Rant: When Best Practices Become Useless

- April 18, 2014 1:11 PM
Categories: Friday Rant, Procurement Commentary, Public Sector | Tags:

When I speak with providers and practitioners about best practices, I try to put them into context in order to really understand the use case as well as what the implications might be. Often, or ideally anyway, this helps me discover areas where existing resources, data sets, and solutions can be used in new areas or in fresh ways to drive additional value. I find that providers and practitioners alike develop a certain level of myopia that can prevent them for doing the best with what they have available. It is hard to see the forest when you are constantly bumping into the trees.

Similarly, during the briefings I have with technology providers I try to provide feedback along these lines, to see what the boundaries are and what their plans might be, as well as to size up solution footprint, potential strengths, and areas where partnerships might make sense. A company is rarely as narrowly focused as they think they are, so I encourage providers and practitioners to reflect on what they do and seek an external perspective. This can be quite valuable. In the case of Spend Matters, this might be one of the true hidden-gem benefits that come with working with us. A relationship at any level.

Then there is the truly big picture – and this gets to the headline of the article – where procurement comes into play at the macro level. Some of this falls into areas such as supplier diversity, as well as CSR or other “subjective” spend areas. (I’ll have to give credit Rod Robinson at ConnXus for the clever term subjective spend.) My point here is that procurement goes from tactical and efficient to strategic and effective, along with societally transforming. You might not think about your work in procurement this way, but what you buy, who you buy from, and where you buy it from all makes a long-term difference.

Some people think this line of analysis somehow gets overly political, but it is what it is. If analysts don’t point out the consequences of supply chain decisions, who will? Conversely, if politicians come up with rules and regulations that affect procurement or other corporate functions, shouldn’t those of us who look at supply chain comment on the consequences of these policies? When bad policies are set, best practices can be thrown out the door and we are all of a sudden working with suppliers we really had no intention to work with, because the ones we wanted to buy from are now either outright prohibited from selling to us, or priced out of the market because of regulations.

Here is one example from sugar policies affecting the food and beverage space – the protectionist U.S. sugar tariff system (from the mid to late 1970s) that has forced US manufacturers to switch to taxpayer subsidized domestic high fructose corn syrup instead of buying on the global market. And now our politicians are implementing rules to stop companies from selling so much sweet foods and so many sugared beverages (in larger than 16oz containers at that!) to children of all ages. Sure, if you buy sugar, you might do it according to best practices, but ultimately you are arranging the deck chairs on the Titanic – decoupled from market forces on both buy-side and sell-side.

The above example is relatively straightforward and graspable. But if we were to discuss the more services focused sectors such as life sciences, healthcare, insurance, finance, and education, it gets convoluted in a hurry. Much like the sugar example, forcing the services industries to answer to policy regulations rather than operate against true market forces will not lead to effective services delivery. Best practices become useless, and instead practitioners spend their days busily rearranging the deckchairs to conform to the latest desired policy outcomes.

What a senseless waste of human life – Mousebender (played by John Cleese)

Comments

  • Alan Holland:

    You’re points concerning regulatory interventions curtailing efficient market operations are well made. However, the two regulatory interventions in the sugar market are not mutually incompatible and both serve to artificially curtail consumption. So I feel this may somewhat undermine your argument (that I broadly agree with, nonetheless).

  • Thomas Kase:

    Alan,
    I strongly disagree – we (in the US) pay far more for real sugar (about 3X) than world market prices because of the import regs, and as a result F&B manufacturers (like Coke) have switched to tax subsidized HFCS instead – adding pounds to the average American while taking tax dollars out of the pocket.

    For pols to then have the gall to come out and start making regulations around how much HFCS we can consume in one serving is an excellent example of the mess pols create for themselves and for us.

    Don’t get me started on the corn ethanol fuel racket and all the waste involved there.

    Then you have the impact on South American sugar farmers – who are effectively shut out of the US – leading to lower levels of employment, poverty, crime etc. And some start to grow the “other” white substance…

    Nope, I think the sugar regs are a perfect example of what happens when politicians interfere with market forces.

    Thank you for the comment though!

    Thomas

  • Thomas Kase:

    Speaking of corn fuel – this was released today on AP:

    Study: Fuels from corn waste not better than gas

    “”The study says it will be very hard to make a biofuel that has a better greenhouse gas impact than gasoline using corn residue,” which puts it in the same boat as corn-based ethanol, said David Tilman, a professor at the University of Minnesota who has done research on biofuels’ emissions from the farm to the tailpipe. Tilman said it was the best study on the issue he has seen so far.”

    http://hosted.ap.org/dynamic/stories/U/US_BIOFUELS_GLOBAL_WARMING

    Takeaway: let the marketplace, not tax subsidies, decide outcomes

  • Bonzi:

    Uh, how paranoid (or desperate for hits) do you have to be to actually suggest that there is any chance of meaningful federal regulatory intervention in the international supply chain any time soon? We’ve not only had an acrimoniously split Congress for the last four years (and most of the preceding two decades), but you reached back almost 40 years to find a poignant example of this happening. The risk of your hypothetical actually occurring in the current political climate and foreseeable future is so hilariously remote it barely even merits a half-cocked conversation over beer and pretzels, not to mention a deceptively-generic titled article on an otherwise credible blog. No more tin-foil hat stuff, please.

  • Thomas Kase:

    Bonzi,

    My apologies if I anywhere implied that I think there can be such as thing as “meaningful federal regulatory intervention” – that’s a serial oxymoron in my book and certainly not something you’re likely to find in my writing.

    Other than that, I can’t please everyone – within some people hope springs eternal that the next regulation will take them closer to the promised land. Or the next one, or maybe the next… and so the road to a warmer place is paved.

    Nonetheless, made you look, made you read, made you mad, made you comment – not bad!

    Cheers,

    Thomas

    • Bonzi:

      Thomas,

      Sorry, what’s your angle here? Are you trying to run a Buzzfeed-y clickbait site for procurement professionals, or are you trying to establish credibility as a serious industry analyst that large corporations will subscribe to for insider news and consultation? You can’t be both. While I would expect someone like Matt Drudge or Ariana Huffington to back themselves on the back for generating hits and comments on a preposterous, subtle fear-mongering piece, I never thought I’d see that from a SpendMatters contributor. Shame on you.

      And as for there being “no such thing” as “meaningful federal regulatory intervention”, what a childish, bone-headed thing to say. You might consider avoiding discussion about your general political philosophy in the future. While no one expects industry mouthpieces to openly beg for more rules and regulations from Uncle Sam, most of us don’t want to support anarcho-libertarian garbage either.

      Cheers,
      Bonzi

      • Bonzi:

        *pat themselves

  • Thomas Kase, Spend Matters:

    Bonzi,

    I hesitate to reply – don’t want you to suffer a heart attack here. Take a deep breath.

    Perhaps you noticed that the headline opened with “rant” – thus signalling a piece carrying a good dose of opinion. Check them out, we do lots of rants on Fridays – they are part of our charm.

    As for your charm… not so much. Ad hominems aren’t really called for. Especially when coming from someone wanting to claim high ground on “credibility” and “professionalism” some tact and facts would be in order.

    Thomas

    • Bonzi:

      Thomas,

      I’m glad you brought up the title, because that is my main beef with this piece. Your title was misleading, as it suggested some kind of holistic breakdown of how best practices are nice and all, but often impractical and difficult to implement in the face of internal and external pushback. Instead, you just focused on external pushback, and from the least likely source in this day and age. I don’t care if you rant (I clearly have no problem ranting myself), but if you’re going to do so as a contributor to a site I respect, do so in an intelligent way.

      Your entire piece amounted to “blah blah blah, I sure hope government doesn’t mess with us and our squeaky clean best practices, blah blah blah, remember when they took our sugar in the seventies, blah blah blah”

      Last but not least, you might want to re-educate yourself on what an ad-hominem is. Biting criticism =/= ad-hominem attacks. In these comments, I’ve never said anything about you personally, I’ve simply offered my opinion about your terrible article.

      Here’s to better, less Ayn Rand-ish Friday Rants in the future!

      Brent

      • ?:

        Oops, there goes my pseudonym. Oh well.

  • Thomas Kase, Spend Matters:

    Brent,

    Several sections to the piece – all building toward a bigger and bigger picture. I think the transition point is clear to most among our readership – we could of course have bolded the sections to make it a little clearer for you.

    I prefer using broad, non-esoteric examples – something all readers can relate to, regardless of industry. Sugar vs HFCS is a good one – but with the reach of current regulations, the list of commodities to write about is sadly long indeed.

    Your idea of “biting criticism” would be more effective if it actually contained some on-topic critique, and not relied on ad hominems and creating strawman positions. If not ad hominem, what would you call the many labels, like “boneheaded”, “childish”, “tin-foil” etc that you throw around?

    If there is something that is boneheaded it is the regulations that force us to rely on tax-funded heavily water consuming corn – whether for HFCS or ethanol. The environmental and fiscal consequences are boneheaded, indeed – not to mention the obesity from over-consumption of HFCS, and then instituting new federal initiatives to fight the outcome. Now, that’s really boneheaded!

    Sometimes someone just has to look at the bigger picture – or the Emperor would still be running around naked.

    Be inspired – fight myopia – take a look at the bigger picture in your organization.

    Thomas

  • Pierre:

    hmmm, let me chime in here.
    First, when we do our Friday rants, we tend to just do them and self-police ourselves re: asking each other for input before publishing. In this one, Thomas could have been tighter on the argument – especially relative to the title. So, let me re-cast this slightly…

    Best practices are basically ‘root solutions’ that tend to solve frequently occurring root causes to not achieving certain business outcomes.

    A stupidly thought up or implemented regulation might indeed reduce the effectiveness of typical commercial ‘best practices’.
    So, how to frame this and solve this?
    Well, that regulation is creating another root cause problem that is hampering our desired outcome, right. It is a new constraint.

    As such, Procurement professionals must go back to the Desiderata and have the wisdom to not just know what they can change or not, but also to provide the cost/benefit/risk of different options to deal with that constraint.

    Hopefully, they can offer solutions to ‘relax’ the constraint and not just simply ride the trade-off curve, but actually change it. There are almost always ways around a dumb regulation, and smart Procurement professionals will come up with a menu for the business to consider…. is the regulation real? can it be tweaked? can local reg’s supercede it? when will it REALLY be enforced? will it what are penalties? is it worth the risk? are there exemptions? can we make ourselves exempt? what are the jurisdictions? can we change our model slightly to get out of the jurisdiction? Do our customers hate the regulations? Can we be creative and use the regulation as an advantage and a call to arms to drive up revenue, build brand equity, develop new capabilities? How are our competitors dealing with it? What about our suppliers? How are innovative suppliers thinking about it and how can we create a joint solution together? Can we use the problem as an internal call for innovation? Better yet, can we crowdsource a solution?

    By articulating the impact on the supply chain and by also finding creative solutions to the problem, Procurement can really step up as a strategic business problem solver and become a constraint loosener, and less of a constraint itself, in the eyes of stakeholders.
    And maybe THAT itself is a good best practice to consider? So, maybe we can agree on this, and maybe table the particular policy discussions for another forum and another day?
    Love the passion though – procurement folk are clearly not wallflowers. :-)

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