Category Archives: rants

There’s No New Normal — And There’s Definitely No New New Normal Either!

I was very, very, very disappointed to come across this recent article on ‘The “New Normal” and Its Effects on Supply Chain Management’ in the Supply Chain Management Review because it’s one of the few publications in the place I hold in high regard and, as I pointed out in a recent post, there is no new normal. This means that there is definitely no new new normal either.

The author, who pointed out that senior managers in many businesses are using the catchphrase “The New Normal” as if it were a prescient view of the way things will be from now on, suggested that — since most decisions today are driven by economic conditions — we should consider a New New Normal, defined as a frame of mind where we choose to take the risk of utilizing practices that always work whatever the conditions are. Huh? And double Huh?

First of all, as I said in my last post on the topic, there is no new normal. We’re just in a transitory state on the way to the old normal … coming back after an extended hiatus. Secondly, no practice will always work. Markets always evolve, and practices that work regardless of economic state need to evolve with them. Third, smart companies are already using flexible practices that can adapt with the markets. In short, kill this new normal and new new normal BS and kill the new new new normal BS before it starts. Dust off those old business and economic texts from 20 years ago and start remembering how things in stable economies work — and if you need a reminder, look at the European economies which have been around longer. Then we can get back to the business of running the supply chain.

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There is NO New Normal … Just the Old Normal Coming Back

I have to be honest … I get sicker and sicker of “the new normal” each time I hear about it … even though I must admit that upon reflection I did find the recent article from McKinsey Quarterly’s Strategy Practice on “Navigating the New Normal” to be hilarious. For a while I couldn’t put my finger on why I couldn’t stand hearing about “the new normal”, but then it hit me. There’s no such thing as a new normal … just the old normal coming back after an extended 15 year hiatus. After all, if you think back to before 1995 and before the leading edge of the first tech boom, you see a slow, steady growth in the year-over year stock indices going back to 1975*1. And if you look at the annualized GDP data in the same time frame, you see that growth went up and down, usually between -7% and 7%, over time*2, but averaged out to slow, steady growth*3.

Not only does this mean, as the McKinsey Quarterly article pointed out, that (continual) market growth of 5% to 7% is a thing of the past, but that you have to go back to the good old days where your growth is going to be at the expense of your competitor’s loss. That means that you are going to have to buckle down and build better products, create better services, and offer them at a better price point than your competitors. In other words, the days of new markets and free growth are over.

And while I agree with the leading “strategists” that you are going to have to limit growth plans to “growth above market” and adapt to changing conditions on a quarterly basis, I am fed up about this bullshit about having to go to shorter and shorter planning cycles. That’s why the economy is in the gutter. No more long term thinking. No more research labs. No more support for long term research projects in academia (where it’s now “publish another paper, no matter how trivial, tomorrow or perish”). It’s one thing to be on short production cycles … as that lets you adapt to changing market conditions. But it’s another thing to not be planning beyond three years. It’s just crazy. We need to get back to the days where companies not only had five year plans, but ten year plans … and even longer term plans where innovation roadmaps were concerned. Until we do, I don’t see things getting much better. But in the meantime we’ll get lots of five page articles on discussions with “leading” Chief Strategy Officers who, in long winded diatribes, essentially tell us that they don’t know where things are going … which is exactly what you get when you stop planning for the future.

*1 Comparison of the Dow Jones Industrial Average, NASDAQ Composite, and S&P 500 after 1975

*2 Annualized US GDP Growth from 1947-Present

*3 US Gross Domestic Product 1947-Present

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Facebook at the Factory?

Sure! Why Not? While we’re at it we can get Plaxo for the plant, MySpace for the warehouse, and Back Orifice for the Office! After all, why shouldn’t we let our employees SuperPoke their buddies all day, flit away their day following their contacts’ twitter feeds, or hack into their supervisor’s computer … it’s not like they have anything better to do with their time! Right?

Needless to say I was outraged when I saw “Facebook at the Factory: Manufacturing Must Become More like Social Media” headlining over on the Supply & Demand Chain Executive site — because it’s such an idiotic idea. I’m faceless, spaceless, and twitter-free for a reason … and that reason is because these platforms offer zero value to a hard-working professional.

So I’m going to take a moment and point out the dumb conclusions the article reached … which were especially idiotic given that the writer(s) had access to a study with valid results and lots of information easily available through a Google search upon which to draw more realistic conclusions.

The article started by quoting a finding that said “62% of respondents want their ERP system to capture and record the knowledge of senior experienced engineers and professionals so that it becomes part of the corporate knowledge base”. That’s knowledge management, not social networking.

It then quoted the CTO of IFS who said “Enterprise 2.0 and social media tools are designed to draw information out of people, to get them to talk”. While this is true, it bluntly failed to mention what kind of information Social Networking sites draw out of people … their entertainment preferences, their personal preferences, and where they went to get blind drunk last night (with potentially embarrassing pictures they don’t remember taking). And what use does that information have in the daily operation of your business? That’s right. None!

Finally, it quoted the CTO of IFS who, correctly, said that web 2.0 tools like wikis, threaded discussion boards, and other features of social media will become common fixtures in enterprise software. That’s right, useful tools will become incorporated in enterprise software as time goes on. And Facebook, as of today, does NOT fall into that category.

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The Real Reason No One’s Buying Contract Management Software

Over on Commitment Matters, Tim Cummins authored a post on The Guilty Secret of Contract Management Software where he attempted to explain the disappointing uptake in contract management software. It was pretty good, and he was right in that the uptake is not simply down to a reluctance to buy and due to a failure to achieve widespread internal adoption within many organizations that have bought. But he missed the real reason why.

According to Tim, the problem is that contract management continues to be a football, today owned by one function, tomorrow another; today centralized, tomorrow decentralized; at one moment an instrument for compliance, at the next a source of empowerment. Basically, the activities that lead to [contract] creation and management are generally fragmented. Finance, Legal, HR, Product Management, Marketing, Procurement, business unit management, Sales — all of them have an interest, yet none feels responsible.

While Tim’s observations are correct, it’s not a problem of “the buck doesn’t stop here”, it’s a problem of “where is the buck“? Even if a company appointed a head of contracts with ultimate responsibility for all contracts (which should reside in the Procurement or Supply Management department), such as a VP of contracts, you’d still have an uptake problem. Why? Because contract management systems, on their own, don’t offer much in the way of value.

But they centralize all of my contracts. So does a shared directory on the central file server. Heck, so does a filing cabinet and a little bit of diligence.

But they provide me dozens of useful contract templates. So does the CD I picked up for $5 ten years ago.

But they allow for automatic contract generation from standard clause template libraries. So does Microsoft Word.

But they allow me to query my contracts and create custom queries. So does an Access database and a high school programmer.

The simple fact of the matter is that most of what the contract management vendors sell is hot air. The real value of a contract management system materializes when you integrate it with your e-Procurement, EIPP, and/or P2P system and use it to automatically check all invoices against your contracts to make sure that

  • no off-contract purchases are accepted without appropriate management approvals, and only with good reason and
  • all charges are at contracted rates.

Then you stop maverick spending and overcharges dead in their tracks, which collectively account for the 40% to 60% of negotiated savings that are never realized in your average Procurement department. Otherwise, you’re just buying an over-priced content management system with word processing capabilities — and you might as well use Open Office and a centralized shared directory with naming conventions as the uptake will be about the same unless you can demonstrate how the software is going to result in real hard dollar savings.

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