Category Archives: rants

AI — Almost Smart Enough to Replace Common Sense!

Almost!

If you’ve been following the doctor‘s deep dices in AI in Procurement () and AI in Sourcing () Today, Tomorrow, and the Day After over on Spend Matters Pro [membership required], you should be firmly aware that, in the true definition of the term, there is no AI in any enterprise software platform today. Period. In fact, what’s there isn’t even close.

You’ll also know we define AI today as assisted intelligence where AI helps you identify relevant information, trends, etc. much faster than you could on your own and augmented intelligence where AI supplements your intelligence with advanced algorithms and capabilities that allow you to make informed decisions many time faster than you could without the technology — and that even the most advanced platforms out there struggle to even deliver assisted intelligence. All the majority of platforms do is deliver RPA – robotic process automation, which is just a fancy way of saying they can automate complex workflows under a wide variety of conditions, provided somewhere along the line an expert has created enough rules and models for it to follow.

And if you’re willing to spend enough money, you too can buy a state of the art system that will tell you that people like to drink coffee in the morning and that if you have a lot of employees they will form a line to get it and they will waste a lot of time waiting for it if you don’t have a big enough coffee area and coffee pre-brewed and pre-poured. You know, the same thing any current or former Starbucks barrista would tell you for the price of a coffee.

And the doctor wishes he was joking. This was what he found in his twitter feed just before he had to stop everything and write this post!


Wow! How much did they spend on this software that documents basic process times and runs simple models to determine that some things take time and any action that reduces that time for multiple workers can save time and money? Hire any lean specialist to just walk around your operation for a day and you’ll get a hundred common sense recommendations like this.

the doctor thinks WeWork should say WeWereRippedOff!

Especially since the other “observation” was equally obvious and if they simply required people to book a room, log a count, and asked a secretary to review the logs for two weeks they’d learn in ten minutes that people prefer to work in smaller groups because smaller groups get things done!

I wonder if they are training these systems on Pigeon English? (At least we know the dangers that common from Pigeon droppings … )

The Key to Successful Supply Management? No MoBAs, no PiMPs, no Paper Pushers, and no over-reliance on dumb bots.

It seems the list gets longer every year as those looking for a quick-fix try to take shortcuts to solving their problem that involve pushing those problems to third parties who are even less competent to solve them.

A few years ago we said the key for a successful supply management center of excellence was no M(o)BAs and no P(i)MPs!. This is because successful supply management relies on supply management expertise and experience, not on meaningless business models and knowledge-free project management frameworks. (Remember that SI still firmly believes that individuals that only have MBAs are just Master of Business Annihilation!)

This is because not only is it the case that you can’t manage what you can’t understand, but all you can do if you try is make it worse! Supply Managers are overworked and under-resourced, and any misstep has a ripple effect throughout the supply chain — one that can go from a minor delay to a major catastrophe. Management knowledge and project management skills are good things, but whereas supply chain is concerned, only if this knowledge and skill is added to a fundamental understanding of the supply management process that needs to be performed.

However, as we indicated last year in our post that The Key to Successful Supply Management? No MoBAs, no PiMPs, and no Paper Pushers!, simply eliminating the unknowledgeable MoBAs and PiMPs is not enough anymore. Paper pushers have to go to. There’s no time for tactical people who only receive, process, and send e-paper in a modern fast moving supply chain when the majority of this work can be automated by modern bots.

Today’s professionals need to be able to identify, implement, and make use of modern assisted and augmented intelligence solutions that can help them identify what needs to be analyzed, what needs to be addressed, what needs to be done, and the best ways to potentially go about it. The individuals who can do this are not PO paper pushers or AP invoice processors. They are knowledgeable and capable sourcing, procurement, and supply management experts who know their domain, and the tools, first and the business and project management second.

And they can’t be hampered by dumb bots. Dumb bots do poor invoice matching and create a lot of false positives to be unnecessarily checked. Dumb bots simply flag differentials between current and market price with no understanding of what the cause for the difference is and whether or not savings could actually be realized if a sourcing event was conducted. Dumb bots automate auction and RFX stages on a schedule, but don’t ensure that stages are complete or requirements are met. Dumb bots can extract potential terms, costs, etc. but make no sense of them and not even classify them properly. And so on.

Smart bots are needed, but dumb bots create more tactical work than they take away. So make sure they go with the paper pushers when you show them the door.

2020 is Less Than a Year Away. And we still haven’t crossed the supply chain plateau. Part II

In yesterday’s post, we referenced a post from six years ago where we commented on a piece by the Supply Chain Shaman who believed we had reached the supply chain plateau. And while we do not agree that the plateau has been reached, despite the extensive objective analysis of balance sheets, we certainly agreed that progress was, and still is, stalled.

We also referenced our post from a year ago today, where we asked will this be the year we traverse the supply chain plateau, that we believed the root of the issue was manpower capability. And we conjectured the root of the issue was a lack of education. But good information, good training, good consulting, good peer groups, and good courses — while still few and far between — have been available for years now but there has not been much improvement in the overall education level and manpower capability.

And while it’s true that most Supply Chain / Supply Management / Sourcing / Procurement / etc. managers don’t leave college or university with a solid supply chain background, as few institutions offer such programs, with the right foundational program in STEM (Science, Technology, Engineering, and Mathematics), the fundamentals of supply chain can be rather easily taught to intelligent and capable STEM grads.

So why aren’t they properly trained — especially when there are professionals out there more than capable of training them? And while supply is scarce, and they command top consulting dollar, when you think about the ROI a top performing team can deliver in just a few weeks (which can be in the millions), even a top dollar trainer can deliver the organization a ROI 10 to 50 times her price.

Well, because at the end of the day, management is not as well-intentioned as the Shaman or the doctor gave them credit for. Or, more accurately, their good intentions are more focussed on what’s good for them or their management peers today, not what’s best for the organization (and, at the end of the day, the shareholders) over the long-haul.

That’s why, year after year, when dollars get tight, the training budget is the first to get cut. Management believes that when times are tight, spending should be cut, and rushes to be the first to cut their budget to look good in the eyes of the CFO and CEO. Instead of investing today to take more off the bottom line tomorrow, they take the short-cut to look good today.

Instead of going over budget and buying a modern, 3rd generation, S2P platform, they cheap out and buy a first generation or low-cost, low-capability, second generation platform with limited capabilities that limits the eventual performance gains the system can provide to one that barely makes sense. A 3x ROI with an average 2% to 3% savings vs a 5X to 10X ROI with a 5% to 10% savings.

Instead of owning up to their own incompetence and own short-sightedness, they hire analysts and consultants to do market assessments and find ways to blame the market, the supply base, the systems, or even the staff instead of themselves.

In other words, we haven’t reached the plateau yet because less-than-well-intentioned management won’t do what is necessary to hire and elevate the organizational manpower to the skill levels necessary to scale the walls that surround the plateau and hide the even higher plateau blocked from view.

And while this is a dark and dreary view, what other reason could one give?

2020 is Less Than a Year Away. And we still haven’t crossed the supply chain plateau. Part I

Six years ago tomorrow we commented on a piece by the Supply Chain Shaman who believed we had reached the supply chain plateau. This was based not on a gut feeling, but on an objective analysis of balance sheets of process companies over the course of a decade. The result: the average process manufacturing company has reached a plateau in supply chain performance. As bluntly stated:

Growth has stalled. To compensate and stimulate revenue, the companies increased SG&A margin by 1%. However, the conditions were more complex; the average company, over the last ten years, experienced a decline of 1% in operating margin, and an increase in the days of inventory of 5%. While cycle times have improved, the majority of the progress has come from lengthening of days of payables and squeezing suppliers.

And while SI still believes, as it did last year, that we have not reached the plateau, SI believes that growth is still stalled. As the Shaman conjectured, complexity has increased, but many well-intentioned executives still lack the understanding of the supply chain’s potential or how to manage the supply chain as a system. So while select projects in the hand of gifted buyers, departments as a whole are not performing as well, and often being managed even worse.

The core problem has not changed — manpower capability has not kept up. While leading vendors are building assisted intelligence technologies (and a few are experimenting with augmented intelligence technologies on the way to delivering cognitive, almost AI, experiences), the average organization, if they are lucky, are running on first generation Sourcing and Procurement systems from the early 2000s. And if they aren’t, they are running on spreadsheets and thoroughly outdated ERPs (as noted by the Supply Chain Shaman in the aforementioned article).

A year ago tomorrow we conjectured, in our post where we asked will this be the year we traverse the supply chain plateau, we conjectured the manpower capability issue was a lack of education. While the average practitioner is not educated enough, it’s certainly not a lack of education opportunities, so we’re obviously still missing part of the puzzle.

So what are the missing pieces?

M&A Mania – Will it Ever End?

As per our posts on Sourcing Innovation earlier this year, the M&A Mania has been in full swing for the past couple of years, and as per the acquisition news that came out Monday, it seems the mania hasn’t abated. But will it abate in 2019?

We hope so.

Sometimes M&A makes sense, but sometimes it’s too much too fast. The theory behind M&A is that it’s easier for the customer to have all the related solutions under one vendor’s roof than three, four or six when they need to build an end-to-end S2P support solution than to have to deal with six vendors when they have integration issues, support issues, or system errors.

It’s a great theory, but it doesn’t work any better in practice if all a vendor is doing is buying up smaller vendors to sell them under one roof. If all of the development teams are separate, all of the product management teams are separate, and all of the support teams are separate, you’re still trying to sync with six different groups in order to resolve integration issues, support issues, or system errors. What difference is it if they are under one roof, three roofs, or six? From your perspective, none at all!

The reality is that it doesn’t help you as a Procurement Practitioner at all if the solutions aren’t integrated, and we don’t just mean data-based end-point integration — where it’s easy to push data out of one tool and pull it into the next. It has to be a deeper integration that integrates process and workflow. And that type of integration doesn’t happen fast. It takes many months in the best of cases, and many years in the worst.

So when a vendor goes on a buying spree, without forethought as to how it’s going to integrate all those solutions into a cohesive platform in a reasonable amount of time, it’s just bringing the integration and support nightmare for its clients under one roof, and not adding any value.

The best M&A is when a company buys a company with a great complementary solution and then steps back, takes the time to get the teams fully integrated and the solution integrated at least at the process level with its solution (not necessarily deep workflow configuration but more than just end-point data integration), and only then thinks about the next acquisition.

Right now the big players have made so many acquisitions that the doctor thinks they are all at full capacity to manage integrations, and in a couple of cases, maybe beyond. So he certainly hopes that the M&A Mania winds down, at least until there is settling across the space.

Plus, any company that acquires too many solutions too rapidly puts itself at risk of acquisition by someone bigger still. Just look at what happened to CA Technologies — the Acquirer became the acquired … by a hardware company! The last thing we want is a big S2P play to be acquired by a big hardware or generic platform vendor that doesn’t understand the space.