Procurement

Tony Goodson is back on the stump. His postings from inside a corporate (where he’s been for just three months) continue to amuse and enlighten. His rant against corporate procurement rings bells with me.

Our procurement has been outsourced. I contacted our contact. I emailed him a price I had agreed with the only supplier in Australia for this software product. He emailed my email to their outsourced software supplier, yes you got it, an outsource of an outsource! And yes that means the price is doubled or squared! And even though I’d given them both the price and contact name, number and email, they managed to come back with a price significantly higher than the one I told them they could get it for!!

That takes some beating.

I’ve several times experienced the rigours of organised procurement and I think if often sucks. If you grasp sand too tightly, you end up losing more of it through your fingers. Some tendering processes squeeze out the scope for ingenuity. They confuse rule-following with excellence. I worked for a government agency a year ago helping them procure market research according to EU tendering rules… what a palaver, an enormous amount of time spent ticking boxes instead of a more subtle human process of engaging in dialogue. The result: a costly process and an inflexible contract. I wouldn’t go so far as Tony in labelling all procurement people as idiots; I am sure some do their job well by allowing some flexibility and humanity into the process – but as in so much of business, excessive efforts at control can be completely counter-productive.

4 thoughts on “Procurement

  1. Anthony

    John I have to concur. I recently was involved in a search for a “supply chain lead”.

    One of the people I interviewed described a strategic sourcing project he had worked on with a major bank.

    Because “global” sourcing was the mantra they had to eliminate all suppliers that didn’t have a presence in the countries that the bank did.

    Then they had to elimnate any supplier that was doing business with a competitor.

    In the end before they could even start talking prices or capabilities the first two criteria narrowed it down to only 3 potential suppliers.

    Reply
  2. Canadian Headhunter

    I’ve also done strategic sourcing searches during which I spoke to people in banks. They described their projects and explained that they saved millions of dollars for the company just by consolidating purchases of little things like office supplies.

    So I was shocked to read this post about how ratioalized sourcing can over-complicate and raise the price of simple purchases.

    Reply
  3. Johnnie Moore

    The thing about any rational system is that there will be limits to its effectiveness. A yin and yan thing, if you will. What may seem rational at a macro level can fail at a micro one. For any human system, rules-of-thumb can often be more effective as they leaves some scope for individual creativity and engagement.

    Reply

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