The industrial corporate, standing tall amongst the world: a bastion of compliance, structure and value creation. A behemoth, a law and order book to itself, history has manifested itself into this tall house of cards. Oh, how we lust over it! How we revere it! How the policies and regulations within it are sacrosanct and to be followed without question.

The procedures set out by the head office shall be followed at all times. The little red company book shall not be questioned! Procurement operations and engagement with suppliers MUST be done according to company rules! The industrial corporation has spent $10mm+ on consultants and bloated enterprise software sold to management that forces you all to engage and communicate with your supplier chums in a certain way. Deviate at your peril, whether right or wrong we have spanked too much cash on this to backtrack now!

enterprise software supply chain procurement

This, my friends, is the kind of attitude we are dealing with when trying to empower users and individuals who work within industrial enterprise companies with superior tools to do their jobs.

Human behaviour is beautiful – and valuable

And not only that, humans – well – they tend to be humans. The market rules, people rule. What does this mean? You burden them with an inflexible way of working, a prescriptive route they need to take. However, their brain, whether by construct or serendipity, finds a superior route of communicating. One that, perhaps, might save the industrial corporate 10% on a $200mm purchase order. In such cases, 1 of 2 things happens:

1. The procurement officer is a munchkin. He has to follow the rules! He MUST! The prescriptive route which has been set out in front of him is there for a reason! Ignoring the 10% savings, he must do as the route says. The right thing to do. His children will be proud.

procurement office munchkin

2. The procurement officer is not a munchkin. He says that it is totally ridiculous that his ERP system updated 5 years ago does not allow him to chat to another supplier and get in a bid and extend the deadline. And send some dox which are not part of the prescribed procurement flow he has been given. He bangs this supplier an email, he deviates!! He uses his brain! He then finds a work-around and tells back office IT guys to log it on the system so the boxes are ticked. He saves the 10%*.

*Unfortunately he gets paid nothing for this, and despite the supply chain being absolutely critical to performance for companies, with around 50% of total spend going through CAPEX and hitting the bottom line,  incentives are not aligned for procurement officers, who should be the best paid people at industrial corporates – but that is for another blog.

And human behaviour will find a way

I am happy to say that my faith in procurement officers is still intact – nearly all of the procurement officers I speak to will admit they choose a variant of the second option.

Full automation of procurement processes without human intervention, for complex buyer-supplier relationships, which require qualitative reasoning around purchasing/ awarding decisions, is a myth. The executives wasting shareholder money on huge Digital 7.0 teams trying to do this by 2050, constructing 10 year grand plans to keep them in a job, and pretending that AI will eventually mean procurement departments should consist of robots and machines only (whilst their current procurement teams are doing everything totally manually with emails and faxes) should be fired immediately.

enterprise software procurement office munchkin

Reality clashes with misguided notions of software, with negative outcomes

So, what does this mean? In simple terms, for complex (read: adh-hoc, no prescribed route, multiple parties involved, lots of back/ forth) procurement the communication in the BuyerCo to SupplierCo (or BuyerCo to IntermediaryCo to SupplierCo) is done via emails and attachments. This is a manual process of business-critical data exchanges, which has large risks attached with it – see below:

 

manual process business critical dataAnd why does this happen – from a systems perspective? Put simply, procurement and supply chain software that exists has been built in a high prescriptive and dogmatic manner. It works extremely well for plain vanilla engagements with suppliers (read: high volume, low ticket items, selected on price and availability, extremely structured).

procurement officer working

I always have some extra chilli in my supply chain operations

Existing prescriptive enterprise software works in pre-determined scenarios, but add a little spice to the situation and it breaks down. We all know that industrial procurement is more like a nice enchilada con salsa than a plain waffle. As soon as there is an unexpected turn, users will deviate back to emails…

indiana jones emailLet’s reflect back on the industrial supply chain, in all of its quirky glory. This is not a clean, Swedish hospital – with clinical lines and well thought out design. It is more like a maze from Indiana Jones, unstructured and full of surprises and interactions, unmapped territory.

unmapped territory of procurement softwareAnd each of these transactions have people driving the processes.

complex business data transactions industrial softwareYes, that is right, many human brains seek to engage with each other through communication channels in arriving at awarding commercial transactions! Many minds, connected to fingers, communicating!

There can be method to the madness

madness procurement software

But what we can do is give them a flexible, digital, communication medium. Where, if structure is required, it can be organically built out by the users of that medium. Where complex structured multi-stage tendering processes are required, they shall be there! When simple chat-based exchanges to exchange information and reduce information asymmetry in an informal way is required, so too shall that be possible!

Flexibility, ladies and gentlemen, allows for the empowerment of users within a digital web that is clean, auditable and transparent. This simple philosophy of liberal yet digital data exchanges, is what is required by the market to reduce bloated OPEX and CAPEX and – potentially more importantly – engage via transparent and sustainable processes throughout the industrial supply chain.

How much flexibility can you have whilst not breaking a coherent structure?

Unlike the human body, technology can be built from the bottom up allowing for a huge amount of organic flexibility.

flexible supply chain communication

DeepStream is this flexible, tailored to industrial needs, platform-based software that allows for engagement between businesses in contracting commercial transactions with counterparties. Simple, clean, user friendly and powerful.

Deepstream enterprise software auditableIt can be spun up and used in under 2 weeks for entire buyer enterprise teams, and under 10 minutes for suppliers to create an account and start bidding on transactions and exchanging data. A highly secure platform which caters for critical commercial transactions. It costs a fraction of the price of the old order software companies. And most importantly of all, we listen to our users, those individual brains whose ideas and commercial passions are channelled through their fingertips into our cutting edge software, and release new features every 2 weeks, powering our product for the benefit of global trade.

rockstar sofware supply chain

So the question is yours to answer. Do you value your employees’ minds? Or do you want to be the leader of munchkins, straight-jacketed within a rigidly prescriptive and doomed-to-fail process?

supply chain magic

Jack Macfarlane

Jack Macfarlane

Jack Macfarlane is the CEO and founder of DeepStream.