A new Procurement blog

Welcome to the Procurement Excellence blog.  I'm Peter Smith, chief blogger, although I hope to have exciting guest bloggers on a regular basis.  Procurement / purchasing / sourcing / supply chain (whatever you want to call it ) is the main topic, but we may occasionally divert into my other passions; principally music (please go and listen to the Joy Formidable immediately) , food and drink, sport and growing vegetables.  I have 25 years experience as a buyer, purchasing manager, procurement director in the public and private sectors, consultant, CIPS ex-President etc.  And I still find our profession fascinating and full of challenges; also full of issues I can get quite excited / annoyed about. They will probably be the ones featured here.

I work as a consultant, and I'm a non-exec Director for a couple of organisations, so certain subjects and organisations will be off- limits for reasons of confidentiality; but any issues in the public domain that are of interest to the procurement community may be featured here.

Our aim is to  develop a community; that sounds a bit pretentious, but this will be a lot more interesting and useful if we can get some debate going.  So please respond to posts, even if it is only to say 'rubbish'. We intend to post frequently so do check regularly; I will probably start twittering just to notify you of new posts once I've got this going.

I look forward to hearing from you!

Peter Smith

Voices (6)

  1. colin cram:

    I have only just come across this comment about the article the IOD commissioned me to write. The timing was not connected to the election. Also, the procurement savings that I suggested could be achieved through re-structuring public sector procurement amounted to 7% of total procurement spend, far lower than that of most other commentators. If David had worked right across the public sector as I have and had seen, despite some areas of excellence, the overall chaotic and disjointed picture and hugely varied capabilities, he would not think 7% was at all far-fetched. Many private sector procurement directors would be relieved to have a target of just 7% in 3 years. The point is that public sector procurement is structured neither to be able to deliver value for money nor government purchasing policies. We are now seeing some big improvements in the structure of central government ptocurement, but that represents just one third of total public sector procurement spend. Does it matter? Well, public sector procurement accounts for only one third of the taxes that we pay and about 18% of UK GDP. Not worth bothering with really.

  2. David Smith:

    Peter,

    Have you read the Report by badged as from the IoD (they should know better) on the ‘huge’ savings that public procurement is missing (SM online and many others). What a load of old (and I mean old if you look at the examples!) tosh. Turns out it was written by our old friend Colin Cram. I really do despair that every ‘ill-informed’ consultant and lobbyist (well it is election time) is pitching unreal numbers proporting poor performance and intent to get their name in print. If only they knew or had a proper job to do!

    David

  3. Doug Greene:

    Mr. Smith;
    I am blown away by the professionalism, content and insights you provide. The information will most certainly be helpful to all procurement professionals. By the way, I have found the flaw in outsourcing purchasing and also the simple truths to share with suppliers.

  4. Mano Manoharan:

    Peter,
    Thank you for the excellent article.
    I run a small scale procurement consultancy in Sydney, Australia and the issues that you raise are pertinent to our business and to the procurement process down under.
    The public sector in Australia is the biggest spender of capital and non capital money(believe the same in the UK) and goods and services are procured via the dreaded ‘tender box’ which is viewed by the industry as amechanism for squeezing out the sap. The evaluation and tendering processess are viewed as ‘behind the scenes’ and ‘secretive’ processess. The industry has access to documentation on concluded bid evaluations after the event via the Freedom of Information legislation; there are time and cost issues in chasing up information. The more information that is shared by Govt on the evaluation process the easier it is for industry to make the ‘bid-no bid’ decision. One of the objectives of Govt procurement is to minimise the industry’s cost of bidding which is in the region of 2-3% of the tender price. Industry expectation in Australia is a strike rate of 1 in 7 tenders and the industry carries the cost of bidding over that range and eventually the total cost of the 7 bids is transferred to Govt in the 7th bid. I support your view of providing industry with not only the criteria and weightings but also the scoring mechanism for each evaluation criteria.
    Ranking or prioritisation of tenders should be based on multi criteria based on a structured Multi Criteria Decision Making (MCDM) process and the determination of relative weightings should be done in a transparent and colloborative way. The Obama administration has come out strongly on these aspects and there’s a push in the US public sector towards this end. The Analytic Hierearchy Process (AHP) which theorises the ‘pairwise comparison’ technique offers a rational basis for determination of relative importance in a criteria set. There are a number of on-line [Software as a sevice (SAAS)] and software systems that assist in implementing MCDM processes in a transparent and colloborative manner.
    There are other misconceptions which I would to touch upon, briefly. The first relates to scoring ‘tender price’ opposed to ‘assessed tender cost (ATC)’. The latter is defined as ‘the cost to the agency in accepting the bidder’s bid’; ATC includes the cost of the goods/services based on tendered prices plus other costs to the organisation arising from acceptable conditons imposed by the bid. Examples of ‘other costs’ includes extended working hours in a construction projects that results in paying penalty rates to internal supervisory staff, risk arising from capped indemnity etc.
    The second relates to public sector’s view that the bidder ranked No. 1 in the priorised list from a MCDM assessment is the winning bidder. I have observed some evaluation panels including this ‘rule’ in the tender evaluation methodology document. The priorised list of tenders only provides a basis for decision making and the evaluation panel should pick a bidder from the list and justify it’s selection. Using techniques s such as the ‘value for money index’ can assist the panel in its task.
    My comment has become quite lengthy! Do keep up you good work in leading improvements to the procurement process. If you think I can contribute or participate further in your task, please do get in touch.

    Mano Manoharan
    Principal
    NMM Professional Services Pty Ltd
    Suite 403B, 33 Lexington Drive
    Bella Vista NSW 2153 Australia
    +61 2 9836 5102
    +61 409 247 621
    E: mano@nmmprofessionalservices.com.au

  5. Stuart Bellamy:

    Peter
    Read your article on evaluating bids, very interesting.
    I supply a computer program called “TAP” (Tender assessment Program) which has a comprehensive scoring system along the lines you mentioned. It is in use throughout the UK, mainly in the public sector.
    Regards
    Stuart Bellamy
    Procurement Consultant
    PO Box 7111
    Newark NG23 5WE
    Tel: 01636 629100
    e-mail: stuart.bellamy@virgin.net

  6. Dr Chris Jelley:

    Congratulations on the new blog Peter. I am sure it will become an engaging and vibrant community. Have to say I agree about the “Joy Formidable”!!

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