Non-compliance is the procurement professional’s friend (part 2)

We discussed yesterday the thesis that “non-compliance is the procurement professional’s friend”. Our basic premise is that it enables you to learn something useful. That may relate to your processes, your choice of suppliers, their performance.. but whatever the learning is, there will be something behind the non-compliance.

Get to the bottom of it, address the issue, and procurement performance will improve.

And if there was no non-compliance – well, that might mean you have a perfect procurement system. OR it might mean you live in North Korea, or your organisation is so dull, un-imaginative and process-bound that you’re unlikely to survive in these dynamic and fast-moving times.

So embrace it, and learn from non-compliance.

Why does it happen though? Here are the main reasons, based on our experience, why we see non-compliance when it comes to the use of contract and suppliers.

Communication – quite simply, the stakeholders don’t know what it is they are supposed to be doing, the contracts and suppliers they “should” be using .

Buy-in – users don’t understand why they should be complying or don’t support the reasoning behind it.

Meeting their needs – very simply, the contract or supplier that procurement is promoting does not meet their genuine needs

Value for money – they can buy cheaper elsewhere. Now I know it’s easy to say “you can always find something a little cheaper” and that is true. But sometimes users can do a lot better. Or – going back to point 2 – they need persuading that there are other benefits that make it worth paying a few cents more.

Process – if it is just too complicated to buy from the approved contract / supplier, a busy stakeholder will find ways round that.

Corruption – there are times when non-compliance is indicative of a corrupt relationship with a supplier or suppliers.

Stupidity – the stakeholder is stupid.

Now, when you look at that list, understanding and addressing those issues will lead to benefit for the organisation ( as well as to the procurement function). It’s also interesting to note that procurement can directly address all of those except the last two. And actually in the case of corruption, there are steps that we can take.

But we can address communication, simplify processes, look at different suppliers, make sure we choose suppliers who meet genuine needs, address pricing issues. And in all cases, the non-compliance will have taught us something useful about our strategy or actions.

We’ll come back to that specific list of causes this at some point, but for now, embrace non-compliance, and smile in the face of awkward stakeholders! You might learn something...

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  1. Ian Heptinstall:

    Neat summary Peter.

    Under “Meeting their needs”, do you include…..

    Poor procurement – it may not be a very good deal.

    Volume aggregation “Collateral Damage”, which is where parts of the business end up paying a premium, though most others see savings and other benefits. There are several possible reasons for this.

    They may believe that there are side-effects from the deal that would cause problems.

    like you I much prefer open resistance and argument to either blind compliance or subversive resistance.

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