There is “No Legal Obligation To Have a Procurement Function”

Something about the recent employment tribunal dispute between Kath Harmeston and the Co-op Group, for which she was CPO briefly in 2014, was preying on my mind the other day. (If you are not familiar with the case, where have you been? Catch up here …)

It was a comment from Richard Pennycook, the CEO of the Co-op Group, who incidentally we have heard from an informed source was a good supporter of procurement in one of his previous senior roles in retail. He was responding to the claims from Harmeston and her lawyer that the Co-op did not have strong procurement processes in place, and some were anyway ignored by the senior management. As Marie-Claire Kidd reported in the Co-operative News:

He said the Group had no legal obligation to have a procurement function, although like most other large businesses it did so for good practice”.

Indeed. But how would this sit if the Chartered Institute of Purchasing and Supply (CIPS) gets its way and introduces a “licence to practice” with some sort of regulatory basis underpinning procurement activity? Would the Co-op be forced to have a procurement function with certified professionals? Do those certified folk have to “buy” – or at least sign off – everything that the group buys, including retail stock as well as all the indirect spend?

I just have no idea how that would work. What happens if their regulated person leaves – is the organisation not allowed to buy anything until they recruit a new certified executive? Or might it end up being that if you choose to have a procurement function, then the key people must be certified?

Because we suspect in that case, we might see the death of the profession, pretty quickly. I suspect many firms would take their lead from Pennycook's comment and simply not bother to have a procurement function at all. Automate the processes, delegate the supplier selection and contracting process to budget holders, maybe use a bit of outsourced expertise when you really need it.

We still have the fundamental problem too that surely it is the shareholders, the owners of the business, who can and should decide who spends money on their behalf. Not CIPS. Now that's not to say that some form of controls and licencing mightn't bring some value, particularly in the government sector of  countries that are riddled with corruption. But really, it will be limited to this sort of area, we suspect. And it might even drive the formal “procurement profession” into being purely a public sector phenomenon.

A final thought. All the major professions that we have looked at which are licenced have a separation between the governance of the process and the bodies that can train people and award the licence. So there are no less than 35 bodies that can award the Chartered Engineer designation in the UK! The Engineering Council gives those 35 the right to do so, and checks how they do it, how good their education process is and so on. But it does not do the training itself.

Which role does CIPS want to play? The regulator or the educator? I don’t see how it can do both.

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Voices (3)

  1. Rob:

    For me, this is all about policy. If you have HR policy, IT policy, expense policy and you abide by all of these but ignore procurement policy, then you’re enjoying little more than weak, inconsistent leadership.

  2. DrGordy:

    I think resorting to mandating the ‘CIPS way’ is an admission of failure to win through persuasion and demonstration of the benefits. Part of CIPS strategy up to now appears to be, if you get into a high profile procurement position without the qualifications, we’ll give Honorary status to you anyway!

  3. Bitter and twisted:

    Why do we need a self-appointed procurement nannny quango telling us what we can and cant do?

    We have to follow The Law: we have to follow our employers rules: we have to follow our own consciences.

    Isnt that enough?

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