IMPORTANT NOTE: When I reference “Velocity Procurement,” I am not talking about the consulting firm Velocity Procurement. I am talking about “Velocity Procurement Model” in which I refer to the practice of accelerating the procurement process to acquire goods and services more rapidly and efficiently. This approach emphasizes speed and agility, aiming to reduce bureaucratic delays and streamline operations.
Key Aspects:
Process Optimization: Implementing strategies to expedite procurement cycles.
Agility: Enhancing the ability to respond swiftly to market changes and organizational needs.
Reduced Bureaucracy: Minimizing administrative hurdles to facilitate faster decision-making.
My apologies if there was any confusion.
What Is The Velocity Procurement Model?
Jon W. Hansen’s concept of “Velocity Procurement” is a modern evolution of his earlier work in supply chain and procurement optimization, reflecting his decades of experience streamlining processes for organizations like the Canadian Department of National Defence and the New York City Transit Authority. While Hansen hasn’t published a formal manifesto on it, the term emerges in his 2024 writings and discussions, notably on platforms like LinkedIn, where he positions it as a response to the sluggish, tech-heavy procurement systems dominating today’s landscape. Let’s unpack what it means based on his insights and track record.
Velocity Procurement is about speed and agility—procuring goods and services faster, smarter, and with less bureaucratic drag. Hansen contrasts it with traditional approaches, like those reliant on clunky Enterprise Resource Planning (ERP) systems (e.g., SAP or Oracle), which he critiques as rigid and slow. His idea builds on the principle that rapid decision-making, driven by data and human judgment, trumps over-engineered automation. Think of it as procurement at the pace of business need, not at the mercy of software workflows or endless approval loops.
At its core, Velocity Procurement seems to extend Hansen’s 1998 innovations—where he slashed costs by 23% annually and cut buyer teams dramatically—into a philosophy for today. Back then, he used an algorithm-based platform to forecast demand, optimize inventory, and sync with suppliers for MRO parts. That system’s success (e.g., 97.3% accuracy) came from quickly connecting data “strands” (usage, pricing, lead times) to act decisively. Velocity Procurement takes that further, emphasizing real-time responsiveness in a world of global supply shocks, like chip shortages or shipping delays. It’s less about a single tool and more about a mindset: strip out waste, accelerate cycles, and prioritize outcomes over process.
How does it work in practice? Hansen hints at a lean, adaptive framework. Imagine a manufacturer needing parts after a sudden demand spike. A traditional system might take days—requisition forms, ERP updates, supplier bids. Velocity Procurement might use pre-vetted supplier pools, real-time data feeds (e.g., stock levels, shipping ETAs), and empowered buyers to lock in an order within hours. It’s not anti-tech—Hansen’s roots show he loves smart algorithms—but it’s anti-bloat. He’d likely pair lightweight AI (say, demand prediction) with human overrides, avoiding the “black box” trap of fully automated systems.
In his 2024 article “Procurement Optimization Explained,” Hansen ties this to cost savings and competitiveness, arguing that velocity lets firms pivot faster than rivals. For example, during a 2023 port strike, a velocity-focused company might reroute suppliers overnight, while others wait on ERP recalculations. He also nods to sustainability—faster procurement can cut excess inventory, reducing waste. It’s practical, not theoretical; his DND platform managed 465,000+ SKUs across bases, proving scale isn’t the issue—it’s sluggishness.
Compared to modern tools like Blue Yonder or Flexport, Velocity Procurement isn’t a branded software but a strategic lens. Those platforms offer velocity through AI and IoT; Hansen’s version might use them selectively, but he’d ditch their complexity if it slowed things down. His critique of “technology-led” procurement suggests he’d favor a stripped-down dashboard over a $100,000/year suite if it got the job done.
The term’s newness means it’s not fully codified—Hansen’s still shaping it in public forums. But it’s rooted in his legacy: data-driven, people-centric, and obsessed with efficiency.
Velocity Procurement Versus SAP IBP
Let’s compare Jon W. Hansen’s Velocity Procurement to SAP Integrated Business Planning (IBP), a heavyweight in modern supply chain tools, and ground it with a hypothetical case to see how they play out. Hansen’s concept, as pieced together from his 2024 writings and prior work, prioritizes speed, simplicity, and human-driven adaptability, while SAP IBP leans on comprehensive, tech-heavy integration. I’ll frame this around a specific scenario—say, a mid-sized manufacturer handling a sudden demand surge for parts in February 2025—and break down how each approach stacks up.
The Case: Sudden Demand Surge
Imagine a company, Precision Metals, making industrial pumps. On February 26, 2025, a major client doubles their order due to a construction boom, needing 10,000 extra pump components by mid-March. Lead times for raw materials (steel, gaskets) are tight, suppliers are stretched, and a West Coast port strike just hit, delaying shipments. Precision Metals needs to procure fast, keep costs down, and avoid overstocking once the surge passes.
Hansen’s Velocity Procurement
Approach: Hansen’s philosophy is about rapid, decisive action. Based on his 1998 platform (which cut costs 23% annually) and 2024 reflections, Velocity Procurement would likely:
- Tap real-time data (e.g., current inventory: 2,000 units; supplier stock levels) from a lean system—think a custom dashboard, not a bloated ERP.
- Use pre-vetted supplier networks (e.g., Supplier A for steel, B for gaskets) to bypass lengthy bidding.
- Rely on a small, empowered team to make calls, guided by simple algorithms forecasting demand (e.g., 12,000 units total needed) and optimizing orders (e.g., 8,000 now, 2,000 later).
- Pivot fast: if Supplier A’s shipment is stuck, switch to a local backup (Supplier C) within hours, not days.
Execution: The team checks usage trends (50% spike last month), sees the port delay, and orders 6,000 units from Supplier C (higher cost, $5/unit vs. $4, but 3-day delivery) and 2,000 from B (gaskets, unaffected). Total time from decision to order: 4 hours. Cost: $38,000 (6,000 × $5 + 2,000 × $4). Delivery: March 5, beating the deadline. Excess stock is minimal, as forecasts adjust post-surge.
Strengths:
- Speed: Decisions in hours, not days, echoing Hansen’s “velocity” focus.
- Agility: Swaps suppliers without process paralysis.
- Cost-Effective Simplicity: No $100,000/year software fees—just targeted tools and human judgment.
- Proven Roots: His DND system handled 465,000 SKUs with 97.3% success.
Weaknesses:
- Scalability: Fine for Precision Metals’ 10,000-unit surge, but unclear how it handles global networks or millions of SKUs.
- Tech Light: Lacks deep predictive analytics or scenario modeling beyond basic algorithms.
- Team Dependent: Relies on skilled buyers, not automation—could falter with inexperienced staff.
SAP Integrated Business Planning (IBP)
Approach: SAP IBP is a cloud-based, end-to-end planning suite integrating demand, supply, inventory, and logistics via SAP’s HANA platform. For Precision Metals, it’d:
- Pull real-time data from IoT (e.g., warehouse sensors), ERP (SAP ECC), and external feeds (port status).
- Run advanced demand sensing (AI crunches sales, market trends, even news of the construction boom) to predict 12,500 units needed.
- Optimize across the network: simulate supplier options, shipping routes, and inventory levels using what-if scenarios.
- Auto-generate purchase orders, synced with production schedules and budget constraints.
Execution: IBP flags the port strike instantly (via supply chain control tower), forecasts 12,500 units (10% buffer), and models options: Supplier A (delayed, $4/unit), C (local, $5/unit), or air freight from D ($6/unit, 2 days). It picks a hybrid—6,500 from C, 2,000 air from D—balancing cost ($45,500) and speed (March 3 delivery). Orders sync to suppliers via Ariba integration; production adjusts automatically. Excess stock (2,500 units) is flagged for later use.
Strengths:
- Precision: AI-driven forecasts nail demand (12,500 vs. Hansen’s simpler 12,000 guess).
- Scale: Handles global supply chains—ports, DCs, multi-tier suppliers—effortlessly.
- Visibility: End-to-end tracking spots risks (strike) and opportunities (air freight).
- Automation: Cuts human error; buyers just approve, not calculate.
Weaknesses:
- Cost: Licensing, maintenance, and training could hit $50,000-$100,000/year—steep for mid-sized firms.
- Complexity: Setup takes months; Precision Metals might still be onboarding during the surge.
- Rigidity: If the AI misreads (e.g., overestimates at 15,000), overruling it mid-process is clunky.
- Delay Risk: Planning cycles (even fast ones) might take a day vs. Hansen’s hours.
Head-to-Head
- Speed: Hansen wins. Velocity Procurement acts in 4 hours; SAP IBP, even streamlined, might need 24-48 hours for full simulation and approval. Hansen’s lean approach thrives in a crisis like this.
- Cost: Hansen’s $38,000 beats SAP’s $45,500 in the short term, plus no hefty software overhead. SAP justifies higher costs with long-term precision and scale.
- Accuracy: SAP IBP’s AI edges out Hansen’s simpler forecasts (12,500 vs. 12,000), reducing waste if the surge persists.
- Scalability: SAP dominates for large, complex firms (e.g., multinational automakers), while Hansen’s approach suits nimble, mid-tier players like Precision Metals.
- Adaptability: Hansen’s human-led pivots (Supplier C swap) outmaneuver SAP’s reliance on pre-modeled scenarios—though SAP could adapt with customization.
Verdict
For Precision Metals’ urgent, mid-sized challenge, Velocity Procurement fits like a glove—fast, cheap, and effective, leveraging Hansen’s battle-tested instincts from the ’90s. SAP IBP shines for bigger players or long-term planning, where its depth pays off (e.g., a global firm managing 100,000 SKUs across continents). If the port strike worsens or demand spikes again, Hansen’s agility might still edge out SAP’s slower recalibration. But if Precision Metals grows 10x, SAP’s firepower would outscale Hansen’s lean setup.
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Procurement Insights
A Case Study: How does Hansen’s Velocity Procurement Model stack up to SAP IBP or a specific case?
Posted on February 26, 2025
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IMPORTANT NOTE: When I reference “Velocity Procurement,” I am not talking about the consulting firm Velocity Procurement. I am talking about “Velocity Procurement Model” in which I refer to the practice of accelerating the procurement process to acquire goods and services more rapidly and efficiently. This approach emphasizes speed and agility, aiming to reduce bureaucratic delays and streamline operations.
Key Aspects:
Process Optimization: Implementing strategies to expedite procurement cycles.
Agility: Enhancing the ability to respond swiftly to market changes and organizational needs.
Reduced Bureaucracy: Minimizing administrative hurdles to facilitate faster decision-making.
My apologies if there was any confusion.
What Is The Velocity Procurement Model?
Jon W. Hansen’s concept of “Velocity Procurement” is a modern evolution of his earlier work in supply chain and procurement optimization, reflecting his decades of experience streamlining processes for organizations like the Canadian Department of National Defence and the New York City Transit Authority. While Hansen hasn’t published a formal manifesto on it, the term emerges in his 2024 writings and discussions, notably on platforms like LinkedIn, where he positions it as a response to the sluggish, tech-heavy procurement systems dominating today’s landscape. Let’s unpack what it means based on his insights and track record.
Velocity Procurement is about speed and agility—procuring goods and services faster, smarter, and with less bureaucratic drag. Hansen contrasts it with traditional approaches, like those reliant on clunky Enterprise Resource Planning (ERP) systems (e.g., SAP or Oracle), which he critiques as rigid and slow. His idea builds on the principle that rapid decision-making, driven by data and human judgment, trumps over-engineered automation. Think of it as procurement at the pace of business need, not at the mercy of software workflows or endless approval loops.
At its core, Velocity Procurement seems to extend Hansen’s 1998 innovations—where he slashed costs by 23% annually and cut buyer teams dramatically—into a philosophy for today. Back then, he used an algorithm-based platform to forecast demand, optimize inventory, and sync with suppliers for MRO parts. That system’s success (e.g., 97.3% accuracy) came from quickly connecting data “strands” (usage, pricing, lead times) to act decisively. Velocity Procurement takes that further, emphasizing real-time responsiveness in a world of global supply shocks, like chip shortages or shipping delays. It’s less about a single tool and more about a mindset: strip out waste, accelerate cycles, and prioritize outcomes over process.
How does it work in practice? Hansen hints at a lean, adaptive framework. Imagine a manufacturer needing parts after a sudden demand spike. A traditional system might take days—requisition forms, ERP updates, supplier bids. Velocity Procurement might use pre-vetted supplier pools, real-time data feeds (e.g., stock levels, shipping ETAs), and empowered buyers to lock in an order within hours. It’s not anti-tech—Hansen’s roots show he loves smart algorithms—but it’s anti-bloat. He’d likely pair lightweight AI (say, demand prediction) with human overrides, avoiding the “black box” trap of fully automated systems.
In his 2024 article “Procurement Optimization Explained,” Hansen ties this to cost savings and competitiveness, arguing that velocity lets firms pivot faster than rivals. For example, during a 2023 port strike, a velocity-focused company might reroute suppliers overnight, while others wait on ERP recalculations. He also nods to sustainability—faster procurement can cut excess inventory, reducing waste. It’s practical, not theoretical; his DND platform managed 465,000+ SKUs across bases, proving scale isn’t the issue—it’s sluggishness.
Compared to modern tools like Blue Yonder or Flexport, Velocity Procurement isn’t a branded software but a strategic lens. Those platforms offer velocity through AI and IoT; Hansen’s version might use them selectively, but he’d ditch their complexity if it slowed things down. His critique of “technology-led” procurement suggests he’d favor a stripped-down dashboard over a $100,000/year suite if it got the job done.
The term’s newness means it’s not fully codified—Hansen’s still shaping it in public forums. But it’s rooted in his legacy: data-driven, people-centric, and obsessed with efficiency.
Velocity Procurement Versus SAP IBP
Let’s compare Jon W. Hansen’s Velocity Procurement to SAP Integrated Business Planning (IBP), a heavyweight in modern supply chain tools, and ground it with a hypothetical case to see how they play out. Hansen’s concept, as pieced together from his 2024 writings and prior work, prioritizes speed, simplicity, and human-driven adaptability, while SAP IBP leans on comprehensive, tech-heavy integration. I’ll frame this around a specific scenario—say, a mid-sized manufacturer handling a sudden demand surge for parts in February 2025—and break down how each approach stacks up.
The Case: Sudden Demand Surge
Imagine a company, Precision Metals, making industrial pumps. On February 26, 2025, a major client doubles their order due to a construction boom, needing 10,000 extra pump components by mid-March. Lead times for raw materials (steel, gaskets) are tight, suppliers are stretched, and a West Coast port strike just hit, delaying shipments. Precision Metals needs to procure fast, keep costs down, and avoid overstocking once the surge passes.
Hansen’s Velocity Procurement
Approach: Hansen’s philosophy is about rapid, decisive action. Based on his 1998 platform (which cut costs 23% annually) and 2024 reflections, Velocity Procurement would likely:
Execution: The team checks usage trends (50% spike last month), sees the port delay, and orders 6,000 units from Supplier C (higher cost, $5/unit vs. $4, but 3-day delivery) and 2,000 from B (gaskets, unaffected). Total time from decision to order: 4 hours. Cost: $38,000 (6,000 × $5 + 2,000 × $4). Delivery: March 5, beating the deadline. Excess stock is minimal, as forecasts adjust post-surge.
Strengths:
Weaknesses:
SAP Integrated Business Planning (IBP)
Approach: SAP IBP is a cloud-based, end-to-end planning suite integrating demand, supply, inventory, and logistics via SAP’s HANA platform. For Precision Metals, it’d:
Execution: IBP flags the port strike instantly (via supply chain control tower), forecasts 12,500 units (10% buffer), and models options: Supplier A (delayed, $4/unit), C (local, $5/unit), or air freight from D ($6/unit, 2 days). It picks a hybrid—6,500 from C, 2,000 air from D—balancing cost ($45,500) and speed (March 3 delivery). Orders sync to suppliers via Ariba integration; production adjusts automatically. Excess stock (2,500 units) is flagged for later use.
Strengths:
Weaknesses:
Head-to-Head
Verdict
For Precision Metals’ urgent, mid-sized challenge, Velocity Procurement fits like a glove—fast, cheap, and effective, leveraging Hansen’s battle-tested instincts from the ’90s. SAP IBP shines for bigger players or long-term planning, where its depth pays off (e.g., a global firm managing 100,000 SKUs across continents). If the port strike worsens or demand spikes again, Hansen’s agility might still edge out SAP’s slower recalibration. But if Precision Metals grows 10x, SAP’s firepower would outscale Hansen’s lean setup.
30
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