MIT's Center for Transportation and Logistics has always served an interesting role somewhere between academia and the private sector. I've come to think of it as a more academic version of AMR Research (in fact, executives have moved between the two organizations). Most recently in Supply Chain Digest Chris Caplice, Executive Director of the Center, chimed in with his supply chain predictions for 2010. I'll quote a few here and provide my own commentary, but I'd suggest reading the entire column if you have a minute. Chris begins by noting that "the most obvious prediction for 2010 is that the level of uncertainty in the financial markets, commodity prices, consumer demand, and virtually every other facet of the economy that supply chain managers are concerned with will only increase." And this, of course, makes "all aspects of a supply chain manager's job more difficult. It increases the need for more flexible and sophisticated forecasting methods, contractual arrangements, operational models, sourcing strategies, etc."

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Over the weekend, my wife shared with me that one of her high-school friends was interviewing for a category/vendor-management position focused on professional services and IT spend. The job would report up to the CPO of the organization (rather than to IT, as such roles often have in the past, at least indirectly). I did a quick check of our market-segmentation database. It turns out that the company, a supplier in the automobile and truck manufacturing industry, is in the top 10% of organizations we track in this market from a procurement, supply chain, and IT-sophistication standpoint (in Geoffrey Moore terms, they're a classic "early adopter"). The fact that such an organization plans to invest in a senior category manager in this area should not be surprising, but far too few organizations assign senior supplier/vendor-management resources to these categories today.

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There has been much chatter in the market of late about the eventual migration away from Frictionless (also described internally at SAP and with partners as the "bridge" platform). I recently had the chance to catch up with Marko Navala, who not long ago took ownership of the solution for SAP, and Paige Leidig, a long-time product and marketing veteran of the SAP procurement suite. They told me that "there are no plans to re-platform the e-sourcing" solution set. A few weeks ago, David Marchand, who used to focus on SAP's e-Sourcing product before changing his role within the company, also suggested the same thing. Moreover, the current SAP party line appears to be that there are "no plans to force e-sourcing [customers] to another platform." Moreover, while the age of the Frictionless design (over ten years) implies an eventual migration to a more modern SaaS platform at some point in the coming years, according to SAP, "re-platforming" will "not happen in 2010 or 2011."

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Recent headlines about Toyota have no doubt been music to the ears of its major rivals -- especially Ford and GM. From a giant recall for gas pedals that stick (making the Audi 5000's sudden-acceleration PR woes look tame by comparison) to botched hybrid braking systems, Toyota's image has slid downhill faster than just about any automaker in history. Which is precisely why, if you're a contrarian, it might make sense to go out and buy a Toyota. Stay with me for a minute here. In fact, the strategy of contrarian buying is one that we should all consider more often in our procurement careers. First, let's consider the case for plunking down your hard-earned dollars on an automotive brand that can't seem to get either acceleration or braking right.

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I'm thrilled to announce this morning that Zycus has become a Lead Sponsor of Spend Matters. Previously an Associate Sponsor, Zycus has now assumed a Lead Sponsor role. If you're not familiar with Zycus -- or think all that they do is spend classification -- then you're clearly missing out. Zycus is a vendor that has transformed itself in recent years from a strong niche player in a single area to a broader Spend Management suite provider with capabilities stretching from upfront data acquisition, spend classification and analysis through to sourcing and contract management. And they have ambitions on building out an even larger footprint in the Spend Management market. I'm hearing Zycus' name come up in an increasing number of sourcing and related deals and it's clear that their message and solution focus on usability and value is resonating in the current environment. If you think that Zycus is just about spend classification, then your knowledge is clearly a few years old. A lot can change in a short period of time, and it has with Zycus.

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Last week we featured an intro to low-cost automated phone surveys using InstantLoop. This week, we'll examine how to quickly look at some consumer-spending trends.

- Ryder Daniels, Capsaicin, LLC

Bundle is a new service that uses a node-based taxonomy metaphor to provide fast, simple visualization tools for exploring consumer spending habits all the way down to a zip-code level. It also allows for the comparison of different demographic data including age, income, and household. What is the percentage of income spent on electronics vs. restaurants? At which retailers do consumers spend most? What about transportation vs. house and home costs? How does healthcare stack up against charity?

Bundle's data comes from "... the U.S. government, from anonymous and aggregated spending transactions from Citi, and from third party data providers." There's also a useful "Discovery" section, and an active community that addresses spending and consumer issues. Bundle is also planning to explore how consumers save in the coming months. With the beta, data is updated quarterly.

My first two predictions in the Spend Matters 2010 forecasting series were certainly more controversial than this one. Still, one could argue that my third prediction, that an increasing number of procurement organizations will budget for supply, commodity, and supplier risk content in 2010, is the most important of the three so far. That's because, with increasing frequency, company procurement organizations -- not to mention finance and operations -- are becoming aware of the degree to which they've been flying VFR while up in the clouds in recent years (despite an initial perception that they were piloting their way through a perfectly clear environment). Increasingly, even average-performing procurement organizations are sensing the need to go up and down the ranks -- from the CPO to the category manager -- to invest more in the type of data and insights that can help them make better total-cost decisions and reduce or eliminate business risk.

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Punxsutawney Phil saw his shadow on February 2nd; looks like six more weeks of winter. It has come to my attention, however, that his predictions have been right only 37% of the time. Born and raised in Lancaster County, Pennsylvania, I was more attuned to the predictions of rival groundhog Octorara Orphie, from the Slumbering Groundhog Lodge of Quarryville, PA, founded 102 years ago. This year Orphie predicted an early spring, as did a number of other woodchuck prognosticators. As they say, there are lies, damned lies, and predictive groundhog analytics. (By the way, if you're interested in joining the Quarryville Slumbering Groundhog Lodge, you must be at least 35, as Slumbering Groundhogs must all be old enough to be President of the United States.)

With groundhogs demonstrating so many occasions of predictive inaccuracy, perhaps the KPI for the arrival of spring needs to be based upon more robust data. Since Punxsutawney Phil is correct only a little more than one third of the time, maybe the performance measure needs to be defined more clearly; in any case, how can you base the prediction of such an important event on the shadow of a rodent soothsayer? Besides, if you apply Six Sigma tools, you may find that there is too much variation in the conditions outside Phil's burrow. Or, Phil himself probably needs a Gage R&R (gage repeatability and reproducibility) to ensure that his measurement system will produce reliable results. Perhaps Punxsutawney Phil needs to be replaced, possibly by automation, as suggested by PETA, who would prefer a cruelty-free robotic groundhog. But KPIs should be based upon an organization's own goals, not on those of other organizations, such as PETA.

Now that we have some baseline data on Phil, we can begin to set some targets for improvement. We probably need to put in place some performance-improvement incentives, or a "carrot" approach, if you will. I'm not sure whether groundhogs eat carrots, but they do like sticks, suggesting the "stick" approach instead. If performance incentives do not prove effective, we should consider outsourcing Phil's job to lower-cost counties in Pennsylvania, or following through on the automation threat. It's a global economy, and predicting spring does not need to be performed by high-priced local rodents and their fancy top-hatted protégés.

With its latest quarterly earnings announcement from last week, Ariba appears to be on a roll. While I plan to examine some of the details from the call and the earnings report in more detail next week along with the yearly and quarterly performance of other providers (the Capgemini/IBX news from this week took priority on Spend Matters), I thought I'd put on my contrarian hat this Friday and offer up a few thoughts on what could still hold Ariba back from building additional momentum. Now, don't get me wrong; Ariba put on a good show with its numbers, and much of the trending was headed in the right direction. But any time I see the general market latch on to a binary (i.e., good/bad) view of a provider, I feel it's worth taking the subject off the pedestal and offering a more balanced viewpoint. So just as I defended Ariba's strengths when its earnings reports and forecasts did not delight investors, I'll offer for consideration a few points on areas in which Ariba still needs to focus to take its performance to the next level.

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Capgemini's recently announced acquisition of IBX got me thinking this week about what it will take for procurement outsourcing to go mainstream. Fortunately, the timing of my analysis (not to mention the deal timing) could not have been better, as it coincided with a last-minute visit from an expert on the subject who happened to be in Chicago the day following the acquisition. I had the distinct pleasure of catching up this week over some firewater with my old friend and colleague, Phil Fersht, of Horses for Sources fame (or would that be offshore infamy?) Phil knows more about trends in the overall outsourcing market than just about anyone I know, and he's got some fairly strong -- even survey-informed -- views when it comes to procurement outsourcing specifically. In a recent post on his blog, Phil spilled the BPO beans on some survey data that sheds some insight on procurement outsourcing.

In his new study, Seeking the New Normal in Outsourcing Delivery, Phil managed to get 1,055 outsourcing executives across customers/service providers and advisors to share their views on outsourcing and their intentions for 2010. In this rant, I'll share some of what he found, and offer up my own perspective on the situation. In Part 2, next week, I'll offer a no-holds-barred prescription for curing what holds back procurement BPO today (and how providers are just as guilty as companies when it comes to getting the sourcing/purchasing/payables outsourcing equation right).

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