Category Archives: rants

Half of Procurement Leaders Expect Their Budgets to Increase. Are They the Kings of Wishful Thinking?

A recent article over on the Supply Chain Quarterly (which launched about the same time as an article on the Supply Chain Management Review) quoted the newly released 2024 State of Procurement Data Report from Amazon Business (whose PR team was working overtime) that was revealed at Amazon Business Reshape. The report, which surveyed 3,000 buyers, procurement decision makers, and organizational leaders, had a number of interesting statistics.

The ones quoted by Amazon Business on their site included:

  • 95% of decision-makers acknowledge that there’s room for procurement optimization
    (which says to the doctor that 5% of decision makers are clueless and need to be replaced)
  • 85% of respondents say the difficulty of sourcing suppliers that follow sustainable practices prevents their company from setting or achieving strategic sustainability goals for procurement
    (which is totally logical because when there is a national demand for something that is in extremely limited supply, most companies will fail; it’s like demanding gender equality in STEM organizations in North America; on average, women are 25% of STEM workers; this means that for every STEM organization where they manage to fill more than 25% of their positions with women, there is an organization of equal size that won’t)
  • 81% of respondents had mandates to buy from certified sellers, which might include sustainable, local, or disadvantaged group-owned businesses
    (and it would be nice to know what percentage achieved those mandates; the doctor would be surprised if more than 25%, at most, succeeded)

The SCQ and SCMR picked up on different statistics, and you can read the articles to find out, but the most interesting to the doctor is:

  • 53% of business respondents in the survey expect their budgets to increase in 2024.

Go West, Young Man, Go West and pan for the gold! As far as the doctor is concerned, you’re the King(s) of Wishful Thinking. And, if you really want to, you can call me a bitch like it’s a bad thing for suggesting you’re so far out of this world that you’re a space oddity, but it doesn’t change the fact that you need to sit back, have a deep think, and accept the reality that it’s not going to.

Before you find new offensive adjectives to describe the doctor, ask yourself: When was the last time you received a significant budget increase that was above inflation? And when did it include even a dollar more than what was needed for the new hire(s) you fought nine months for or the system that your CFO decided he or she liked best? And if so, was it enough to actually acquire a new system or an extra hire you didn’t have to fight nine months for? In other words, when was the last time an increase you received was truly significant?

Procurement needs to remember that, in most organizations, it is still looked at as a cost center even though it may be the only profit center a company has left in an inflationary economy with declining consumer demand. As a result, with budget scraps are few and far between, those budget scraps are going to continue to go to sales and marketing hoping that the closers and the mad men will save them, and we all know that’s not going to change anytime soon in most companies.

Expectation is not always reality. And wishful thinking is just that. To succeed, don’t plan for any increases beyond specific increases for specific headcount or CFO friendly systems you have already hard fought and negotiated. This way, you won’t feel let down and you’ll be setup for success.

And while my gloomy glass more-than-half-empty outlook on the situation may not be very gladdening, remember that you are Procurement Pros, you always have sour lemons (and nothing else), and when challenged, you still find ways to make the best lemonade. Prepare for tough times and, on the off chance they are a little less tough, you are guaranteed to succeed.

Data-Driven Workforce Planning — WTF?

Data is good. And you should make use of it all the time. And while data might help you identify gaps in your work force capability, it can’t help you plan your future workforce. Why? A couple of reasons. First of all, you don’t know what’s coming down the pipe in future Procurement and Supply Chain needs and issues. Secondly, existing skill sets may not be enough to address those future needs and issues (which could require evolved versions of current skill sets or even entirely new skill sets). So while the doctor would agree that the 14% of Procurement Leaders who believe they have adequate talent to meet future needs are idiots that never look at the data, he would also argue that looking at the data alone will not allow one to adequately define their workforce needs.

Planning implies you are building a workforce for the future. Data can only identify gaps in your workforce today. And while you need to fill those gaps to conquer today’s challenges, put out the fires, and get to the point where you can start seriously thinking about the future, analyzing historical data is not going to get you there. You need to look at how new technologies will change production, how new technology will change logistics (not just green vehicles, but better planning technologies, more efficient cross-docking techniques, etc.), how regulations will impact trade, and so on. There’s no data on that yet (other than patent documents, vendor spec sheets, draft legislation, and so on). So how can you analyze data you don’t have?

So, why do we need to talk about this? Well, Info-Tech Research group is flooding the PR and Business News Wires with an article on how data-driven workforce planning is key to future-proofing organizations. And while data-driven workforce planning is key to getting your workforce right today, as we just explained above, it can’t future proof your workforce because you don’t know what skills your future workforce will need.

Yes, there are serious talent shortages in IT and Procurement. Yes, it reinforces the reality that a proactive approach to workforce management is something that most organizations should have been doing a decade ago. Yes data-driven insights are often the fastest way to see where you don’t have enough people or enough people with the right skills to tackle the job. And yes tools that can help you are highly valuable. But don’t confuse solving today’s challenges with people you will hire tomorrow with solving the problem of future workforce planning.

Now, if you hire the right people with the right education and the right skill sets in analytics and the ability to learn on their own, they will be more prepared than those employed by your peers. This may put you in a better place, as they may even have the skills to identify the gaps when the world changes, but there are no guarantees. So find top talent with the education, drive, and ability to learn, continually train them, give them time to look ahead once in a while, and you’ll be better off than those who just hire the cheapest resource they can to put out the latest fire.

Top 10 words or phrases to ban from an RFP response, Part 2

In this two-part article we are giving you the top 10 words or phrases you should ban from RFP responses if you want a meaningful response to your technology / technology-backed / technology assisted RFP that’s not full of meaningless buzzwords, ambiguity, misdirection, or some combination thereof. The simple fact of the matter is that if you allow any of these phrases, you are not getting an answer, or at least not an answer you need.

5. Best Practices

This one might drive you even crazier than some of the buzzwords coming up. It would dive the doctor crazier than the next two buzzwords except for the fact that vendors/service providers are a bit more honest here — they are delivering “their” best practices. However, their “best practices” are not necessarily “best practices” appropriate for you or your organization, not necessarily better than their peers, not necessarily new, not necessarily old, and so on. It’s vague. Too damn vague. You want them to describe explicitly what process / service improvements they will bring to you, how those improvements will help you, and what results the vendor/service provider expects that you will see. Not just “best practices”. As the doctor recently read somewhere, “best practices” are the learnings based on what a service provider was doing three years ago. Some will still be relevant, but with markets and technology always evolving, some won’t. Again, you need solutions, not “best practices”.

4. Sustainable Practices

Yes, you want sustainable practices. Sustainability is key, and not just because it’s becoming a regulatory compliance issue, or necessary to maintain a good brand image, but because it’s necessary to maintain a source of supply and a reliable supply chain. However, at the end of the day, “sustainable practices” is just as vague as “best practices” or “sustainable procurement” and even more impossible to gauge without deep details. You absolutely, positively, without a doubt need your vendors to describe their practices and processes in detail so that you can judge how sustainable they are and if they are sufficiently sustainable for you.

3. Innovation

This one should drive you crazy. How many times have you read “we are a very innovative” or “our innovative solution” or “innovation is our number one goal”. Great. WTF does that mean? What have they done that is ACTUALLY innovative? And how did that innovation create a better product/service/solution than you could get from their three closest competitors? What is their latest improvement, what does it actually do, how is it better than the last version, how does it compare to the closest competitor, and is it good enough to actually warrant a cost increase? Every vendor and their mascot claims to be innovative, but most aren’t, and most of those that are, aren’t that much more innovative than their closest competitor, and it rarely justifies a significant quote increase.

2. Automation

Yes, you want automation, but only if the automation is appropriate for the solution you need, the business processes you use, and the business practices you want to adopt. Plus, you want controllable automation, not an automated product/service that is not controllable. If you allow a provider to say they have automation, they are going to assume that’s enough of an answer and you won’t actually know what kind of automation they have, to what extent it can be customized, how hard it is to configure, how often it needs to be checked/monitored, etc. You need the vendor to specify how the solution works.

1. AI

Especially Gen-AI. As we have explained repeatedly, there is no true AI, most marketing is bull crap, and when companies try to do too much or go too broad with AI, what they deliver is Artificial Idiocy.

Besides, as a buyer of technology for a technology, technology-backed or technology-assisted solution, you don’t care about AI vs. no AI, you care about whether the solution will do what you need it to do, do it efficiently, do it effectively, and do it in a way that can be supported for the lifetime of the solution. The best products in our space have never needed AI, or even had access to AI, and they worked just fine using traditional analytical algorithms, optimization, classical machine learning trained and tweaked to a specific problem, and so on.

Let’s be clear that the promises of “AI” are not new, and that these promises have NOT delivered for the last 60 years. Let’s repeat that. AI has NOT delivered for the past SIXTY years. In the 1970s, shortly after the founders of AI started researching early systems, it was hailed as the future of computing. Nope. Then in the 1980s we were told AI would give us expert systems that would replace specialists. Nope. Then in the 1990s we were told 4GLs and 5GLs would enable the emergence of true AI. Nope. Then in the 2000s with the emergence of the internet and early distributed (cloud) computing models and the ability to create deep neural networks, we were told we’d finally get true AI. Nope. Then in the 2010s with the emergence of turn-key cloud platforms, map-reduce, multi-core processors supporting more parallel computation, and neural network optimization, we were again told we’d have true AI. Nope. And now, with ChatGPT and Gen-AI, we’re told we’re finally there. H3ll NO! AI is BS. Don’t look for AI. Look for solutions that work.

So ban the buzzwords. Maybe then you’ll get some real insight into real solutions.

Top 10 words or phrases to ban from an RFP response, Part 1

In this two-part article we are going to give you the top 10 words or phrases you should ban from RFP responses if you want a meaningful response to your technology / technology-backed / technology assisted RFP that’s not full of meaningless buzzwords, ambiguity, misdirection, or some combination thereof. The simple fact of the matter is that if you allow any of these phrases, you are not getting an answer, or at least not an answer you need.

10. Savings

Let’s get straight to the point. “Savings” do not exist. Cost avoidance does exist, but if a sourcing event identifies “savings”, it doesn’t mean that you negotiated savings, it meant that you were overspending and that the event identified that overspend so you could make changes to your Procurement to prevent that overspend. That’s it. Savings is money the business accumulates over time. The other definition is finding a way to truly reduce the amount of time, material, or resources to make something — which is something that is up to your supplier to figure out, not you. Your job is to buy at the lowest cost + margin the vendor/service provider will sell for and avoid overspend. The only “savings” you can realize is in the amount of time a process takes (which is why you buy appropriate software platforms to minimize your effort) or the amount of resources a product takes (with a better design). That’s true savings.

9. Market Intelligence

This one absolutely drives the doctor crazy and it should drive you crazy too. WTF is “market intelligence”. The market is not intelligent. In fact, ever since the introduction of Reaganomics, predicated on the false belief that a rising tide floats all boats (as discussed in Why America Abandoned the Greatest Economy in History), one could argue that the market has become decidedly unintelligent (at the same time that American IQ’s have dropped as per a recent article on The Hill, which, of course, we all blame on X).

Now, they may promise better insight into market pricing (but what is that, especially if you can just buy a real-time data feed to commodity indices or public sector contract prices), market dynamics (but isn’t that just buy and sell data), inflation or cost changes (but that requires good predictive analytics, do they have that technology and do they know how to use it), and so on, but only true experts can really provide insight that is likely to come true. And do they have those experts? And what’s their historical accuracy? Most firms don’t have leading experts in the top 10%. Basic math says only 1 / 10 “experts” are in the top 10% and only 1 / 10 companies offering a “market intelligence” service are in the top 10. So ask exactly what information/advice they provide you, how they provide it, how often they update it, who in particular does any manual predictions, and so on.

8. Diversity

Diversity is important. It’s very important. It’s absolutely necessary if you need a supplier to come up with innovative solutions to a problem. But simply allowing a supplier to say they are diverse or check a “diversity” box doesn’t tell you anything. First of all, what’s their definition of diverse. One white woman on a board that otherwise is entirely composed of greedy old white men? Might make their definition of diverse, but definitely, definitely, definitely wouldn’t make the doctor‘s definition of diversity.

True diversity is men and women of all ethnicities, experiential backgrounds, educational backgrounds, and so on that are available to you in the areas in which you employ people. Especially those from diverse backgrounds divergent from your founders / management. And it’s not an arbitrary target, it’s representative of the average diversity in your area. As we have said before, saying you want 50% women in an IT or Engineering company when only 25% of graduates are women is not achievable (but 25% is).

7. Green Procurement

What does “green procurement” mean. the doctor bets you have a definition. And the doctor bets its probably bull crap. Not to say that your intentions, or goals, are bad, or that what you think it is is bad, but that how a less than scrupulous supplier will respond to it is bad. Because when it comes to “green”, there is an awful lot of “greenwashing”, “greenlighting”, “greenrinsing”, “greenhushing”, “greenshifting”, “greencrowding”, or other decidely ungreen practices out there, and if you’re not careful, a supplier will sell you one of these not-so-green services when you ask for a “green” solution. (And, in fact, you’d be greener if you simply asked Kermit the Frog to buy you some lettuce from the local farm. After all, no one knows better than Kermit that It’s Not Easy Being Green.)

6. Sustainable Procurement

What does this mean? It’s even more ambiguous than “green procurement”. Does it mean that what you are buying is sustainable, or does it mean that the process is sustainable. Technically, under the rules of English Grammar (you know, that system of language rules they don’t seem to teach anymore), “sustainable” is an adjective to the “procurement” noun that follows, so as long as the vendor/service provider supports your Procurement process in a way that is sustainable to you, they’ve technically met the requirement, right? Right! But what you want is sustainable goods and services, but that’s not technically what you asked and the sneaky slippery suppliers will try to use that ambiguity to give an ambiguous response and slip a bid in that you shouldn’t consider. So again, don’t ask if they have sustainable procurement, ask what efforts they make to use renewables, minimize resource (water, energy, non-renewable material) use, ensure their suppliers are using sustainable practices and financially sound, and so on.

In other words, buzzwords are not answers, and any provider that simply spews slang at you is not solving serious situations that are relevant to your business. So ban the buzzwords, get deep insight, and make the right decisions.

Of course, since we started at 10, these aren’t the worst of the buzzwords. Not the worst by far! In our next part, we’ll review the top 5. Stay tuned.

Ten Best Practices for (Software) Vendors, Part 6: Bonus Best Practice #3

If you need to catch up:

  • Part 1 Best Practices #1 to #3
  • Part 2 Best Practices #4 to #7
  • Part 3 Best Practices #8 to #10
  • Part 4 Bonus Best Practice #1
  • Part 5 Bonus Best Practice #2

This summer, during the dog days of summer, as a cure to the summertime blues, the doctor gave you ten best practices for success inspired by the common mistakes that the doctor has seen small/mid-sized vendors do over, and over, and over again for the past twenty years (and, more specifically, mistakes that are costing them deeply). And while the best practices linked above won’t necessarily solve all your problems, implementing all of them should prevent a number of major problems, or at least a number of the major problems that are common to multiple technology companies trying to developer and deliver deviceful delicacies to software shoppers.

We stopped at ten, and two significant bonus, tips because ten is the number talent likes to start with, and most of the other issues the doctor has seen repeatedly (that the tips were designed to address) were either a) less relevant or b) less common or occurred less often. However, every time we enter either an extended recession, or a tech downturn (symbolized by the top employers shedding tens of thousands of workers based on economic expectations and fear and not reality [despite bank accounts richer than some nations]), there is one mistake the doctor sees over and over again. Furthermore, this ONE mistake is very dangerous as it prevents some companies from fully recovering, and sometimes starts the downward fall to insolvency or forced (fire)sale to stay in business. To counter it, we give you Bonus Best Practice #3:

BUILD(UP) DURING A DOWNTURN

The biggest mistake the doctor sees over, and over, and over again during a downturn is pushing off (market) research, development, marketing, hires, and other activities necessary for growth until “sales pick up”. The problem is, in many of these smaller enterprises, they usually barely have the resources to support the current customer base and when “sales pick up”, there’s often not even enough manpower for the implementations, so development is stopped to redeploy developers to implementation in the short term; marketing is stopped as those resources are diverted to partnership development with consultancies and implementers; pre-sales support is diverted to account management; and so on. At the same time, the big companies — who can offer bigger salaries, hire faster, and bring more people on board — are planning for rapid hiring, marketing increases, and accelerated development as soon as the market starts to swing up again. They may not be hiring more, spending more on marketing, or augmenting the dev team, but as they have enough resources already, they are preparing to do this. As a result, when the market starts to ramp up, they’re ready to go full swing, be everywhere, demonstrate they are working on a new-and-improved roadmap, and address the major market concerns.

In order to grow as a small/mid-size operation, you need to fully capitalize on up-swings, and the only way to do that is to:

  • have marketing plans and content in place
  • have (pre-)sale position descriptions ready to go and outlets identified
  • have optimized implementation processes in place (so you can do more with less)
  • have partner training courses and support ready to go (so you can augment when you need to)
  • have identified the most critical features that companies want that you don’t have
  • have identified the most innovative/unique/valuable improvements you can start working on and sell as part of the roadmap
  • have done your market research so you can go head-to-head with the big boys who will be ready (and win without properly prepared competition)
  • and so on

AND THIS NEEDS TO BE DONE DURING THE DOWNTURN!

When the upswing starts, it’s too late. Even experienced experts can’t always move fast enough when your more forward thinking peers have been working on their plans in the background since the downswing started and are ready to hit the market full force, while you’re struggling to figure out what to do now that companies are spending again.

Now, the doctor understands that hiring can be an issue because you don’t know precisely when the upswing is going to begin, and if it only takes 3 months of work to get the marketing plan, content, and pre-sales artifacts in place, you don’t want to hire that person 6 months before the upswing. Or maybe it only takes 3 weeks to identify the right improvements to the platform to optimize the implementation process, and then your developers just need to do it. Maybe you only need partner support for training and services with an optimized implementation process, and that’s just completing put-off documentation which only takes a few months (until more platform capabilities are developed). And you don’t have to code features your customer base won’t be ready to use for another two years that take six months to build for another eighteen months, but you do have to know what they are, how long they will take, and how you will sell them. So timing is difficult.

But nowhere did the doctor say you had to hire! Just that you needed to prepare. And, as per Bonus Best Practice #1, Get the Help You Need, you can always hire a contractor or a consultant to get this done, and then, when the upswing starts, sales start coming in, and the marketing, research, product roadmap/management, (pre-)sales, and partner support needs become more intensive, then hire full-time on staff people once the workload for a specific function becomes almost full time.

In other words, the key to success is to get ready to get ‘er done, and get ready to get ‘er done NOW!