I decided to enter a 10K race last weekend. It was a distance that I’ve not run in at least five years. Even though I consider myself in fairly good shape and jog short distances a number of times per week, the predictable happened. After completing the first four miles at a good clip, I fell apart for the final two. But I was so sure of hitting my target based on my mile times in the early part of the race I had no doubt I’d finish in my targeted range regardless of how much I cracked. After all, if you can get through two-thirds of a challenge ahead of your plan, you can get through the whole thing -- or so I thought. Well, sometimes logic like this does not always hold up either with running or in managing a procurement team or individual category.
Consider the current situation that many companies find themselves in thanks to the downturn. In terms of achieving savings targets for the year, we might all find ourselves rejoicing that commodity prices have dropped. But we all know measuring our results without tracking to an index that adjusts for market variables outside of our control is probably not the best approach to begin with. And even if we have beaten the market benchmark from a commodity buying perspective -- either directly or as elements of a part, component or service -- these savings could easily be eroded by a crisis such as a supplier bankruptcy that catches us off guard in the final months of the year. Or, perhaps, when we provide new volume forecasts to suppliers that are 5-20% lower in the coming months because of the downturn in the market and then they come back and ask for a price increase, will we still be performing ahead of our plan?
All I had to do to reach my goal of completing the race in less than 45 minutes was to run the final 2.2 miles in 17 minutes -- a pace roughly 15-20% above what I had been running the entire time. No sweat, I thought with each stride. But as my splits got slower and slower, reality set in -- I was going to miss my target time. Looking back, I could have prepared more. Heck, I could have even practiced at something approaching the actual distance. But I did not. And I paid the price in disbelief at the very end. Perhaps most important, though, is that I think this little incident can serve as a good metaphor for the importance of preparing for the unexpected, especially in the current business climate. So don’t get cocky like I did and believe that your goal is in the bag if you’re ahead of plan -- think about all of the risk elements that could, in fact, lead you astray as you approach your finish line for the year. Given the overall economy and market, they’re certainly more potential landmines to watch out for than there has been in at least a generation in this thing we call procurement and supply chain.
- Jason Busch