Taking The Heat Out Of The Resolution Room

If you can’t take the heat get out of the resolution room! Or invite Watson! 

VladisChern/Shutterstock.com

We’ve all been there. Something’s gone terribly wrong with a major customer delivery. Emails are flying around and there are rumours from HQ that “heads are going to roll”.  Everyone concerned has been summoned to “THE meeting” in order to resolve the supply chain issue.

We know what happens next; fists slamming, red faces, an embarrassing lack of data and a lot of verbal ping, pong. Eventually, a resolution is found.

But what happens when Watson is in the resolution room? Could this take the heat out of your supply chain disputes?

 What is a Resolution Room?

A Resolution Room provides the organisation the ability to collaborate quickly to resolve supply disruptions. Users can discuss and resolve issues with other colleagues, business partners, or their suppliers. What distinguishes Resolution Rooms from all other collaboration platforms is Watson.

What does it mean to have Watson in the resolution room?

The big benefit of Watson being in the resolution room is that it recommends experts, provides insight from all data and actionable advice based on learned best practices.  Over time, it leverages Watson’s capability to develop a body of knowledge by learning how issues were best addressed in the past.  This enables greater speed and accuracy in responding to future events.

“Watson provides the opportunity to deliver business value and insights from all of these data insights – structured and unstructured, data from weather patterns, news, D&B and supplier IQ,” explains Joanne Wright, Chief Supply Chain Officer, IBM.

“It does this with speed and accuracy. No more are we saying ‘OK…let’s get the data and meet again tomorrow’ because Watson takes my team’s input and incorporates that into the next iteration as we go.”

Watson In The Resolution Room: A Case Study

IBM Watson is always a room participant, so you can draw on Watson’s expertise using natural language to ask a question, for example: @Watson what is the status of order ABC123?

Imagine the following scenario; A Late Shipment alert in the Ops Center reveals that orders of your most popular drone are in jeopardy because the shortage of the entire supply of a critical part, a lithium battery, has been delayed. You create a Resolution Room to manage the incident collectively.

Watson is in the room.

Whilst your team discusses how best to manage the problem you have the ease of asking Watson questions such as:

  • Which customer has the most sales dollars that will be late?
  • What are the financial impacts of any late orders?
  • Have we experienced this problem before? Who are the experts who have worked on these similar issues in the past?
  • Are there any alternate suppliers for part number 46001?
  • Why is there a shortage of lithium batteries?

Watson can provide answers to questions such as these based on the data available in the data model and in other Resolution Rooms. Learning over time, it becomes smarter and able to provide better insights about your supply chain.

Click here to try a Resolution Room demo. 

Got a big idea you want to push through a big company or simply want to learn more about Watson and the Resolution Room?

Sign up for next week’s procurement webinar, How IBM Built the Cognitive Supply Chain of the Future. hosted by Tania Seary and featuring IBM’s Chief Supply Chain Officer Joanne Wright. 

Data. Tech. Talent. Giving Procurement The Edge

Today’s challenging business environment is marked by social and economic uncertainty, weakness and volatility in emerging markets, and increasing geopolitical risk. How can  procurement teams ensure they have the edge?

Dramatic changes in the role of the procurement function over recent years have meant a remit that exceeds traditional operational responsibilities, often having a critical impact on shaping business models. The challenge is to continue adding value – addressing new opportunities and risks, and becoming a strategic business function – without increasing overall cost.

CPOs need to think differently about three key assets – data, technology and people – and how to bring them together to deliver for their stakeholders.

Data deluge

Today’s procurement teams face a deluge of data from internal and external sources, and in the digital age, new data streams are emerging every day. Many companies have yet to overcome the problems of poor quality data, held on disjointed legacy systems. Historical spend data is often uncategorised and needs significant cleansing before it can form the basis of a forward-facing outlook.

So, while procurement teams can access an immense amount of information, it’s a challenge to deliver valuable, actionable insights. Used wisely and effectively data can deliver robust insights to underpin every decision and tackle today’s challenges head on. Mismanage it, and it can swamp internal teams and lead to indecision and paralysis.

Tackling technology

Technology is frequently seen as being the answer. We heard an enormous amount about digitalisation, and the promises of AI and ML in 2017, yet few organisations are ready to adopt these new digital technologies. Many procurement operation teams recognise they have yet to make the most of existing technology, and tackling the problems that come with legacy systems, so their focus is on getting the basics right.

The first task is to understand which technologies are applicable to organisational challenges and maturity, and this assessment is important to create a digital roadmap for the future. Technology is only an enabler – not the complete solution – and needs to be fine-tuned to match individual business contexts.

People power

In theory, putting data and tech together creates intelligence, but all too often the process fails to produce relevant insights. It is the third asset – people – which can have a major impact on the potential to generate valuable business information.

There are plenty of talented individuals in existing procurement teams, yet many CPO’s believe their teams lack the skills required to turn strategy into results. They recognise that unless they have greater visibility and insight, it’s difficult to make the right decisions. For category and contract managers, the largest skill gap is in analytics, where teams struggle to use levers including external market intelligence, supplier portfolio optimisation and actionable spend analysis to best effect.

As procurement’s influence in the organisation grows, innovative technology gets introduced, and new data streams become available, roles of procurement professionals also evolve. This necessitates continuous review and addition of new skills and capabilities which may not exist in the current team.

Helping hand

We have launched a white paper looking at what solutions can be used to overcome the data challenge, decode technology, and plan how the skills gap can be resolved, to help procurement teams become more active influencers and respected decision makers in 2018.

Welcome to the Most Miserable Day of the Year

Feeling down? You’re not alone! Today is Blue Monday, a date widely claimed to be the most depressing day of the year.

Andrey Kozachenko/Shutterstock.com

The concept of the most miserable day of the year was first publicised back in 2005, dreamt up by a public relations agency on behalf of holiday company Sky Travel.

Put simply, the “equation” used to calculate when Blue Monday falls is nonsensical pseudoscience (i.e. absolute baloney), but that doesn’t mean it isn’t fun. 

W=weather, D=debt, d=monthly salary, T=time since Christmas, Q=time since failing our new year’s resolutions, M= motivational levels, and Na=the feeling of a need to take action.

In other words, the horrible weather (in the northern hemisphere), the realisation that you’ve overspent in December and that your salary isn’t going to cover it, and failing your new year’s resolutions outweighs your flagging motivational levels and the feeling of a need to take action to start the year with a bang.

 

Two factors missing from the equation

  1. Keeping up with the online Joneses!

For those of us who spend a lot of time on social media, there’s another theory emerging about why this time of the year can be so painful: social media envy. How many posts have you seen on LinkedIn along the lines of… “I’m SO EXCITED ABOUT 2018! I’ve already secured 15 new clients, I’ve met my future spouse, and I’m running a half-marathon every morning before a super-healthy breakfast! Go ME!”

If you’re exposed to enough of this, it really can make you feel inadequate. “Why aren’t I feeling this motivated?” “Why do I just want to crawl back into bed?” “Where’s MY future spouse?”

  1. Are people really brimming with joy about being back at their desk?

Yes, there is a chance that some of your co-workers are genuinely chuffed to be back at the grindstone, and best of luck to them. But for the rest of us, the end of long, pleasant holiday is really no reason to celebrate. It’s hard to get back into the swing of things and regain your work-week mojo – and until then, it’s easy to fall into a bit of a slump. After all, have you ever seen your kids’ reaction when a “back to school” ad comes on the telly?

Take heart, though, from the likelihood that many of your (apparently) highly-motivated, back-to-work-loving colleagues on social media are in fact putting on a front. Whether it’s for the benefit of their bosses, their co-workers or their clients, the super-positive post may not reflect the mood of the person glumly typing it out.

So – wishing you a miserable Blue Monday. Try not to eat too much chocolate.


In Procurement and Supply Chain News This Week:

Fiat Chrysler Reshoring Production

  • Fiat Chrysler Automobiles is investing $1 billion to move production of Ram Heavy Duty pickup trucks from Mexico to Michigan.
  • The move will lower the automaker’s exposure to potential changes to the North American Free Trade Agreement (NAFTA).
  • Approximately 2500 jobs will be moved to the company’s factory in Warren, Michigan.

Read more: http://fortune.com/2018/01/12/fiat-chrysler-michigan-mexico-nafta/

 Iranian and Chinese Tankers Collide

  • Thirty-two sailors are presumed dead after Iranian tanker “Sanchi” collided with Chinese freighter “CF Crystal” 257 km off the coast of Shanghai. The casualties are from the Iranian vessel, while the 21-member crew of CF Crystal have all been reported safe.
  • The Sanchi was carrying nearly 1 million barrels of ultra-light oil, bound for South Korea. After listing for nearly a week, a large explosion sank the vessel on Sunday.
  • The cause of the collision is unknown. Thirteen ships were employed in the rescue effort, which has been hampered by poor weather.

Read more: http://time.com/5102663/iranian-tanker-collision/

 Maccas Is Finally Ditching Foam Cups

  • McDonald’s has announced a plan to use recycled and certified sources for its fibre-based packaging by 2020, while foam packaging will be eliminated by the end of 2018.
  • Polystyrene drink containers are known to be eco-unfriendly and very difficult to recycle. The restaurant chain eliminated polystyrene packaging for hamburgers nearly 27 years ago.

Read more: http://metro.co.uk/2018/01/13/mcdonalds-will-get-rid-foam-packaging-2019-7226373/

3 Reasons Why You Should Multisource Your Procurement Software

Choosing new procurement software should be exactly that, a choice! Duncan Jones on why organisations should follow an eclectic, multi-sourcing strategy for their key business applications.

While doing my research for The Forrester Wave™: eProcurement, Q2 2017, I was surprised and disappointed by how many companies I interviewed had bought an incumbent vendor’s eProcurement product without really looking at alternatives. For instance, one source told me “we didn’t choose Ariba, we chose SAP, and SAP chose Ariba”.

That’s a dangerous strategy, often driven by people who are thinking more about their own short-term job security than about their current employer’s long-term success. Yes, there are advantages in buying software from a known source, but those won’t outweigh the disadvantages if the product is deficient, or fails to keep pace with the market.

An existing supplier’s product, such as SAP Ariba, or Oracle Procurement Cloud, may be the best choice for your organisation, but it should be a choice, after you have compared it with leading independent alternatives.

I see a similar bias towards suites driving market consolidation at the moment, such as Determine/ b-pack, Coupa/ Trade Extensions, Tradeshift/ IBX and BravoSolution/ Puridiom. Many clients tell us they want a complete suite to support all their digital procurement, including supplier risk and performance management (SRPM), upstream source-to-contract (S2C) and downstream procure-to-pay (P2P).

Yet our research suggests that very few companies actually implement a whole suite, even if they buy one. I advise most clients to follow an eclectic, multi-sourcing strategy for their key business applications. I don’t mean assembling a solution from 15 different products, but maybe four or five.

For example, you may want one central solution for S2C, embrace two or three P2P products that different autonomous divisions currently use, with maybe one or two additional specialist products for, say, services procurement, or SRPM. This approach may be more appropriate for your organisation because:

  • It may take too long to choose and implement a single suite enterprise-wide. You have to live with obsolete software while you collect requirements, argue about priorities, and then roll the suite out module by module and site by site. Multi-sourcing is a more agile approach, enabling individual divisions to move forward while still allowing you to quickly implement a global point solution to address an urgent need.
  • Suite approaches cause vendor lock-in that is hard to escape. Software decision makers who prize integration over innovation risk ending up with obsolete software. Software giants’ portfolios are of inconsistent quality; they cannot keep all their products at the head of the market. Some, such as SAP SRM and Oracle iProcure, lag so far behind that the vendor decides to replace them. Independent vendors, such as Hubwoo, IBX and Perfect Commerce, may get acquired more for their customers than for their technology. Those customers are trapped in products with an uncertain future, because switching suites involves changing everything at once.
  • You need to be able to take advantage of valuable innovation from new sources.The eclectic CPO is constantly watching for new ideas that can make him more successful and doesn’t care from which direction they come. The suite CPO, in contrast, has to wait for his chosen vendor to spot, implement and integrate that idea. Right now there is some exciting innovation going on in the application of artificial intelligence to the Purchasing domain, particularly in risk assessment and monitoring. Vendors such as Ecovadis, GRMS, Resilinc, and risk methods help customers identify and mitigate risks more effectively than any manual process could do. Smart CPOs will be evaluating these services now and incorporating them quickly in their SRPM frameworks, while their laggardly peers are waiting patiently for their suite providers to catch up.

The bottom line

Smart CPOs should consider an eclectic software strategy. Balance the benefits of intra-suite integration with the potentially greater benefits from smart, easy-to-use, flexible specialist products. Look at what innovation is available in the market before you woodenly replace your existing product with the same vendor’s new offering. And even if you do base your digital procurement strategy on a suite, ensure you complement it with specialist products that fill gaps or extend it into new areas.

You Will Be Assimilated: The Collective Intelligence Of Procurement

For those who remember “The Borg” from Star Trek, you’ll remember the notion of a dispassionate alien mind-being that would suck up your individual mind to subsume into the collective intelligence.  Resistance is futile. You will be assimilated.

Crazy stuff, right?  Or maybe not.

Flash forward to today.  For most people, your every move is being tracked by your smartphone, social media apps, web browsing, and credit card transactions.  Ever wonder why Google and Amazon are basically giving away their helpful devices and AI assistants?  You are being watched.  You are the product (not the customer).  You are the raw materials of a collective intelligence being built upon your individual experiences and desires.  In other words, the proverbial machine is watching and learning from you (in order to sell to you, er, rather, to “better meet your needs”).

But, this is all consumer stuff, right?  B2B is different, right?

Sort of – but it’s not THAT different.  And with all the regulatory pressures coming on consumer data privacy, as compared to much of the privacy that you sign away your rights to when you enter an employment contract, the tables may actually turn here. If you’re using a popular cloud-based Procurement system, you are also being watched (many providers analyse your system behaviour to figure out how you navigate the system and how to help you… yes, the chatbots are coming). If you use a procurement “business network” or eMarketplace (e.g., Amazon Business), your suppliers are signing away some of their intellectual property – whether they know it or not.  And smart companies are trying to gain a market intelligence advantage through digital business strategies in the supply chain. There’s a reason why GE created Predix; why Flex funded Elementum; why DHL sells supply chain risk technology; and so on.  Adoption creates insight and intelligence… and advantage.

All this isn’t necessarily bad for you though.  It serves up price benchmarking, risk intelligence and improved system usability.  It also signals how the world is moving away from “empty apps” that push documents around in workflows and move towards systems that are building intelligence to make your apps “smarter”.  This intelligence is typically built using machine learning fed by large data sets that help improve repetitive tasks like spend classification. Of course, AI is a bigger topic, and there are 23 distinct areas in AI for procurement and supply chain that we’re following that I can’t cover in a single blog post!  For example, contract management is a great example where AI is already having an impact and this will be very disruptive in the Legal services (e.g., Legal BPO) area.

Still, building your collective intelligence for your firm doesn’t necessarily require AI.  You can avail yourself to some good old-fashioned knowledge management built up from the various collectives that are all around you:

  • The internal corporate collective. Learn from consulting companies and build presentation storyboards of your procurement projects that created change and value – and use them to win over skeptical stakeholders.
  • Your supplier collective. Your current supply suppliers, previous suppliers, “almost suppliers” (who bid on your business), and potential suppliers via crowdsourcing are a wealth of knowledge – if you know how to tap them through supplier innovation programs and proper supplier management processes.
  • Your customer collective. This includes not just internal stakeholders, but external customers as well.  For example, Lenovo uses its social customer mining tools to identify key customer/demand information that can be passed upstream to suppliers.  On the flip side, many similar intelligence tools are being deployed on the supply side with varying results (that’s a whole topic for another day).
  • The installed base collective. Your procurement app providers, consulting providers, and managed service providers are likely working hard to extract and productize your individual intelligence into a re-saleable collective intelligence. Choose a provider that is working on building collective intelligence into its overall platform strategy.
  • Your peer/community collective. There are lots of communities out there right now where you can learn from your peers – and many of them are free. You’re learning right now by reading this on Procurious, so you’re already well on your way!

We even practice what we preach at Spend Matters when we tap into this collective intelligence of procurement technology users by capturing end user satisfaction (think Net Promoter Score on steroids) and using it as an entire axis of our “SolutionMap” vendor scoring model/methodology.  And, yes, there’s a freemium version (it has eight procurement technology areas mapped out based on five different buyer personas from which you can select)!

The bottom line is that although we all start with a certain amount of individual intelligence, it’s the collective supply market of intelligence that is all around us if we can learn how to tap it, build it, and wisely bring the right intelligence back to our individual selves (and we’ll even be able to augment that individual intelligence into our own personal bots and ‘digital twins’).  And since procurement should be enabling stakeholders to also tap that collective intelligence of supply, it couldn’t be a more important competency to build right now.

So, go bravely into that supply market and assimilate yourself into the collective intelligence of procurement and be smarter and better from that experience.  It’s really what life is all about, isn’t it?

This article was contributed by guest author Pierre Mitchell, Chief Research Officer and Managing Director at Azul Partners.

The Best 10 Minutes of Wasted Time I Ever Spent

Have you ever sat in a meeting and thought, ‘I am never going to get these 10 minutes of my life back’? I had that experience and it turned out to be the best poorly-used time I ever spent.

During my time as a procurement consultant, I once met with a client who wanted to introduce me to a supplier she highly recommended. She pulled out a two-inch thick binder filled with supplier business cards – she had accumulated years’ and years’ worth of prized intelligence. She couldn’t remember the supplier’s name, so she carefully flipped through the binder, one – page – at – a – time, hoping to recognise their logo or card design. By the time she found the card 10 minutes later, I couldn’t stop thinking about the number of binders and stacks of business cards sitting under people’s desks filled with intel, but not accessible to anyone else, not leveraged by procurement teams, and not benefiting suppliers.

I copied down the supplier’s information and handed back the card, as she didn’t want to lose their contact information. I walked away asking myself:

What innovation constraints did it create that no one else could access the information?

What would that loss of knowledge do to the organization when that person left the company?

How much time is being spent searching for information in disparate sources of data?

My Break Through Moment

That meeting would become the genesis of tealbook, the company I founded to deliver actionable supplier intelligence to enterprise. Of course, that 10 minutes was also only just the beginning. I spent the following 8 years seeing the same challenges across Fortune 100 and emerging companies looking to reduce process friction among stakeholders while making faster supplier decisions. I looked for a solution, but nothing was available. This was my career break though moment.

I have met many procurement professionals with a strong inner entrepreneur. Stepping out of the security of a corporate function to start a business is scary and requires the bandwidth for risk taking. You can satisfy your passion for entrepreneurship by getting involved in start-ups looking for guidance and advisors as they grow their business. But if the urge is too great to resist, you should take the chance. Before you do, here are a few things that might help shape your future venture:

  • Pay attention to inefficiencies in your day to day work life and validate them with your peers. Understanding your space and being an expert in your field will help shape your business and bring confidence to future clients and investors.
  • Spend some time building a business plan. What is your business? How are you going to develop it? How will you monetize or where will the capital come from to support its growth? Joining an accelerator program while keeping your corporate job (look into The Founder’s Institute) can be a great way to shape and validate your business idea.
  • No one will be as passionate about your idea as you are – keep that in mind as you are reaching out to potential customers and make sure your value proposition is strong enough for someone to champion it and make it a priority (you know best that championing and getting the budget to bring in a startup is not easy).
  • Think about your future and where you want to be. If building a business is part of it and makes you want to wake up every day (and work around the clock!), then go for it and give it your very best shot! You will never regret trying and you will own its success!

Sometimes I think about where inspiration comes from. It is often the simplest moments or actions that lead to the creation of solutions, and the founding of some of the best companies.

About Procurious’ Powered by 5: Procurement Entrepreneur – Tealbook Founder and CEO Stephany Lapierre  

That one meeting would become the genesis of tealbook, the company Stephany founded to deliver actionable supplier intelligence to enterprise. Stephany knew that if she could get those business cards out of her client’s binder and into a centralised, intuitive cloud-based platform, the client would be able to leverage the full capabilities of her suppliers, her peers would have instant access to her rich knowledge legacy, procurement would use the intelligence to make faster decisions, and her company would be able to preserve all of its supplier intelligence through turnover, reorganisation, etc.

Three years ago, Stephany put the pieces together and since then, her team and has collaborated with customers to gather requirements, build out functionality, design a social media-inspired UI, and lay the foundation for incorporating AI capabilities. With every new enterprise client, tealbook gains new insight into the upside potential of accessible intelligence, and every new supplier that creates a profile expands the understanding of buyers across companies and industries.

Team Approach: How Procurement Pros Can Procure Talent Better

What’s harder than finding top talent for your procurement team? Finding the RIGHT talent!

The only thing harder than finding top talent in the current candidate driven market is to find the right talent. Especially those individuals that have the technical and collaborative skill-set required to be successful with today’s ever-growing list of expectations from Procurement practitioners.

In our recent experience with several clients we have witnessed organisations building teams from scratch due to newly undertaken Procurement Transformation initiative. There are many cases of leaders bringing along a key player or two with them, or sometimes executives will hire consultants or a trusted managed service provider (MSP) to help supplement their efforts. This got us thinking a bit more broadly about whether companies should consider hiring teams instead of individuals as they are undergoing transformations. Based on our experience, we would say yes to this option. The three main benefits we see to this approach are immediate impact, decreased conflict and increased collaboration.

Team Players

Companies increasingly want skills that are difficult to assess in job interviews but can be easily seen in a team setting environment. According to the World Economic Forum, following are the 10 skills most sought after by companies in 2020:

  1.  Complex problem solving
  2.  Critical thinking
  3.  Creativity
  4.  People management
  5.  Coordinating with others
  6.  Emotional intelligence
  7.  Judgment/decision making
  8.  Service orientation
  9.  Negotiation
  10. Cognitive flexibility

Subjective and biased candidate selection process

One of the many pitfalls for hiring managers is the subjective and biased candidate selection process. There is still a tendency to over-rely on the tough interview questioning and ultimately hire candidates that either look like us or come from similar schools and backgrounds. So, think of the impact if a Director or VP was hired that could bring on a team of people he or she knew well. Imagine a leader who knew exactly where to deploy resources to maximize their benefits, such as specific commodity expertise or management of key supplier relationships. This hiring manager would leverage the hard data they have on these preformed teams and position them to hit the ground running.

Conflict amongst team members

Another scourge facing employers today is that of conflict amongst team members. These conflicts are the leading cause for employee disengagement, burnout, turnover, lower productivity and creativity, etc. By hiring teams that have a history of successfully functioning at a high level, organizations increase the odds that their new hires will have the reservoir of rapport and goodwill to accelerate positive results. It’s analogous to why Procurement prefers early involvement when it comes to advanced engineering of products/services, so they can help stakeholders engage with the best suppliers. It’s a lot more difficult to select and negotiate when you have built your product specs around a specific supplier’s capabilities and technologies rather than vice versa.

Superior collaboration

And finally, there is the benefit of superior collaboration that comes from being part of a high performing team. Imagine how an empowered team would feel knowing that they have been hired en masse as the “A-Team” when it comes to the mission critical nature of their jobs. It would be an intense, yet collegial environment where they would almost be joining as insiders and delivering tangible value. Just this past year we have witnessed a couple of examples that are in stark contrast as it relates to hiring and building out groups. Company A was a CPG leader in the Midwest US and brought on a Head of Sourcing that, in less than two months, created and filled several roles. These were all filled with former direct reports and colleagues from her past two companies. Not only did the team come in firing on all cylinders in a new environment and deliver immediate results, this hiring manager was promoted to a newly created senior level position within 7 months of joining the company. Company B hired a leader that had the perfect experience on paper, but in his transformation journey he’s been a lot less successful. This was partly because he didn’t assimilate into the company culture and insisted on getting rid of most of the current employees on his team. Even though he had over 20 years’ experience with good companies, he failed to bring over a single person he has worked with in the past. His leadership style and reputation became a barrier to his and ultimately his department’s success.

While every company will have its own unique set of challenges surrounding types of candidates and expertise being sought, this team-hiring approach is certainly not a panache for all companies. But the ones that take the risk and try a novel approach to combat the challenges of procuring talent just may gain an advantage over their competitors that have not yet confronted the new reality in sourcing for the best.

7 Procurement Trends To Watch Out For In 2018

Which hot topics and trends will everyone in procurement be talking about in 2018…?

What’s the buzz in 2018? We’ve done a spot of investigating to identify all the hot topics the procurement world is excited (and concerned!) about in the coming year…

1. Technology Hype Won’t Let Up

Steve Banker, writing for Forbes, concurs stating that “emerging technologies such as blockchain, 3D printing, autonomous mobile robots, IoT, machine learning, and related technologies continue to get a tremendous of amount of publicity.

According to Supply Chain Digital, “The pace of innovation is picking up steam at an exponential rate.

“Robots, self-driving vehicles, electric trucks, blockchain, the Internet of Things (IoT), and new mobile-enabled categories are all poised to explode onto the scene in one form or another.

“It’s hard to predict what’s real and what will fade away, but expect 2018 to become a year of heavy innovation for supply chain leaders, even if it’s experimental.”

Vivek Soneja, writing for EBN online  asserts that “Blockchain capabilities have transformed collaboration across trading partner networks”. He believes Blockchain will “enable much tighter collaboration across supply chain planning and execution decisions. ”

Read our latest articles on Blockchain by Basware’s Paul Clayton and  InstaSupply’s Simona Pop.

2. Brexit Will Continue To Cause Disruption 

“While 2017 was the year of Brexit uncertainty, 2018 will be the year where things start to change,” asserts Francis Churchill on Supply Management.

Last year CIPS revealed that 63 per cent of EU companies planned to move some of their supply chain out of the UK as a result of the decision to leave the single market and customs union.

“The slower-than-expected progression of Brexit negotiations has put off business investments in current or new UK operations,” explains Gary Barraco on Global Trade Mag. Recent readings on economic growth showed investment by companies to be flat in the second quarter.

“Supply chain executives are voicing concerns about tariff and quota changes, hoping to keep trade open and flowing as it does today. For manufacturing to remain strong, the raw material imports from Asia need to remain duty and tariff free, as they are currently in the customs union. Costs could go up without the trade advantages, leading to higher export costs from the UK.”

We discuss the implications of Brexit for procurement in this Procurious blog. 

3. Cognitive will reign supreme

Global Trade Magazine predicts that “by the end of 2020, one-third of all manufacturing supply chains will be using analytics-driven cognitive capabilities, thus increasing cost efficiency by 10 per cent and service performance by 5 per cent.”

And IBM predict that, by this point, all of our important procurement decisions will be made with the assistance of artificial intelligence. We know that our teams must “transform or die” if we don’t want the function reduced to the back office,  facing extinction.

But if you’re still feeling a little overwhelmed by the magnitude and potential of cognitive technology or simply wondering how to get started, this Procurious article has some great advice.

4. Transparency

Paul Martyn , writing for Forbes, spoke to Sue Welch, CEO, Bamboo Rose, on her supply chain predictions for 2018, discussing why “transparency and sustainability will be practiced with more vigor in 2018.”  She said ” ‘There’s been an explosion of demand from consumers to know where their products are originating and the required information is extremely granular. For example, with a package of carrots, consumers want to know not only the farm where they were harvested, but also the row and lot number where the carrots were planted.’

“Welch, whose company, Bamboo Rose, works with a number of top retailers and apparel companies, expects traceability demands to not only shape how consumers buy, but how companies will source and market their services.

“Smart retailers will begin to market their products from an information/sustainability-first standpoint and to be credible about it, they’ll need to invest in integrating technology that makes this level of transparency possible at every level of the supply chain.’ ”

5. Cybersecurity

Global Trade Magazine predict that by the end of 2019, cybersecurity will have surpassed physical security as a top concern for one-half of all manufacturers, and in the transition to digitally enabled, cognitive supply chains, cybersecurity will have become a top investment priority.

“High-profile hacking cases that compromise sensitive information for millions of people will continue in the coming year.” states Soneja, “With the proliferation of data and connected endpoints, companies will need to step up their security and privacy protection protocols in 2018.”

Earlier this year, we spoke to Craig Hancock, cybersecurity expert and Executive Director of Telstra Service Operations on the dangers of cyber crime. Read the full article here. 

6. Back to basics

“While a number of new trends are giving procurement leaders directions to explore in 2018, many supply chain professionals are still aiming for easy-to-understand goals” explains The Strategic Sourceror.

“According to Deloitte’s latest research on chief procurement officers, cost advantages and cash flow improvements are still the bread and butter of the supply chain. Traditional efforts to improve contracts and advanced, tech-driven strategies can deliver favorable costs to companies.”

7. Big data is a big deal

“In the context of the supply chain for most businesses, big data and predictive analytics are still an untapped resource that can potentially provide insights which help anticipate or respond to events or disruptions,” explains Raanan Cohen on Supply Chain Management review. 

“Unpredictable consumer behaviour, traffic or weather patterns, and labour unrest are all external events that can disrupt a supply chain and lead to increased costs and customer service challenges. Big data can help organisations become better trading partners to their customers and suppliers. But before insights and analytics can be leveraged for a better supply chain, there’s a huge task at hand for the many organisations that need to first collate data points from all sources and align them to their business operations.”

Improve Contract Compliance by Thinking Like Sales…Not Procurement

Call us crazy but we reckon Procurement would be better off looking at the Contract Management process the same way sales does…

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If you’re anything like me as a procurement practitioner, you think of our end-to-end process in a linear fashion. It usually starts with spend analysis or some other source of information (budget, ERP, BI system output, etc.) and ends with Contract Management and/or Supplier Performance Management. For us, this is completely logical because the sub-processes that we view as the most “active” portions of procurement – strategic sourcing and negotiation – have been dealt with at this point.

In Contract Management and Supplier Performance there is something of a phased handoff back to the budget owners. After all, the spend we bring under management is rarely associated with a procurement need; we are often just temporary custodians of someone else’s spend.

Unfortunately, the procurement phase that covers implementation and ongoing Contract Management includes the following two milestones:

  • The majority of the supplier’s value is created for the business.
  • Weaknesses and disturbances come to light, threatening to diminish total value and reduce contract compliance.

Procurement may see the contract phase as the end of the project, but our internal stakeholders (and in many cases, our suppliers) see this as the beginning of the effort. Everything up to this point has been theoretical, now it is real.

Contract compliance: think like sales

As crazy as it sounds, procurement would be better off looking at the Contract Management process the same way sales does. The day after you sign a contract is the first day of a new sales cycle. Your contract win is a prospect once again, maybe not for the same product or service they just bought, but for expanded coverage, increased volume, a longer commitment, or an alternate type of offering. This is the worst possible time to go hands-off, especially if you think there is the potential for more business.

Procurement may be guaranteed “more business” from their captive clients (a.k.a., internal stakeholders), but if those clients aren’t satisfied with the services and support they receive, they have no incentive to be loyal; to procurement or to the contract. In the alternate scenario, procurement stays involved to ensure a smooth transition to the new contract and serves as an advocate for the business as well as the supplier during the agreement lifespan. In this case, spend is far more likely to stay on contract where it lowers risk, increases savings, and delivers the desired value.

Here are a few examples of how procurement’s proactive investment in contract compliance can build loyalty for the future:

If the shirt fits…

In a sourcing project for driver uniforms at a freight company, several business divisions were combining their demand for the very first time. Each division brought their supplier and their current service levels to the table. Although being an incumbent was an advantage, the mandate was to select one provider for the whole company. This would inevitably lead to someone losing their incumbent so another division could keep theirs. After the selection was made, procurement redirected the team members who had been responsible for the sourcing effort to manage the rollout at the division transitioning to the new supplier. This not only minimized disruption to the business, it prevented the rise of resentment – something that could easily have lowered compliance and become a barrier for future sourcing efforts.

Have your supplier’s back

Sometimes you can tell that compliance is going to be an issue before the ink on the contract is dry. During a reverse auction for “35% water-added ham” at a wholesale grocer, procurement discovered that the category owner was secretly telling their incumbent supplier what they needed to do in order to win. After much drama, the supplier was excluded from the business because of their willingness to undermine the negotiation process. That left us with a guarantee of a new supplier and an ANGRY category owner. No supplier selected at that point was going to have an easy time with implementation. Knowing that contract compliance would be an issue, procurement took extra time to include metrics and SLAs in the agreement and worked with the new supplier to ensure that they would be able to report their performance back in detail. This effectively created a framework where they could quantitatively prove their performance. The wholesaler got the product they needed and the supplier was protected from unfair, costly complaints about their performance. Orders for “35% water-added ham” were placed and fulfilled with no disruption to local grocery chains. Yum.

Compliance credit where it’s due.

If procurement goes hands-off during Contract Management, we get no credit for value creation, but full credit for having created the circumstances leading to buyer inconvenience and frustration. The amazing thing is, that effective Contract Management is borne out when projected savings become realized savings – or not. And actual purchases become managed spend – or not. Without active Contract Management, there is a good chance that procurement’s efforts will be undermined and we’ll inadvertently create a tense relationship with internal stakeholders who we will, no doubt, need to work with again in the future.

In a Determine webinar featuring Spend Matters’ Jason Busch, Contract Compliance: Why It Matters to Procurement, he stated that contract compliance is more important than procurement performance. Strong words, but there are many components to that truth — and it’s a must-watch on-demand video.

Contract compliance and procurement’s role in ensuring it are a big and growing topic. You’ll find information on the subject in Determine’s extensive library of resources, or contact them to schedule a personalized demonstration of the Determine Cloud Platform.

This blog was orginally written for Determine by Kelly Barner .

Let’s Get Internet of Things (IoT) Ready for Procurement!

What can the the Internet of Things (IoT) do for you and your procurement team? 

IoT is a big buzzword these days. From industry experts to academia to specialised thought leaders, everyone is talking about how IoT as a technology has the potential to disrupt not only the day-to-day workings of our companies, but also the lives of the individual.

Panchenko Vladimir/Shutterstock.com

The Internet of Things: A History

Let’s go back a bit and see how it all began. In 1999, Kevin Ashton, a British technology pioneer and cofounder of the Auto-ID Center at MIT, proposed the Internet of Things (IoT). It refers to gadgets and applications with built-in wireless connectivity that can harness great amounts of data from their surroundings and help monitor, control and organise things better. From home appliances to fitness gadgets to technology helping industries automate their processes, IoT can do it all!

And two decades later, IoT is the live wire. Smart homes, smart gadgets and smart cars- IoT has already given us a glimpse how is future going to be. But what does it hold for procurement?

Procurement and the Internet of Things

For Procurement particularly, IoT works as an enabler, empowering companies to gain visibility into their spend analysis and keep a vigilant eye on their consumers consumption pattern. The supply chain data generated is monitored continuously and analysed for behavioral sets to make better-informed decisions. Having a proactive overview helps companies to estimate the demand and supply statistics, as they are aware of the needs and usage pattern of their consumers. This empowers them to negotiate with supplier side in a more streamlined manner as they know in advance what material and what quality and quantity is required. All these factors combined contributes to cost savings and brings value for the procurement function.

Another area where Procurement can benefit significantly is in the tracking and monitoring of the movement of goods within supply chains. Deploying the right set of sensors, which are tracked remotely with an IoT-enabled device can identify equipment faults, stoppages and leakages in real time allowing service and maintenance teams to respond to issues more promptly and accurately. This also ensures diagnostic data is obtained in order to d

eploy the right set of technicians.

These factors directly impact the maintenance costs incurred by a company, contributing positively to the overall cost savings.

There is more that IoT can bring to the table for Procurement function. But to realise the utmost advantages, companies must ensure that they are investing in the right kind of technology, processes and people. They need to invest in setting up the infrastructure that will unleash the possibilities IoT has to offer. In short they need to be ‘IoT ready’.

If you are curious to learn more about how IoT will impact procurement, do join our upcoming webinar where our expert group of panelists will examine the practical impact of IoT on how our supply chains will work and what you will need to do to become IoT ready.

Webinar Speakers

  • Jon Hansen – Editor and Lead writer at Procurement Insights
  • Robert Handfield – Executive Director of the Supply Chain Resource Cooperative
  • Mark Hubbard – Managing Director at Smart Brown Dog Ltd

Webinar on ‘Getting Internet of Things (IoT) Ready for Procurement’ is on January 18, 2018 | Thursday. Register here for free to reserve your seat.