Supply Managers Will Be the RockStars of The Resource Revolution


I’m through with standing in line
To clubs we’ll never get in
It’s like the bottom of the ninth
And I’m never gonna win
This life hasn’t turned out
Quite the way I want it to be

  from Rockstar by Nickelback

Supply Management hasn’t exactly been the poster-child of the corporation in recent years. In fact, in some organizations it would have been lucky to be the Island of Misfit toys that Mr. Dominick of Next Level Purchasing has compared it to. But if the Resource Revolution comes to pass, that might all change.

A recent article in the 2014 Q2 Edition of the McKinsey Quarterly that asked Are you ready for the resource revolution? said that another industrial revolution is coming, and while the first two focussed on labour and capital, two of the three primary business inputs identified by Adam Smith in his classic treatise The Wealth of Nations, the third will focus on the last input identify by Adam Smith — resources that come from the land.

According to the authors, who recently authored Resource Revolution, five approaches will be utilized by companies that lead the resource revolution. And three of these — namely substitution, optimization, and virtualization — will be critical to success. (The other two, circularity — or design for reuse and recycle, and waste elimination — or lean to the next level, will primarily be used in conjunction with the other methods to deliver significant enhancements that neither approach on its own to achieve. )

Substitution, the process of replacing costly, clunky, and/or scarce materials with cheaper, better, and more readily available materials, is already being used by those companies that have advanced to the highest stage of maturity in Supply Management.

Optimization, the process of embedding software in resource-intensive industries to improve how companies produce and use scarce resources, is also being used by those companies that have advanced to the highest stage of maturity in Supply Management.

Virtualization, the process of moving processes out of the physical world, is being employed by leading manufacturers (who will use a platform like Aravo’s) to determine the most efficient and cost effective process to produce a part as well as aircraft and car manufacturers (who will use advanced 3D modelling tools) to determine the most environmentally friendly or best performing design. But this too will be used more and more by leading Supply Management organizations to design the best supply chain to support the products and the business.

And when you get right down to it, no other organization in the corporation is in a position to make more use of these approaches than any other. That’s why, if the Resource Revolution is to come to pass, forward-thinking Supply Managers will have to lead the way, and become the corporate rockstars they always desired to be. (And put those motor-mouth marketers in their place.)

… And 65 Years Ago Today …

George Orwell published 1984.  He was 30 years too soon in his prediction of when technology would reach the point where omnipresent government surveillance, public manipulation, and a perpetual war (on terror) would be possible, but he was dead on in his predictions of what would be possible … 

85 Years Ago today, the smallest sovereign city-state in the world was established.

That’s right, eighty-five years ago today the Lateran Treaty was signed, bringing Vatican City into existence. With only 44 hectares, and 840 citizens and residents, it is the smallest independent state in the world by both area and population with an annual GDP in the magnitude of 20 Million and not Billions or Trillions.

It is more comparable to a mid-size company with 840 employees who live in residence year round and whose every need requires attention in addition to all of the maintenance associated with the business and resident properties, except this company has valued assets over 10 Billion dollars (as that is the estimated foreign investment by the Institute of Religious Works – the Vatican Bank – in the 1990s) and non-valued assets worth billions (upon billions) more on the open market, which include priceless buildings and works of art going back millennia.

The head of Procurement must have one of the most interesting jobs in the world. First of all, that individual would be procuring almost every commercial and consumer item at one point in time or another. Second, deliveries are limited to truck, train, and helicopter. (There is no airport, only one train line, and deliveries can be made to the gates.) Third, while that person would have every pressure to keep costs down for every day items and maintenance, that person would have an almost unlimited budget for works of art and historical artifacts of religious significance desired by the church. Fourth, security would be a concern with every purchase and delivery. And so on.

Relatively speaking, for an average mid-size company, Procurement is fairly straightforward. But how do you effectively management Procurement for the smallest independent city-state in the world?

If you have educated guesses, leave a comment or send the doctor an e-mail!

The (Board) Gamer’s Guide to Supply Management Part XXIII: Oddville

Do you sometimes feel like your Purchasing Department is the Island of Misfit Toys? Then OddVille is the game for you!

Oddly enough, several of you have been hired to build the city of OddVille, home to four powerful worker guilds. You will use your workers to obtain resources, coins and building projects in order to build the most valuable buildings and to gain the favour of guild members.

A city-building card-game, OddVille is a resource management game where, like in your real-world Purchasing department, you have limited resources to secure your contracts (buildings) and competing shareholders to appease (guilds). And you win by securing the most contracts (just like you typically win in OddVille by securing the most buildings).

In OddVille, at the start of the game, each player gets:

  • four worker cards in her colour (which may be used to obtain coin, resources, or building permits) which represent the classes of workers you have available to task
  • nine worker meeples
  • one resource (wood, clay, stone, or crystal)

Just like in the real world, you have a small team and limited resources to work with.

On each turn, a player can take one, and only one, of the following actions:

  • use an available worker (to obtain coin, resources, or building permits), dictated by the current worker classes available
  • build a building

Just like, in the real world, a Purchasing pro can only do one thing at a time — like executing a buy on contract to save money, building up the corporate intelligence, negotiating for a contract, or executing a contract.

The complexity of the game is that each worker, at a different experience level, has different skills, which means each worker can generate different amounts of coin, acquire different resources, and acquire building permits at different costs. Furthermore, once a worker has been committed to a task, that worker is unavailable for another task until your pool of available worker classes is empty (to model the amount of time a worker would be unavailable in the real world) or you are willing to spend coin to reclaim a worker class (as workers will work overtime for money). And, victory depends not only on which buildings are built but where they are built in OddVille (as bonuses can be obtained from orthogonally connected buildings and victory points are often dependent not on the building but its neighbours). (Similarly, sometimes the victory in a negotiation is not in the primary product or service being negotiated, but the value-adds or related products you manage to negotiate a deep discount on.)

Obtaining coin is straight-forward, a worker is tasked and coin is received. In order to acquire a resource, the worker must be given coin equal to the current cost of the resource and tasked with obtaining it, and to acquire a building permit, the worker must be given coin equal to the cost of the building permit desired. The cost of resources depends on how many other players are currently seeking that resource (and go from 0 to 2 coin, as the first seeker is able to acquire extra and sell enough to cover cost) and the cost of building permits depend on the skill of the worker who is negotiating them (and go from 0 to 5). In order to build a building, the player must have the required resources (shown on the permit) and a free worker meeple to staff the building. When a building is built, the player obtains any bonus associated with the building (such as a resource, coin, or guild member) and any adjacent connected buildings in the town. If the player gains the help of a guild member, he or she gets to use the special assistance of that guild member whenever applicable for as long as she has the help of the guild member. For example, if a player builds a building for the blue guild and gains the help of the Human Resources Manager, she can use any worker card to gain any resource (as her workers have access to the special skills of the Human Resource Manager).

The game ends when a player has placed her 6th worker in the city. Her score is the sum of the value of each building she has a worker meeple on, the value of the special guild members she has acquired the help of, and 1 point for each worker meeple on the resources board. (Similarly, the value of a Purchasing department is the value of each contract cut, the value generated for each stakeholder, and the value of value-added services she has managed to obtain on behalf of the Purchasing Department).

OddVille is a very odd little game, but has the advantage that, unlike many more complex worker placement games, you can generally finish a game with 10 minutes per player once you get the hang of it. You can play multiple head-to-head games against your cube mate, or a couple of 3 or 4-player games in a lunch-hour.

Projects Fail — Here Are Four Proven Reasons Why!

An article over on Outsource Magazine on “Project Delusion” summarized research from a group that has been tracking UK project management for more than a decade. This group, which has seen budget overrun recently climb from 18% to 27%, investigated the minority of projects that ran more than 200% over original projections. When the causes of deviation from the plan were analyzed, the following major contributors were found:

  • Missing Focus
    Specifically, unclear objectives, poor requirements, and a lack of business focus.
  • Execution Issues
    Specifically, unclear objectives and reactive planning.
  • Content Issues
    Specifically, shifting requirements and uncontrolled technical complexity.
  • Skill Issues
    Specifically, an unaligned team, lack of skills, experience, and resource.

That’s why you should never start a project until

  • The Goals Are Clearly Defined
    along with the metrics that will be used to measure against them.
  • Disaster Recovery and Business Continuity Plans Have Been Defined
    along with processes and procedures for creating new plans for unexpected situations.
  • Change Request Procedures Are Clearly Defined
    so that requirements don’t shift and technical complexity does not spiral out of control.
  • Proper Training is Provided Before the Product Starts
    so that team has the right training, is led by the right experience, is aware of, and able to use, the resources at their disposal, and have what it takes to align toward the project goals.

Also, you should adopt some best practices based on lessons learned. Four best practices, as detailed in the article, include:

  • Manage strategy and stakeholders.
  • Master technology and the business.
  • Excel at core project management practices (as defined in the PMBOK).
  • Fail quickly and cheaply.

For details, see the great article on “Project Delusion” in Outsource Magazine.