voice within the organization. When senior leadership establishes a deep commitment within a sourcing initiative, it validates efforts and aligns departments. Even when expectations are clear, and roles are well defined, stakeholders who perceive low levels of sponsorship will not engage to their full potential or will lose interest quick.

Stakeholder engagement is essential because it creates collaboration across business units, even in cases where sponsorship is lacking, or other stakeholders seem disinterested. When stakeholders are engaged, they become loyal supporters of the sourcing initiative. Driving shareholder engagement is a dedicated effort. As needs change and evolve, checks and balances should be managed throughout in order to increase the success of the initiative.

Thanks, Diego!

Procurement Trend #09. New KPIs

Only six sinsational anti-trends to go. That means we’ll reach the end of this series in two weeks. We should be all happy, happy, joy, joy! But how can one be joyful when one realizes that this means we had to slog through a two-four of anti-trends to get here, and that some of us probably had to drink a two-four in the process to keep the dark thoughts at bay! And, to be honest, the doctor is really worried that there is no skin left on the futurists’ drum (which has taken more of a beating than any drum set Neal Pert has ever owned) and that, giving their predilection for ancient trends, these futurist historians may try to skin LOLCat to give their drum new life.

So why do these funky* futurists keep trying to push new KPIs as a future trend? Is it because of their fondness for three-letter acronyms that stems from their party-hardy frat-days (filled with a little too much beer pong)? the doctor has his suspicions, but it’s probably because they finally figured out that:

  • what gets measured gets managed is still trueand KPIs require measurements
  • new processes and new technologies mandate new measuresso KPIs need to be updated whenever a new process or technology is brought in, which should be a regular occurrence in a best-in-class Supply Management organization that makes an effort to keep up with the times
  • new measures provide new opportunities for improvementjust like new Intel cores have provided new opportunities for faster computation ever since it was all about the pentiums

Measure to Manage

If the only reason that you are measuring spend, year-over-year changes, and captured savings is to report those metrics at the monthly meeting, then you are doing it all wrong. If you are not using base measurements as a foundation to identify inefficiencies and opportunities for improvement and repeated measurements as the foundation for evaluating progress, then you shouldn’t be measuring in the first place. You’re better off spending your time in old-school hard-nosed negotiations because, at some point, you might actually whip that sales rep so hard that he forgets which way is up and goes under the floor just to escape the verbal onslaught. (Of course, you will create disdain in the supplier who will do the bare minimum to fulfill the contract terms and, if the rep buckled too much, you might even bankrupt the supplier who hopes to make it up on future deals but never does, but hey, at least you got those impossible savings, right?)

Measure to Master

It’s not enough to measure just to track the status and success of current initiatives, you should be measuring with a goal of achieving mastery. If the benchmark for the average throughput in your industry is 100 invoices/day/clerk, then you should be striving to get your exception-based invoice automation process to 100/day/clerk error-free invoices and nothing less should do. If you don’t get there in the projected amount of time, you should be introducing new measures that break down, or influence, the process flow such as resolution time per exception invoice, average buyer response time per clerk contact, average number of line items on a problem invoice, etc. until you figure out where the slow-down is and what you should do about it. (Automatically reduce exceptions by kicking invoices back to suppliers with explanations of errors and do not allow resubmission until corrected, mandated response within 48 hours or a black mark in the buyers’ performance review, break down POs to insure more manageable invoices, etc.)

Measure to Excel

This means not just measuring process, throughput, and savings but finance measures favoured by the C-Suite, even if they do not help Supply Management directly improve performance. At the end of the day, if Finance is happy, the C-Suite is happy, and Supply Management is much more likely to get the financial resources it needs to implement new systems and processes that will ultimately improve the metrics even more.

* and not the good kind of funk

Procurement Trend #10. e-Procurement Integrates Sustainability

We’re down to seven anti-trends. And even though most of the “future” trends we are now discussing are recent enough that the older generation can actually remember their beginnings with clarity, we need to follow LOLCat’s lead and find a way to stop the beat of the futurists‘ drum because, even with these trends that started in some of our life-times, the drum has been beaten to death and I still fear, like LOLCat, that the futurists’ may soon return to the age old art of cat-skinning to make a new one!

So why do these hare-brained futurists (who obviously re-enacted one too many Looney Tunes skits during wabbit-season) keep pushing the integration of sustainability into e-Procurement as a future-trend? Is it because, after years of real forward thinkers trying to convince the Businessman that cost-savings and sustainability weren’t diametrically opposed ideas, the futurists finally clued in? Or is it because

  • energy prices are going through the proverbial roof

    and they are grasping at straws trying to find a solution (and lucked on the right one)

  • raw material supply is running out

    and they finally realize the importance of sustainability in supply management, but since that’s not catchy, they chose to integrate it with the first concept they pulled out of their hat (and got lucky again)

  • CSR is increasing in importance with consumer concern

    and since customers are telling them to buy responsibly, and buying is e-Procurement, this must be the way to go.

Well, they are right. But leading companies have recognized this since the 1990s and have been doing this for well over a decade. They recognized that while renewable energy had a high-up front cost because it required large investments in solar panels, windmills, and turbines and new plants to either store excess energy produced during peak times in natural pump storage or huge battery arrays, it’s cost over time approaches pennies per Megawatt hours as sun, wind, and water power, unlike coal and oil, is free. Once the plant construction costs are paid off, it is just maintenance costs. It doesn’t matter if the technology is only 80% efficient and the pump storage only captures 60% of excess energy. The energy is free! Plus, these forward thinkers, unlike our futurists, also recognized that fresh water would soon be in short supply and invested in plant redesign to minimize water requirements.

Energy Prices

You need to go renewable to the extent possible and put plans in place to get to 100% renewable energy for all fixed operations and short-haul transport as soon as is feasible. While electric and bio-diesel may not yet be a suitable option for long-haul 18 wheelers, trains, and air-planes, electric and bio-diesel has bee proven cost effective for local courier delivery and hybrid has been proven cost-effective (by Walmart) for long-haul 18-wheeler transport. And if you build your own power plant, the long-term return from solar, wind, and/or water power, depending on where your operations are located, will be enormous. So there’s no excuse to not be using renewable energy for the majority of your energy needs. Plus, the first company to get 100% renewable for its operations gets huge bragging rights and brand karma!

Raw Material Supply

As per our post on increased raw material scarcity, you have to facilitate alternate designs that reduce or eliminate rare earth minerals and other expensive metals in limited supply and design for recycle in the interim so that you can recover as much as possible of the rare-earth minerals as possible to keep future costs down. (Preferably without outsourcing to a third-world country that breaks down your products in improper environments without proper containment and safety gear for handling your products that contain hazardous chemicals. No one wants your e-waste, especially if its hard to handle. If even India enacted anti-dumping legislations for e-waste, that should tell you something.)

Corporate Social Responsibility

We are approaching the point where it is no CSR, no sale, with many consumers, and as far as the doctor is concerned, it cannot come soon enough. We won’t knowingly put up with sweatshops and unsafe working conditions at home, so we shouldn’t put up with it in our supply chain. To turn a blind eye is hypocritical and, to be blunt, just unacceptable. It is time to get sustainability initiatives in place, embed ethics in the supply chain, and embed responsibility in the organizational culture. Suppliers don’t have to go the extra mile, but they should provide their workers with safe working conditions, a fair wage based on the local market, and actively insure that child labour is not used in their supply chain.