Procurement Trend #12. BYOD Mobile Procurement

Nine trumped-up trends still haunt us, and it’s probably best that LOLCat has been trapped in a box by the Futurists as these are nine trends he doesn’t want to waste any of his nine lives thinking about. Plus, at some point we’re probably going to have to call in Scooby Doo to sniff out whatever it is that the futurists have been smoking because it’s hard to believe that anyone lucid would utter such statements.

So why do so many historians keep rambling on about BYOD (Bring Your Own Device) Mobile Procurement? Did they all upgrade their old Nokia flip phones to iPhone 6s and Sony XPerias all at once and realize that you could do more on a digital phone than just send a text? I don’t know, but I do know that:

  • everybody in the corporate world has at least one portable device
    and most people have 2 or 3 (that they carry everywhere)
  • modern smart phones and tablets have more power than early laptops
    and much higher screen resolutions to boot
  • software providers have contracted mobile fever
    and this isn’t necessarily a good thing

So what does this mean?

A plethora of portables

Go mobile where mobile makes sense and go wired where it does not. What do I mean by this? The software, and the device it runs on, should support the workflow and not the other way around. For example, inventory and procurement software should support the creation of goods receipts on a mobile device in the hands of a warehouse worker on the floor and the creation of new spend cubes by an analyst at her desk with a big screen monitor, not the other way around. Busy executives need the ability to approve requisitions and invoices on their mobile devices when they are on the go and have five minutes, but I wouldn’t let a payable clerk set up ACHs on her smartphone just because she can (for many, many reasons).

Portable power

Portables are powerful, and you can take advantage of that to allow a team member visiting a supplier to take notes on her tablet as she walks the plant, view reports that need to be discussed with the supplier, use the collaboration components of the software to message and video conference with her peers, and so on. But, as per the last paragraph, only use the power when it makes sense to do so. Just like power often drives people mad, overengineering the software just because you can leads to a maddening experience for the end user. When I want to see the shipment error rate I just want to see the $%^&* shipment error rate — I don’t want a 3-D spinning infographic that I have to twist and twirl to try and find the one number I need.

Mobile Madness

Every time your employee gets a shiny new mobile device, he’s going to want every excuse to play with his shiny new toy. Don’t give it to him. Stick to your guns and make sure the software you use only supports mobile interfaces where those interfaces make sense. Your employees aren’t paid to play on mobile devices, they’re paid to get the job done in the most efficient way possible. Sometimes that’s on the phone. Sometimes that’s on the tablet. And sometimes that’s on the old-school desktop box hardwired into the LAN that is at, of all places, the employee’s desk! Imagine that!

Procurement Trend #13. The Cloud

Ten time tripping trends from the eighth dimension still remain, and as much as we’d like to assume that string theorists aren’t right and that those dimensions don’t all curl up and trap LOLCat in a box, we can’t. Thus, we must continue to follow the lead of the MythBusters and attack each claim made by the futurists, who are so deeply despised by LOLCat, one by one.

So why do so many historians identify The Cloud, which, to be blunt, has to be the single biggest piece of marketing malarkey of the past decade, as a future trend? Is it because they are dumb enough to believe that anything repeated enough times must be true? I don’t know, but I do know that:

  • computing is becoming ubiquitous

    and just about anything that can have a microprocessor shoved into it has one

  • on-demand computing can be bought with a credit card

    and can be bought from the same online store that you buy your books, clothes, and groceries from

  • cloud marketing is ubiquitous

    and even Oracle was crushed under the weight of the cloud craze and eventually buckled to the trend

So what does this mean?

Computing is not the Problem, Modelling is

These days, the average person has more computing power in her smartphone than she knows what to do with. Because so much computing power is wasted on unnecessary graphics and very poor algorithms, she may not know it, but the dual-core 1.4 GHz Apple A8 processor in your iPhone 6 with over 2 billion transistors can process hundreds of billions of instructions per second. This is 100 times faster than the first Pentium that revolutionized Procurement!

Computing is not expensive, Mindsets are

Computing used to be expensive, but it’s not anymore. You don’t need expensive Sun, IBM, or HP racks for most day-to-day business processing, and you certainly don’t need expensive machines for high-power computing. Remember, analysis and optimization is running data sets and models over and over again until you find a result. If you burn out a core, you can just buy a new one. The only place you really need to invest in redundancy and reliability is in the SAN (Storage Area Network) — you need multiple backups of raw data — not of temporary data sets.

Many Marketers are Morons, or, at the very least, think we are

The cloud is as vacuous as the real thing. It’s all about access to the software you need when you need it, not what you call it or where the application is hosted (and whomever is cutting the cheque should know where it is hosted). If you want to buy infrastructure as a service, with all the pros and cons, go for it. But it’s the applications and what you need to do with them that matters.

Procurement Trend #14. Shorter and More Complex Product Life-Cycles

Eleven anti-trends from the pre-internet pundits still remain, and as much as we’d like to not give yet another reason for LOLCat to hate futurists, we must continue to make sure that no good deed goes unpunished and since the futurists’ advice is still as good as it gets, we must break it all down until you can look past the shiny new paint job and realize that it’s still a twenty year old Skoda you are being sold.

So why do so many historians keep pegging shorter and more complex product life-cycles as a future trend? I honestly can’t fathom this as the video console, cellphone, and apparel industries have been in this mindset for over two decades, but maybe it is because the futurists, who finally realized that the internet has given everyone a need for speed, are finally catching on or because:

  • consumers in some verticals, like electronics, expect major new releases each year
    because they’ve been conditioned by the manufacturers and the marketers to, and
  • they expect every release to contain more new and exciting features than the last one
    even though they don’t even use half of the current features, and
  • they also expect each new product to be smaller, lighter, faster, and more powerful than the one before …
    even though they’ll then complain about lack of battery life, screen resolution, or something else when you have are faced with an impossible choice between two incompatible feature requests.

So what does this mean?

Annual Release Cycles

No matter how good Procurement is doing, it has to do it better, faster, cheaper and keep doing it better, faster, and cheaper (relatively speaking) every year. To do this, it’s going to have to institutionalize its knowledge and process in a workflow driven sourcing suite with integrated analysis and optimization that will tell it if its method is still appropriate, the market is ripe for the preferred event structure, and the costs are optimized.

Constant Innovation

The product has to keep improving, which means the organization and its suppliers have to keep innovating and Procurement needs to manage that innovation. Knowledge management, team management, and project management is just the beginning. When the team hits a dead end, Procurement is going to have to bring an innovation methodology like TRIZ, FORTH, or Design Thinking to the table to help it get past the finish line.

New Market Identification

At some point the incremental improvement in the new product is going to be so minimal that it’s going to lose value to the market and if the organization doesn’t phase the product out, the market will. So the organization not only has to constantly identify potential new versions of its products, but new markets for which it can design new products for. Preferably blue oceans, but open seas are a good start.

Content is a Cornerstone of Compliance

In Friday’s post, we asked if you could solve the compliance challenge before it cost you tens or hundreds of millions of dollars. We noted that the biggest reasons for lack of compliance are lack of knowledge, policy, visibility, analysis, and procurement technology and the fixes are knowledge, policy, and appropriate technology.

One of those technologies is a Procurement Marketplace that can steer (or force) buyers to buy the right products from the right (and approved) suppliers. Another is supply chain visibility technology that lets a company monitor what is going on in the supply chain and evaluate a potential supply base before making a decision. A third is import/export/trade management software that helps the organization identify the regulations it must comply with, collect the necessary information, produce the required documents, make sure the documents get to the proper authorities complete and on-time, and track all of the associated certifications and insurance certificates that go with the products and the supply base.

A good trade solution will address, at a minimum, import/export requirements, ECCN (Export Control Classification Number), custom security programs, FTA/FTZ/SEZ (Free Trade Agreements/Free Trade Zones/Special Economic Zones), country of origin, HS (Harmonized System) codes / HTS (Harmonized Tariff Schedule) codes, DPS (denied party screening), and entry visibility. Essentially it will help a company determine all of the export requirements, all of the import requirements, produce the necessary documentation, and track its product from country of origin to the destination country.

In order for this solution to work, it needs a lot of content. Namely:

  • import/export regulations for all of the countries being sourced from, sourced through, and shipped to
  • US ECCN database
  • requirements for programs such as C-TPAT, PIP, and AEO
  • Free Trade Agreements between all of the relevant countries
  • database of all FTZs / SEZs in the relevant countries
  • HS schedules for all of the relevant countries and mappings
    and/or mappings to from country specific schedules
  • Denied parties lists for the relevant countries

That’s a tall order. But no longer an impossible one. Stay Tuned.

Optimization, Do You Know What Comes Next?

Admit it. You don’t. You have no clue. You’re still struggling with the basics of model building, data collection, constraint definition, scenario comparison, and, most importantly, when you should use optimization (always, but not necessarily to make the award decision). It’s math, it’s hard, you weren’t trained, and you’re already struggling to keep up with the increasing demands placed upon your Supply Management organization by the C-Suite, stakeholders, and suppliers.

But you should. Costs, including labour and energy, are rising across the board. Inflation is about to make its way back with a vengeance. Markets are uncertain and in some places unstable. It’s getting to the point where all optimization on a category optimized in the last three years is going to do is limit cost increases to inflation. Unless the model is expanded, the category is redefined, or an innovative approach is taken — there will be no more savings to be found.

As a result, you have to take your optimization to the next level. You have to go from T-CAP (Cost of Acquisition and Production/Utilization/Distribution) to true TCO (Total Cost of Ownership) as you work your way to TVM (Total Value Management). You have to learn how to take your modelling and analysis skills to the next level. And you have to be innovative in your application of optimization.

And what does that innovation look like? To find out, download Sourcing Innovation’s new Illumination white-paper on Optimization, What Comes Next (registration required). Sponsored by Trade Extensions, this white paper presents six ways you can merge big data, analysis, and optimization to take strategic sourcing decision optimization (SSDO) to the next level and find savings and cost avoidance opportunities you would never have imagined even a year ago.

The reality is that even if you’re Hackett Group top 8%, regularly applying SSDO to high-dollar and/or strategic categories, and building nine, and even ten, figure sourcing events on optimization, you’ve barely mastered the basics of optimization 2.0. Since the doctor regularly interacts (and sometimes works) with five of the seven providers of SSDO technology (and the two e-CHAOS hold-outs have not upgraded their platforms substantially in years), including the true market leaders, he knows the extent of the projects they have supported and knows that even the most advanced organizations are just scratching the surface of optimization 2.0. But these providers are now taking their products to the next level and have started releasing the foundations of 3.0 capability, with lots more to come over the next few years. The organizations that adopt, and master, these 3.0 capabilities first will be decades ahead of their peers in supply mastery. Decades.

So, if you want to be one of this decade’s Supply Management leaders, download Sourcing Innovation’s new white-paper on Optimization, What Comes Next (registration required) and start preparing for the future of optimization today. It will be worth your while and when you start applying these techniques, you won’t be disappointed.