As per Part 1, the doctor ignored this article over on GlobalTrade Magazine on 10 Innovative Approaches to Enhance Procurement Efficiency in 2024 because the approaches weren’t all that innovative, and the article, while professionally written, clearly wasn’t written by a Procurement Professional, as most of the recommendations were so basic even Chat-GPT could likely have produced something equally as good with high probability (gasp!). He’s only covering it because one recommendation had the potential to be the most innovative recommendation of the year (because no one is recommending it) had the author got it right (and approached it the right way).

However, since we covered and analyzed the McKinsey recommendations in great detail in a four-part series over the past two weeks, we will be fair and give GlobalTrade their due. In this two part article, we’ll quickly discuss each recommendation one-by-one to make it clear most of the suggestions really weren’t innovative. In fact, the one recommendation that is innovative wasn’t even described in the one way that makes it innovative. But since it did remind the doctor of one thing many of the recommendation articles were missing, this gives us another reason to cover it and use it as an example of why you need to seek out advice written by the experts, or at least people who live Procurement and/or Procurement Tech day-in-and-day-out.

6. Use AI to Review Process.

Uhm, NO! Use analytics and automation, not AI! And use traditional process analysis tools to identify where you are spending the most (and possibly too much) time.

7. Try New Inventory Software.

And if everything written to this point wasn’t a dead giveaway this article wasn’t written by a Procurement Pro, this is. First of all, inventory is operation / supply chain & logistics, not Procurement. Secondly, it’s not new inventory software, it’s e-Procurement software that can integrate with the inventory management system to determine if a request should be (re)allocated from inventory or ordered from a nearby supplier (using a pre-approved catalog item). (Heck, the author couldn’t even get the market size increase right — it’s 4.9 Billion according to the linked study, not 4.9 million! And if you’re interested in the Procurement market, Technavio, owned by Infiniti Research, is NOT one of the leading analyst firms in the Procurement Market.)

8. Formalize the Procurement Process.

How non-innovative can you get? Are there any organizations still in business at this point who have Not formalized the process? It’s no longer formalize, it’s SaaS-back and automate as much as possible!

9. Strategize Market Analysis.

Would any Procurement department doing market analysis really be doing it off the cuff? Uhm, no! It’s not strategize, it’s automate — implement platforms that automatically collect, track, analyze, report on changes and provide predictions on costs, availability, risk, and other important pieces of information.

10. Reassess Cost Evaluation.

This is the ONE prediction that could have been the most innovative prediction this year if thought through and presented properly. The author noted that many companies are not looking at the total acquisition cost and indicated that buyers should look at this, as well as usage costs and even disposal costs, getting into total cost of ownership (TCO) territory — you know, the concept we’ve been talking about here on SI since we started in 2006!

However, in today’s economy, TCO is no longer enough, and you have to move onto the next generation of what we have been calling TVM: Total Value Management since 2007! The root of TVM was that total cost of ownership is not enough when the end goal of every product or service obtained is about value, and value goes beyond pure cost elements and includes bundled services, controlled and understood risk, and brand recognition.

So cost evaluation needs to factor that in as well, but often that’s not enough anymore either. It’s not just supply or stability risk, it’s regulatory compliance. It’s not just product cost, but carbon cost. It’s not just brand recognition, it’s brand risk if your suppliers are using slave labour, polluting the environment with carcinogens, or finding new and inventive ways to be truly evil. It’s also not just today’s price, it’s tomorrow’s price. If the product relies on a raw material currently getting scarcer by the day, can you find an alternative that doesn’t need that material, or needs less of it? And so on. Cost evaluation is not just cost alone anymore. And any organization that takes the next step here will be truly innovative.

Now, in all fairness, the doctor should point out that the article’s recommendations could be considered innovative if the organization didn’t have a Procurement department, but in today’s economic environment, unless it had a monopolistic stranglehold on a market, the doctor doesn’t see how a company of any size without a proper Procurement function could still be in operation.

Anyway, that’s all, folks!

Except for one suggestion, and only if you interpreted it the right way. But let’s backup.

the doctor ignored this article over on GlobalTrade Magazine on 10 Innovative Approaches to Enhance Procurement Efficiency in 2024 because the approaches weren’t all that innovative, and the article, while professionally written, clearly wasn’t written by a Procurement Professional, as most of the recommendations were so basic even Chat-GPT could likely have produced something equally as good with high probability (gasp!).

However, since we covered and analyzed the McKinsey recommendations in great detail in a four-part series over the past two weeks, we will be fair and give GlobalTrade their due. In this two part article, we’ll quickly discuss each recommendation one-by-one to make it clear most of the suggestions really weren’t innovative. In fact, the one recommendation that is innovative wasn’t even described in the one way that makes it innovative. But since it did remind the doctor of one thing many of the recommendation articles were missing, this gives us another reason to cover it and use it as an example of why you need to seek out advice written by the experts, or at least people who live Procurement and/or Procurement Tech day-in-and-day-out.

1. Consolidate Various Supplier Lists.

Is this 1984? This was advice you’d expect to see when Jack Welch started revolutionizing Procurement at GE in the 80s, which gave rise to the first sourcing and procurement platforms in the 90s (like FreeMarkets Inc. that was started by Meakem in ’95 after leaving GE to productize what he learned). Today, the advice should be upgrade to a modern supplier management 360 platform that consolidates all of your suppliers and their associated information including, but not limited to, complete corporate profile, insurance and compliance, risk, sustainability/ESG/Scope 3, and any other information you need to do business with the supplier.

2. Conduct Frequent Educational Courses.

This is best practices 101 for any critical discipline within your organization, not just Procurement, and it’s relevant both for the team, and the people who need to interact with / depend on the team and / or use Procurement’s systems. Plus, overworked, and overstressed, professionals will learn better with frequent short courses (that they can put into practice) vs. a once a year cram session. The best advice here is to conduct frequent, specialized, courses on key systems and processes by role. And archive the materials online for easy access for refresh as needed.

3. Work on Supplier Relationships.

Supplier Relationship Management is Procurement 101 for strategic suppliers and has been for two decades. Nothing to learn here. Except make sure your modern Supplier Management 360 platform can support your supplier relationship management activities by tracking performance, agreed upon development plans, synchronous and asynchronous activities between all parties, etc.

4. Review Expectations with Suppliers.

Isn’t this part of supplier relationship management? Which, as we just discussed, is something you should have been doing since day 1. The advice here should be to make sure your modern Supplier Management 360 portal contains all of the agreements, milestones, orders, delivery dates, real-time performance data, development plans, and other elements that define supplier expectations.

5. Remain Open to Solutions of All Sizes.

While not very innovative, especially as written, this was the only other suggestion that Procurement departments need to hear. Consumer spending is flat or falling. Investment money has slowed to a trickle. Inflation is back with a vengeance, and budgets are being slashed to the bones. So you should be open to solutions of all sizes, especially when it comes to:

• supplier management
• process management
• software / SaaS platforms
• consulting

And especially SaaS platforms and consulting. If you haven’t looked for a solution to solve process / problem X since the last decade because it was too expensive, look again. When spend analysis first hit the market, it was a Million Dollar solution for software and services. A few years later, when BIQ hit the scene, you got more power and more value identified for 1/10 of the cost and low six figures bought you a full enterprise license and enough services to identify a year’s worth of opportunities. Then, a decade later, when Spendata hit the scene, a mid-market could get a full enterprise license for a core analytics team of 5 for $14,000 a a year, and for another $10,000, get enough training and guidance to use the software themselves to identify a year’s worth of opportunities from built-in templates and standard analyses. Same holds for any application you can think of — for any module you could want, someone has a SaaS mid-market solution for 2K to 3K a month. Not the 20K to 30K you would have paid a decade ago.

And for consulting, you don’t need a Big X where you have to hire a team at rates starting at 4K a day for the recent grad. You can hire an expert from a mid-market niche who is powered by the right tech who can do the work of an entire team for 6K a day — which is less than the Big X charges for the project manager who adds no value to your project.

We’ll tackle the next 5 in Part II.