The Ten Commandments of Procurement – Competition is Good

We have had several responses to our Ten Commandments of Procurement challenge - we’ve listed them at the bottom of this article. Thanks to those who have contributed  – and let’s see some more! The idea is to come up with simple, “commandment” type statements concerning procurement and supply chain management that are difficult, preferably impossible, to disagree with. It is surprisingly challenging, as you will find if you try.

Anyway, here is my first contribution.

“Competition between suppliers – or the threat of competition – is good”.

Whatever the situation, the category, the particular requirement, our hypothesis is that we will always achieve a better result (in terms of the value provided by the suppler and contract) if there is competition – or at the very least, if the supplier believes that there is the threat of competition.

That last addition is important because you might argue that there is no competition within a long-term single source relationship, and it can work fine. Yes, I agree, but if the supplier knows there is at least the threat of competition, they will work harder, I believe. Turn it around the other way. If there is no competition or threat of competition you are in a monopoly situation, and anyone who has bought from a monopoly supplier (as I certainly have) will know that given the choice, that is not something you would want to do in any circumstances.

Competition pushes suppliers to become more competitive in terms of value for money. It drives innovation, both at individual supplier level and across the market. It enables the buyer to experiment, to try different options, different suppliers, different products or services even. Basically, it is a good thing.

It also feels appropriate to have it as the first of my list of commandments, because it is so fundamental to procurement. And yet, we’ve often seen evidence that organisations and procurement people forget this at times. They settle into that long term relationship, they’re happy to buy from the same old supplier(s); they fail to look for innovation and new suppliers.

So, what do you think? Do you agree? And what about your Commandments? All ideas gratefully received – and here is what we have so far from our readers and contributors. (No comments from us on these as yet, but I have slightly edited Bitter and Twisted’s contribution!!)

  • Supplier Relationship Management is not optional
  • Think in terms of value, not cost
  • Managing contract gaps in a company’s supply base will help them to minimize legal and commercial risks.
  • Have but One Boss – thy head be sore
    from reporting to two or even more
  • Don’t be damned for telling lies
    Instead massage the KPIs
    Honor thy suppliers, that is all
    From whom hospitality may befall

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