The Commentary Category

Risky Business — Our Illogical Attitudes to Risk, Regret and Gambling [Plus+]

supply risk

We've featured aspects of Daniel Kahneman's brilliant book, Thinking Fast and Slow, over a number of articles looking at his concepts such as Priming and Anchoring, and in particular what they (and other ideas he and others in the field have developed) mean for procurement professionals.

Kahneman won the Nobel Prize for Economics, with his collaborator Amos Tverksy — not bad going for two psychologists. And the work that led to the prize was largely around the area of risk, which is what we will look at today.

He and Tversky showed that the assumptions economists made about human behaviour — that we acted rationally in hard economic terms — could be proved false. That meant many of the standard economic models and theories were also flawed, which rather upset many in the economics community!

Kahneman called the strange beings who behaved in this perfectly rationally manner "econs" as opposed to "humans," who behaved — well, like humans do. And his work on risk shows exactly why the assumptions of rationality doesn't hold up. Our decisions aren’t rational — but driven by factors like the “endowment effect,” risk-aversion, and regret.

There is obviously a huge amount of detail that we could look at here — an entire Nobel Prize's worth, we might say. But we will just focus on a few key conclusions and a handful of implications for procurement. As before, we strongly recommend you read the book if this interests you (and, really, it should).

So let’s get into three key Kahneman findings.

Supplier Diversity Success Story: How an MBE Partnership Won a $100M+ Contract

As a procurement professional, I’m primarily tasked with identifying the best ways to utilize our spend and influence to as to create the maximum advantage for my organization. Obviously, this is extremely valuable for the company but can sometimes leave me feeling a bit uninspired. As a purchases manager at a global consumer products company, I was known to say to my closest colleagues, “It’s just soap and toilet paper. We are not changing the world.”

However, several years ago I was presented with a rare chance to make a difference in a way that was highly meaningful for me. I may not have realized it at the time, but I was fortunate to work in an organization that called out supplier diversity as a critical factor in its business strategy. A category plan couldn’t be written that didn’t include a supplier diversity component, and an RFP or business award couldn’t be made without addressing how we will reach our diversity targets.

SciQuest Rebrands Itself as Jaggaer

Earlier today, SciQuest, a source-to-pay technology provider, announced it had rebranded itself as Jaggaer.

The new name is “a derivation of the German word for hunter, and reflects the company’s brand promise of delivering comprehensive, focused spend solutions for a broad range of businesses.”

For us, the name conjures up memories of sticky bar room floors from college.

3 Reasons Why Procurement Needs to Worry About Mexico

President Donald Trump followed through on one of his central campaign promises Monday by officially withdrawing from the Trans-Pacific Partnership (TPP). And while trade with China, Vietnam and other Asian countries is certainly of concern to most procurement groups, our neighbor to the south also needs to be on your radar for 2017.

Will Trump Deregulate Employment to Create New Jobs, Gigs or What?

President Donald Trump recently said, “Now, we’re going to have regulation, and it’ll be just as strong and just as good and just as protective of the people as the regulation we have right now. The problem with the regulation that we have right now is that you can’t do anything… I have people that tell me that they have more people working on regulations than they have doing product.”

So considering the evolving and heavily regulated labor market, how should we read these tea leaves?

In Their Own Words: 5 Contingent Workforce Companies We’re Tracking in 2017

Last year was an exciting one for the contingent workforce procurement market. This year, according to our resident CW/S procurement expert Andrew Karpie, is unlikely to be a massive breakthrough year. “For the most part,” he wrote, “the developments and trends that we have seen taking shape in 2016 will continue, and maybe accelerate or attract greater interest by procurement practitioners.”

To keep the momentum going, we thought about the innovative solution providers in this market whose next steps we’re eagerly anticipating, and we shot over a simple question to them: What exciting things are you doing in 2017?

The Untimely Demise of FMS: Gone, Buried and All But Forgotten

When the idea and prototypes of what was called the Freelancer Management System (FMS) appeared at the end of 2013, it was met with much excitement and interest, which continued well through 2014 and 2015. Though propped up into 2016, FMS — after a long struggle with confusion, rebuttal and lack of adoption in the market — finally succumbed, quietly and without much notice. Scarcely a tear was shed, and barely a whisper was heard, not even from investors who poured millions of dollars into their progeny.

How I Left the Corporate Office to Run My Own Consultancy

At that point I decided that I wanted to work for myself as a career. I had a network of consultants that I had met during my time in corporate roles and I leaned on them for advice, contacts and my first couple of gigs. I also kept my options open for permanent corporate roles. I had recruiters tell me that I needed to make sure I was putting “real” work on my resume or I would not be taken seriously. I interviewed with companies that felt that “consulting” was a resume filler in between real jobs. Screw it. I’ll show them all.

And Now in Risk Management: Trump Tweets

Ford. Macy’s. General Motors. Lockheed Martin. Carrier. Rexnord.

What do these companies have in common? Well, one thing is that each has been rebuked on Twitter by President-elect Donald Trump, mostly for using foreign-made materials or having operations overseas or “moving to Mexico.”

Why Procurement Is a Vital Seat at the Executive Table

Spend Matters welcomes this guest post from Stan Garber, president at Scout RFP.

It’s no secret that handling large enterprise costs in a siloed, departmental manner is detrimental to the business. Not only is it inefficient, but it also reduces the organization's overall competitive edge and increases its operational expenses. With the office of finance putting more emphasis on cost reduction, vendor consolidation, and impactful suppliers, strategic sourcing has emerged as a top priority in 2017. As such, CEOs are looking for procurement teams who can execute cost effective strategies and manage operations and outsourcing with aplomb.

Wendy’s Releases Annual Corporate Social Responsibility (CSR) Report

Wendy’s moves to phase out antibiotics from its chicken supply is a laudable step, if not particularly cutting-edge. With its peers, including McDonald’s, setting and reaching similar goals regarding antibiotics in their food supply chains, Wendy’s would be left behind if it did not do the same. Spend Matters has reported on this trend before. In a survey of consumers, 74% said they would “pay a higher price for antibiotic-free food and beverages. Similarly, 76% of consumers would pay more for preservative-free food and beverages and 75% said they would pay more for hormone-free products.”

Defining Disruption and Innovation: A Cranky Editor’s Critical Take

disruption

Working at the nexus of enterprise technology and procurement strategy, we see the words “disruption” and “innovation” a lot here at Spend Matters. So often, in fact, that every time I come across either of these words, whether in a press release or marketing copy, the letters begin to blur together and a strange ringing noise fills my ears. Maybe that’s an exaggeration. But I do know that the increased appearance of disruption and innovation in my daily reading has caused me to question whether some writers pick those words for their specific definitions or just to liven up a sentence with an adjective that surely means only good things.