25 May 2015 I love my Mini. I just don’t love Mini – A rant at procurement
My less-than-one-year-old MINI broke a few days ago. It was a disappointment but not the end of the world. Breaking down in the middle of the Cambridgeshire countryside in England on a sunny day is no real hardship especially when MINI provide a roadside repair and recovery service. I’d just bought a new mandolin so it was actually quite pleasant sitting at the side of the road playing along to Steve Earle. That’s how it started but by the end of the day I was in a less cheerful mood and I blame procurement people.
After an hour of waiting a recovery truck arrived. No attempt at a roadside repair just a recovery. That wouldn’t have been so bad if the recovery truck had been working. They couldn’t rescue us so they called another recovery vehicle. Nearly two hours later it arrives. Shit happens of course but you can’t play Galway Girl for 3 hours so by the time the second truck arrived I was not in the best of moods. I cheered up when we finally got home but that wasn’t the end of story? It gets worse.
We arrive home at about 9 o’clock, tired hungry and thirsty. I became puzzled as to why the recovery truck driver was taking so long. It soon became clear. His truck had broken too and he had to be recovered himself. It was midnight before my MINI was safely parked outside the house.
It had been an enjoyable holiday weekend Saturday but since my MINI ground to a halt, my mood had gone steadily downhill by the way MINI had dealt with our problem. One truck breakdown is unlucky but two isn’t acceptable. Luck though has absolutely nothing to do with the filthy state of the truck we were driven home in. The MINI recovery fleet (outsourced I have to say) is a disgrace which is why, while I still love my MINI, I don’t love MINI anymore.
Now let me just take a step back because this isn’t really a rant about MINI. In fact they acknowledged their shortcomings in recovering me and I’m sure they’ll make up in some way for the unfortunate events last weekend. I will love them again soon. And this is not a rant at the subcontractors whose trucks that were barely roadworthy broke down. I actually have some sympathy for them. It’s poor procurement I’m annoyed at.
A few years ago I was involved in a procurement exercise to reduce the costs of outsourced recovery vehicles – not I should point out for MINI but for a completely separate roadside rescue business. The aim of the procurement exercise was to reduce significantly the fees paid to recovery operators. They were all to agree to a new reduced rate card otherwise their contract would be terminated. This is difficult for contractors. They have to offer a 24/7 service. They can’t refuse a job and they have to maintain high standards. That comes at a cost. The change in prices represented something like a 30% cut in these suppliers’ rates and it was applied universally and indiscriminately.
The effect polarized the suppliers. The larger recovery businesses simply refused the price reduction claiming that they couldn’t maintain their own high standards at those reduced rates. They walked away. On the other hand, the smaller operators who needed to maintain their contracts to survive – the “no job too small” brigade – went along with the price reduction. For them, they had no choice, They’d have to make up the losses with cost cuts somewhere else – perhaps keeping trucks on the road longer before they’re replaced or cut corner elsewhere.
And the effect was a 30% reduction in costs. From a procurement perspective, a good job done. But from a business perspective, what effect did it have?
Last weekend I saw what the effect must have been like from a customer point of view and it was not good. I am not going to presume that the reason why the MINI recovery fleet is such a mess is because of some procurement policy but it does seem obvious to me that they have been slapdash in the way they’ve outsourced their recovery fleet. The MINI brand is valuable and in outsourcing to a business that doesn’t even keep their trucks clean, never mind road worthy, they’re delegating their brand management to a bunch of cowboys.
But I sympathize a little with those cowboys. Small businesses like them get squeezed and squeezed by big bully businesses but you can only squeeze a lemon so many times. Many procurement organizations have the wit and wisdom to know how much a supplier can be stretched before it negatively impacts the business but there remains a culture in many big organizations that is blind to this. Perhaps they should see the effect of their procurement policy from a customer perspective.