In our first post we noted that, after two series, fifty (50) posts, and almost seventy five (75) pages on the “future” of Procurement, we learned that while the majority of trends being positioned as “future” trends weren’t future trends at all, they were trends that your organization will encounter as it matures and grows and the sooner your organization ploughs through them, the sooner it can get to the real future trends.

We then reviewed our series and noted that most of the requirements for dealing with these trends fall into a baker’s dozen plus one of high-level categories. Today we will break the last seven categories down into the most important sub-categories:

Regulations

• get up to date on &
• get systems in place &
• get BOM visibility for
  • Environmental Regulations
  • Financial Legislation
  • (Free) Trade Agreements / Zones
  • Trade Security
• to make sure, among other things, that you don’t
  • get activists on your case
  • join Fox in the box
  • get burned on duty rates
  • lose your cargo

Risk Management

• supply chain visibility to detect issues and disasters as they happen, not three months later when the delivery doesn’t show up
• mitigation planning for when disruptions occur
• (natural) disaster response for when disaster strikes
• rare earth minerals plans for when costs skyrocket
• food reserves plans to reduce waste and deal with rising costs as reserves shrink
• supplier failure responses ready

Supplier Development

• co-design of product and services
• cost avoidance when market costs (for labour, energy, raw materials, etc.) rise
• new supplier identification if current suppliers aren’t improving
• performance tracking to make sure suppliers are performing as expected and to identify areas where continued improvement is needed
• value generation from supplier relationships

Supply Chain / Inventory Flexibility

• Faster production cycles to keep up with faster product life cycles
• Flexibility to ramp production up or down with demand
• (Better) Forecasting for better volume determinations pre-contract negotiation
• Innovation from suppliers and partners and customers for market advantage
• Just-In-Time (JIT) production / distribution when needed

Talent

• Development – EQ / IQ / TQ is analytical, technical, and emotional skills all need continued advancement
• Collaboration between team members, departments, suppliers, partners, and customers
• Fiefdoms must be disbanded and the heads cut off
• Management to insure regular collaboration, development, and team-building

Technology

• applicability / usage management to make sure the right technology is used for the right task
• support the right processes subject to the 80 / 20 rule as core systems must support the common (mass) requirements (and niche solutions can be brought in for the rest only once the base-line is covered)
• design & implementation management as many of the greatest supply chain and corporate failures have been due to failed technology implementations
• S2C & P2P -> S2P -> S2D (Delivery) as the entire product lifecycle needs to be managed, not just identification
• complete roll-out of the right platforms to all users who need access
• mobile management as mobile devices proliferate like Fibonacci’s rabbits

Transportation

• Mode Planning taking new options into account
  • Panamax vs Post Panamax
  • 787s
• FTL & Inventory Management vs LTL & JIT to minimize cost and maximize flexibility as needed
• Supplier vs. 3PL vs. In-House depending on efficiency and cost effectiveness

Overwhelmed? We hope not! While getting these categories and sub-categories under control is a good start for any organization wanting to progress in maturity and capability and get yesterday’s trends under control, in terms of what an organization has to know and deal with, it is just the tip of the iceberg. There’s even more a Supply Management organization has to know, and master, to be best-in-class and take the enterprise to the next level of performance. And, like you would expect, SI will address these requirements in one or more future blog series. Stay tuned!

In our first post we noted that, after two series, fifty (50) posts, and almost seventy five (75) pages on the “future” of Procurement, we learned that while the majority of trends being positioned as “future” trends weren’t future trends at all, they were trends that your organization will encounter as it matures and grows and the sooner your organization ploughs through them, the sooner it can get to the real future trends.

We then reviewed our series and noted that most of the requirements for dealing with these trends fall into a baker’s dozen plus one of high-level categories. Today we will break the first seven categories down into the most important sub-categories:

Cost Control

• Life-cycle Costs need to be modelled and true TCO understood because all that is accomplished with T-CAP modelling is opportunity capping
• Should Cost Models need to be developed for all custom manufactured products so that an organization can do a proper bid evaluation
• Optimization needs to be done for any buy of any complexity as costs and opportunities often mix in unexpected ways
• Supply Chain Finance with respect to DPO vs Discounts vs. Alternate Value for Money needs to be understood

CSR

• recycling, design for since rare earth minerals are becoming expensive and hard to acquire and dangerous materials in some countries have to be safely recovered by your organization by law
• renewable energy as energy costs are going through the roof and coal and oil generates too much pollution
• renewable materials whenever possible to keep long-term costs down
• responsible supply chain from a people and environmental perspective
• waste reduction where natural resources and food are concerned (especially given recent all-time lows in global food reserves)
• workers’ rights as no supply chain should contain slave-labour conditions

Home vs Near vs Out Sourcing

• product development / production which has to consider the best decision given transportation and time-to-market options as well
• procurement, back-office, and front-office functions which has to be balanced against cost-savings, expertise, knowledge, and reaction-time

Knowledge Management

• Capture because knowledge can’t retire with your employees
• Distribution because everyone needs to be able to tap into organizational knowledge
• In/Near/Out Sourcing Management needs to be knowledge based
• Master Data Maintenance as good decisions require good knowledge and good data
• Value Generation as the IP is an asset that should be tapped into

Market Knowledge

• New Emerging Markets because it’s not the BRIC anymore, it’s the MIKTS
• Emerging -> Emerged Markets as every BRIC country is now a top 10 country with respect to total GDP
• Hyper Competition in Developed Markets due to high jobless rates, slow GDP growth, and other factors that are making for intense competition in traditional / home markets
• Opportunity Identification in different markets from a source/sell perspective as the markets arrive
• The New Silk Road because the new China – Germany – Russian trade partnership is a game-changer and if the EU goes all-in, that’s over 40% of Global GDP participating in a new, non-North American trade partnership

Market Intelligence

• commodity market data as this greatly influences should-cost models
• consumer & public markets as this provides the baseline for off-the-shelf CPG and services spend
• labour rates as this greatly influences should-cost models
• energy rates as this greatly influences should-cost models
• supply vs demand as this influences sourcing decisions
• should cost models to understand what the organization should be paying
• trends to understand if prices have been rising or falling
• predictive analytics to take different factors into account and predict future prices and availability of labour, materials, and energy

Organizational

• Center Led / Control Tower / COE to make sure the organization is on the path to being Best-in-Class
• Stakeholder/Shareholder Management to keep stakeholders happy and the shareholder monkeys off your back
• Strategic Focus to make sure the organization is aligned on the right way of doing things
• Transition Management to take last year’s processes and technology to next year’s processes and technology

Tomorrow we will break down the remaining seven.

After two series, fifty (50) posts, AND almost seventy-five (75) pages on the “future” of Procurement, what have we learned? Besides the fact that most futurists are backwards-looking attention-seeking historians who will happily sell you snake oil past its expiration date, we’ve learned that they are able to sell this snake oil because they are addressing issues that not all organizations have encountered yet.

Recognizing that certain issues and trends are only encountered when an organization reaches a certain level of maturity and/or size, these futurists have figured out that when they target those organizations that are below a given level of maturity and/or smaller than a certain size, they look like they are visionary when, in fact, they are just selling knowledge they acquired by keeping a close eye on the leaders.

In the end, what we learned is that the trends they are telling us about are the trends that, if they haven’t hit you yet because your organization hasn’t matured or grown enough, you have to plough though in order to get to the true future trends.

We’ve mentioned three. We’ve discussed the Top Ten Trends for 2015. And maybe, if the LOLCats let us, well discuss a few more future trends. But for now, we need to focus on the trends that won’t end and what your organization needs to do to get these trends under control and out of the way. If we review all of the trends, we find there are a (core) set of (common) categories of common and related issues that must be addressed to deal with the trends. The fourteen categories that are the most important with respect to the futurist anti-trends that we examined are:

• Cost Control
• Corporate Social Responsibility
• Home / Near / Far Sourcing
• Knowledge Management
• Market Assessment
• Market Intelligence
• Organizational Insight
• Regulations
• Risk Management
• Supplier Development
• Supply Chain / Inventory Flexibility
• Talent
• Technology
• Transportation

In our next post we’ll break out the sub-requirements in each category as they provide a guide that helps you target your learning and organizational advancement.