15 Nov 2012 Hauling procurement into the sunlight
I don’t think of myself, much, as a grumpy old man but I seem to have spent a lot of time recently reading blogs, LinkedIn, tweets and press releases, scratching my head and wondering “is it just me”?
There is a saying of which my old boss used to be fond: things that are ‘well known’ are rarely known well. These well known things tend to form our basic day to day operating assumptions. It is sensible to haul these assumptions into the sunlight every so often to give them a good dust down and re-examination. I am going to mention five of them today:
1 Procurement is about spend control
2 Procurement is about achieving savings.
To be sure, controlling expenditure and finding savings opportunities are important things, although one hopes employees and managers are doing them anyway, but they are only a part of what procurement actually is. Nor is procurement
3 a process leading up to putting a contract in place
4 purchase to pay or settling invoices.
No. Procurement is the means by which an organisation secures delivery of the resources it requires to undertake its functions and/or to deliver its desired strategic outcomes.
No doubt an organisation wants to do this in a cost effective manner, but cost effective is not a general synonym for lowest price. In the end it will matter not a jot that you have negotiated really keen prices if your supply chain fails to deliver. That would be a catastrophic outcome in the case of a supplier of strategically important goods or services (which yields the proper meaning of ‘strategic sourcing’).
If your negotiation style is cut-throat in the good times it is likely to be your throat which is exposed when times get harder.
As one of my old tutors put it: in all negotiations you should know what you want, what you’ll ask for and what you’ll settle for. A good outcome is one in which all parties to the agreement are content.
5 Procurement is something that “procurement professionals” do.
This assumption leads to a kind of exceptionalism. It leads to the idea that Procurement is a bounded functional specialism which operates in its own professionalised silo. This is a tactical and operational view of “Procurement” which, I suspect, underpins a lot of flawed projects (do you really want your projects to be structured by buyers negotiating with salesmen)? It certainly underpins the idea that Procurement can be outsourced.
We should now be looking at Procurement as a core part of any organisation’s strategic activity. I would go further and suggest that it is only in a strategic context that the idea of Sustainable Procurement has any real meaning.
Lest you think that I am tilting at straw men, take an objective look at the torrents of untreated guff flowing through social media channels in the guise of marketing messages from our industry these days. And there’s another thing: social media – don’t get me started….
