For Star Wars fans everywhere, although force majeure is French for a “superior or great force,” we are not referring to the famed energy field that gives the Jedi their power and binds the galaxy together. In the world of business and contracts, force majeure is actually defined as an extreme event beyond the control of an obligated party that prevents performance under a contract.
Blockchain epitomizes network-centric business, and procurement departments must take the lead exploring its possibilities for supply chain disruption. “Blockchain will radically change how we drive transactions and what procurement does as a profession,” said Robert Kain, Principal Consultant at Nitor Partners. “Being able to create and connect the networks that allow things like digital and mobile payments, bitcoin, data analysis, financial platforms and crowdfunding will create a much faster and secure world where who you are and who you’re dealing with are completely visible.”
Races have a starting line and a finish line. Whether running a sprint, in a Formula One race car, on a thoroughbred horse or in a homemade soap box derby car - the same fundamental premise applies: get off to a great start, run an effective race and get to the finish line in the quickest way possible. Races begin with the announcement “ON YOUR MARK; GET SET; GO!” or some variation of this timeless announcement. The key is that racers are provided direction as to when to find their mark (starting point) and get set (a time to prepare). These stages leading up to the “Go!” moment are crucial to an effective start.
Many business cycles have a “season.” In retail, the holiday season is a make-or-break occasion. In the world of accounting, tax season provides the heaviest workflow. Some business seasons follow the school calendar (travel and school supplies) and others the seasons of the year (construction or HVAC repair/sales). The best part of seasonality in business is it is predictable.
The world of Procurement, including the different technologies, methodologies and strategies will continue to evolve and have a significant organizational impact in the coming year. Staying abreast of the latest trends and offerings will differentiate best in class organizations from those that fall behind.
Throughout 2016 there were many significant events that shaped the current state of the Oil & Gas industry. As the price of oil continued to plunge, world events hinted at a very slow recovery in the sector. Projects were put on hold, headcounts slashed, but production seemed to continue unabated. Some of the events that have had or will have a major impact in this space are:
- "Brexit" shook up the EU, continued financial chaos in Italy and Greece, and a general fear of the unknown led to declines in European markets. These events drained demand for oil, putting increased downward pressure on crude prices.
It's tempting to see the recent announcement that OPEC will cut production as having a positive impact on the price of
oil. Taken out of the context of reality, OPEC's historical influence is huge - just the mere announcement of a production cut would send prices up. But the reality is that OPEC has lost its war against shale producers, and is trying one last time to exert control over the market. Yes, we will see a (very) short term upward tick in the price per barrel, but any price move will not be sustainable. American oil giants are flush with cash, and eager to jump back into the game at the right price. Let's further assume that all of the OPEC member states adhere to the production cuts, except of course those that have already negotiated exemption clauses (Iran, Libya, Nigeria). Let's further assume that Russia agrees to halt production increases. As the price moves up towards $55-$60, U.S. shale producers will be incentivized to restart production. All of those capped wells will come online, in less time than it takes to sign another deal. Any price gains from the production cuts overseas will be swallowed up by the increased supply from domestic shale production. OPEC is facing a losing battle, and their only way out is to invest in more production capacity.
How many times have you worked in a setting where you were the end of the line of a long, multi-department initiative? All of the workflows and processes linked together and each employee along the way had time to fully complete tasks. This well-oiled business machine created an easy, almost automatic, response from you to quickly close the loop.
This is a nice story and every employee’s dream. But realistically, when the initiative reached your desk, the well-oiled machine had probably already broken down somewhere along the way and lost a gear or two. Within Nitor Partners’ 8-Element Procurement Transformation Process, the seventh element, Invoice and Payment, helpsclosethe loop.
That huge tree in your backyard has caught a disease and is infecting the surrounding trees. It needs to come down. While it seems like a straightforward task, (all you have to do is grab an axe and a plaid shirt) in reality, there are so many details you have to consider - dust, falling branches, whether or not the tree is already leaning in one direction, how far the tree will fall - and this is all before you even pick up your axe to start chopping.
One of the nice advantages of consulting for many Fortune 500 companies is the amount of perspective we gain. Nitor has helped build industry leading sourcing organizations in almost every business sector. Over time, we've taken note of the most common sourcing organization myths in the field, and we're going to bust them one by one...