We’re continuing our foray into the top barriers to success that we outlined in our top barriers post that chronicles the barriers that keep coming up over and over again in every Procurement survey in our effort to ensure that you don’t have to read another state of procurement study for the next 5 years. Today’s topic: the talent gap!

A Brief History …

As we have previously noted in our discussion of category and market complexity, with each successive innovation, business, and process improvement, processes and tasks became more complex and required more education and experience to perform. As a result, with each successive innovation, the available talent pool shrinks. When you consider that traditional post-secondary programs haven’t kept up with the pace of innovation in business in decades, there’s a lack of formal training programs, mentorship programs disappeared decades ago (and every time there’s a workforce reduction, the older generation is the first to be let go or be bought out), and most businesses haven’t invested properly in training in decades, you can see that, for many traditional complex tasks, the talent pool is shrinking quickly.

But the lack of talent in traditional areas is just one side of the coin. The other side is that technology is progressing faster than even technology professionals can keep up. Combine this with the recent SaaS explosion in most corporations, with some large corporations using over 1,000 different SaaS applications, and the increasing complexity of “AI”-X applications, and the talent gap is expanding in tech as well.

The Problem

The problem here, as we expounded upon in our brief history, is multi-fold. There’s not enough talent in many domains, and in domains where there is talent, the rapid pace of development and innovation is still leaving top talent behind.

The Necessary Realization

In theory, the multi-fold solution is easy, but in practice, it will take a lot of human effort to realize, just like execution support can’t be solved overnight.

1) Bring Back Training

Stop trying to hire someone with all the skills and knowledge they need to do the job that is at least somewhat customized to your operation and start training again. Formal programs. Ensure all the materials are accessible online all the time so the parts your employees tend to forget (because they don’t perform the tasks regularly) are quickly and easily accessible.

2) Mentorship and Shadowing

Don’t wait until someone leaves to start looking for a replacement. Start training a replacement for a key position within three months of someone new taking the role via shadowing and mentorship. Make sure there is no task that relies on one person (even if always done by one person as it’s not demanding enough to require more than one employee) and that there is always a backup person. Stop trying to replace teams with agentic software and start trying to empower small teams with augmented intelligence so they can do the work of teams three, five, and ten times their size but still ensure the knowledge remains in the organization.

3) KMS: Knowledge Management System

Despite being introduced in the late 2000s, these never caught on and this is, honestly, one of the biggest reasons we have a talent gap today. Not only do most organizations not do enough planning around succession for those that perform key functions (it’s not just the C-Suite you need a plan for), but they don’t capture the key knowledge built up by long time employees who know how to run certain functions efficiently and effectively. That’s why performance degrades over time as people leave and new people are hired because the days when you’d join a company and stay for five, ten, twenty years or life disappeared with the last millennium. When organizations failed to properly capture this knowledge when the first round of massive layoffs hit in the dot com crash of 2000, and then never learned from it (and we saw the same mass exodus of senior, knowledgeable, people in the financial crisis of ’08), we ended up with massive increases in the “talent gap” as the knowledge required to forge talent suitable for your organization was lost. (On top of the fact that knowledge was increasingly leaking to China with the global outsourcing system.)

The reality is that unless the knowledge needed to run your business is captured, you’ll never have the talent you need, real or virtual (as these new-age AI-based agentic systems that will, according to the marketing, solve all your problems won’t work at all unless properly trained, and they can’t be properly trained unless the right data, processes, and organizational knowledge are appropriately captured — that’s a big reason these efforts continually fail and will continue to fail).

4) Augmented Intelligence Systems

For well-defined tasks for which mature (pre Gen-AI) agentic workflows exist that can be appropriately defined, controlled, and tailored, implement such systems to ease the burden on new employees as they attempt to learn the role and be productive and strategic.

The Technological Requirements

The technological requirements, especially for the KMS and the Augmented Intelligence Systems, are considerable and require supply chain aware sourcing and sourcing aware supply chain and expertise from source to sink and back again on both sides.

A continuing reminder that if you want guidance in the short term, hope that your favourite provider reaches out to Bob Ferrari of Supply Chain Matters or the doctor and enables us to focus on writing the series (or in-depth e-book) explaining what modern Procurement and Supply Chain Tech needs to look like (and how it needs to be implemented) to address the challenges, reduce the risks, and address the priorities versus just dripping out tidbits as free time permits.

We’re continuing our foray into the top barriers to success that we outlined in our top barriers post that chronicles the barriers that keep coming up over and over again in every Procurement survey in our effort to ensure that you don’t have to read another state of procurement study for the next 5 years. Today we turn to one of the biggest barriers in any organization, and especially if they don’t realize it. Data^*

A Brief History …

Unlike all of the other barriers on this list, this is the one barrier that is relatively new. Up until the introduction of computers in the average business, the only real data that was maintained was the accounting data. Orders, and costs, sales, and revenues. That’s it. Other than that, the
“data” of the business was its contracts (on paper), its product designs (on paper), and its processes (on paper).

But with the introduction of modern computing into the average business in the 1980s, a lot of this data became computerized. Plus, the amount of data collected, and maintained, started to increase significantly over time. In addition to costs you could maintain quotes. In addition to revenues, you could maintain sales volume by product and location. In addition to current designs, you could maintain historical designs and alternate designs being considered.

You could start to collect and maintain market data on commodity costs and availability. You could collect and maintain data on currencies and exchanges and markets. You could build your own database of global logistics options instead of relying on suppliers and trading partners to select local carriers for you. And so on.

As time went on the average business unit went from having essentially no data when computers were introduced in the 80s to having lots of data as the internet took over in the late 90s to having a combinatorial explosion of data by the 10s when there was a SaaS app for everything!

The Problem

As data exploded, a number of problems arose.

• How do you manage and maintain the data?
• How do you analyze the data?
• How do you integrate data from other departments? partners? the internet?
• What data do you need for a meaningful analysis to make meaningful decisions?
• What data do you need to send to other departments? partners?

And the reality is that as the data exploded, the need to understand the data exploded, and the need to integrate the data exploded

• training and technical competence fell behind with each advancement
• data formats and models exploded (as SaaS apps exploded)
• internal and external data needs exploded, but the ways to easily get and send the right data at the right time shrank

The Necessary Realization

The data explosion that was supposed to be the blessing has instead become the curse.

• Every system uses its own storage formats behind it’s own data models — so you need to obtain custom middleware / iPaaS to integrate data between systems, and often services to link in all the systems not supported out of the box
• Back office analytics software has not kept up — most of the big name software is ROLAP, Relational Online Analytical Processing — where you are limited to drilling down in pre-defined cubes (and it’s not easy to create new cubes to power new reports)
• Analytics capability has not kept up — the average employee doesn’t know what can be done (and what techniques to use to do it)
• AI is more of a curse than a blessing — sure it can uncover interesting trends, outliers, deviations, etc. — but it doesn’t really understand the data, whether its prediction on what should be done is accurate (as AI is NOT intelligent), or how to guide you on what additional analysis to do to figure out what to make of its “discoveries”

This means that to make progress you need to understand:

• what modern analytics is (and what AI is not)
• what systems support it
• what systems you need for integration and transformation of data
  (even though most analytics can do all the necessary data transformations, some systems still require proprietary integrations to get that data)

And there is very little education out there on all of this. (A lot of marketing, but not a lot of real education.)

The Technological Requirements

The technological requirements are considerable and require supply chain aware sourcing and sourcing aware supply chain and expertise from source to sink and back again on both sides.

A continuing reminder that if you want guidance in the short term, hope that your favourite provider reaches out to Bob Ferrari of Supply Chain Matters or the doctor and enables us to focus on writing the series (or in-depth e-book) explaining what modern Procurement and Supply Chain Tech needs to look like (and how it needs to be implemented) to address the challenges, reduce the risks, and address the priorities versus just dripping out tidbits as free time permits.

^* Remember every office worker’s favourite song!

Well …
I have a little data
I store it on my drive
And when it’s old and flawed
The data I’ll archive

Oh, data, data, data
I store it on my drive
And when it’s old and flawed
The data I’ll archive

It has nonstandard fields
The records short and lank
When I try to read it
The blocks all come back blank

I have a little data
I store it on my drive
And when it’s old and flawed
The data I’ll archive

My data is so ancient
Drive sectors start to rot
I try to read my data
The effort comes to naught

Oh, data, data, data
I store it on my drive
And when it’s old and flawed
The data I’ll archive

We’re continuing our foray into the top barriers to success that we outlined in our top barriers post that chronicles the barriers that keep coming up over and over again in every Procurement survey in our effort to ensure that you don’t have to read another state of procurement study for the next 5 years. Today we are covering supply chain visibility and the issues it creates.

A Brief History …

This is very closely related to our last barrier of supplier reliability. In many ways it’s the same, except this one is more from a supply chain focus than a procurement focus and is more focussed around logistics, warehousing, free trade zones (FTZs), etc. Not only do you have supply assurance issues now that you’re sourcing from tens of thousands of suppliers all around the world, but you have lead time and carrier issues as well as issues of network complexity and real-time transportation balancing.

The Problem

We discussed the core problems of supplier and third party management and supply chain visibility in our last barrier, but that was just scratching the surface.

We now have the problem of logistics planning, modelling and real-time tracking. This is much easier said than done when sourcing from half a world away. How does it get to the “local port”? How does it get to the “destination port”? How does it get from the destination port to the local warehouse? Do you need cross-docking and load consolidation/splitting anywhere in that delivery chain? If so, will this involve intermediate warehousing anywhere along the delivery chain and/or will you need to manage intermediate warehousing at a Free Trade Zone next to a port where you transship to a neighbouring country?

All of this should be done before a supplier is selected to understand how it will impact the current network? Will it utilize the existing distribution network fully (because the supplier is in a city where you have a carrier already that can tap right into your existing supply network in the region)? Partially (and require you to find a new carrier to a local hub and / or lease a new warehouse for storage and cross docking)? Or is it in a new region/country you have no supply network at all and would require considerable upgrades, or changes, to your supply network. Otherwise, if this is done after the contract is signed, it could be a mad dash to try and get something, anything, in place before the shipment is needed, leading to suboptimal decisions and network designs that negate all of the expected savings from the new supplier and/or the other expected advantages (such as carbon in the logistics chain, shorter lead times, etc.).

Then there is the issue of warehouse and (remote) inventory management, as we know that, done poorly, this can increase your logistics and product costs considerably! You pay the same for a warehouse lease whether it is empty or full. Power and heat are quite consistent too. Water might increase slightly if you have a large staff, but that’s it. This means only a warehouse that is consistently mostly full is cost efficient. (In other words, you want inventory flowing through it regularly and keeping it near capacity.)

And, of course, you want to integrate all of this into your supply chain visibility solution so that you’re not just maintaining visibility into your suppliers, but also your carriers and your warehouses. A full supply chain network view.

The Necessary Realization

Supply chain aware sourcing is quite a challenge. It’s not just the supplier, it’s the supply network — the carriers, the warehouses, the ports — and all of the players you need visibility into. That’s why you not only need the:

TPRM (Third Party Relationship Management) solution and the SCV (Supply Chain Visibility) solution discussed in our last post, but also need:

A Logistics / Transportation Management System (LMS/TMS) to maintain (near real time) visibility into your global transportation network to track where your goods are and when they are expected to reach each stop in your network and finally be delivered.

A GTMS (Global Trade Management Solution) that allows you to manage free trade zones, import and export documentation (to keep things flowing on time), and (those beautiful, beautiful) tariffs.

And, of course, you need to understand not only how to link all of these systems but deploy them in unison so everyone has the right view at all times.

Then, each person involved in the chain needs to know how to make use of the information presented, and make the right decision keeping the needs of the other department in mind as well as the organizational priorities and goals. Easier said than done as there is a need to balance, at a minimum, Procurement, Supply Chain, Logistics, Risk Management, Operations, and possibly, Finance.

The Technological Requirements

The technological requirements are considerable and require supply chain aware sourcing and sourcing aware supply chain and expertise from source to sink and back again on both sides.

A continuing reminder that if you want guidance in the short term, hope that your favourite provider reaches out to Bob Ferrari of Supply Chain Matters or the doctor and enables us to focus on writing the series (or in-depth e-book) explaining what modern Procurement and Supply Chain Tech needs to look like (and how it needs to be implemented) to address the challenges, reduce the risks, and address the priorities versus just dripping out tidbits as free time permits.

We’re continuing our foray into the top barriers to success that we outlined in our top barriers post that chronicles the barriers that keep coming up over and over again in every Procurement survey in our effort to ensure that you don’t have to read another state of procurement study for the next 5 years. Today our focus shifts to quality and supplier reliability and continuity.

A Brief History …

Back during the Industrial Revolution and the Gilded Age, most corporations were vertically integrated down to the raw material supply. It was one big operation from raw material to processing plant to distribution to end customer. If there was a quality issue, it was your operation, you went to the factory, you had a stern talk with the factory floor manager, actions were taken, and quality improved. If supply wasn’t steady, it was a problem with your mines or farms and the solution was the same. You went to the mine or the farm, had a problem solving session with whomever was in charge, and that was that.

While the railroads may have required supply from a lot of different corporations, which resulted in the first handbook for modern purchasing (Handbook of Railway Supplies, 1887), most operations didn’t and, moreover, the railroad tycoons often owned many of the companies they needed. However, with the introduction of the Ford Model T in 1908 and the invention of the first modern electric refrigerator, the Domelre, in 1913 we entered an age where appliances and automobiles and other modern conveniences started to required specialized parts. As a result, as time progressed forward, more and more businesses began to specialize in the production of chemicals and parts to support the increasingly complex manufacturing requirements that arose in the production of these modern conveniences.

Supply reliability and quality became an increasingly important concern as operations went from having to source a few chemicals and parts to having to source dozens (and then when the age of electronics began, hundreds and eventually thousands). If there was a quality issue, you could complain, but you couldn’t ensure it would be fixed in a timely fashion. Thus, reliability of supply started to become an issue if you didn’t have alternatives.

Then global outsourcing began to step up in the 1960s and explode in the 1980s, especially to Japan and then to Taiwan for electronics and then to China and the rest of Asia for everything else. Supply chains extended halfway around the world for everything we buy daily. Quality may or may not match the sample (where the production batch may or may not be produced in the same factory), and if it’s poor, there’s not much you can do about it except to find a new supplier and wait weeks or months for a new shipment. But that’s even assuming you can assure supply at all.

The Problem

Supply chains have gone from tight vertically integrated operations in single corporate monopolies to overly extended and overly complex behemoths that span the globe, consist of multiple tiers (that can easily be 6 to 8 levels deep on average), and often consist of 10,000 or more suppliers because of electronics that supply commodity wiring and connectors and chasis to one-of-a-kind custom manufactured processors. We’ve went from a point where the head of production knew every key component in the product; where it was mined, processed, and made; and who was responsible for or supplied it to the point where maybe one person can name all of the tier 1 suppliers currently being used to produce a single product in question, even if it happens to be one of the core products produced by the company. And that’s a big maybe if there’s more then 10 tier 1 suppliers involved.

An average large organization now has tens of thousands of “active” suppliers that supply everything from office supplies and MRO to products and services for resale to services, with over 80% of these suppliers being in the tail in terms of overall spend (and, usually, number of purchases, with some “active” suppliers only being used once or twice in a year, and some only being used for one year). That still leaves a few thousand core “active” suppliers in the top / strategic spend categories, and it’s impossible to keep an eye on every one and be certain that the next (critical) order is going to come in. Especially when it’s not just supplier solvency and performance, but geo-political, logistical, and regulatory issues that can get in the way, disasters that can bring operations to a stand still, and economic issues (like trade wars) that can upend a supplier overnight.

The Necessary Realization

Not only are modern supply chains are too complex to manage without software, but so is supply assurance. This goes well beyond supplier selection for an award to continuous supplier monitoring from a compliance, performance, and risk perspective to ensure supply keeps coming in and proactively detect and predict issues that may arise.

This is not something any human, or team, can do without a lot of technological help. You need solutions for:

TPRM — Third Party Relationship Management — i.e. Supplier/Vendor Management on Steroids where you can track all continuously active direct tier 1 suppliers who are in the top 80% of spend or supply a sole source critical component or service and maintain their regulatory, compliance, insurance, performance, and risk profile that can be accessed before sourcing events, during regular performance reviews, when issues are reported, and so on.

SCV — Supply Chain Visibility Solutions — that tracks and monitors your supply chain at least to tier 3, and further if possible. You’re going to have a tier 1 problem if your tier 2 supplier goes bankrupt, becomes inaccessible to the tier 1 supplier because of new sanctions or border closings (due to geopolitical tensions or uprising), or happens to be near the epicenter of a significant natural disaster that at the very least will cut off supply lines even if its plant wasn’t damaged. You need to be monitoring to the extent possible critical tier 2 and tier 3 suppliers that you know provide the majority of parts and raw materials that go into your products, especially if your tier 2 and tier 3 suppliers have limited options. And if there’s an issue, you need to know months in advance because chances are your tier 1 won’t realize an issue until your tier 2 is late, which could be way too late for you to find another source of supply.

And, more over, you need to be developing ready-to-go mitigation plans and processes to react the minute you realize there is a disruption anywhere in your critical chain or the products delivered don’t meet the quality requirements. Tagging and monitoring isn’t enough (even assuming you can get all the data in that you need to tag and monitor appropriately), you need to know how to pre-plan, react and adapt quickly to a completely unexpected situation, and execute efficiently.

This means you need a to understand not only your supply chain and production requirements, but also risk identification, risk mitigation, and risk plan execution. Moreover, you need to understand it beyond what an average risk manager in Risk Management (who are looking at more immediate Legal and Cyber risks understand it!)

The Technological Requirements

The technological requirements are considerable and require supply chain aware sourcing and sourcing aware supply chain and expertise from source to sink and back again on both sides.

A continuing reminder that if you want guidance in the short term, hope that your favourite provider reaches out to Bob Ferrari of Supply Chain Matters or the doctor and enables us to focus on writing the series (or in-depth e-book) explaining what modern Procurement and Supply Chain Tech needs to look like (and how it needs to be implemented) to address the challenges, reduce the risks, and address the priorities versus just dripping out tidbits as free time permits.

We’re continuing our foray into the top barriers to success that we outlined in our top barriers post that chronicles the barriers that keep coming up over and over again in every Procurement survey in our effort to ensure that you don’t have to read another state of procurement study for the next 5 years. Now it’s the barrier of organizational support and, specifically, technical support. (Most organizations just don’t have the IT Crowd they need!)

A Brief History …

As we discussed with the top barrier to success, siloed ways of working, with each successive innovation, business, and process improvement, became more complex and required more education and experience to perform. As a result, with each successive innovation, the available talent pool shrinks. Moreover, with the average large organization having eight (8) or more departments (Finance, Ops, HR, Legal, Sales, Marketing, IT, R&D, Manufacturing, Procurement, Supply Chain, Logistics, Risk Management, etc.), each department is always stretched and needs more organizational support. Plus, the number of IT systems both available and implemented in an average organization has skyrocketed from a handful (an accounting system, a MRP, and basic word processing) to, according to a recent Zylo survey, 660+ SaaS applications (on top of dozens of installed systems). (That’s average. Some organizations have more than 1,000 SaaS applications!) Despite this scary fact, there’s still only one understaffed IT department.

The Problem

In a nutshell, due to the proliferation of complex processes and their component tasks as well as the combinatorial explosion of systems and software to implement and, theoretically, support those tasks, there has been a similar, combinatorial, growth in the need for organizational and IT/Tech execution support in each enterprise department.

The Necessary Realization

The answer here is not easy. It’s not even easy to explain all of the factors you need to understand. But we will try.

First of all, as per an upcoming barrier to success, there is a talent gap in many areas. This is true even if there isn’t a shortage of available talent in the market since organizations have fixed budgets and can’t always hire all of the talent the organization could use, so there could still be a talent gap internally.

Secondly, even if the organization has talent capable of dealing with every support requirement, there’s only so many hours in a day and only so many individual support calls that an overworked (IT) support employee can take.

Thirdly, despite promises that technology would solve everything since the introduction of the first MRP (over 60 years ago), it hasn’t, and the technology project failure rates, which have never dropped below 66%, have been rapidly rising for the past 5 years or so and recently reached an all-time high of 88% (with some informal and formal indications, including a recent MIT study, that AI technology project failure rates are now as high as 95%). (See our article on two and a half decades of project failure.)

As a result, there is no perfect or simple solution to this one. However, there is a simply stated solution, and it is this:

Identify all of the tasks and processes that can be automated and automate them. (And, as per many, many articles on this site — this does NOT mean [Gen]-AI!)

However, this is easier said than done. It requires the classic people – process – technology approach which involves your best people identifying and documenting the right process, along with all of the exceptions, then figuring out what can be automated with technology, and finally taking the time to identify the right technology, define the implementation plan, oversee the implementation, do the testing and validation, and train all of the stakeholders who have to interact with it how to do so appropriately. In other words, as SI likes to say, it’s the modernized talent – transition – technology approach.

This has to be done for each process individually, and the time and effort required will vary. Especially when it comes time to identifying the right technology which, the majority of the time, will not be the tech-du-jour in the latest hype cycle. Sometimes it will be a 60 year old algorithm wrapped in 20 year old RPA. It’s not the tech, it’s the outcome … and whatever gets you there as quickly, efficiently, and free of unnecessary human effort as possible. (Remember, machines are great at thunking, as they can do trillions of calculations in the time it takes us to do 10, which is something we are not good at; but they are not great at thinking, as they are not intelligent, but that is something we are good at — but yet we spend 80%+ of our time doing tactical data processing best left to machines when we should be more focused on strategic decisions and the human element of business.)

It will take a lot of time, but if the organization as a whole follows the 80/20 rule, and focusses in on the processes that are taking the most time and deals with those first, one by one, and doesn’t fall for the vendor and consultancy hype and get misled down the wrong path, within a few years, they will start to make significant progress and within a decade will have all of the time consuming processes under control. (After all, the average journey to best in class by a committed organization is eight (8) years, as determined by the Hackett group in the 2000s.) In fact, within a couple of years of just automating one process at a time, you’ll will suddenly realize that you have made significant strides well beyond what the big consultancies will promise, but never deliver with big-bang AI projects that never end.)

The Technological Requirements

The technological requirements are considerable and require supply chain aware sourcing and sourcing aware supply chain and expertise from source to sink and back again on both sides.

A continuing reminder that if you want guidance in the short term, hope that your favourite provider reaches out to Bob Ferrari of Supply Chain Matters or the doctor and enables us to focus on writing the series (or in-depth e-book) explaining what modern Procurement and Supply Chain Tech needs to look like (and how it needs to be implemented) to address the challenges, reduce the risks, and address the priorities versus just dripping out tidbits as free time permits.