Procurement Still Not Getting the Basics Right – and it’s Happening Too Often

For all our talk of great strategic initiatives, capturing innovation from suppliers, and complex data analytics, talking to actual, real suppliers can be a depressing experience when the conversation turns to what they see of the procurement profession sometimes.

It is often really basic stuff, that just makes you wonder whether there are systemic failings in training, in management supervision, in resource levels – but whatever it is, the sales side are not seeing the procurement profession at its best, that’s for sure!

So I've seen a recent tender where a complex scoring mechanism for “price” was part of the evaluation. That's fine, except in this case, the basic price was scored, and then the level of prompt payment discount was scored separately, with quite a high weighting. As you may have guessed, this meant that a price of £100 a unit plus a 3% prompt payment discount might well score better marks than a price of £95 with a 1% discount. Ridiculous, illogical, and it does not take a Maths degree to spot the flaws. Yet, there it is, in a major tender.

In another case, a supplier of complex services tells me they increasingly get invited to participate in electronic sourcing events with no prior engagement, and a tick box procurement process, with no scope to include references, case studies, or suggest site visits, or have any creative discussion. How on earth in such cases does the buyer choose the "best" supplier? Purely on size? Number of other clients? Ability to say "yes" to every question about health and safety, diversity and all of those factors? Or just who can bid the lowest price?

Remember - our job is to find the BEST supplier(s) to help our organisation to achieve its strategic goals. If you can't tell me how you made that decision and show me some logic, some diligence, some intelligence in how you went about it, then perhaps you shouldn't be doing procurement.

I'm not sure things re getting better either. Perhaps we need to name and shame? Or withdraw CIPS membership from people for incompetence as well as for unethical behaviour? I don’t know, but perhaps things would be better if the robots took over, if this is the best we can do.

OK, rant over.

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Voices (8)

  1. Paul Wright:

    I dont think its just procurement – you see it in many elements of business and government. My mantra has long been lets do the basics right and only then worry about the complex stuff.
    As a trainer, the reason all the courses seem the same us becausebthat is what people buy. If you try something new it doesnt seem to sell, so people go back to what does sell.

  2. Anya@MarketDojo:

    Very interesting article 🙂

    From the little I have seen of procurement (9 months in to the industry), it seems like in some cases logic, reasoning and common sense get forgotten. And as an ex-‘sales’ person, turned marketing, infiltrating the procurement space, I can understand both sides.

    I love a process as much as the next person, but they shouldn’t be so structured and ‘tick-box’ that they stagnate creativity and opportunities.

    Where is the opportunity for innovation? How is one able to seek ideas from within their supply chain if suppliers are eliminated for not matching specific (sometimes not truly mandatory) criteria? Yes we all want to get the lowest price and save money at the end of the day, but could we look at additional ways of doing it?

    (Apologies for adding to the rant! 🙂 )


  3. bitter and twisted:

    Thing is, i dont think basic failures are due a lack of basic skills or individual stupidity.

    Its dogmas, fads, internal politics and perverse incentives etc. obscuring basic skills.

    1. Life:

      Very thought provoking. I don’t think it’s a failure of imagination but rather too much. There is no need to reinvent the basic structures of evaluation and scoring mechanisms on a procurement by procurement basis but often there seems to be a feeling that, in order to justify procurement, innovations need to be constantly made or (CCS) that changes need to be made as if that somehow keeps suppliers on their toes, rather than keep them focussed on the fundamentals of what they are actually supposed to be doing. It’s not just that a lot of these techniques aren’t even scenario tested, but just that they are unnecessary and daft. Procurement is not an end in itself and good design should mean one notices it less not more.

      Prompt payment is an excellent example. Why not just get the best price, or tariff structure, rather than effectively award points to yourself for future (notional) early payment when you should be doing it anyway? It’s a two way street. Why not award some extra points to the supplier for undertaking to deliver all the product or service, but knock a few off if they say they will only deliver half of it?

      Or my recent favourite is the reverse auction for framework consultancy services with no bottom stop and no incentive for suppliers to not just keep bidding lower, even if they then accept no work through the framework, just to keep their competition off it. And the procurement team didn’t get it until half way through the (very very long!) auction.

      As discussed here previously, IT improvements and cost reduction mean that procurement could increasingly – and probably correctly – become a set of templated approaches that allow the focus of procurement to be on the content of responses rather than the structure of the procurement itself. This would also allow procurement professionals to focus on concise and efficient process, and the actual specialists and users of products and services to focus on the content.

      1. Secret Squirrel:

        Life: or (CCS) re: that changes need to be made as if that somehow keeps suppliers on their toes

        In CCS’s case, I suspect its more about either

        1) Appeasing policy makers i.e. Government Digital Service and the constant ‘reinvention’ and ‘iteration’
        2) Justifying your existance

        On kind of note, see the ‘Digital Outcomes and Specialists’ framework. Which is, in essence, an admission that the ‘Bespoke Applications’ lots of the old Specialist Solutions and Software Applications Solutions frameworks was right in that it allowed for a whole package of work to be delivered. GDS forced it out of Corporate Software Solutions because it wasn’t ‘digital’.

        So now it’s back.

        How about stopping ‘iterating’ and applying some good solid logic of what people are trying to achieve? That would solve the problem.

  4. Secret Squirrel:

    Agreed, Peter. Utter gibberish.

    I’ve been working with clients on just that, working out different pricing approaches and the consequences. Indeed, it’s not even that hard to work out the model properly with decision logic built in. It’s called an Excel model (OK, using the Solver add-in)…..

  5. Dan:

    There does seem to be a lack of quality training available. The choices are largely a choice between negotiation, specification writing or contract drafting – all a bit academic rather than practical, and of little use unless you’re a novice.

    Maybe there’s a gap in the market for Spend Matters to exploit?

  6. Bitter amd twisted:

    Best is the enemy of good.

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