Future disruptions

 Last time I whittered on about current crises.

And (pessimistically) said that there are more to come.

Ok, so what do I think they are?

First, obviously, is climate change.  It is time to stop pretending it is not happening.  We can moderate the impact, and work to slow the change.  The time is right because renewable energy is also energy less dependent on fossil fuels, and so strategically acts to limit the impact of oil/gas disruption.

Secondly, AI.  Never mind how well it works - it will get better.  But what will happen to our economy?  What will happen to your business?  If you have an AI buying from an AI sales bot, then you have a lower headcount.  But then who are the people buying your products and services if we massively reduce our collective workforces? I don't know, but you should.

Thirdly, Demographics.  People still seem to think that the world is going to explode in population over the next few years.  The reality of a shrinking EU population, a shrinking Korea, a shrinking Chine, a shrinking Japan just is not in people's minds.  Yes the global population is projected to increase by 20/25% from 8 billion to 10 billion.... but there are other scenarios that say actually it go no higher than 8.5 or 9 billion.  Malthus was wrong (thankfully) but these are ideas are not really in the public arena.

fourth, the decline of democracy - authoritarianism and corruption go hand in hand.  And both are on the rise across the globe.  Reversing those trends will be difficult, but without it we are all in a heap of trouble.

Fifth, people still do not realise how important Procurement is, and how important it is to invest in my training courses.

Come on, I can't be all serious!

I am sure that there are lots of things I've missed.  Always interested to hear.

Middle East Conflict - 3 weeks in (or more)

 There are definitely going to be people who say that the conflict in the Middle East has been going on for longer than 3 weeks.  

Some will say since 9/11.

Some will say since 1953 when the elected Iranian government was overthrown.

Some will say since 1919 and the "Peace to end Peace" and Sykes-Picot.

Some will say since Homeric times and the war against Troy... (Just listened to the Penelopiad by Margaret Atwood - very good).

And of course this by no means the only conflict in the world today - some "hot" wars and some less so.

So my question, is "why do we keep thinking that things will return to normal after this crisis"?

One thing we can see is that there is usually another, different crisis within a decade.  (and of course some crises are ones that just re-ignited).

So from a procurement point of view, we should not just assume that everything will be all right in the end.  Maybe it will.  But then there will be something else.

So how do we prepare and plan for this.

Lean supply chains and Just In Time have huge benefits, but are easily disrupted by global incidents.  Resilient or Agile supply chains are typically more expensive, but more robust.

I think the key thing is not to abandon your strategic approach (whichever it is) but to have in place contingency plans and options for when the next thing(s) come over the horizon.

And it will.

(but to be more optimistic, and we shall survive it, pretty much no matter what it is).

Middle East conflict and Procurement

 

Iran

It is disturbing to see places you know well in the news because of war – in this case Dubai (in particular the airport and Palm).

It helps to bring home that these things are happening to real people not in video game or AI generated content.

I hope this ends soon, and that there are no more casualties.

 

Not by any means the most important thing, but I would like to think about what it means for Procurement.  These days I frequently discuss with my delegates the acronym VUCA – Volatile Uncertain Complex Ambiguous.  Unlike other tools this is just a descriptor rather than a diagnosis, but I think it is useful to help us consider what we might need to do.

In Procurement and Supply Chain we often have to deal with today’s problems, but we do have to try and be ready for future ones.  At the moment the world economy is certainly Volatile.  There is a case that it always is, but I think the past 20 years have been much more volatile than expected in the “End of History” 1990s.  Currently there are many active drivers of political and economic volatility, including both wars and trade wars and the effects of climate change.  Naturally this leads to Uncertainty as it is difficult to know what will happen next – the changing USA tariff situation for example.

The Complexity is something we need to think about.  The obvious impact is likely to be higher fuel prices in the near term, which will lead to higher inflation and therefore reduce the chance for a drop in interest rates.  This may lead to an increased risk of supplier failure.  But this may have some positive impacts, (the Ambiguous element) if the increased risk leads people to continue looking at Resilient rather than Lean supply chains and that leads to more opportunities for local/national/regional businesses.

The Ambiguity is apparent on a global scale – rising oil prices will help Russia to fund their war in Ukraine, but Iran was a key weapons supplier and probably will not be so much in the future.  But China needs oil, and may therefore step in.  Will higher fuel prices support the transition to renewable sources of energy? 

Short term, Procurement needs to move quickly to determine where there are vulnerabilities – and (let’s be clear) opportunities. 

We all think/hope Business As Usual will be around the corner.  But we have been assuming that for 20 years since the Global Financial Crisis. 

Time to get planning.  (and yes I have filled up with fuel today)