On March 14th, the world lost a genius with the passing of Stephen Hawking. It seems that everyone – from the academic community, to movie buffs, to curious individuals – is memorializing him in their own way.
Perhaps this is why the Theory of Everything (the focus of Hawking’s early career) immediately came to mind when I read Jon Hansen’s recent post on this blog: Why Data (Harmonization) Is The Oil That Drives The New Digital Transformation Engine. Jon wrote about the need for data to be not just centralized, but also harmonized – accurate, but also meaningful. In order to stage a digital transformation, procurement needs data that can be strategically and philosophically aligned with the overarching objectives of the enterprise, but also reliable at the most granular level.
Procurement and the Theory of Everything
The Theory of Everything is a highly sought after (but as-yet unproven) explanation for everything in the physical world. It is perfectly aligned with all large scale, observable laws of nature AND ALSO the minutest exchanges of energy and physical matter. In so many ways, this is precisely what procurement is in search of today.
We are asked to be value contributors and to ensure that our priorities are in alignment with enterprise objectives. At the same time, we are tied to the need to optimize granular spend data. Procurement can drive value by applying our resources to top line growth or form a better understanding of the full capabilities of our supply chain without generating a single dollar in savings (top down). Or, we can drive savings and stress the need for compliance and efficiency without understanding how that impacts the enterprise’s ability to create shareholder and customer value (bottom up). Both extremes will lead to failure in most cases.
Hawking may have stopped looking for the Theory of Everything later in his career, but procurement is still working to establish a balance between the macro and micro perspectives on our responsibilities. As Jon suggests in his post, the place they are most likely to meet is in the applied value of our data.
Accuracy is not enough, whether it is in reference to historical spend, supplier capabilities, or forecasted demand. Procurement must find meaning by translating the trends and patterns we observe into measurable business impact. Data accuracy provides the company with directional precision, but procurement’s job is to identify what we can influence or change for the better. Should spend with a supplier be increased? Decreased? Eliminated altogether? What about demand – does it reflect the value contribution from that part of the company? Accurate data may hold the answers, but it is up to procurement to ask the right questions of it.
The same is true of centralization. Procurement must bring data together from an IT storage perspective, but this is just physical centralization. We must also ensure that there are bridges between data sources and sets. These bridges should extend from the beginning of the P2P process to the end, and connect spend, suppliers, sourcing events, contracts, purchases, and payments. Better yet, centralized data will also incorporate enrichment from third party sources, enabling improved risk management, supplier diversity, and opportunity assessment.
As Hawking himself said,
“One of the basic rules of the universe is that nothing is perfect. Perfection simply doesn’t exist…..Without imperfection, neither you nor I would exist.”
The same is true of procurement. If data, the supply chain, and spend information were ‘perfect’, logical, or naturally orderly, there would be no need for procurement. The daily challenges we face in pursuit of an improved state are the very reason for our existence.