EDITOR’S NOTE: In her September 18th, 2023 article Regenerative Procurement is the new Procurement, Elvire Regnier writes, “Procurement performance is assessed primarily on the basis of price reduction. Cost reductions and avoided costs are, in the vast majority of cases, not recognized by finance departments.”
The misalignment to which Elvire refers results from equation-based versus agent-based modelling.
Misalignment takes many forms under an equation-based model. Here are just a few examples dating back to 1998:
1. DND process and technology misalignment – https://bit.ly/3oe5Vql
2. SHL Worldcom service department – purchasing department misalignment (technician service call incentives undermined procurement performance).
3. CFOs do not think that procurement delivers any real value – https://bit.ly/44TOPgM
4. Are net Zero policies more damaging than beneficial? – https://bit.ly/44jMECT
5. How painful are the costs of a hidden ESG strategy?* – https://bit.ly/3Ntje06
* Elkington’s Cannibals With Forks – The Triple Bottom Line of 21st Century Business
As a side note, James Meads‘ recent LinkedIn post – on procurement’s big challenges had “Misaligned objectives between procurement leadership and the wider business” as the top concern. – https://bit.ly/48kg2My
Based on 25 years of research and supporting case studies, we must refrain from prescribing a siloed, formulaic approach to complex challenges. Instead, we must understand the unique operating attributes of stakeholders within and external to the enterprise and then implement adaptable solutions, e.g. an agent-based approach.
Thoughts?
30
Procurement Insights
Agent-based versus Equation-based modelling: What every procurement professional needs to know
Posted on September 20, 2023
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EDITOR’S NOTE: In her September 18th, 2023 article Regenerative Procurement is the new Procurement, Elvire Regnier writes, “Procurement performance is assessed primarily on the basis of price reduction. Cost reductions and avoided costs are, in the vast majority of cases, not recognized by finance departments.”
The misalignment to which Elvire refers results from equation-based versus agent-based modelling.
Misalignment takes many forms under an equation-based model. Here are just a few examples dating back to 1998:
1. DND process and technology misalignment – https://bit.ly/3oe5Vql
2. SHL Worldcom service department – purchasing department misalignment (technician service call incentives undermined procurement performance).
3. CFOs do not think that procurement delivers any real value – https://bit.ly/44TOPgM
4. Are net Zero policies more damaging than beneficial? – https://bit.ly/44jMECT
5. How painful are the costs of a hidden ESG strategy?* – https://bit.ly/3Ntje06
* Elkington’s Cannibals With Forks – The Triple Bottom Line of 21st Century Business
As a side note, James Meads‘ recent LinkedIn post – on procurement’s big challenges had “Misaligned objectives between procurement leadership and the wider business” as the top concern. – https://bit.ly/48kg2My
Based on 25 years of research and supporting case studies, we must refrain from prescribing a siloed, formulaic approach to complex challenges. Instead, we must understand the unique operating attributes of stakeholders within and external to the enterprise and then implement adaptable solutions, e.g. an agent-based approach.
Thoughts?
30
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