2025 Is Just Another Year … But Is It All Doom and Gloom? Part 5 (Risk Reduction)

It’s just another year, unless you look beyond the hype, identify true talent, give them real solutions, and then truly tackle the threats … with strategies for success.

Supplier (Plant) Shut Down

In reality, typically only three things shut down a supplier:

  • Bankruptcy
  • Disasters
  • Governments

With respect to each of these:

  • you can typically predict bankruptcy from financial monitoring, which is easily available for public companies, semi-available for private companies that survive off of international trade (just monitor the public trade data), and highly correlated with a noticeable decrease in quality or performance (which can be predicted off of your data)
  • you can’t predict disasters, but based on geo-location, you can predict type and likelihood, and subscribe to news-based event monitoring services to identify when one happens that likely impacts your supplier (and then verify) so you know the minute a disruption occurs, and not three months later when the order doesn’t materialize
  • governments will generally only shut down a company if it is a fraudulent enterprise or when they are taking something over that was private; your category expert consultant can let you know whether or not the country the supplier/plant is in has a history of forced public acquisition or is eyeing restrictions on the industry (and otherwise, the risk is pretty much non-existent)

Supplier Becomes Unreachable

This usually happens as a result of three things:

  • sanctions
  • border closings
  • customs / port shutdowns due to strikes

With respect to each of these:

  • sanctions are typically politically driven and hard to predict, but a sanction list monitoring service can inform you within 24 hours if a supplier or connected party has been sanctioned
  • border closings usually result from trade wars or real wars, and news monitoring can indicate potential that can be monitored, and once the threat gets too high, you can proactively identify new / switch suppliers
  • customs / port contracts with unions in terms of validity dates are typically public knowledge, and you can monitor when they end, and whether there is any news that negotiations have started once you get close (say 3 months) to expiry … as well as monitor statements put out by both sides during negotiations that could indicate a strike (vote) (and look at the history to see how often a strike [vote] results in a strike, how long it usually lasts, etc.)

Supplier Loses Access to Raw Materials

With respect to a supplier losing supply, they have the same risks you do with respect to supply lines, plus two more major ones and one more minor one:

  • sanctions, border closings, and strikes
  • mine collapse / crop destruction from a natural disaster
  • government reclamations or limitations on natural resource extractions
  • mine / well runs dry!

With respect to each of these risks, if you map your supplier’s critical supply chain:

  • you can monitor sanction lists for sub-tier suppliers and news sources for events that would lead to border closings and strikes as you do for your suppliers
  • you can monitor news sources for events that indicate a natural disaster that would threaten or destroy raw material supply
  • you can research past history and monitor news sources for indications a government might restrict access to or reclaim natural resources from the private supplier in your supply chain
  • you can contact environmental experts to determine when a given source a sub-tier supplier depends on might run out!

Logistic Route Cut-Off

This is pretty straightforward to enumerate. In addition to port closures above, you have:

  • major carrier strikes and failures (as only public postal services can run deficits ad infinitum)
  • natural disasters that take down major roads, bridges, and ports
  • intermediate border closings on current routes

And the way you handle each of these is to:

  • monitor the financial scores from the financial monitoring services and the union contract expiry dates to know when you need to look for negotiations and negotiation status to try and predict if you will need to lock in new carrier contracts before competitor quotes go through the proverbial roof in response to your carrier striking
  • monitor news sources for natural disaster events along your major supply routes
  • monitor geopolitical situations across countries on your routes

Procurement risk management doesn’t have to be hard to not only be good enough, but considerably better than your peers. Dwell on that.

2025 Is Just Another Year … But Is It All Doom and Gloom? Part 4 (Risk Redux)

It’s just another year, unless you look beyond the hype, identify true talent, give them real solutions, and then truly tackle the threats.

Risk Management IS Easy

And so is getting started with risk management as long as you approach it correctly! The key is not to try and identify every conceivable risk that might impact your business (there are literally too many to enumerate now and trying will drive you mad — but if you really want to try, we suggest starting with the 101 Damnations that SI chronicled for you back in 2015), but to identify what impacts would seriously hurt your business and work backwards to risks from there.

For example, if your primary revenue stream is products, what are your major product lines where a disruption would significantly hurt (and possibly even end) your business? Analyze the Bills of Material and identify what are the key components that can’t be easily sourced from a different vendor because they are proprietary and/or need a specialized manufacturing process. It doesn’t matter how much you spend on them or with the supplier, it matters how hard it would be to replace the component if it suddenly became unavailable.

Once you identify those critical components, look at

  • the supplier,
  • where the supplier is located,
  • what critical material inputs the supplier needs to make the component, and
  • how it gets the component to you.

The critical risks, that you have to monitor for, mitigate, and manage if they arise are precisely those risks that would

  • shut down the supplier
  • cut the supplier off from you
  • cut the raw material supply to the supplier
  • cut off the logistics routes you depend on

That’s it. Yes, there are more risks. Yes, they could occur. Yes, they could have a big impact on your brand and your business. But chances are that as long as you keep getting product in, selling that product, and moving it out, i.e. as long as you have assurance of supply, everything else will eventually blow over or be forgotten. Even if there is a temporary disruption in profit, it will return and the business will continue. Sensationalist media can’t keep people’s attention if it tries to sell them the same story everyday, so unless your product actually kills people, you don’t really need to worry about brand damage (unless it’s due to a lack of quality control, but you should already be ensuring that on every contract signature and critical shipment). (Plus, preventing brand damage for something out of your control is PR’s job anyway!)

If you analyze these four risks, and cross-correlate with the World Economic Forum’s Global Risk Report, you’ll see that most of the time there’s not that many risks with a reasonably significant chance of occurrence that you really need to worry about. (Except Pandemics! There’s going to be more of those as the world still isn’t ready for them and wont’ make the investment to get ready for them.)

Focus on identifying the risks around supplier and supply, and you’ll be leagues ahead of your peers.

In the Software World, It Is Never Build vs. Buy!

In a LinkedIn post, THE REVELATOR asks “Why is the build versus buy debate a moot exercise?”.

The answer to this question is super simple.

If you are NOT a software* company, it is NEVER build. NEVER, EVER. Especially since “Build” typically means outsourcing to a Big X who are typically specialist implementors, not builders, and will just have to outsource to a Dev Shop and add a high margin to manage that outsourced project for you IF they want to get it right. (Just Google “Accenture Hertz Lawsuit” to see what happens when they get it wrong, so the smart Big X really do add a layer between you and an outsource Dev Shop in South America, Eastern Europe, or India … and trust us when we say that the last option ain’t always great either!) In the end, the project will cost 5X to 10X, take significantly longer than you expect, and rarely deliver entirely what you want.

The debate today should be “assemble vs. buy”, because the most you should do is determine whether its best to go with one provider who provides some functionality across the board for a function, but maybe not as deep as you want in certain areas, or if you want to assemble a slew of best of breed modules that go deep everywhere you want deep. In the latter case, you are deciding whether you are going to select a slew of best of breed modules from a slew of vendors and oversee the integration yourself (one time cost plus incremental costs on the update of each component solution) or go with an “orchestration” solution (and its year over year SaaS fee) vs. just selecting one of the same old Big Suite providers that will handle everything (with a fee to match).

The only thing that remains correct about the “build” vs buy debate is that you need to maintain the “build” mentality, in that you may have to lego-block “build” from a collection of best-of-breed modular solutions. However, the “build” will never be a build from scratch, just a build from components, the same way we used to assemble our own desktop systems.

* and even if you are a software company, if the type of software needed is not the type of software you build, and there is a reasonable SaaS solution, you should go with that;

Yes, There is a Fork in the Road. Which Path Will You Choose?

THE REVELATOR asks What is the ProcureTech fork in the road.

The answer is easy! It’s the same fork every year. As a ProcureTech practitioner, you have two choices:

1. Take the shiny yellow brick road that the marketers are trying to lead you down with their fancy soundbite hogwash and promises that all your dreams will come true when the software is implemented (as long as you don’t ask to see the wizards behind the curtain creating and implementing the software until after the contract is inked and the payment made).

(But, of course, the wizard behind the curtain, like the Wizard of Oz, is nothing more than a conman and a simple circus magician. The yellow paint is fool’s gold. And the bricks are made of cheap plaster and can’t take much weight.)

2. Take the dark path through the forest where you’ll have to clear the brush and bramble yourself, learn how to be self sufficient, and, presuming you survive, come out stronger in the end for undertaking the journey.

Of course, this is a harder path, and you’ll have to work for it. You’ll have to do all of the work and follow all of the guidance in our 2025 is Just Another Year series that we just finished. More importantly, you have to be willing to admit that all the marketers are telling you lies, damn lies, and fake statistics produced by Gen-AI. That the promises from sales are all best case hypotheticals and not practical reality, likely assume you are getting functionality not yet developed, and that you have perfect, complete, data well beyond what you actually have. That the implementation will be more involved, take longer, cost more, and be much, much harder than they want you to believe. And integrations won’t be out of the box and will take a lot of custom jiggery. And then your data won’t be clean enough or complete enough or in the “expected format” and the data migration will be way more challenging.

Success will ultimately depend on you owning the system selection, implementation, integration, data migration, and training. You have to understand your needs, your systems, their integration requirements, your data, the cleansing and enrichment requirements, and the training your team will need. And you have to oversee the creation of the plans for each step of the journey. You can hire outside expert consultants … but you have to make sure they are experts and nothing is overlooked. It’s all on YOU. Just YOU.

And only one of these paths is the right fork, but guess which fork will be chosen by the majority of people?

2025 Is Just Another Year … But Is It All Doom and Gloom? Part 3 (The Talent Tussle)

It’s another year, unless you decide to make it otherwise. As per our last instalment, the first thing you can do is look behind the hype and find the right tech (and not the tech the vendors and analysts are trying to push upon you.) The next thing you can do is:

Identify Talent Outside the Norms

There’s not enough talent in Procurement as there is, so STOP LOOKING in Procurement. Unless you are going to be smart enough to bring back apprenticeships, and even then, that could be long term talent (especially if you are bringing in kids with no real world experience in what the company does, how to run a company, or even how to do basic buying).

Start looking in functions that understand the business need, and find the doers with good people skills, good planning skills, and good computing technology skills. Hire them and train them in Procurement. Working for a manufacturer buying mainly direct parts — recruit engineers as sourcing professionals. Working for a department store chain selling primarily CPG, hire a distributor rep who knows all the big brands, products, and logistic networks as procurement professionals. Looking to create better contracts, hire a lawyer with a STEM background as your contract manager. What to get vendor management right, hire former vendor account managers who worked for multiple big names that match your customer profile and train them on Procurement needs so they can find a balance that will NOT p!ss off your customers. It’s a lot easier to teach basic Procurement than engineering, advanced logistics modelling and management, law and risk management. Especially to reasonably skilled and intelligent engineers, Masters of Operations Management in logistics, lawyers, and economists specializing in econometrics (and risk management). I’ll tell you one thing, learning everything a Procurement Manager did buying a nine (9) figure category was way easier than designing one of the first Strategic Sourcing Decision Optimization solutions that hit the market (and the first with multi-line item support, as recognized by Gartner 25 years ago), and that’s with a PhD and degrees in mathematics and computer science. It’s not Procurement that’s hard, it’s the people and planning skills that are hard, and that comes from doing the hard STEM (-based) degrees and getting real world experience applying those degrees. And if you can find the engineer, lawyer, economist, etc. who’d rather work with people than machines, and offer them a bit more, those are golden hires that will quickly transform your operation once you teach them what Procurement does (as they are also seekers of efficiency and outcomes).

The reality is that Procurement skill is not buying skill, it’s relationship management skill; it’s strategic planning skill; it’s logistics management and supply assurance skills; it’s quality management; it’s risk identification, mitigation, and management; it’s everything but buying. You can automate an e-auction or a multi-round RFP to do buying, or outsource it to a GPO if you don’t even want to think about it at all. The value of Procurement is not just cutting costs and keeping them down, but it’s keeping the business running, and that requires, as they say, mad skillz, and those aren’t found in traditional Procurement departments staffed by the island of misfit toys, despite what some bloggers may claim.

And then, once you have that talent, remember that they need good solutions and that

There Are Affordable Solutions

If you think solutions still cost mid to high seven figures when all is said and done, I have news for you. It’s not the noughts (even though you may feel like it because budget requests always end in the nots and get you in knots), it’s the twenties. (And if you don’t start roaring, the 20th century showed us what awaits in the thirties.) And good cloud-native SaaS solutions cost two orders of magnitude less. Enterprise licenses for BoB modules that can do everything an average mid-sized plus business needs to do (and more) start in the five figures, with starter solutions for SMEs and smaller mid-sized businesses being cheap enough to put on a P-Card. We’ve already told you about Spendata for spend analysis, but there are solutions for every step of the cycle.

You have (pay-as-you-go) solutions like Market Dojo or Serex Procurement for sourcing. New players like Bedrock and Canopy for SXM (and if you just want survey powered SPM, check out Vendor Score IT). CLM, check out Curtis Fitch or an AnyData Solution. SME Procurement — get yourself a Blue Bean. Or, if you want a full Procurement Suite with proven performance at the mid-market and F500 levels, bundle up everything you need, pay a reasonable six figure fee, and off you go to a Vroozi or Eyvo. Can’t manage those categories? Go do an Airflip. Not enough service management, it’s trivio with Zivio. Vendor Data Nightmare. You don’t need a team of overpriced Big X consultants, you just need a Tealbook. Too many apps? Get a Focal Point. SaaS subscriptions out of control, lock them away in SaaSrooms. And so on. (More information on most of these can be found in the SI Vendor Archives. Also, while the dives are not nearly as deep, Mr. Meads does his best to catalog the mid-market providers on his Procurement Software.site. It may not capture the Mega Map, but trust when I say that’s a good thing!)

Moreover, these solutions don’t take months to implement and years to integrate. They take a flip of a software switch to activate, usually a few hours to days at most to configure, and the only delay is usually your IT department providing the integration details to the necessary systems or producing the data dumps for flat file upload (which will then have to be cleansed, enriched, and mapped because your data will be dirty.) Some of these (like true DIY analytics, vendor performance assessment, and e-Procurement enhanced with full internal catalog [cross-indexed with active contracts and agreed to pricing], punch-outs, GPOs, and third party marketplace support) will deliver an ROI the DAY you start using them.

So get them … and use them!