Should Procurement Be More Scientific?

Here is another one of our summer “blasts from the past”, this one from May 2011. It is another that  still seems relevant today - have we moved on? We’ll let you judge. (This has been slightly edited as it was originally in two parts).

I saw the Uncaged Monkeys on tour at Basingstoke last Friday. No, not the latest indie band, but a group of scientists and entertainers from the Radio 4 programme “The Infinite Monkey Cage” which popularises science in a humorous but clever way. Professor Brian Cox, Simon Singh, Robin Ince etc.

It was a very good evening, but the part of it that I most enjoyed – and had a real impact on me – came from Ben Goldacre, who spends much of his life de-bunking ‘bad science’. That ranges from scaremongering journalists and dodgy government reports, to quackery (faith healers and similar), through to the drug companies that cleverly skew drug trials to favour their products.

He also said that he has found journalists and politicians much more hostile to his challenges than other scientists. Perhaps that is because they are less used to serious fact-based challenge to their work and opinions; a scientific conference can be a ‘blood bath’ because much of what scientists do is based on trying to disprove another’s theory. But they don’t tend to take it personally – that’s how science evolves and we learn.

And he said this.

 “There is such a thing as objective reality, and we determine it by scientific evidence and challenge”

Which sparked a bit of an epiphany for me. Where does procurement sit in this? Do we have an ‘objective reality’ of how procurement works? Are we like scientists; trying to develop more understanding, willing to be challenged, looking for objective ways of proving what works and what doesn’t? Or are we more like the journalists and politicos who express a point of view and get upset if anyone argues strongly and objectively against us? (Or even worse, are we the faith healers, peddling our own brand of snake oil?)

Let’s face it, when did you last go to a procurement event and hear someone say to a speaker, “I don’t agree with you” or “I don’t think that’s the best way of doing that”.  When did you last read an academic paper that objectively measured the success of a particular procurement approach, strategy or process? I saw a paper recently that ‘proved’ the success of a particular procurement approach based on a sample of three organisations.  Statistically significant? Of course not.

Goldacre’s comments then led me onto part 2 of this train of thought. Here’s my hypothesis (

Procurement is THE least scientific of all major business disciplines.

Yes, even more so than Marketing or Sales.  Or Human Resources. There are two factors which we think mitigate against procurement being ‘scientific’.

Firstly, it is the lack of clear and objective understanding of even the key parts of our profession.

Now some people feel they can define what drives success. AT Kearney or Professor Cox with his IIAPS capability assessments would no doubt take issue of some of what I’m saying. But real, empirical proof that this category management methodology really works better than that one?  Or the relative merits, over time, of collaborative supplier strategies versus aggressive leveraged approaches?  And one problem here is that where people do have something that is genuinely scientific, it is protected as valuable intellectual property; that’s true of both consultants and practitioners.

Secondly, and perhaps most importantly, it is the lack of clear metrics that measure the success of procurement.

Savings? Pretty much impossible to measure, and even then, what if those savings led to a deterioration in sales performance?

Strategic contribution to the business? Far too vague and subjective, with too many other variables to carry out a clear analysis of dependencies and casual factors. And look at RBS for instance – a very highly rated procurement function, but totally unable to stop the firm going (virtually) bust.

Now when we get into two subsets of procurement, things do actually get somewhat better. In manufacturing, there are some objective measures around on-time delivery, quality of goods purchased on and so on. So we can get a bit closer to real measures. But even here, the dependencies and variables are confusion. Retail buying is a different animal again, and here it is much clearer. The buyers play a central role in driving  clear measurable such as margin and market share.

So why do I say we are worse off than other business areas? Well, I’ve pointed out before the weakness of our academic base, compared to Marketing, HR and others, although they may be an outcome of these problems rather than a cause.  But I’d also argue that these other functions have better objective measures of success.

Advertising, which we may think of scornfully as soft and fluffy, has far more measurable effects than our latest category management tool. Marketeers can measure consumer brand awareness, the % of retailers stocking the product, sales and market share. They CAN tell you, scientifically, whether a new campaign has worked or not.  Similarly, HR can measure staff turnover rates, staff satisfaction, the number of responses to a recruitment campaign; as well as having some good measures on the operational side of their work.

We struggle with our equivalents. For instance:

  • Does supplier relationship management work?
  • What are the long term effects of an e-auction strategy?
  • Are long-term contracts better than shorter?
  • When does a Prime Contractor approach work in a spend category?
  • What are the real effects of aggregating spend?

I don’t have any easy answers to this, but it seems to me that procurement will never move to its next level of credibility and power if we can’t show in a more scientific manner that what we do really matters.

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First Voice

  1. bitter and twisted:

    You are being too kind to the other disciplines.

    They think they are scientific and they are wrong.

    Business isnt physics, its war.

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