Category Archives: Procurement Damnation

Technological Damnation 86: Template Mania

We’ll admit that compared to the rest of the technological damnations, and damnations like Cybersecurity / Cyberattack (76), The Cloud (80), and Dashboards (84) in particular, just to name a few, this particular damnation isn’t that bad [and it’s certainly no Big Data (79) or Spreadsheet (83)]. But it’s bad enough to make our list. Why? Let’s get to it.

But first, what is a template? Well, that depends. Wikipedia has over a dozen definitions for templates, including:

  • a pre-developed page layout in electronic or paper media used to make new pages with a similar design, pattern, or style;
  • a standardized non-executable file type used by computer software as a pre-formatted example on which to base other files, especially documents; and
  • a master page on which you can globally edit and format graphic elements and text common to each page of a document.

However none of these definitions really clarify what a template is. So let’s consider a few of the templates we use in Supply Management.

  • RFX templates to quick start sourcing projects for common or previously sourced categories
  • Strategic Souring Decision Optimization templates for pre-defining models
  • Data collection templates for analyzing surveys using BI tools
  • Scorecard templates for supplier performance monitoring
  • Workflow templates for setting up a sourcing project
  • Workflow templates for (automatically) approving invoices

And right now you’re probably even more confused. And that’s the point.

Extreme template proliferation makes it hard to even identify what a template is.

Is it a form? It is a form generator? Is it a workflow that powers a form generator to create a form custom for your sourcing project? Is it copyable, or just configurable? Is it specific to you, your project, your organization, and/or your platform? Can it be altered by you, by an administrator, or just a vendor rep? The questions are dizzying. And we still haven’t addressed the fact that …

Even if we can define what a template is, it’s hard to know when it could be used.

Take a quick-start sourcing template for mobile electronics. If it was designed for cell phones, can it be used as-is for smart phones or does it need minor edits. What about tablets. And what about those damn unclassifiable phablets. Aaarrrggghhh!

With so many options for each situation, it’s almost impossible to know which one is best.

If the templates can be copied and altered, there might be the vendor template, the modified template from the Center of Excellence, the modified modified template from the last Sourcing project created by the previous buyer, a modified vendor template from another region created by yet another buyer, a third party template in the customer network on the vendor’s site, and so on. Which one is best? Are any appropriate? At this point you just want to bang your head against the brick walls.

And how do we keep them all up to date?

This is the real damnation. Not only do we have to keep a never ending deluge of data up to date, but we have to now keep a never ending deluge of templates that may or may not be used to capture the never ending deluge of data up to date. Ack!


Data, data everywhere
and all the tables burst
Data, data everywhere
we thought it’d get no worse

Consumer Damnation 72: Corporations

In consumer damnation 71, we talked about governments and how government customers can not only be very demanding, but how they can be quick to pass on the blame to your company when something goes wrong even if it’s not your company’s fault. In addition, they generally mandate that you provide bill of material data, shipping manifests, country of origin determinations, quality inspections, and other information with every product that you provide the government so they can meet their accountability mandates — a paperwork nightmare, especially if all you are selling is office supplies. And if that’s not enough, if the government runs out of budget and can’t get agreement to run a deficit, there can be an indefinite spending freeze while the situation is resolved — and if you are waiting on a few million dollars for products and/or services delivered, you could be waiting quite a long time. They can be your organization’s best and worst customer.

That is, until your corporate customers are taken into account. Government customers will always give you headaches, but corporate clients will often give you nightmares. But that’s partially a story for different post. In this post, we are going to talk about specifically how they can be a nightmare for your Procurement organizations.

They can demand the SLAs be met — or penalties be applied.

If a big corporation knows that a good chunk of your organization’s revenue needs are dependent upon getting their contract, they will be very demanding in their negotiations and your sales team might end up agreeing to rather unfair SLAs that Procurement will be expected to deliver on. For example, there might be a penalty for every day a shipment is late, which could be something out of your control if a port closes, a primary transportation company’s drivers go on strike, or the supplier’s source of raw material dries up due to a mine collapse and there is no way to get a new shipment of the product produced on time to transport from the new supplier’s factory in Shanghai to the distribution facility in San Francisco, but yet Procurement will be held accountable when the shipment is late and penalties are applied to the invoice.

They can not only insist on extreme corporate responsibility requirements and demand not only end-to-end supply chain transparency, but that every supply chain participant be one that has been vetted by an accepted third party audit in the past two years.

This can make complying with the documentary requirements that the local government will insist on a walk in the park. As a good corporate citizen, you would have mapped your supply chain and vetted all of your tier 1 and critical tier 2 and tier 3 suppliers, but considering there could be over ten thousand suppliers in your corporate supply chains when you consider every purchase from the 50M you spend on your primary electronics retail products to the 50K you spend on miscellaneous office suppliers, its an almost insurmountable task to identify every organization in the chain and map them against a list of audited suppliers. If your choices are do your best to comply or lose a third of your revenue (because you are CPG and they are the biggest of your big box retailer clients), it might be the case that you really don’t have a choice.

They can be a real pain in the backside.

If they are a big customer, in addition to the huge discounts they negotiated during the sales process, they might expect free service, warranty support beyond the warranty period, and the ability to make additional purchases at a moment’s notice. And who has to arrange that free service, deal with the manufacturer to try and negotiate additional warranty support, convince the supplier to add a second shift, or find an additional source of supply at 7 pm on a Friday night? That’s right, Procurement.

Corporate customers don’t just make hell for Sales, they often make hell for Procurement too. And when they decide to spread the damnation, Procurement is the organization that really feels the burn.

Regulatory Damnation 37: Industry Associations and Standards

One would think that the regulatory damnations would stop with the ever increasing onslaught of regulations being passed around the globe that restrict the organization on:

  • raw materials,
  • production processes,
  • available labour, and
  • third party providers

that collectively cover

  • environmental regulation,
  • energy and water usage,
  • slave labour, human trafficking, and child labour,
  • oversight and documentary requirements,
  • taxation and reporting, and
  • corporate social responsibility and ethics

among a few dozen other regulatory requirements. But they don’t.

To top it all off, you have to deal with industry association standards that you have to include in your products or face becoming the next pariah. In today’s hyper-connected, mega-corporate world where a few big companies determine the fates of thousands of smaller companies who sink or swim on as a result of their boycott or their support, your company’s fate could rely on another companies whim. So if that company enthusiastically supports a standard that you don’t, that could be the end for you. But that’s just the beginning of the damnation.

Newly enacted standards could be the exact opposite of the protocols you built your product on.

For example, you could have designed your electronics product to work on DC current but the new standard for the GPS system, designed to be used in the car and on the trail, is AC with an AC to DC adapter. All of a sudden, you can’t get the Industry Association seal of approval and your product is dropped by all of the major electronics retailers.

Newly enacted standards could redefine the communications interface.

You might have spent years developing a custom communications protocol to interface with your new mobile weather data reader, but then the major software packages adopt a new standard you weren’t expecting and drop support for your standard faster than a hot tomato and your product can’t even be sold through the discount outlets because there is no support for it.

Newly enacted self-imposed regulations could prohibit the purchase of raw materials from producers expected to violate fair-wage and human rights principles.

If you already locked into a contract with a producer that has been banned, all of a sudden you could be the target of competitors negative advertising campaigns that target you as a consumer of unfairly produced goods. This could destroy your brand value if you are buying raw materials that might be harvested by child or slave labour, even if the claim has no evidence to back it up.

While industry standards are not as damning as regulatory damnations, as industrial competitors cannot seize your goods, levy fines, or press criminal charges, they are still damning as we noted above because if you fail to honour the industry association’s boycott, you could be the target of negative advertising. And the right negative advertising can considerably damage your brand, plummet your stock, and bring sales to a trickle. This damnation, that likes to hide in the shadows, doesn’t emerge often, but when it does, it’s a doozy.

Geopolitical Damnation 27: UNCLOS

No, that’s not a typo. We’re not talking about UNCLES, we’re talking about UNCLOS, short for the United Nations Convention on the Law of the Sea — an international agreement that resulted from the third United Nations Conference that took place between 1973 and 1982 and finally came into effect in 1994 (a year after the 60th nation signed the treaty). (So if you think your Legal department is slow approving your latest contract, they’re running at breakneck speeds compared to the glacial United Nations.)

This international agreement, that has been agreed to by 166 countries and the European Union as of 2015, replaced the conventional freedom of the seas concept that was the de-facto, unwritten, agreement between nations from at least the early 17th to the late 20th century that stressed the freedom of all nations to navigate open waters.

However, as of the early 20th century, this de-facto unwritten agreement was not enough for those wishing to engage in global trade as nations that wanted to protect mineral resources, fish stocks, or pollution-free waters started to stretch the conventional definition of territorial waters from the accepted 3-mile limit all the way up to a new 12-mile zone in 66 cases and, in 8 cases, a 200-mile limit. If every country has a different territorial claim, how do you know if your ship suddenly leaves international waters and enters a nation’s waters, and, conversely, how do you know how long you have the protection of your nation while entering or exiting your waters?

Under this new agreement, countries have, from the low-water line or a straight baseline (when the coastline is deeply indented, has fringing islands, or is highly jagged) a:

  • 12 nautical mile territorial zone
    where the nation has complete control as it is free to set laws, regulate use, and use any resource; in this zone, vessels generally have the right if innocent passage
  • 12 nautical mile contiguous zone
    where the nation can continue to enforce laws in four specific areas: customs, taxation, immigration and pollution, but only if the infringement started within the state’s territory or territorial waters, or if this infringement is about to occur within the state’s territory or territorial water
  • 200 nautical mile exclusive economic zone
    where the coastal nation has sole exploitation rights over all natural resources.

This all sounds crisp and clean, but there are a number of caveats that you need to be aware of if you are the Procurement person responsible for managing ocean freight.

You have no protection against theft or piracy beyond the 12 nautical mile territorial zone.

Unless the product originated from, or is being shipped to, the nation the contiguous zone belongs to, then the nation has no claim to customs or taxation, and can’t do anything. So, from a shipping perspective, the continuous and extended zones offer you nothing.

You have no protection from the nation within the 12 nautical mile territorial zone (or even the 12 nautical mile contiguous zone under certain circumstances).

The right of innocent passage is only valid so long as you are passing through waters in an expeditious and continuous manner, which is not “prejudicial to the peace, good order or the security” of the coastal state. If the nation decides that your vessel is a threat, it can be stopped, seized, and the crew brought up under criminal (or terrorist) charges and held indefinitely without release.

You don’t even have protection against the nation in the extended zone.

If your vessel or crew gets associated with a crew or vessel that is trying to illegally exploit natural resources in any way, shape, or firm, your vessel can be stopped, seized, and the crew brought up under criminal charges.

Now, the chances of these last two happening are low, unless your vessel is registered to a nation that is currently at diplomatic odds with the nation whose waters it is passing through. For example, if there are embargoes or military conflict, the vessel can be captured simply to use as a negotiation point. Not always likely, but always a possibility hiding in the darkest corners of the shadows just beyond the corner of your eye.

The crux of this post is that when it comes to open waters, it doesn’t matter whether your ship is in a zone or not, because either way it’s not safe. Protection from pirates leaves it open to seizure by law enforcement and freedom from law leaves it open to pirates. Damnation covers the open sea.

Technological Damnation 93: Technological Disasters

When we covered Environmental Damnation 18: Natural Disasters, we noted that natural disasters — including earthquakes, volcanic eruptions, and tsunamis — are on the rise. However, these aren’t the only disasters that can bring your supply chain to ruin. Man made disasters stemming from technological advances can also disrupt, and sometimes destroy, an entire supply chain (region).

Three major disasters we need to be on the lookout for are:

  • Nuclear Meltdowns

    While the proponents might like to sell us on how clean nuclear energy is compared to petro-carbon alternatives, the fact of the matter is that while the energy is clean, the waste is much dirtier, with Plutonium-239 having a half-life of 24 Thousand years and Neptunium-237 has a half-life of 2 Million years! Plus, while an explosion at a petro-carbon energy plant might wipe out the plant and immediate surrounding area, an explosion at a nuclear power plant can make an entire city, or even a small state, uninhabitable for millennia! For example, the 30 km exclusion zone surrounding Chernobyl will not be safe for human life for another 20,000 years (and even today, 30 years later when [over] half of the iodine-131, caesium-134, caesium-137, and strontium-90 — the four most harmful radionuclides that spread as a result of the explosion — have reached their half-life, workers are not allowed to work in the zone for more than 5 hours a day and not for more than one month at a stretch due to the ongoing risk to one’s life).

  • Chemical Leaks

    Most of the chemicals we use in manufacturing and production need to be transported, and most are transported by tanker truck or rail car (or pipeline between plant locations), but some are transported by barrels, especially when being shipped by sea (or air). Leaks can be dangerous if the chemical is explosive, acidic, or poisonous, especially if the leak is near a populated area or a water supply. For example, the Bhopal disaster of 1984 exposed over 500,000 people to methyl isocyanate (a toxin often used in pesticides such as Carbaryl which are designed to kill bugs hardier than us, and banned in many countries) and resulted in 3,787 confirmed deaths, 3,900 severe and permanent injuries, and 558,125 reported injuries.

  • (Natural) Gas Leaks

    Gas leaks, whether chemical or hydrocarbon, are among the most dangerous leaks, and natural gas leaks are among the most dangerous. Not only are they toxic (as we are talking about a mixture of methane, carbon dioxide, nitrogen, etc.), but they are also highly explosive, requiring only a single spark to (potentially) obliterate an area the size of (multiple) city blocks. Recent examples are the 2012 explosion in Springfield Massachusetts that destroyed 2 buildings and damaged 42 and the 1992 explosion in Guadalajara that killed over 200, injured 500, and left 15,000 people homeless.

The more we progress, the more we need more, and, stronger energy sources and more chemicals to produce our new technology, and the more danger we place ourselves, and our supply chains, in.

This necessitates the need for more safety audits, more safety practices, and more oversight — especially as more regulations start popping up to try and prevent more accidents and control dangerous substances. So not only do you have to worry about the well being of people in your supply chain, you have to worry about the well-being of your brand if you fail to maintain top safety practices, go afoul of regulations, or take your time switching away from dangerous chemicals or energy sources to more environmentally friendly sources.

This damnation always needs to be at the back of one’s mind or when it unexpectedly rears its ugly head, one will not be ready.