The 2015 prediction season is thankfully winding down. We, too, are wrapping up our predictions (see related links below). Many of our predictions are really a continuation of some 2014 predictions, and, like other predictions, are updates on some trends that get extrapolated forward. We don’t fashion ourselves as “futurists,” and if we did, we’d have to incur Dr. Lamoureaux’s wrath on the topic and also on predictions in general.
Anyway, prediction season is a good time for providers and pundits to invent new buzzwords that try to encapsulate a trend, but more specifically, also try to support a new concept or marketing push that they like. So, for an analyst firm, this might go something like: “Supplier Management is dead: Long Live Supply Base Management!” or “It’s time for Procurement 4.0!”
Version numbers are also very popular, but I wish everybody would agree and we could get on the same version (like cloud applications!). Maybe something we should do? Maybe not – I’ve gotten myself into a pickle by signing up for 50 Shades of Pay. I’m making myself into the Mickey Rourke of procurement – and that doesn’t end well. But, you do have to admire Accenture for taking its BPO maturity model to 6 “generations” (levels). If it adds 5 more, it will reach Nigel Tufnel’s 11 and then we’re all out of a job. I can envision it now: “HAL, I’d like to source this new service…. I’m sorry Pierre, but I cannot do that.”
But again, I digress…
Procurement is certainly no exception with buzzwords. I wrote about this in BuzzwordPalooza Part 1: Category Management and Procurement Buzzword-Palooza Part 2: ‘Power Words’. And, if there is a real trend, such as a shift from procurement as a narrow functional specialist to “supply management” (i.e., enabling the best possible management of supply within an end-to-end value chain), then it should get a new name. Ariba coined “spend management” (I remember Michael Schmitt pitching the term to me well over a decade ago). I coined “guided buying” around the same time, which was a response to the CRM- and supplier-led term of “guided selling” of buyers on a supplier’s website – itself alive and well when someone “punches out” (another Ariba buzzword that’s become sticky) to a supplier website. And sometimes you just need to hijack someone else’s term. “Strategic sourcing” and “category management” are 2 terms that were not actually invented by procurement practitioners or providers.
A new term is also often needed when the concept is a bit broader than the old term. For example, “third-party management” is a term that is slightly broader than “supplier management” or “vendor management” because it deals with how to best manage key relationships with any type of external commercial entity (i.e., customers, channel partners, BPO providers, etc.) in an increasingly componentized and virtualized world.
Sorry, I’m getting off track again…
So, when you have a new buzzword, and you want to make it sticky, you need to have a senior executive to champion it. You should also have an “office” – not for the person but for the staff who will man a Center of Excellence to drive best practice into the firm. In the case of strategic third party relationships, we might need a Chief Relationship Officer and a third-party management office (basically a tarted up VMO). Seriously though, there is nothing wrong with this, and many firms find that supplier management is not a subset of procurement, but a better default framework within which other procurement and non-procurement processes live. Yes, VMO’s that are tactically/narrowly implemented are not the answer, but a VMO can be a better way to offer your sourcing services and supplier management services and P2P services in a better/broader way. For example, this is a very good book on the topic you might want to check out: The Vendor Management Office: Unleashing the Power of Strategic Sourcing.
There is also nothing wrong with certain senior executives who are champions of a certain concept, focus, initiative, etc., and are accountable and empowered to work cross-functionally to get something done. For example, someone should be accountable for supply risk where enterprise GRC requirements are elegantly extended into the supply base while P/SCM specific requirements are also handled – but it is an accountable role – not a department. For more on effective procurement operating models, see our webcast on Procurement Performance Management, but you can also check out at great deep dive on the topic from KPMG here.
Setting up bureaucracy-laden tsars to build ivory towers is never a good idea. It is the road to confusion and ruin. Yes, if you are big enough, you should have a formal Procurement CoE (or Supply Chain CoE) or a even a Procurement PMO (which is really just a function of a CoE). But, when you create too many chiefs stepping all over one other – and not enough warriors to execute – then you have a problem. As a side note, you SHOULD have a SINGLE chief procurement officer at a firm. The words “chief” and [corporate] “officer” should have some meaning. Too many firms have “CPOs” by business unit, region, etc. Yes, it’s a good way to get invited to CPO shindigs from various providers, but puh-lease!
OK, I’m REALLY now going to get back on topic…
I could list a zillion examples of the CXO phenomena, but the best, and saddest example, is ironically about happiness. Yes, employee engagement is not enough. Being social is not enough (this Dilbert cartoon on social supply chain is hilarious). Employee wellness is not enough. Corporate now wants you to be happy dammit, and the punishment will continue until morale improves! As an aside, if you live in the US or work for a big firm suffering from “HR gone wild,” you MUST read this hilarious and scary book: Surviving Workplace Wellness: With Your Dignity, Finances and Major Organs Intact. It’s an area where procurement might help HR not embarrass itself. It’s a provider- and regulatory-driven example of demand management gone bad. Sort of like spaving in the land of unicorns. I won’t say anymore. Read the book. Anyway, back to happiness. Do not emulate Google here, but can read some funny articles on the topic like this one.
OK, so what’s the solution? Well, like anything that happens in our Dilbert-esque procurement world, we should make the problem the solution! I recommend that we create a new position called the Chief Buzzword Officer who is tasked with monitoring, decoding, translating and communicating all the various buzzwords encountered within the corporate world. Heck, just doing this to make sense of all of the buzzwords made up by Gartner analysts looking to establish their little niches would pay for itself in no time! In the procurement and supply chain world, we’ll try our best to find the value-added signal amongst the buzzword noise and let you know what you might want to pay attention to. And we hope that you will do the same and share back with us.