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).

Built Intelligence - an Overview of Procurement

 I had the pleasure of recording an hour long webinar making the case for Procurement (especially in the construction and engineering industries) with Built Intelligence.

This should be made available free of charge later in the year.  I'll let you know when.

Basically this was me just raising (again) the need for a strategic Procurement plan.  With the current global economic turbulence it becomes even more important to try and get ahead of the game rather than just reacting with transactional purchasing.

The acronym VUCA - Volatile Uncertain Complex Ambiguous - certainly seems appropriate for our times.  A strong Procurement strategy may not avoid all problems, but it should certainly help businesses to be better prepared for whatever happens.

Tariffs again...

 Well, the transatlantic tariffs situation is still not clear.  At the time of writing it seems that there will be a 50% tariff imposed on EU goods by the USA from 1 July.  But this deadline has already been postponed once, and maybe again.  And the size of the tariff may change.  And then again, the courts have decided that the current tariffs should are not permissible in law and if the US government wishes to apply then it has to be done by Congress, and not by the Executive claiming (rather ridiculously*) an economic emergency.

I do not pretend to know what is going to happen, but as Procurement and Supply Chain professionals we should take this chance to shine within our own organisations.  This period of high volatility will create both challenges and opportunities.

We need to be constantly reviewing the situation and developing (then implementing) appropriate plans.

Obviously we have to consider what it will mean if there are tariffs or reciprocal tariffs in our supply chains.  We need to check what these are (or might be) and then consider our supplier's approach is going to be.  Some will take this as an opportunity to raise prices to the full extent of tariff rate (even if there is a draw back arrangement, or if tariffs only apply to half of the product...).  Others (dare I say more sensible) will see this as an opportunity to have more dialogue with their customers ("we don't know any more than you do, but we have to work together...").

But don't forget the opportunities that might arise from displacement effects - Chinese and EU goods unable to win market space in the USA because of high tariffs will look to find other customers.  This might lead to price reductions as they seek to gain space in currently well served markets.

Whether we want to take advantage of that (risking existing relationships for a possibly temporary advantage) is of course the sort of thing we ought to be discussing internally and developing appropriate strategies.

Good luck

* The Global Financial Crisis of 2008/9 and Covid-19 in 2020 were obvious economic emergencies.  The USA in 2025 was the fastest growing major economy, had actually caught up the growth trend line from before Covid, had 4% unemployment (technically full employment) and 2.5% inflation (just 0.5% above target) - Clearly not an emergency, though of course governments are free to adopt whatever policies they wish following due process.

CIPS Strategic Transformation - online - 4/5th October 2022

 I shall be running the CIPS online open training course on Strategic Transformation on 4th and 5th October 2022.  Full details are here.

We are in, to say the least, "interesting times".  And appropriately as well as a lot of tactical activity businesses are trying to re-evaluate their strategic choices.  The disruption of the past few years has lead most people to realise that business as usual refers to a past state of affairs that we are unlikely to revert to.

As an example, Working From Home (WFH) was a rarity and has now become the "new normal".  Of course, historically most people worked from home - factories and offices were new inventions a couple of hundred years ago.  But things changed, and change again, and while sticking with the previous strategy might be the right approach we should review it and check.

Personally, the move to online training has made me re-think how I work.

Hope to see you there, and hear your thoughts as well as discuss how to set and revise appropriate strategies for the future.

Sainsbury's, ASDA WalMart and Morrisons

The news is that supermarkets ASDA and Sainsbury's are looking to merge.  Lots of reportage discusses how they will look for efficiencies, and improved leverage over suppliers (presumably to match Tesco).

According to industry stats here the combined ASDA/Sainsbury will have a larger market share than Tesco (30% compared to 28%) but after required divestments that may mean they are of very comparable size.

 The question is  - What next for Morrisons?  Currently in 4th place with 10% they will automatically go up to 3rd, but be a third of the size of the two big supermarkets.  This is stick or bust time I suggest.  They could pick up retail units that ASDA/Sainsbury have to relinquish to please the authorities.  But do they then go all out to get to, say, 15% share?  OR do they stay where they are and hope to fend off Aldi on 7%?

I live in the home of Morrisons, Bradford, and would hope they go for growth, but part of me thinks that a better deal would have been for ASDA to take over Morrisons - roughly comparable market positions, whereas ASDA and Sainsbury now bracket Tesco in brand proposition.  Maybe that is the idea - leave Tesco no where to go either upmarket or downmarket.  But what do Morrisons do? Stick or Twist?