All posts by Procurious HQ

Three Technical Terms Procurement Pros Should Stop Using Now

Do these technical procurement terms have a place in today’s organisation?


By pathdoc/ Shutterstock

Technical procurement terms. Whether you love ’em or loathe ’em you’ll probably have experienced definition disagreements and C-suite confusions. And that begs the question, do they have a place in today’s organisation?

For Nick Dobney, Former Global Head of Procurement – Puma Energy, procurement terms is the one thing that really gets under is skin. “There are terms that my C-suite won’t understand, my stakeholders won’t understand and, frankly, in procurement we spend a lot of time debating them as well.”

Nick believes that all the time and effort spent defining and redefining technical procurement terms is distracting procurement professionals away from delivering on behalf of the business. At Big Ideas Zurich last year, he outlined three of the terms causing him the most grief.

1. Tender

“My team know full well to never come to me and talk about tenders,” Nick jokes. He argues that “tender” is such a broad word, open to so much interpretation, that it has actually become meaningless.

“What do you want to do?” he asks. “Are you selecting a supplier? Are you exploring the market? Are you benchmarking your costs? If those are the things you’re doing, let’s say them. Let’s not wrap them up or hide it into the word “tender.”

2. Direct/Indirect

In procurement we constantly talk about direct and indirect spend.

“I’ve been in procurement for 25 years and I’ve never worked in a manufacturing company.” In a manufacturing company it might make total sense to use these terms and easy to understand the difference between direct and indirect spend. But the same can not be said for service companies.

Nick worked for an airline, where the distinction is unclear. “We bought aircraft, we bought fuel, we bought engineering services, we bought food and drink, we bought ticketing systems, we bought call centre operations. What’s direct and indirect?”

“In my world when I talk to the C-suite I need to talk about impacting operating expenditure, capital expenditure or the cost of goods sold.” Whilst it might be ok to reference indirect and direct spend amongst procurement professionals Nick advises not to waste energies trying to explain the terms to the wider business.

3. SRM

Some call it Strategic Relationship Management. Others say Supplier Relationship Management. “I don’t think [a room full of procurement professionals] could come together with a single definition,” says Nick.

“I know I’ve never used the words SRM in conversations with the CEO. The fundament of SRM means getting the best performance I can out of the suppliers I choose. So let’s talk about it as performance. Let’s talk about it as a means by which I get the performance I require in my business from my supply base and from my suppliers.”

Speaking in these accessible terms makes the procurement function accessible to business leaders and that’s what procurement professionals should be striving for. “We want to break those doors down. There’s lots of talk about getting procurement a seat at the top table and the first thing we have to do is make sure these terms we’re talking about – we only use amongst ourselves!”

Impacting the business

“The terms we use with our business leaders has got to be the terms that they understand,” Nick explains. “Can you explain simply and straightforwardly the impact you are having on the business?”

Leaders in your business want to know:

  • Are you taking assets of our balance sheet so we can free up resources to invest in product development?
  • Are you improving our margins?
  • Are you getting a better return on our investments?
  • Are you reducing our net debt?

And as Nick says, “the language we use is fundamental to how we can move away from being seen as a very technical function into being a function that really does contribute to the business.”

Nick Dobney speaking at Big Ideas Zurich 2018


Do You Have The Leadership X Factor?

What are the common traits shared by the top CPOs around the world and how can you demonstrate leadership within procurement and supply chain even if you don’t have a team?

CThe best leaders in procurement and supply chain know all too well that you don’t get results without the support and hard work from a killer team. It doesn’t matter how brilliant you are at your job, you can’t do it all yourself and having the best people around you will result in a huge multiplier effect on your overall output.

ISM’s CEO Tom Derry truly believes in this ideology. “The best leaders see the whole business, which most frequently manifests itself as a real concern for their people.” These types of leaders, who we all admire, understand that they got to where they are today based on the strength of their teams. “And so they’re always focussed on their team. How they’re building them , what roles are evolving, what skills they need now. They understand the bigger picture.”

Advice for a first-time procurement and supply chain leader

Tom believes that there is one important thing people need to understand before they set their sights on a leadership role. “The opportunity to lead people flows from you. You’re not a leader if you don’t have followers.” By followers, Tom means gaining support from colleagues within the organisation, to have people gravitate towards you as a natural leader.

“We all know people [like this] in our workplaces who aren’t formally leaders of the people [follow them] but they’re respected, they’re prepared they’ve done their homework. They have data to support their arguments, they’re affable and friendly and people like being with them because they’re seen as authentic. It’s those people who get the opportunity to manage teams in my experience.”

And whats the most important thing to remember once you’ve bagged that leadership role?

“The key to first time management is listening,” argues Tom. “I spend the first period of time doing one on ones and face to face interviews with my team. I ask them in an unguided way: What’s going on? What do you like about what you’re doing? What issues are you facing? What opportunities do you have?” And once you get all of this information on the table it’s so important to take action and respond. “If you ask for input you have to show that you reacted to it and show people your plan in a visual way.” What is the outcome from all of this listening and learning you’ve done and what is the future measure of success within this team going to be?

Part Seven of Tuesdays with Tom is available now. Click here to sign up and hear ISM CEO Tom Derry discuss common traits shared by top CPOs around the world, top tips for first time team leaders in supply management and how to demonstrate leadership even if you don’t have a team.

The Future Is Superfinance

At our last Procurement Thought Leadership Forum of 2018, sponsored by Basware, we discussed risk mitigation, Superfinance and the future of the CPO. 

How do you prepare for those black swan events that could truly impact your organisation? 

Can Superfinance transform the procurement and supply chain professions?

What challenges does the CPO of the future face?

At this Procurement Thought Leadership Forum, sponsored by Basware, we discussed risk mitigation, Superfinance and the future of the CPO. Check out some of the highlights below.

Understand Your World

Justin Crump, CEO at Sibylline thinks that every procurement leader needs somebody to tell them the world forecast so they can figure out when they’re going to need an umbrella.

Given the rate at which technology is evolving and how global events are impacting the world, it is increasingly difficult for companies to keep up without considering risk in real-time.

The growth in media means we care about things we didn’t before, have access to much more information and can communicate instantly. And being able to anticipate and respond to events around the world allows us to be more global and more competitive.

Justin believes that every organisation can implement an intelligence process to predict and mitigate risk but argues that any risk assessment is only as good as the day you do it. You can’t, for example, say that you assessed terrorism in 2015!

Listen to Justin speaking at Big Ideas Chicago earlier this year. 

Justin Crump CEO – Sibylline Speaking at Big Ideas Summit

The Future is Superfinance 

Louis Fernandes, VP and Country Manager, UK & Ireland at Basware, introduced the idea of Superfinance. That is, the bringing together of mind and machine that empowers finance and procurement professionals to combine emerging technologies with uniquely human talents.

As Louis explained, Superfinance means:

  • Creating a unified & accurate view of all the data
  • Being able to answer new questions
  • The ability to rely on data analysis to make better decisions
  • Transforming workforces to become insights-driven
  • Being behaviourally aware and understanding human limitations

Superfinance demands data insights, the transformation of business roles to ensure that employees are working collaboratively with machines and a change partner who champions it. It’s about putting insights at the heart of everything you do. 

The roles of procurement and finance professionals will fundamentally change with the rise of automaton and technology but Louis believes “predictive analytics and AI enriches the human condition. Humans are uniquely good at everything that isn’t programmable such as abstract thinking and the ability to reason.”

Holding the right data is absolutely critical in order to harness the benefits of new technologies. If an organisation can turn all the data they hold into tangible customer value by leveraging machine learning and AI they can actually begin to benefit from these technological advances in the market. But to do so relies on having the right volume, quality and completeness of data.

Once you have meaningful and relevant financial and procurement data in place, it allows your teams to:

  • Negotiate better prices and select the right suppliers, thus reducing supply-chain risk
  • Make well-informed, strategic decisions
  • Replace manual supplier catalogue maintenance processes 
  • Ensure master data integrity
  • Work in a fraction of the time and cost

“If you don’t have a view to the future when you are evaluating automation options, not only will you not achieve your business case for today, but three years from now, your system will be obsolete,” Louis asserted.

“We have to embrace the opportunity to work in collaboration with AI. AI won’t replace people but people who use AI will replace people who don’t”

Vision from a CPO

Nick Dobney, former Chief Procurement Officer of Puma Energy and Andrew Cameron, Group Chief Procurement Officer, RSA Group led a group discussion on the challenges and opportunities a CPO must face and what their predictions are for the future of the profession.

Hear more from Nick Dobney, a speaker at Big Ideas Zurich, in the interview below:

Nick Dobney, former Chief Procurement Officer – Puma Energy speaking at Big Ideas Zurich

Procurious’ Procurement Thought Leadership Forum was sponsored by Basware.

Space Trucking: The Challenges Of Managing A Supply Chain That Is Truly Out of This World

We investigate the perennial deadly hazards of operating on the world’s truly most remote supply route: the ‘road’ to the International Space Station.

 Sergey Nivens / Shutterstock

Are you responsible for sending your people into danger? In a new Procurious blog series, The World’s Deadliest Supply Chains, we investigate the most high-risk supply chains out there.

The fiery disintegration of a manned Russian Soyuz rocket above the steppe of Kazakhstan on October 11 highlights the perennial deadly hazards of operating on the world’s truly most remote supply route: the ‘road’ to the International Space Station orbiting between 330 and 435 kilometres above the earth.

In this case, the Soyuz occupants, US astronaut Nick Hague and Russian cosmonaut Alexei Ovchinin, got lucky after what NASA described diplomatically as the mission’s successful “abort downrange”.

Because of a problem later identified as a faulty sensor, the launch terminated two minutes after blast-off. The men, who were to be the first members of the 58th expedition to the station, escaped in their capsule and were rescued on the ground 32 hairy minutes later.

Other ISS missions haven’t been so fortunate: on February 1, 2003 the space shuttle Columbia imploded on re-entry, killing all seven astronauts on board.

The Soyuz setback highlights an awkward rostering problem for NASA: since the cessation of the space shuttle program in 2011, the US has relied on ‘buying’ seats on the Soyuz to swap over crews on its half of the ISS.

Who said Uber pioneered ride-sharing? The US recently swallowed its pride and confirmed the acquisition of three extra Soyuz seats in 2019, amid concern that its program to replace the space shuttles was proving too ambitious.

But with a three-person crew due to blast off in a Soyuz in early December, the latest mission to the station has some chance of getting back on track.

The most expensive structure in the world – and, indeed, beyond –  the ISS was built between 1998 and 2011 at a cost of $US150 billion. To date, 15 modules have been assembled (rather like a Lego set) with a further five to be added.

The maximum crew of six performs scientific experiments, eats, sleeps and exercises as the metal orbits the earth 15.5 times a day at a speed of 29,000 kilometres an hour.

Maintaining a semblance of normal life for the crew requires a large amount of provisions – an average of 2722 kilograms per mission. The transit of any goods – anything from toothpaste to heavy scientific equipment – needs to be planned painstakingly months in advance.

When it comes to supplying the ISS using unmanned craft, the procurement controllers have more flexibility because a mini United Nations of spacecraft regularly visit the station (all with different docking procedures).

Despite the perception that the ISS is exclusively a US-Russian concern, the program is actually a venture between five agencies: NASA, Russia’s Roscosmos, the Japan Aerospace Exploration Agency, The European Space Agency and the Canadian Space Agency.

Thus, the station has been supplied by not only the shuttle and Russian craft such as the Progress and the Soyuz, but by unmanned milk runs from Japan’s H-II Transfer Vehicle (also known as the Kounotori, or White Stork).

Whether the craft are manned or unmanned, the visits are eagerly anticipated by the space station’s cramped occupants. After all, a delivery of fresh fruit and vegetables makes for a welcome respite from the everyday diet of textureless, vacuum-packed mush.

(Sadly for the cosmonauts, vodka deliveries are off limits).

So far, the ISS has been visited by more than 150 craft – an average of slightly more than eight per year – including 50 crewed Soyuz, 70 Russian Progress one-way freight vessels and 37 space shuttles.

A key link in the ISS logistics chain is NASA’s Payload Operations Centre in Huntsville, Alabama. Described as the heartbeat of the ISS research operations, the centre co-ordinates all scientific experiments carried out on the station as well as the “payload activities” of the international partners.

In space, no-one can call roadside assist. As a result, equipment requiring regular replacement – such as the antenna, batteries and pumps – are kept on external pallets called ‘express logistics carriers’ and can be put in place by robotic arms.

Despite the supply mission setbacks, on November 2 this year the ISS celebrated 18 years of continuous habitation, eclipsing the previous record of just under 10 years set by the crew of the Soviet-era Mir station.

But nothing lasts forever, with the future of the ISS under review. While NASA and Roscosmos have pledged to co-operate on a replacement facility, tetchy on-the-ground relations between the two nations means there’s a likelihood they will go their own way.

In the meantime, the US is hardly enamoured with its ‘can I hitch a ride with you, comrade?’ approach and is working on its own crewing and supply options so as to mitigate its reliance on the Russians.

Both Boeing and Elon Musk’s SpaceX have separate contracts to develop space ‘taxis’, but their timetable for crewed test flights originally scheduled for August and this month are behind schedule.

Suffice to say, there’s mounting pressure from Capitol Hill on the rival contractors to complete the new era craft sooner rather than later.

After all, in the extraterrestrial trucking game, it always helps to have a Plan B.

If you’d like to read additional related content or get involved with thought provoking discussions check out the Supply Chain Pros group – a one stop shop for all your supply chain needs.

3 Ways To Make It Big In Procurement and Supply Chain

Tom Derry, CEO – ISM shares his three top tips for early-career professionals who aspire to be a CPO or Head of Supply Chain in a leading organisation.

The next generation of CPOs and Heads of Supply Chain will need to be “next-level” talent.

“It’s easy to point out a few critical success factors for people who have risen to the very top of the profession,” explains ISM CEO – Tom Derry.

In this article Tom shares his three top tips for early-career professionals who aspire to be a CPO or Head of Supply Chain in a leading organisation.

1. Align yourself with the best in the business

One of most important things to do during the early years of your career is to align yourself with the best talent out there. “If you’re just getting into the field or are early on in the field discover who has the best reputation, who’s the best leader and who’s regarded as being leading-edge and running a great organisation” Tom suggests. It’s also advisable look at the company’s reputation. “It’s clear that certain companies have created an awful lot of talent in our profession, disproportionately more talent to other companies.” So find those great leaders, at those great companies and that’s going to be a launching pad for you.”

2. Be courageous

“There are a lot of metrics of dubious value that we often pay attention to in the profession that have outlived their usefulness.” Tom says. He advises professionals to try and link what they’re doing day-to-day with what’s driving value for the firm – whether it’s bringing new products online, introducing new features to new products, driving top line revenue growth or increasing earnings per share by reducing cost. “Speak the language of the business and link explicitly what you’re doing to driving those kinds of outcomes.” This will help you to gain respect because that’s how we keep score in business and those are the measures that matter the most.”

3. Be competitive

“Businesses are about competition,” asserts Tom. “It’s about competition between firms but, frankly, it’s also about competition within the firm to gain resources to win the opportunities for promotion and advancement.” Tom believes it’s important to understand that you are competing, you’re being regarded by your superiors in the firm in terms of your output and your productivity. “You’re in a competition for advancement – maybe it’s advancement within the firm, maybe it’s advancement in another firm but you have to recognise that and put your game face on every day. As they say in sport: leave everything on the field. At the end of the day someone may outcompete you if you’re not taking that approach.”

Part Five of Tuesdays with Tom is available now. Click here to sign up and hear ISM CEO Tom Derry discuss top tips for aspirational early-career professionals, how high profile leaders can become talent magnets in supply management and the latest data on salaries.

Putting The ‘I’ In D & I

By having an inclusive corporate environment for people we can make a change and improve the way society works…

In today’s workforce, diversity has become a buzzword, with organisations increasingly communicating its importance through their advertising and core business values.

But what does diversity mean, why is it important, how do you achieve it and, once you have it, what do you do with it?

Joelle Payom, Global Strategic Sourcing & Vendor Management Lead explains that there is an enormous pressure for organisations to hire people that are different. But alongside that moral pressure to ‘do the right thing’ is a very strong business case. “A UK report revealed that the British economy could be boosted by as much as £24 billion if black and minority talent was fully utilised . When you have a diversified workforce you have a broader [talent pool] who are able to bring different ways of working, different ways of dealing with issues and can provide greater innovation.”

Putting the ‘I’ in D & I

As Joelle points out, there is no point in building a diverse workforce if it is not nurtured into being an inclusive one. “To reap the benefits of a diverse workforce it’s vital to have an inclusive environment where everyone is treated equally, feels welcome to participate and can achieve their potential”

Diversity = The What

A mix of diverse types of people

Inclusion = The How

The strategies and behaviours that welcome, embrace and create value from diversity

“What is really at stake is not diversity, but inclusion. How do you make sure your diverse workforce will generate the expected benefits – that increased profitability – no matter who they are. You cannot simply integrate a human being [to the workforce] because they come with their own character and uniqueness.

“How do you ensure [everyone is able to] give their best to the company?”

  1. Let People Be Themselves: It is the employer’s role to ensure that all employees, no matter their specific characteristics, can be themselves. “In the corporate world we all have to fit in but fitting in doesn’t mean you forget who you are.”
  2. Equity – The entire employee base should be given equal chances whether that’s an equal chance to be promoted, equal pay or other opportunities within the organisation.
  3. Intersectionality – A black man, who is a wheelchair user and identifies as gay might endure multiple forms of discrimination at the same time. To better include this person it doesn’t make sense to only address one of these factors – you can’t foster an inclusive environment without addressing everything. D & I teams often isolate their efforts on one particular minority group but the experience of a white woman might be very different to that of a black women, and that needs to be addressed when it comes to developing D & I strategies and policies.
  4. Safe space – Employees should be encouraged to speak up about these issues without fear of retaliation. “Organisations must ensure their people management approaches don’t put any group at a disadvantage.”

“What I want people to take away is that diversity and inclusion (D & I) is not only for women or for people of different ethnicities or sexual orientation. It is for everybody. D & I , which is much more important than diversity, means that we need to provide each human being with equal treatment in the corporate world. By having an inclusive corporate environment for people we can make a change and improve the way society works.”

Joelle Payom, Global Strategic Sourcing & Vendor Management Lead

Procure with Purpose

Procurious have partnered with SAP Ariba to create a global online group – Procure with Purpose.

Through Procure with Purpose, we’re shining a light on the biggest issues – from Modern Slavery; to Minority Owned Business; and from Social Enterprises; to Diversity and Inclusion.

Click here to enroll and gain access to  all future Procure with Purpose events including exclusive content, online events and regular webinars.  

Blockchain: Procurement’s Secret Weapon

Procurement will be the single largest instrument in the world to change the world…

“Frankly procurement is at the same level, in my eyes, as auditing, accountancy and that level of excitement. There’s more excitement in the hashtag #Birdsarentreal – because people believe in that more and with more emotion than this.”

Olinga Taeed became the world’s first Professor in Blockchain and Social Enterprise at Birmingham City University in 2018. His research explores how blockchain can be used for social good, focussing on studies into methods to alleviate problems and provide significant intervention into society.

And when it comes to procurement and the future of the profession, he doesn’t mince his words.

“No one grows up saying mummy I’d like to be a CPO,” he explains. “And that’s because we value non-financial value. We grow up wanting to do things that have value in society – things to do with life and sentiment, we want to change the world.”

The Power of Procurement

“Doctors save one life at a time. In procurement, we can save or kill thousands by one decision”

When you say I will knock 3 per cent off my supply chain budget, somewhere in that chain some people will enter into slavery conditions

We now know that 32 people commit suicide manufacturing iPhones in China every year.

800 people might die in a fire making clothes for a retailer.

“In procurement we have the power of life and death and that is a major responsibility.”

Changing the world

Blockchain could enable procurement to change the world by bringing our values back into the workplace.

“In institutional life we often succeed in stripping out any kind of intangible value. But this attitude doesn’t occur in real life, only within institutions.”

In our own lives we use our personal values to procure things “I’d like to have products that are aligned to my values, I’ll use this coffee shop not that one, I’ll eat this ice cream but not one from that place, price is this important to me but slavery is this important. We talk about our feelings”

Blockchain will allow procurement professionals to use our values as a mechanism for procurement, just as we all do in our own lives.

Blockchain can put into a ledger an entire supply chain, which means at the point of sale, just as you would see calories on a food product, you can decide whether to buy it or not to buy it based on the values of the supplier. You are given all of the information and can make a choice based on that.

Olinga explains that AI will help procurement in a similar way “these are my values go and find me products that are aligned to my values – don’t pick companies or suppliers where I know environmentally they aren’t good.”

Organisations used to readily give discounts to NRA (National Rifle Association) members but all of that changed because our values changed, companies stepped back and procurement changed. Using blockchain, procurement professionals can procure against a set of corporate values – “it’s for me to buy products from suppliers that are aligned to those values.”

Olinga Taeed speaking at Big Ideas Zurich

“My honest belief is that procurement will be the single largest instrument in the world to change the world – children will say they want to be a procurement officer because they will want to change the values of the world – what we buy, what we eat, what we sell, the values by which we transact. Blockchain and AI will change our processes dramatically.”

Olinga Taeed speaking at Big Ideas Zurich

Procure with Purpose

Procurious have partnered with SAP Ariba to create a global online group – Procure with Purpose.

Through Procure with Purpose, we’re shining a light on the biggest issues – from Modern Slavery; to Minority Owned Business; and from Social Enterprises; to Environmental Sustainability.

Click here to enroll and gain access to  all future Procure with Purpose events including exclusive content, online events and regular webinars.  

5 Reasons Your Procure-to-Pay Implementation Will Fail

Is your organisation about to embark on an initiative to purchase and implement procurement software?  Well, you’re bound to fail. Unless, of course, you address these landmines.

1. You don’t know what your requirements are

I’m sure you can define your problem.  You can probably guess without looking.  Lack of visibility, process, or control; maverick spending; inefficiency; mounds of paper…you name it. Immature procurement organizations that are not tech-enabled likely have it.  But these are just the symptoms.  It’s far more difficult to understand the underlying causes.  Sometimes Procurement’s ills are simply the result of  lacking the specific tool  to drive efficiencies, increase visibility, etc. In many cases, however, things are the way they are for a much more complicated reason.  The diagnostic process can prove time consuming, but accurately identifying Procurement’s sickness is the only way you can define and design a solution to cure it.  Going through a robust requirements gathering exercise is an essential to step in selecting best-fit technologies.

2. You aren’t buying the right tool

Without its requirements defined, how can Procurement know what tool to look for?  The underprepared organization is left to carry out solution design during the buying cycle, i.e. the sales cycle for software providers. This situation presents more than its share of headaches. For example, a common misstep is to buy P2P software to cure a lack of spend visibility (or simply because that’s what you had at your last company).  Someone selling a P2P platform will happily show you all the ways their reporting will provide spend visibility.  Of course this is after your RFP process (let’s say 1-3 months), implementation (6-9 months), and then onboarding and adoption to pull a full year of spend through the platform.  What that provider might not tell you is that there are spend solutions out there that can pull together your AP data, classify it, and feed it back to you in a matter of weeks!  That’s not to say P2P isn’t important for capturing savings, improving efficiency, and enforcing process compliance, it just may not be what you need right now.  Once you have your requirements down, you need to rack, stack, and prioritize your objectives as well as the tools you’ll need to achieve them. Building a technology roadmap to understand the full scope of investment over time to meet your goals.

3. Change management isn’t just training…and you aren’t prepared

Speaking of P2P, have you thought of just how many people, departments, and processes these tools will affect?  There are two factors that drive a successful technology implementation – strategic impetus and organizational readiness.  If you have neither, you probably won’t get budgetary approval.  But let’s assume that there is executive level buy-in throughout the organization to invest in procurement. Let’s even assume that one of those avenues is technology.  Do they really know what these investments will entail?  Does the rest of the organization understand the impact implementing a software platform will have on their people?  Do you?  If not, there are 2 options: 1) take some steps to get them on board, or 2) start with a less impactful investment that maximizes results and minimizes change.

For any platform, successful implementation depends on end users not just employing the software, but leveraging the technology (and doing so correctly) to derive the business outcomes you are looking for. Unlike more upstream procurement software modules like spend analysis and sourcing, CLM, SRM, and P2P touch various parts of the organization from Operations, to IT, to Finance, and everything in-between. This even includes the non-procurement stakeholders who will need to adopt the platform and the changes in process that come with it.   Communicating, generating buy-in, and managing the change throughout the organization is a huge undertaking.  Doing it successfully? That’s an even bigger ask.

4. You forgot to include your stakeholders

Speaking of stakeholders, did you forget to invite them to the design meetings?  How about the kickoff?  The demos? What about the project initiation meetings? If not, you are already behind the 8-ball.  Stakeholders should be incorporated early and often.  This includes requirements gathering and change management as mentioned above, but also the selection and implementation processes as well.  Not caring about the current state that you are about to change is a mistake.  Even if you think you know all of the ins and outs of the business (which you don’t), inclusion goes a long way in developing buy-in, encouraging  adoption, and (let’s face it) making sure you don’t miss anything. 

5. You don’t have a plan

Sure technology can probably solve your immediate issues, or put out the latest dumpster fire, but making tactical multi-year (and potentially multi-million dollar) investments in an ever-changing  landscape is short-sighted to say the least.  What is your ideal state?  Do you want to develop a best-in-class procurement organization?  Do you even need to?  Do you want 100% spend under management?  How do you even define spend under management?  What will your organization look like in the future?  How are you going to continuously improve?  How do you define success now and in the future?  And how are you going to measure that?  These are just some of the questions Procurement needs to answer when defining their vision for the future.  That vision should provide the foundation for your technology roadmap and ultimately determine the solution you select.  

Done correctly, the technology selection and implementation process could be a once-in-a-career undertaking. Don’t make these decisions lightly. Remember that Procurement’s new tools have to outlive the hype surrounding them and provide for the function’s continued strategic evolution. Slow down, ask questions, encourage collaboration, and never let the discussion around the ‘next big thing’ force Procurement into hasty decision making.

Anthony Mignogna is a Director at Source One, a Corcentric Company.

World’s Most Dangerous Supply Chains: Bolivia’s Death Road

Travellers on Bolivia’s ‘Death Road’ are given a stark visual warning about why the mountainous gravel pass is considered one of the world’s most dangerous supply routes: hundreds of crosses line the track to commemorate the frequent fatalities.

Formally known as La Cerretera de los Yungas, the vertigo-inducing path was once notorious for claiming the lives of up to 300 travellers a year as their cars, trucks and even buses careened over the unprotected roadside and down sheer 1000-metre cliffs.

In July 1983 a bus fell into a canyon, killing all 100 people aboard, while in 1999 eight Israeli travellers died when their vehicle did likewise.

Judging by the pictures and YouTube clips of what can only be described as a “glorified goat track”, it’s a wonder the death toll has not been even higher.

Also known as the North Yungas Road, the conduit stretches 69 kilometres up jungle-clad mountains between the Bolivian capital of La Paz and Coroico, in the Amazonian Yungas region.

The road was built by Paraguayan prisoners of war during the three-year Chaco War in the early 1930s to facilitate a military supply chain linking the Bolivian Amazon to the capital. The miserable living conditions of the construction crews set the tone for locals forced to use the supply route to transport crops, timber and materials to and from La Paz for the next eight decades.

Navigating the jungle-clad La Cumbre mountain pass, the twisting and turning road climbs as high as 4650 metres before descending a winding 54 kilometres to 1200 metres (the world’s longest uninterrupted downward stretch).

As a wise precaution, motorists are known to pray before embarking on the route.

“This road has humbled many egos,” says the Dangerous Roads website. “It’s not for the sissies and shouldn’t be attempted by novice drivers.”

In 1995, the Inter-American Development Bank described Yungas Road as the world’s most dangerous – no mean feat given the glorified goat tracks in regions such as the Himalayas.

The road is so dangerous that, unlike in the rest of the country, vehicles drive on the left so that the driver has a clearer view of the positioning of the wheels on the crumbling roadside.

In the wet season, the single lane road is made even more hazardous by mud, fog, rockfalls and landslides. Waterfalls are known to cascade across the road, taking much of the gravel with them.

In the dry season, choking dust reduces visibility to metres. Wisely, vehicles travelling downhill need to give way to ascending ones, as this forces them to slow down.

In the early 2000s the road was given an upgrade of sorts, with two driving lanes, proper asphalt and protective barriers.

But judging by recent photos, it’s still not exactly autobahn-quality.

The puzzling element is why anyone would continue to use it – apart from intrepid cyclists who have spawned a whole new industry. That’s because the Bolivian government completed a new nearby road in 2009 which, while mountainous, is more in line with western standards.

A 2013 clip from the UK motoring show Top Gear gives a good picture of the type of traffic encountered. Despite this safer alternative, the road remains popular as a supply route for locals, as tarpaulined trucks and even petrol tankers compete for space with buses and four-wheel-drives.

Host Jeremy Clarkson also gives a near fatal lesson in overtaking procedure, as his Range Rover comes perilously close to departing the road.

The footage might be edited for dramatic effect, but Clarkson’s manner suggests he is in genuine fear of producing his very last show. While the Yungas Road may no longer be the mandatory conduit between La Paz and Coroico, the adventure cycling business trades off its grim appeal.

It’s estimated that at least 20,000 extreme pedal-pushers brave the route every year, which exacerbates the dangers for all road users.

While most return home with tall tales and an ‘I Survived Death Road’ T-shirt, at least 20 cyclists have thought to have been killed on their road in the last two decades (exact numbers are unknown).

As might be expected, a thriving cycling tour guide industry has evolved, with a commensurate rise in four-wheeled transport for equipment and supplies to service the expeditions.

Intrepid cyclists are well advised to pick their tour operator carefully. As Australian journalist and Yungas cyclist Andrew Fenton writes, even the mid-range ones leave much to be desired.

“At one point the guide lines us up on our bikes at the edge of the cliff for a photo, and jokes: ‘OK, now everybody take a step back’!

“Hilarious—except one of the riders takes him seriously. His back wheel is hovering in space by the time we grab him.”

While La Cerretera de los Yungas’ Death Road cachet endures, adrenalin-seeking westerners may be heading to the wrong country: the Dangerous Roads site dubs an obscure Turkish pass called Bayburt Of Yolu-D915 as “probably more dangerous” than the Bolivian road.

Climbing to 2300 metres above sea level, the 105 kilometre road navigates 28 hairpin turns, linking Of and Bayburt in the country’s east. It’s a working road used by locals driving anything from trucks to motorbikes – and a highway to hell for the careless and impatient – or plain unlucky.

Why Inventory Management Need Not Be Organised

Amazon is pioneering a new method of customer-centric inventory management.

For decades, inventory managers have been focused on finding optimised warehouse layout to increase its surface area, provide efficient transit and reduce transit times. The fundamental premise has been that a warehouse should accommodate maximum inventory which can be picked and shelved safely.

The layout of the warehouse has been a key focus for most inventory managers, a grid-style warehouse layout has been widely used to optimise the shelf space, transit areas and transit times. The emphasis has been to maximise the cube space by using vertical as well as horizontal space in warehouses. Inventory managers focused on unit load sizes to maximise utilisation of the warehouse space.

Typically, asset inventory managers choose from one of the four widely used sizes – 1200X800, 600X800, 800X400 and 1200X1000. Pallet Racking, Shelving, Mobile Shelving, Multi-tier racking and mezzanine flooring are the key types of storage used in traditional warehouses. Conventional back to back storage is a popular approach from warehouse managers.

Example of organised inventory.

Slotting, replenishment and location control system got a lot of attention. Barcodes were extensively used and congestion was minimised in transit areas.

20% of the SKU’s (Stock Keeping Unit) which are fast-moving and contribute to the most of the sales are clubbed together and often referred as “bestseller or hot zone”.

For a long time, the warehouses have been arranged with physical logistics in mind – receivables, inventory management, inventory flow and dispatch were all based on delivery timescales of 2 to 5 days.

However, over the last 5 to 7 years’ customer’s expectation both in the B2B and B2C areas has been significantly changing. Understanding Inventory Management is vital for small and big businesses to be successful.

The contemporary way of managing inventory is pioneered by Amazon. They take a customer-centric approach and have arranged their warehouse and inventory technologies to improve product selection and delivery times for customers.

For example; At receivables, Amazon performs a six-sided check of each inventory to make sure the inventory is not damaged and is shippable. If there are issues with the receivables, Amazon’s problem solver unit takes anywhere between 2 hours to 2 days to establish the right status of the inventory. Once the item is scanned and okayed as an inventory, its exact location is known and it is available live on their website for their customers to order.

Once a customer orders a product from their website, a picker will be alerted to pick the ordered item. It is important to appreciate that Amazon does not store its inventory in order. Items are not clubbed together by nature or any other aspect. They are randomly stored in the warehouse – the technical term for this is random stow (or unorganised inventory).

Random Stow or Unorganised Inventory (Image: Amazon Warehouse)

There are robots which rearrange the shelves to facilitate the fastest picking route. The transit route is suggested by their algorithm which sends the location of the item to be picked on the handheld scanner of the picker. So rather than organising the inventory, they focus on the fastest route to pick items. Their robots move shelves to makes sure the picking is as fast as possible.

Once the item is picked, their computer suggests the right box size for packing, labelling is done automatically and the product is dispatched. Along the way, there are multiple automatic checks to make sure the product is shipped to the right customer. 

Whilst warehouses and inventory will always be a part of a cost center, approaching them from a customer-centric way can offer impactful revenue outcomes. If you take a delivery-centric approach at receivables and ensure the inventory at check-in is fully inspected, then you increase the chances of delighting your customers. Similarly, if you view the layout of your warehouse with a perspective to have the fastest picking route then your delivery timescales will improve. And as we saw in the case of Amazon, knowing the location of your inventory is more important than organising inventory by type or nature.

Written by Prasanna Kulkarni, Founder and Product Architect at Comparesoft.