Being a CPO – five things I wish I’d done as a procurement leader (part 4)

Here is the fourth post (of five) in our series relating back to my time as a CPO.  (I was European Procurement Director for the Dun & Bradstreet Corporation in the early 90s. I then became Procurement Director for the Department of Social Security – then the UK’s largest non-military government department - and my final CPO role was as Group Procurement Director for the NatWest banking group).

My purpose is very much to help others. I think I’m most unlikely to do a CPO role ever again, so I’m hoping some readers might avoid some of my mistakes – and even learn from the odd success!

No. 4 -  I wish I had focused more on contract management

The procurement function at NatWest was very much about letting contracts. Some of that was one-off projects, for instance working with the business on an outsourcing, or with IT on a big new software acquisition.  Many other deals were “framework” type agreements, some with multiple suppliers and some with a single supplier, which would run for some time and whereby users could call off the goods or services as required.

But in retrospect, in too many cases, we didn’t put enough effort into managing the contract and supplier once the contract was awarded. That wasn’t true everywhere, but too often it was a “let and forget” approach. Now sometimes the business picked up the slack, but even here, we could have provided more in the way of structured contract management processes and tools, which would have benefited the business I’m sure.

In other cases, neither the business nor procurement really followed through to track contract usage and compliance or supplier performance. Our low point came when we put a considerable amount of time into letting a framework for training and development services. This was a major spend, but fairly fragmented, so we let a complex framework with multiple suppliers across several “lots”. We communicated the results to the business, and moved on to our next tender.

A year later, when I thought perhaps we should check usage, we discovered that only about 5% of the training spend was going to our framework suppliers! Now that taught me that training is a tricky   category, as user needs genuinely change so quickly, but it also showed that you have to put effort into implementation, monitoring, and promoting contracts after they’ve been awarded. That sounds obvious, but it’s surprising how many organisations still fail to follow through with this, just as we failed. And contract and supplier management is still a major area of opportunity for most organisations.

Voices (2)

  1. Mary Wildsmith:

    Peter

    Your last example shows another discipline that is often missing, in addition to contract and supplier management – that of internal communication about new agreements. If only 5% of the training spend went to the framework suppliers, it must have been too easy for anyone purchasing training not to use the framework. It is important to tell potential users over and over again that the framework is in place, particularly when there are multiple users spread throughout the organisation

  2. Roshnee Mistry:

    I agree with the views expressed. Procurement teams may pull off a huge sourcing project successfully. However, if the contract thereafter is not regularly monitored then it may undo the success of the sourcing activity. Contracts can either make or break the sourcing project, to a large extent.

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