Category Archives: Procurement Damnation

Procurement Sustentation 73: Individual Consumers

As we said in our damnation post, of course individual consumers are a consumer damnation. They are the consumer damnation. From your point of view, corporations (which will soon rule the world) are bad, governments are worse, but individual consumers take the cake, especially considering most of them bring their views to corporate and government purchases. And you are left trying to deal with the inanity and the insanity. When dealing with consumers, damnations are plenty.

Why are they so damn damning?

  • Consumers are fickle.
  • Consumers are demanding.
  • Consumers are impatient.
  • And some are outright vindictive!

So what do you do?

1. Insist on Third Party Marketing Research jointly overseen by Procurement.

Do you really need feature X or function Y? Does it really have to be blue? Does the schedule really have to be moved ahead 3 months at the cost of quality and reliability? Make sure all demands come out of a well designed survey that truly captures, objectively, consumers’ true desires. And make sure you understand what they are willing to pay, when, and why. Don’t let marketing force their assumptions on you at the expense of quality, reliability, and safety.

2. Make sure you clarify the value delivered, and the trade-offs associated with altering that value.

Make sure marketing understands what they can promote, Sales what they can sell, and all departments understand what the value is — and how that value will be altered if specifications are changed. Make sure Sales and Marketing understands how costs change, quality changes, and value delivered change if anything changes so that changes are not promised, and then mandated on high too late into the NPD process to allow the organization to keep costs low and value high.

3. Make sure all products are worth the weight.

If you can demonstrate that the value delivered will be more than your competitors, whether with new features, better (streamlined) functionality, or a lower cost for a higher quality products, then most consumers will be willing to wait.

4. Demonstrate a responsible supply chain.

You’re going to get sued, even if you did nothing wrong. So make good and damn sure you took every precaution to do everything right.

5. Implement a truly hassle-free return and replacement process.

You can minimize complaints and associated costs by making it easy for unhappy consumers, regardless of the reason, to get a replacement or a refund as fast as possible.

In other words, by making sure decisions are objective, and planning is done ahead, you can minimize the damnation that is going to come your way.

Technological Sustentation 81: Social Media

While there may be a dirty dozen of risk categories that we need to address in order to adequately address the Procurement Damnations we have willingly placed ourselves in as we try to collectively forge a new frontier, the largest category of risk that we need to address is that of Technology. Almost one fifth of all damnations that plague us fall into the technology category. This is the latest technology damnation that we are going to address. Even though it’s difficult.

As we mentioned when we penned the original damnation series, social media might be the most damning of them all. Besides the obvious facts that we collectively as a society waste enough time on a single video to double the size of Wikipedia (Source), that social media is literally making us stupid (Source), and that every marketer and their dog is doing their best to convince you that your company has to be on every social network in existence (including the dozen that are literally here today and gone tomorrow as Facebook and Twitter have pretty much won the social media war in the English speaking world for the time being), there is the simple fact that social media takes more than it gives.

So how do we survive? How do we deal with the fact that despite the fact that social media was designed for people to be social with each other, and not for businesses to sell wares to consumers, and certainly not for businesses to sell goods to each other, we are constantly bombarded by social media firms that tell us we can use social media to conduct important, strategic, operations.

And if having to deal with the outside pressure isn’t enough, you are constantly bombarded with requests from marketing for information about your supply chain efficiency, corporate social responsibility, sustainability, or other operations and practices that can be used to boost corporate image, brand reputation, or product differentiation on these outlets. You’re working hard to define and implement proper category management techniques on dozens of strategic and high-value categories but all marketing cares about is which supplier will get the organization the most free press, whether the “in vogue” corporate social responsibility practice of the day is getting enough attention, or if the new product being sourced will have enough bell-and-whistle features to allow for one dozen unique messages for each social media channel of interest. It’s inane, insane, and both.

And then, to make matters worse, rather than use your supplier portal, your suppliers want to message you on the social network they are signed into 24/7, your partners are checking the never updated Facebook company page instead of the official contact directory, and eliminated vendors keep messaging your organization’s Facebook and Twitter accounts asking marketing why they are no longer being considered, rather than read the detailed explanation in the vendor management portal you provided them.

So What Can You Do?

1. Refuse to answer meaningless marketing inquiries and instead change the conversation.

When marketing asks if the new product being sourced will have lots of features to wrap messaging around, simply state that the product is being sourced to corporate specifications, and that full details will be provided.

When they ask about CSR practices, simply inform them that you have vetted all suppliers using a third party and that they should read the appropriate reports.

And when they ask if you use twitter, simply point out that is their job. Don’t get distracted.

2. Adopt Procurement tools with integrated messaging, message boards, and social media like features in the communication portal.

If your Procurement portal gives the suppliers what they want, then they won’t be constantly asking to message you on Facebook, Twitter, or the platform de jour.

3. Help Marketing select the right CRM and social media monitoring platform.

Even though it’s the last platform you should touch, it is marketing’s livelihood – so it’s critical to make sure that if they are going to be using such a platform, that they are at least using the best one available. And if you can find one that meets all of their needs, maybe they will spend all of their time on it instead of bothering you.

It’s not a perfect solution, but it will at least allow you to survive, if you are strong enough. (Because only the strong survive.)

Organizational Sustentation 60: Human Resources

In our damnation series, we noted how an overly process driven human resources department free of logic and common sense, can ruin the best and worst of plans and inspire your best talent to run to the hills and run for their lives.

Why do human resources (HR) often bring damnation to Procurement? Simply put,

  • They exacerbate talent tightness. (Societal Damnation 51)
  • They drive talent away. (Societal Damnation 50)
  • They think they know what Sourcing is.

HR will insist on owning the talent recruitment process. Now, it’s true that, in most organizations, HR should own the process because most departments wouldn’t know how to go to market for talent if the market came to them and bit them on the thigh like a boghog of NowWhat, but a good Procurement organization knows how to go to market for talent. In fact, a good Procurement organization knows how to go to market for everything the organization needs, and, more importantly a good Procurement organization knows what defines talent to the organization. So a HR department that keeps a Procurement organization at bay that can help is not a good thing.

Especially since the way that many non-best in class HR organizations go about the talent hunt. They blast a poorly written advertisement with a list of requirements no living or dead human can meet across multiple channels, collect hundreds, if not thousands of resumes, and then go through a last-man standing vetting process. They create a ridiculous checklist, a set of arbitrary rules for checking the boxes (because they don’t understand what the boxes are), and then eliminate every resume that doesn’t check every box. They then interview the last men, or women, standing, eliminate those that they feel won’t be a good organizational fit (based on gut instinct), and pass you the candidates that remain. A process guaranteed to eliminate a large number of good candidates, if not all of them.

So what can you do?

1. Define what you really need, as general as possible.

Example. In IT, you need five years doing object oriented software development, with good knowledge of Java, not five years of pure Java. In logistics, it’s big rig training and two years of heavy machinery experience, not two years of commercial sector. Military is just fine. Etc. Don’t make it impossible for the best candidates to even qualify.

2. Help in the selection of resume evaluation technology.

You don’t want dumb “check the box” forms and dumber exact phrase matching technology. If resumes have to be automatically evaluated, you want modern semantic technology that understands coder, developer, and programmer are the same thing and driver and big rig operator are the same thing. You want advanced profile match calculations and not dumb guesstimations.

3. Look at the big picture

Look at references and connections. Yes, references from employees are good, but some are going to recommend everyone who will give them a name just for a chance to get that referral bonus. Connections are even better. If someone is applying for a developer job, how many developer connections are in their business networks, and how many recommend them — even if they work for a competitor. It’s what they know, who can confirm it, and what they want. Do they just want a job, or do they want to make a difference. And if you want someone who will make a difference, that is the person you want. HR probably doesn’t care about any of this, but you do, so stand your ground.

Societal Sustentation 38: The Sharing Economy


Cookie: Me got some something that you want
You got some something that me want
Put both somethings together and share

Ernie: I’ll take my something that you like
You take your something that I like
Then put both things together and share

Both: One for all, all for one
Sharing every everything and having a ball

Sharing is a good thing. Unless, of course, you are the one who isn’t being shared with (or the one who refused to share).

And, as we discussed in our “Future” of Procurement series a couple of years back, the Sharing Economy is one of the few true future trends of the space. And while the sharing economy is currently in the domain of individuals like you and I, and a handful of small businesses that have latched on, the sharing economy is going to migrate to medium sized business en-masse (driven by companies like Uber). This is going to give these businesses access to the latest and greatest technology and economics of scale that these medium-sized businesses will be unable to acquire on their own.

But just because it could help, that doesn’t mean it will help. Especially if the organization cannot accept, embrace, and form the new reality to its advantage. This means the organization has to start by identifying opportunities that it cannot achieve on its own. Then it will have to identify what partners it would need to bring those opportunities within its grasp. Finally, it will need to put together a plan to unite those partners and execute it to completion.

How will it do this?

Identify it’s biggest costs.

Is it the need for specialized equipment owned by only a few select suppliers? Is it the constant LTL shipments? Is it the need for regular day labour?

Identify which of the costs could be reduced with cooperation.

If a group of mid-size suppliers that required the specialized production equipment formed a co-operative and created a production facility based on that equipment that was shared and used to maximum efficiency, that could reduce costs. If a group of suppliers in a small radius band together and synchronize deliveries they can always ship FTL and even manage their own fleet for reduced costs. But unless they can find nearby companies that need day labour at different times, this is not likely something that can be solved by the sharing economy.

Be prepared to lead the charge.

Put together a plan to make it happen. Make sure it demonstrates the tangible benefits to those who will join the cooperative you are about to form as well as outlines exactly what will be required, when, and when the benefits you are promising will be realized. It has to be attractive to all parties you want to join, and has to show your commitment by showing that you’ve thought it all out.

A lot of your peers might want it to happen so that they can compete with the big guys, but very few will want to lead the charge.

Environmental Sustentation 23: Food Shortages

Food shortages are an ongoing concern. They have been since before global food reserves hit a fifty year low a few years ago and will continue to be as global population continues to grow to the point where we will be pushing the planet’s limits (under current technology) to support us. This is scary given that over 800 Million people, 11% of the population, are currently food insecure, as this number is only going to increase as time goes on.

But it’s not just the social viewpoint that is scary, as the corporate viewpoint is also scary. Every time there is a shortage in any commodity, prices spike, and as far as suppliers are concerned, contracts be damned.

If a significant portion of a supplier’s crops are wiped out and it doesn’t have enough to satisfy its contracts, it can claim force majeure, and unless your organization is the one paying the most, it’s going to start by claiming force majeure on you and your supply is out the window.

We’re still in the situation where most crops are grown in fields, and not greenhouses, and this demands the right climate. Sun and warmth, a sufficiently long growing season, an absence of pest swarms, and an absence of natural disasters. But we are in a situation where we have unbearable heatwaves and unexpected cold snaps, both of which destroy crops. Growing seasons are sometimes unpredictable. Pests are becoming more devastating as there is less and less undeveloped green areas for them to feed on. And disasters are in the process of increasing five-fold over a fifty-year period.

So what can you do?

1. Geographically remote sources of supply.

The weather is not the same all over, and most natural disasters are limited to a small geographic area (on a global scale). Thus, if you have multiple sources of geographically distributed supply, the chances of your entire supply being wiped out in a single shot are small. You might lose some supply, but you will still have some supply and with the right supplier mix, you might be able to eek out a bit more.

2. Greenhouses when possible.

Yes, greenhouses have a higher carbon footprint than fields, but some plants grow faster and better in controlled environments — especially certain herbs, fruits, and similar plants. If they have a short growing season, and the greenhouse can be kept at peak capacity, for certain crops, this can actually be a better, more reliable, option.

3. Waste Not, Want Not.

Strive for 0 waste in the food supply chain. In an average food supply chain, up to 30% (or more) of food is wasted during picking, transportation, and processing. This is not a made up stat — according to the United Nations Food and Agriculture Organization (FAO), a third of the food currently produced never reaches our plates (Source). Invest in efficient harvesting techniques, proper storage, proper transportation, and low-waste processing technology so that this statistic is reduced from over a third to less than 10%. (The goal should be zero waste, but that is hard. However, reducing waste by two thirds is not. Start there, and improve over time.)

4. Variety.

For example, there are hundreds of natural varieties of tomatoes, beans, and other plants. Don’t restrict your recipes and buys to a single variety … diversity, and you will have a better chance of assured supply.

5. Be Prepared for the Worst.

Always have backup plans and alternatives. Some product lines might have to be temporarily suspended, but others can be brought in to fill in the gaps.