Author Archives: thedoctor

How to Do “Predictions” Right!

I just finished my dangerous procurement predictions series, where I pointed out 15 of the most dangerous predictions made by the influencers trying to get clicks with sensationalism, whether or not their predictions had any grounding in the real world, and whether or not acceptance of those predictions would lead to disastrous decisions on your part.

And while the majority of annual prediction posts now fall into these first categories, there are still a few, by the old timers, that are done right where they look at where things are, what is happening, and where they are likely to go based on trends and pattern similarity to what came before. (You know, that thing called history that everyone seems to have forgotten about in the AI age that is destined to make the dot com bust look like a tiny blip.)

One example is Bob Ferrari’s Supply Chain Matters post.

Prediction

“The true effects of increased tariffs, U.S. trade policy shifts and the nationalization of supply networks will become more impactful in 2026.”

Prediction Background

“We had predicted that businesses would be compelled toward executing various forms of China Plus sourcing strategies as a response to increasing trade conflict, significant disruptions and needs for added increased supply network resiliency.”

“In December 2025, business broadcasting network CNBC cited data published by Wells Fargo Supply Chain Finance that indicates that since the initial Trump Administration trade conflict, supply chain sourcing diversification has gradually increased away from China and toward the South Asia Pacific region.”

i.e. he looked at the real world situation, and then identified the most logical response … and then followed the market with respect to that response, captured the data, and re-analyzed his position

Tactical Implications

“In 2026, the implications of increased tariff will be manifested in higher working capital costs and increased product pricing among various US and global based manufacturers and suppliers.”

Long Term Strategic Implications

“Our prediction is that within a two to three year window, the effects of U.S. trade policy will lead to a pronounced transition toward more regional focused product demand and supply networks.”

Furthermore, “what eventually comes of the USMCA trade agreement will have fundamental strategic implications for shifts in North America product demand and supply network frameworks.”

Implications for Strategic Sourcing and Procurement Organizations

“Supply chain management teams can no longer focus solely on functionally stovepipe driven key performance and decision-making capabilities nor on singularly focused technology enablement. The organizational implication is one of an end-to-end leadership, goal alignment, and technology enablement perspective.”

i.e. he worked out the short term tactical and long term strategic implications of the developing situation and indicated what leading organizations need to do to survive the turmoil

That’s what a prediction should be — what the reality is likely to be and what an organization needs to do based on that.

Not some whimsical fantasy designed to spread FUD and generate clicks.

Great work Bob!

This post first appeared on LinkedIn.

AI vs No AI – Let’s Make This Clear!

There are valid uses for AI, and valid AI models you should use. (LLMs are rarely one of them, having only a handful of reliable applications, but, when you push them aside, there are lots of other AI technologies that actually work if you don’t get blinded by the hype.) But there are invalid cases, and AI models you shouldn’t use. So to make it easy-peasy for you, here’s a simple guide!

USE AI WHEN DON’T USE AI
It’s a well constrained use-case where AI has been successfully deployed in industry, where the confidence is proven, and where you have access to the right technology. It’s a poorly defined use case, AI has not yet been successful for the use case, the confidence is unproven, and/or the tech you have access to is still in alpha!
It works as well as previous gen tech but with significantly shorter training cycles and easier integration and utilization. Previous gen tech still works better, costs less, and/or has no impediments to integration or UX.
It can bring value beyond what last generation tech can bring. All of the value can be achieved using traditional rules-based (A)RPA, (decision) optimization, analytics, or (classical) machine learning.
It’s a cost effective solution that can be run predictably based on a predictable cost model. It’s based (primarily) on LLM(-based) models that have unpredictable compute costs and, with the wrong request, can eat up thousands of dollars on a single request.
You have a valid use case for agentic tech! You think you have a valid usre case for agentic tech. (If you think you’re ready for AI, you’re NOT ready for AI.)
You’ve mastered current generation tech. You’re still a generation (or three) behind on tech.
You have in-house expertise on what AI is, and isn’t; where it can, and can’t be successfully deployed; and what “AI” is typically appropriate in a given situation. You’re relying entirely on (junior) consultants from the Big X promising it’s gonna “change your life“.
It’s designed to augment human performance and make your employees more productive and more effective super humans (able to do the work of 3, 5, 7, and even 10 regular humans). It’s designed to replace humans. (This doesn’t mean it can’t reduce the number required to do a task, just that at least one is still maintained to handle exceptions and make decisions.)
The firm is selling augmented intelligence! The firm is selling AI Employees. (There are none! And any firm that makes this claim is dehumanizing your employees! But hey, it’s your choice if you want to lose all your money.)

Get it yet?

STOP Outsourcing Your Success!

Joel recently posted that you should stop outsourcing your career development to people who won’t live with the consequences. And it was a great post. But don’t stop there.

Stop outsourcing your success to vendors, consultancies, and analyst firms who don’t have to live with the consequences! (Unless, of course, you like paying The Vendor In Black for a mess and then paying The Vendor In Black [to] Come[s] Back and clean up the mess, and losing time and money just to get back to where you are now.)

Actually, to be more precise, stop outsourcing your success to vendors, consultancies, and analyst firms who don’t have to live with the consequences and who continue to get paid whether you succeed or not!

This means that you should not pick an analyst firm or consulting firm or (mega) source-to-[ay suites that claims to be a “one size fits all and does all” and essentially outsource your success to them!

For example, for:

  • roadmaps: hire the right niche consultant expert who knows her continual employment relies on you actually getting results and who can help you honestly assess your current state and readiness
  • tech selection: engage directly, or through the niche consultant above, an expert who knows who the vendors are, what they can do, and how to help you select the right one (and who knows she’ll never be consulted again if she doesn’t help you select the right vendor)
  • implementation: hire firms with plans that go beyond initial implementation and put them on the hook for ongoing fixes (if they f*ck up), training, and support and where their profit, and margin, depends on your success. (And insist on hybrid payment models where every dollar beyond their fixed personnel costs depends on you realizing outcomes, as per our post on why you should STOP PAYING PROCURETECH/FINTECH ADVISORIES A DOLLAR JUST TO LOSE THREE DOLLARS!)

In other words, you have to find the right experts, determine your readiness, manage your own projects, and ensure your own adoption. At the end of the day, all the big providers care about is that the transfer clears. Your success, and your organization’s success, is up to you. All the princes do is watch,

“Outcomes” is Just Code For …

You’re Getting Ripped Off.

But let’s back up.

THE REVELATOR recently explained Why He’s Done Tracking Gartner (spoiler: they are simply not designed to solve the problem of implementation success in the AI era), and in the post he made two key observations:

1) “Subscription revenue continues regardless of outcome. Predictions expire and are replaced. There are no consequences for failure.”

In other words, they are dangling outcomes, but not doing anything to ensure you get them, and because they are never to blame, the subscription revenue continues. However, it’s only fair to point out that this is NOT unique to Gartner! It’s the Big Analyst Firm Model. It’s why the doctor doesn’t work for Big Analyst Firms (because they refuse to update their methodologies which are decades out of date and hinder more than they help), and why I worked for Spend Matters for years until the buyout (by a PE firm that, frankly, almost destroyed it as they completely stopped all innovation) and why the doctor deeply respects boutique firms like HFS Research because they keep trying to modernize their offerings to provide real value and guide clients to real results.

2) “What scales in this industry is engagement—not outcomes.”

And this is dead-on. The rhetoric is being thrown around by way too many services(-adjacent) firms (who want to charge based on it) and software firms (who won’t charge based on it). And all of it is usually to mislead you on what you should be getting and what you should be paying!

Here’s the reality you’re not being told when they want to, or refuse to, price on outcomes.

1) If a services firm wants to charge based only outcomes, it’s because it expects to make way more money that way. It’s common in audit recovery, contract re-negotiation, and SaaS consolidation because these expert firms know just how much you are overpaying if you’ve never done these efforts before. They also know that they can use cheap software and benchmarks and experience to quickly find the savings you can’t, and make big bucks off of you by charging on outcomes (and not effort and/or software).

2) If a services-as-software firm wants to charge based on outcomes, especially an “Agentic AI” powered one, it’s because their true costs are higher than they let on (due to hefty Gen-AI compute costs) and they aren’t viable offering a classic subscription-based service model.

3) If a software firm refuses to price in (a hybrid cost model based on) outcomes, it’s because they know you won’t get those outcomes unless they (as a firm) put in a lot of work training, guiding, and helping you achieve those outcomes. When their model is “install and backhaul” (out of there) until renewal time (because if they don’t hit their unattainable PE-defined sales numbers, they will be told to hit the road, so they have to spend all their time on sales).

The reality is “outcome-based pricing” only encourages success when done right — and done right is done in a manner that encourages, as THE REVELATOR notes, engagement-focussed.

That’s why, in our post on why you should STOP PAYING PROCURETECH/FINTECH ADVISORIES A DOLLAR JUST TO LOSE THREE DOLLARS!, we told you this is how you should negotiate, and pay for, software and services when “outcomes” are involved:

1. For software, you will pay a base annual fee for the platform that will cover 150% of their base hosting costs, so they won’t lose, and then a percentage of transactions, identified savings through sourcing events, contract value, etc. where the percentage is calculated such that if you save 100% of their promised savings, they will make 50% more than what you would pay on a fixed cost after negotiation -— if they are so confident in their claims, this should be a no-brainer for them. (But if they won’t agree to this, it should tell you what ROI you can actually expect!)

2. For GPO agreements, you will pay a fixed amount on each transaction, calculated based upon the expected savings before you sign the contract, and if they can deliver the savings, you will definitely be using them regularly —- and, as with the Tech Provider — you will calculate this so that they win bigger than if you pay them a fixed cost IF they generate a return for you!

3. For services (outsourcing), you will pay a fixed rate per hour that is enough to cover the assigned personnel cost (their salary plus 30% overhead), and any compensation beyond that will be dependent on the department delivering an ROI beyond a certain amount (which is the amount required to cover the basic fee you are paying them); and again, you’ll fix the compensation such that if they deliver 100% or more of what they promise, they will win big too. (And if they deliver less, while their costs will be covered, their profit will be next to 0.)

There is No One Optimal Team Structure for Procurement …

… not even if you get industry and size specific! But first, let’s backup.

Today I’m going to pick on Tom Mills because he’s well followed, a great practitioner, and gets a lot of stuff right (and I mean a lot of stuff right) … including key functions your “optimal” procurement team needs to support. We’re tackling this now because, in addition to prophetic prediction posts which are full of fantasy, the new year also brings the annual posts that tell you what the Procurement function is, what it’s primary tasks are, and what team you need to address it. And even the most well intentioned ones by the smartest consultants and practitioners don’t always get it right — at least to the extent they think they do.

There’s a couple of reasons for this, and they all relate to their Procurement world view which:

  • boils down to their (limited) experience, which is usually with a few companies in a single industry or related industries
  • typically consisted of sourcing primarily one or two of the six major types of Procurement (which are indirect, direct, services, tail, software, and strategic consulting / commissioning projects — all of which need to be approached differently and often need completely different solutions from different providers to tackle)
  • and usually revolved around a small set of systems and software offerings

Now, I’m not saying I can give you a perfect team model for your company, because I can’t. (In fact, without a deep analysis and evaluation of your company, no one can!) Not even if I created a starting one by industry, size, and geography — because every company is different, and those differences will create minor variations in optimal structure — which sometimes comes down to the talent you can get your hands on.

For example, in most companies product management and product marketing is usually two different functions because it’s rare that one person can do both. But someone who could do both would shift the organizational structure because a person who can do both would bring unique value — being able to design product and communicate the unique value to the market not only ensures all communication is accurate but all design is influenced by market need and reiterated to the market in a meaningful manner.

Now let’s review Tom’s proposal. As per our opening, it’s quite good. In fact, the elements are really good. You need business and category leads. You need sourcing and supplier value. You need operations and governance and someone definitely has to do that. And you need data and digital.
(And if it’s so close, why are we picking on Tom? Because to pick on someone who’s model is bad would require us to write a long multi-part essay or book chapter, and that’s just too much to make a single point.)

So, you need all of the people that are named (or at least the skillsets), but are they leads? Maybe. Maybe not. And is the model appropriate. Somewhat, but not really — not for a lot a of organizations (not being run by Tom or those with his Procurement world view).

But let’s start with the business and category lead and sourcing and supplier value lead. Maybe these are separate, maybe they are not. It all comes down to your philosophy on how you run Procurement. Are you event-based or category-based? If you are truly category-based, sourcing is part of category management, it’s not a separate function or activity — and your category leads know how to source. They will use analysts to help them understand the current market conditions; break down the cost structures; create should and target costs; identify the most likely suppliers; etc. But they will choose the strategy and own the sourcing event. There will be no “sourcing leads”, just “analyst leads” and “supplier development” leads.

Now let’s tackle the “data and digital lead” category. You’ll have a senior analyst lead who runs the team, which will consist of one or more spend and performance analysts and risk and resilience analysts, but the most critical member will be the Procurement Master Data Manager who will work with IT to ensure the necessary data is captured, maintained, enriched, and applied appropriately. Especially since any AI tool you use will blow up in your face without good data. (And if you’re using an LLM there’s no guarantee that it won’t blow up even with good data, but it’s much less likely to blow up with good data than with bad data.)

As for “digital and enablement specialist”, let’s start by clearly stating that any professional that isn’t digital 31 years after Nicholas Negroponte published Being Digital isn’t going to survive much longer in a world where everyone is chasing the AI Dream and trying to automate everything, even that which can’t be automated. Especially since those departments that lie and say it’s AI and adopt tech that works will be three, five, and even ten times more efficient than those that don’t. Every member will be responsible for digital enablement, not just a lead. The team may use expert consultants to help them pick the right tech and evaluate AI (to identify the hybrid or, better yet, old-school AI that actually works), but it shouldn’t be a separate lead in a modern organization.

Working back through the structure, let’s review the ops. An ops manager is critical — and a lot of departments miss this trying to be lean and mean. Someone has to ensure that all of the operations are aligned to support all of the category manager’s requirements from analysis through sourcing support though supplier development through compliance and risk management. And you probably will need a policy and compliance specialist, but should buying channel leads be separate from category management? And if so, is it a channel manager or a technology manager you need? You’re either buying off of contract, usually through an auto-reorder or catalog; from a marketplace; or through a sourcing event. Are those channels? (We’re not talking sales.) But you probably need an internal catalog manager and a marketplace expert.

Finally, the commercial advisory specialist and the contract and commercial manager should probably be on the same team in many organizations (i.e. the commercial advisory team).

In other words, the presented team structure is a great start for identifying key roles, but might not be the perfect org structure for you … or it might be. As noted above, it depends on whether or not you are category driven or not, tech centric or tech supported, and how much support the different roles need.

But most importantly, it depends on what industry you are in and what you are primarily purchasing. If you are in manufacturing, and are primarily purchasing direct, you will need a category manager for each major category as well as a liaison in the appropriate R&D and Manufacturing production teams for each major category. And since, in some categories, the supply will be limited it will be more about negotiation and target costs than open strategic sourcing, you will need engineering experts for target costs; risk experts to identify potential regional, natural, and economic risks related to a supplier; negotiation experts who understand BATNA who can balance supply assurance, quality, and cost; etc.

But if you are a retailer and just need finished goods, you barely even need a category manager. And you certainly don’t need to have a category expert embedded in another department. You just need to source, source, source. And there’s not a lot of risk analysis that needs to be done. It’s finished goods. If one supplier doesn’t supply, you go to another. Unless the retailer is a luxury retailer, it doesn’t care too much what the brands are as long as it can supply products that will satisfy its customers’ needs. And it will be the one organization that latches onto the digital and AI specialist as it will need tech constantly scouring for new suppliers, distributors, and marketplaces that can enhance supply certainty, quality, and/or cost effectiveness — because achievine any two of its three desires ain’t bad!

In other words, the optimal team depends on what the organization actually needs to succeed based on its industry, size, and maturity. It can start with a great template, but it will need to customize based upon its specific circumstances, processes, and maturity. And it might need help to define what that is.