Hey friends,
As we move further into 2024, the procurement landscape is undergoing significant changes, influenced by technological advancements, global economic shifts, and a growing emphasis on sustainability. These changes remind me of a thought-provoking post I read on LinkedIn a few weeks ago, which discussed the evolving role of procurement and the increasing need for strategic thinking within the function. That post resonated with me then, and it's even more relevant today as we witness these key trends shaping the future of procurement:
Automating Procurement Processes: The drive towards automation has intensified, with more companies recognizing the value of automating routine procurement tasks. Back in the LinkedIn post, the author highlighted the importance of freeing up procurement professionals from mundane tasks to focus on strategic initiatives. Today, we're seeing AI and robotic process automation (RPA) tools becoming essential in procurement, enabling teams to process orders, manage contracts, and handle payments with greater efficiency and accuracy.
Supply Chain Collaboration: The post emphasized the need for stronger collaboration across the supply chain, a trend that has only gained momentum. In 2024, companies are increasingly investing in collaborative platforms that foster real-time communication, joint problem-solving, and shared goals between procurement teams and suppliers. This deeper collaboration is key to building resilient and agile supply chains that can adapt to disruptions and capitalize on opportunities.
Blockchain Technology: The idea of leveraging technology to enhance transparency and trust within the supply chain was touched upon in the post, and blockchain has emerged as a powerful tool in this area. Blockchain is transforming procurement by providing an immutable, transparent ledger for tracking transactions and verifying the authenticity of goods. It's especially valuable for ensuring ethical sourcing and reducing the risk of fraud in complex, global supply chains.
Improving Data Management: The LinkedIn post pointed out the growing importance of data in driving procurement decisions, and this trend has only become more critical. In 2024, organizations are investing heavily in advanced data analytics and big data solutions to gain deeper insights into spending patterns, supplier performance, and market trends. Effective data management is enabling procurement teams to make more informed, strategic decisions that drive value across the organization.
Collaborative Relationships: The shift from transactional to strategic relationships with suppliers was a key theme in the post, and it's a trend that's defining procurement in 2024. Companies are recognizing that long-term, collaborative partnerships with key suppliers can lead to innovation, cost savings, and increased agility. These relationships are not just about price negotiations; they are about creating value and driving mutual growth.
Sustainable and Ethical Procurement: The post also touched on the growing importance of sustainability in procurement, a trend that has reached new heights in 2024. Companies are under increasing pressure from consumers, investors, and regulators to ensure their procurement practices are sustainable and ethical. This means prioritizing suppliers who align with environmental, social, and governance (ESG) criteria, reducing carbon footprints, and ensuring fair labor practices throughout the supply chain.
Agile Procurement: The need for agility in procurement was another key point in the post, and it's even more relevant today. The ability to adapt quickly to market changes, supply disruptions, or shifts in consumer demand is crucial in 2024. Agile procurement practices, which emphasize flexibility and responsiveness, are enabling organizations to navigate volatility and maintain competitive advantage.
Risk Management: The post wisely predicted the growing importance of risk management in procurement, and this has become a major focus area in 2024. With increasing geopolitical tensions, natural disasters, and cyber threats, procurement teams are prioritizing risk identification and mitigation. This involves diversifying suppliers, developing contingency plans, and implementing robust risk management frameworks to protect against potential disruptions.
Cybersecurity: The rise of digital procurement has brought cybersecurity to the forefront, a trend that aligns with the post's emphasis on the importance of safeguarding data. As procurement processes become more digital, the risk of cyberattacks increases. Strengthening cybersecurity measures, particularly in supplier networks, is essential to protect sensitive information, maintain trust, and ensure business continuity.
Elevating Procurement's Strategic Role: Finally, the post highlighted the growing recognition of procurement as a strategic function, a trend that has only accelerated in 2024. Procurement is no longer just about cost-saving; it's about driving innovation, managing risk, and contributing to broader business goals. As organizations continue to realize the strategic value of procurement, the function is playing an increasingly pivotal role in shaping the future of business.
In summary, the future of procurement is set to be more dynamic, strategic, and technology-driven than ever before. Organizations that embrace these trends, focus on collaboration, sustainability, and agility, and elevate procurement’s role within the business will be well-positioned to thrive in the years ahead.
Cheers,
Fernando
⚓ Maritime Term of the Week
Gross / Net Tonnage
A few weeks ago, we chatted about shipowners and their important role in the maritime industry. Today, let’s break down two other key terms you might hear in the world of ships: gross and net tonnage.
What are Gross and Net Tonnage?
These might sound technical, but they’re pretty straightforward once you get the hang of them.
Gross Tonnage (GT): Think of this as the total size of the ship’s insides—all the spaces from the cargo holds to the crew cabins. It’s measured in cubic meters and is used for things like safety regulations and port fees.
Net Tonnage (NT): This is all about the usable space on the ship, like the areas where cargo is stored or where passengers are. It doesn’t count things like the engine room or crew spaces. Essentially, it tells you how much space is available to make money.
Why Gross and Net Tonnage Matter
Following the rules: Gross tonnage helps determine if a ship is meeting international rules, like safety and environmental standards. It’s also used to figure out how much the ship needs to pay in registration fees or port dues.
Port and canal costs: Both gross and net tonnage can affect how much a ship has to pay to pass through ports or canals. The bigger the tonnage, the higher the fees—so it’s important to get these measurements right!
Insurance costs: Insurers look at a ship’s gross and net tonnage to decide how much to charge for insurance. A bigger ship might mean more risk, so it could lead to higher premiums.
Ship design: When ships are being designed and built, knowing the gross and net tonnage helps ensure they meet all the requirements and can carry the right amount of cargo or passengers.
Making money: Net tonnage is directly tied to how much a ship can earn. The more usable space, the more cargo or passengers it can carry, which means more revenue.
In a nutshell
Gross and net tonnage might seem like just numbers, but they’re super important in the world of shipping. They help shipowners and operators make sure their vessels are safe, efficient, and profitable.
Thank you for being a part of our journey. Stay tuned for more insights next week, and remember, you can suggest topics by replying to this email or sending me a DM!
🚀 My Personal Growth Discoveries
📺 Video: “How Do the Olympics Make Money? The Olympics Business Model, Explained” by The World Street Journal.
As the excitement builds with the Olympics taking place in Paris, it’s a perfect time to dive into an intriguing question: How exactly do the Olympics make money? The Wall Street Journal's video, "How Do the Olympics Make Money? The Olympics Business Model, Explained," offers some great insights into the economics behind this global event.
The Business of the Olympics
At first glance, the Olympics seem like a massive, expensive spectacle—and they are! But behind the scenes, there’s a well-oiled business model that helps fund this grand event. Here’s how it works:
Broadcasting Rights: One of the biggest sources of income for the Olympics is the sale of broadcasting rights. Networks around the world pay billions to air the games, knowing they’ll draw huge audiences. For the Paris Olympics, NBC alone paid $7.75 billion for U.S. broadcasting rights through 2032.
Sponsorships: The Olympics attract some of the world’s largest companies as sponsors. These brands pay top dollar to have their logos associated with the games, reaching a global audience. Think of big names like Coca-Cola, Visa, and Samsung—these sponsorships bring in substantial revenue.
Ticket Sales: While not as massive as broadcasting and sponsorship deals, ticket sales still contribute significantly to the Olympics’ income. Paris 2024 is expected to generate millions from spectators eager to witness history in person.
Merchandising: From official apparel to commemorative items, Olympic-branded merchandise is a lucrative revenue stream. Fans love taking home a piece of the action, whether it's a T-shirt, cap, or a collectible pin.
Government and Public Funding: Hosting the Olympics is expensive, and cities often rely on government and public funding to cover some of the costs. This funding is justified by the long-term benefits the Olympics can bring, such as tourism and infrastructure development.
Paris 2024: A Modern Take on Olympic Economics
With the Olympics now in full swing in Paris, we’re seeing these revenue streams in action. Paris has embraced the modern Olympic business model, balancing tradition with innovation. The city has leveraged its historical appeal and global reputation to attract sponsors, while also tapping into digital platforms to enhance the viewing experience for fans around the world.
What’s particularly interesting about Paris 2024 is the focus on sustainability and legacy. The organizers are working to ensure that the investments made for the games—whether in infrastructure or community programs—continue to benefit the city long after the closing ceremony.
Final Thought
As the world watches the Paris 2024 Olympics, it’s fascinating to see how a global event of this scale is supported by a complex and well-established business model. From broadcasting deals to sponsorships and beyond, the financial engine behind the Olympics ensures that the games not only captivate audiences but also generate the necessary resources to keep this incredible tradition alive.
The Paris Olympics are a testament to how the games continue to evolve, balancing the grandeur of the event with the realities of modern economics. As we enjoy the athletic feats and cultural celebrations, it's worth appreciating the intricate planning and financial strategy that make it all possible.
Thanks for joining us on this journey through the business of the Olympics. Enjoy the games, and as always, feel free to share your thoughts or suggest topics for future issues of Sunday Compass!
🧠 Wisdom Gems I Heard
Discipline is doing what you hate to do, but doing it like you love it