Spend Matters welcomes a guest post from Art van Bodegraven.
When I use the term Anticipatory Sourcing without setting the stage fully and correctly with an audience, even an audience of one, the reaction is eerily reminiscent of the late and much lamented Richard Pryor exclaiming, "Say what?!?!?" (Shades of the cult classic film, “Stir Crazy.”)
But, at the risk of offending and alienating, I will stake out the position that, unless you are doing anticipatory sourcing, you are taking up valuable space that ought to be occupied by someone more motivated, more aware, more understanding and, possibly, even a bit more intelligent.
To illustrate, take stock of the current situation. And, ask some, perhaps, tough questions:
- Is your spend analysis discrete, accurate, representative and current?
- Which of your materials are vulnerable to: limited supply (e.g., rare earths), conflict (current or prospective future), galloping demand increases from growing economies?
- What is the economic health of key suppliers?
- What are price trends and likely downstream end points?
- What are the impacts of the above on your costs, your prices to customers and their competitive positions?
- Are you talking with customers about their plans based on the trends and developments you are seeing?
- Are you working with suppliers on alternatives, remedies, substitutes or contingency plans?
- Are you working internally with engineering, manufacturing, R&D on solutions to problems uncovered in your analyses?
- If you are not adjusting, refining, tweaking or revamping sourcing based on probabilities discovered in this continuing analysis, your company could be in trouble. What might that mean to your job?
Take Another Step
Putting aside, if only for a moment, a view of current materials, customers, suppliers and ultimate sources, how much time are you spending with R&D on in-development products, material substitutions or quality/availability concerns? If the answer is "little or none," you stand a very good chance of being caught by surprise when changes are announced, and a mad scramble ensues to obtain a reliable supply of whatever is new in materials or components.
It gets more challenging. How much time do you spend with sales and marketing (and R&D) on new product development? What are the new materials, flavors, colors, etc., that new products will require? Do you know where they might be found? Do you know who is in the prospective supply base for them? Do you know how weak or strong those suppliers might be? Do you have a grip on who else, where, is also interested in sourcing and purchasing the same stuff?
If not, your skies are getting more and more cloudy.
Getting On The Bus Before It Leaves
There's more to be discovered, as you might have suspected by now. For example, you need to know what is trending in your industry and among your competitors. Is there a move underway, or a growing interest in possibilities for, the substitution of a new material for a tried-and-true industry standard? If so, what does the pace of development look like? What might ultimate demand be, and what would the effect be on existing sources, supply reserves and suppliers? Where might prices stabilize? How can you establish favored relationships with key suppliers before demand peaks?
Can you avoid the buggy whip syndrome and not defend the now-substandard past against the demonstrably superior future? Consider how PVC replaced copper in many applications, or how ribbed plastic supplanted costly concrete with a short half-life in drainage installations. Or, how cast iron was found to be dangerously susceptible to failure over time when transporting natural gas. Then, there is the undeniable weight advantage of aluminum and plastics over steel in vehicle manufacture. Not to mention the shift from wood to composites in boat building. The list of examples goes on and on.
When you talk with customers, are you asking about their plans and avenues of investigation? Are you plugged in to their internal deliberations about new materials, new processing technology or new products - all of which could have staggering impacts on supplies and suppliers, and ultimate sources (and costs).
Are you a valued discussion partner with your design and engineering peers to investigate changed specs, new composites, new materials or reformulated alloys - any or all of which could require alternative sourcing and altered supplier relationships?
Can This Be Blown Off?
As if life and work life were not serious enough already, this level of pro activity - of anticipatory sourcing - needs to be taken seriously. If you merely go through the motions, if you have nothing of substance to add to interactions, both internal and external, or if you appear cavalier or flip, guess what – the invitations to important meetings will soon dry up. Your input when you do attend will be disregarded. Your attempts to initiate meetings on your own will be ignored. You will be dissed as just another one of the drones, taking up space without adding value.
It's not simply a matter of things getting a touch binding if you have failed to prepare for anticipatory sourcing. What is really at stake is the successful operation of your entire supply chain. Without anticipatory sourcing, you will live out a perpetual fire drill, and your supply chain will be perceived as unreliable.
And, in fact, it will be. By extension, so will your customers' supply chains, and they won't stand for that for very long. Further, you may not be able to retain any position as a preferred customer among your supply base.
So, you have choices. You can do little, and hang with the other drones. You can do nothing, and be looked down on by even the drones. Or you can grow up, seize the initiative, work hard to understand the world around you (and around the planet), take the lead on initiatives for change and be a player, maybe even an all-star.
Which choice do you think would be more satisfying? I'm pretty safe in thinking that batting cleanup would be preferable to journeyman status as a utility infielder.
Would anticipatory sourcing leadership be valued in your organization? If not, feel free to knock down a couple of slow walkers on the race to the lifeboats - the ship's orchestra has just struck up a melancholy chorus of “Nearer, My God, To Thee.”
In one scenario, you would be widely considered to be nothing more than a schlump. In another, going back to “Stir Crazy,”people would say, as Richard Pryor did about Grossberger, "He's mighty!" Or she, as the case may be.