From the June 2019 print edition
With a tagline promising to “spark” creativity among attendees, ISM2019—the annual conference for the Institute of Supply Management—boasted roughly 2,500 attendees in Houston, Texas last April. There were more than 70 breakout sessions and three keynote speakers during three days of education and networking that focused on areas including digitization, supply chain and procurement leadership, the global economy and more.
The event saw supply chain practitioners from more than 30 countries attend and from practically every industry as well as direct and indirect procurement, Tom Derry, ISM’s chief executive officer, said in an interview with Supply Professional.
This year’s lineup of keynote speakers included Carly Fiorina, author, business leader and former US presidential candidate who spoke, among other topics, about her time at Hewlett Packard (HP), said Derry. Specifically, Fiorina told the audience about how important supply chain was to the execution of HP’s strategy along with the impact of leadership.
“Her message around leadership resonated with everybody in attendance. We’ve got people still at the undergraduate level all the way to senior practitioners in attendance and her message was relevant to everybody,” Derry said. “Particularly when she’s addressing the younger audience on the topic of leadership. She points out that the opportunity to be a leader happens at any moment. We all have an opportunity to perceive a problem in our business and to solve that problem.”
Fiorina highlighted a story about efforts to reconcile the circuitry design that she was responsible for in engineering while she was employed at US telecom company AT&T, with invoices she was receiving from the supplier. “So, (she highlighted) the opportunity of taking a concrete problem and getting it resolved as an opportunity to enhance your standing within the company and gain some visibility and potential for advancement,” Derry said.
Derry also highlighted the introduction of the winners of the 30 under 30 Supply Chain Stars program, as well as the six recipients of the R. Gene Richter Scholarship program. The scholarship goes to the rising class of seniors in their undergraduate programs. And while hundreds of students compete in the program, only six are selected. The program pairs students with mentors, both former scholar recipients and senior supply management executives, to get the students on the fast track to leadership roles in the profession, Derry said.
The 30 Under 30 program consists of people already in the workforce today and who’ve been nominated by their companies because of their positive impact.
“They have an amazing resume of things that they’ve been working on already,” Derry said. “We’re able to connect people still preparing to go into the workforce with, at the undergraduate level, recent graduates already having a major impact.”
Tomorrow’s procurement today
Technology and digitization faired heavily at the conference, as seen during the event’s digitization track. And not only supply chain, but technology is involved in mentally changing the way the world works in many other areas, said David Natoff, managing director, Blue Sphere Consulting. Today’s businesses, government and regular people are responding to these shifts, Natoff said during a session called Tomorrow’s Procurement Today.
The iPhone would have seemed unimaginable even a few years ago. Meanwhile, artificial intelligence and robotics are reinventing the workforce, he said. Drones and driverless cars are transforming supply chains. With 3D printing, for example, a failed part at a mining operation in a remote location can be replaced in less time and cost than shutting down operations while a new part ships.
“The technology that we’re talking about, it’s everywhere,” Natoff said. “It’s never been cheaper than it is today.”
Technology remains an enabler, said fellow speaker Amanda Prochaska, CEO of High Performance Procurement. But while it can solve problems within an organization, it can also succeed or fail around three areas: people process and technology, she said. It’s the people within an organization that must live with changes and work in a new way due to new technology. The leaders within an organization are responsible to help them with that process.
“Believe it or not, the technology piece is easy,” Prochaska said. “But if you don’t manage your people through the change curve, then you can talk about, ‘are they ready to follow the new process? Are they capable of doing what you’re asking them to do? Are you changing them from a transactional process to a strategic process? How are they supposed to make their decisions moving forward?’ People are always the hardest part.”
Having the wrong process in place then trying to layer technology on top only results in getting a faulty outcome faster, Prochaska noted. For example, a newly automated master data process is worthless if the data remains wrong.
“These three all have to work together to be successful in your journey,” she said.
Another speaker during the session, Chris Sawchuk, principal and global procurement advisory practice leader at The Hackett Group, referenced a study that the organization did focusing on organizational agility. The study asked whether people believed that digital transformation will change the way they operate globally, with 90 per cent of organizations answering yes. The survey also asked whether organizations had a strategy to deal with those changes. To that question, 66 per cent answered yes, while 46 per cent said they had the resources to execute such a strategy.
But Sawchuk said he was skeptical of the responses, noting that when he asks people what they think procurement will look like in three-to-five years, he sees a lot of “blank stares.”
“If you can’t describe what it’s going to be, how can you have a strategy for getting there?” he asked.
The survey asked about the different technologies available and where organizations sit in terms of adoption. Not surprisingly, Sawchuk said, many responded that they will be using them more going forward. But digital transformations aren’t just about technology, he stressed. The ability to move fast and fail quickly is important, as is the centricity of the customer.
“We have the opportunity to change the relationships, our business models, the way that we deliver services back to the organization in a way that we’re looking through the eyes of the customer,” he said.
To make a digital transformation happen, organizations need data to feed analytics and must build a foundation of data, Sawchuk stressed. An omni-channel experience is important, but not just for customers. Organizations must also look to digitize their own workforce or risk losing their top performers.
“It’s becoming not only a way to attract talent but also a way to retain that talent in your organization,” he said.
Digitization means more than adopting technology, Sawchuk stressed. The process also involves improving the experience of customers, stakeholders, suppliers and others.
Need for speed?
Another session focused on supply sensing capabilities that organizations can put in place. The session featured Joe Carson, president of JWC Advisory, who said that while the pace of business hasn’t increased much, what has risen is the ability of professionals to know what’s out there. So much data now exists that it’s challenging to know what to do with it. Supply chain professionals are now expected to be able to assemble, analyze and formulate a plan around that data. “When you think about the speed of business, it’s this preponderance of all this data that we all have to consume now,” he said.
Fellow speaker Colin Kessinger, managing partner at End-to-End Analytics, said that terms such as artificial intelligence, machine learning or advanced analytics are not very useful labels by themselves. The distinctions aren’t well established within the community, and titles like “data scientist” are about as useful as the title of “doctor,” which is rather vague without knowing whether a doctor has a particular specialty within medicine. Context is key, Kessinger said.
“Why are we doing this and what do we expect to get out of the analytics?” he said.
It’s the economy
During another keynote address, Janet Yellen, an economist at the Brookings Institute and former chair of the US federal reserve, focused on recent economic trends affecting both the US and global economies. The wage gap between those with a high school education or less and those with a college education has widen, Yellen told the audience, and in real terms, wages for less educated Americans have done almost nothing in decades. But while globalization gets blamed for stagnant wages, especially among those with high school or less, Yellen also said that economists point to changes in technology as the larger culprit.
“Globalization is part of it,” she said. “The more important part is technological change generally.
Technological change, automation, IT, has boosted the demand for skilled labour and led to either offshoring or a reduced need for the services that less skilled labour provides. That’s what’s been resulting in the loss of jobs that can be automated or offshored.”
At the same time, interest rates appear to be dropping in most developed countries, she said. Current estimates place the neutral level of real short rates at just under one per cent and two per cent average inflation. Japan, for instance, has zero interest rates and, in Europe, there’s zero interest rates on safe assets without any change to the situation in sight.
“Here we are in an economy that has barely two per cent inflation with the tightest labour market we’ve seen in 50 years,” Yellen said. “I don’t anticipate a recession coming—but of course eventually there will be for one reason or another—there just isn’t a lot of ammunition to address a downturn.”
Overall, the ISM2019 conference took on several large, topical procurement issues, with attendees treated to more than enough tips to “spark” innovation within the profession.