You don't need an IT system for every ill

Over the last few weeks I made some suggestions on how the NHS could reduce procurement costs through minor changes in the use of existing IT. Let's remember that GPs are central to the government's reform of the health service. Even at present, as I understand it, every time I have a visit to the hospital my GP receives a notification of who, what, why, where and when - it helps the GP take a more holistic approach to the patient. it also generally seems to work.

We also know that the NHS has not had a particularly exemplar approach to introducing 'all singing and dancing IT systems' - indeed just over a year ago I discussed how this could be improved.

Today we learn of the proposal for another 'all singing and dancing NHS IT system' - this time it will be used to identify potential cases of child abuse - £8.6m has been allocated for the development of the software.

In keeping with last week's blogs on reducing costs I think this is another opportunity for reducing procurement costs:  'just say no' to this proposed system and use existing records. By this I mean retain central role of the GP in seeing records of all hospital interventions and let the GP identify potential areas of risk - allocate more GP time to consultations and then perhaps they will be able to review the data.

The new system aims at safeguarding children. But I suspect that the introduction of such a reporting system may well lead to those abusive parents taking the precaution of avoiding the spotlight by merely avoiding taking their children to A&E - the abusers have in the past appeared to be quite sophisticated in getting under the radar. If that were the case the children we aim to protect may actually receive appropriate medical care.

Either way, if this system is to go ahead please make sure that the relevant procurement decisions are transparent, including reporting of robust gateway reviews at every stage. That way at least we may ensure all options are considered, including better use of existing systems, and also that we don't learn of another failed system being blamed for a potentially flawed but good idea.

So in summary:

1. Explore all the options, including greater use of existing systems;
2. Consider the potential disbenefits;
3. Evaluate the risks;
4. Adopt an ethos of transparent procurement decision making;
5. Ensure robust use of gateway reviews.

A Yule Blog: Disastrous procurement risk management could lead to untold grief

We have discussed Procurement Risk Management quite a bit in recent months and today, of all days, I would have hoped to have set that discussion aside. Unfortunately, although there seems to have been some flaws in the Mayan Calendar evaluation model the adverse impact of its predictions have now started to manifest themselves in the supply chain.

Personally, I was absolutely certain that predictions of the end of the world would prove wrong. I found it mildly amusing that shamans were casting spells on Friday to hold back the end of the world. Nevertheless, for some it will be reassuring that the intervention of the shaman business consultancy (SHAM & Co.) proved effective!

However, on a more serious note, I have now discovered that there was a major industrial dispute, well hushed up, that is causing unpredicted chaos in supply chains. Apparently a previously highly productive team of workers, the Elves, downed tools some months ago and rather than singing "Whistle while you work", reverted to R.E.M'.s "It's the end of the world as we know it".  Rumours abound that production of toys has been frozen since this time last year in Lapland but there has been evidence of a displacement to the Amazon. Tonight was the delivery date scheduled for global despatch, but all that is up in the air now. No one was available to comment from either the UN or indeed a spokesperson representing the Elves. It is understood the Elves feel more than a little aggrieved too - their view being that they were told a major strategic risk had been identified (the end of the world) and being very risk averse considered it was inappropriate to invest more time in the fruitless task of toy-making. It was impossible to get a coherent answer from dyslexic CEO Santa who just kept muttering "oh, oh, oh, ..."

No one knows what will happen tonight but Bruce Springsteen has requested that no one play his hit "Santa Claus is coming to town".  

Here's hoping all goes well and the last minute mitigation plans all come together. Just in case, enjoy this message from Northern Ireland

How to reduce NHS procurement costs with a Smartie & a click

Yesterday I suggested a comparatively easy approach to reducing NHS prescription costs through placing an electronic gateway, which required merely the click of a GPs mouse, to affirm that, in their opinion, the prescription being issued was not a waste of money. I also suggested a wider trial of embedding such an affirmation more widely into P2P workflows.

Today I have learnt of further research which suggest that sleeping tablets frequently are no more effective than a ‘Smartie’ (well a placebo – I’m sure you get the drift). That’s not to say that the issue of prescriptions for sleeping tablets should be replaced by ‘Smarties’ (or other equal and approved equivalent). No, what I would suggest is, given that sleeping problems are rarely serious, why not first explore the lower cost and lower adverse impact option, and only if the ‘Smarties’ (or other equal and approved equivalent) fail to be effective, progress to trying traditional sleeping tablets.

Surely GPs should be completing yesterday’s and today’s evaluations  anyway, even though the evidence of the two research reports casts some doubt. Therefore why not introduce the ‘affirmative  click’?

So I would extend my proposal from yesterday to include a further affirmative statement:

I confirm I have thoroughly considered and evaluated other potentially lower cost options.

Like yesterday, I think this additional affirmative statement could also be trialled in P2P workflows to see if it proved worthwhile in more general purchasing beyond the NHS.
   

How to reduce NHS procurement cost with a click

On Sunday my minister made an announcement that he recognised that high price of stamps, therefore he hoped the congregation would understand that he would not be posting Christmas Cards. He also said he would understand if the congregation took a similar position. The easy way to save money is not to spend it - common sense.

Now if you knew that one one category of your expenditure was on something which had no real benefit, the easy answer to reducing costs is not to buy it. However, like paying for a postage to send Christmas Cards to addresses which you pass on the way to the post box it needs to be easy to break the habit.

So I am going to take the bold step of offering a low cost option to the NHS on how to significantly reduce costs. I propose that the online pro forma prescriptions which GPs use should be amended to include the following statement with a requirement to confirm, with a click, before the prescription can be issued.

In my professional judgement, I confirm that this medication is fit for purpose, is appropriate for the illness and will deliver an anticipated medical benefit.

If such a statement were included it would put the onus on doctors to confirm that they are not wasting money on prescriptions which they know are likely to 'do no good' and quite possibly go against that medical mantra of 'do no harm'.  My suggestion is aimed at trying to move from a recognition of recent research that "[an antibiotic which accounts for a third of all antibiotic prescriptions] is useless for most people who are getting it at the moment' to a change in prescribing behaviour and the associated reduction in prescription costs.

Come to think of it, could a similar affirmative statement, suitably reworded, be embedded into the workflow of most P2P systems? That would be an interesting pilot to run and test its impact.

Procurement due diligence

We have discussed the problem of 'fake experts' before. We have also questioned the value of professional qualifications when non-procurement staff are appointed to CPO positions. Indeed, only yesterday we raised concerns as to whether we can rely on the robust checking of qualifications and experience by headhunters and interim placement organisations. So readers of this blog should recognise the need for healthy scepticism.

You may therefore be astounded that, yet again, professional credibility has raised its head. Unbelievably, we have just learnt that the inquest into the death of singer Amy Winehouse has now had to be set aside and started from scratch again - you've probably guessed what's coming - yes, because the Coroner was not appropriately qualified. The coroner did not match the criteria of either five years as a qualified medical practitioner, or five years experience with the Law Society. To add to the bizarreness of the situation, the unqualified Coroner was appointed by her husband, who has now resigned as a result of not 'thoroughly checking' that his wife met the basic criteria. Those words 'thoroughly checking' straddle the procurement world too.

I will not revisit my earlier blogs. However, I will share some of my experiences of procurement 'thoroughly checking' credentials.

I once completed a supplier evaluation which included the rejection of one supplier. My report went to a meeting of the Board but at that meeting, which I wasn't attending, one of the Directors stepped in and said he had now received additional information which justified over-turning my recommendation and reinstating the supplier on the Shortlist. A subsequent costly challenge, inquiry which ruled against us, and allegations of corruption taught us a clear lesson - make sure you thoroughly check the claimed facts, even if they appear to come from a reputable source!

I have also completed third party Due Diligence on a number of proposed contract awards - surprise, surprise, when thoroughly checked there were flaws, with those included on shortlists who should not have been, and those not included, who should have been.

I have also seen, time and again, taking answers on PQQs at face value, including amazingly the acceptance of cited reference sites without even bothering to check (NB not 'thoroughly') with the referee!

It would be possible for me to also highlight the need for due diligence of the process itself. However, I do not think that is necessary as Peter Smith has provided the useful lessons of the West Coast Rail Franchise which I would encourage you to read.

Is there an aversion to due diligence in procurement? How good is the profession at 'thoroughly checking'.

Sometimes procurement has a lot more in common with unqualified appointments and Coroners than we would have expected!

The unprincipled Agent

On whose behalf does the agent work?

The procurement world is one immersed in the legal and economic world of Agents. The Chief Procurement Officer is an Agent of their organisation (the Principal) when they represent the organisation in negotiations. The CPO is required to act in the best interests of the organisation and not for their own personal benefit. Equally those dealing with the buyer can be expected to accept that the buyer has the authority to  make commitments on behalf of the buying organisation.

When the CPO lets a contract, as part of a recruitment process, for someone to run an assessment centre, who is the Principal and who is the Agent? To me the Principal is the buying organisation and the provider is the Agent. The provider will be paid by the buying organisation and not by the successful candidate - indeed the provider can expect payment whether or not a successful candidate is found.

When the organisation lets a contract though for intermediary services, say, Executive Search or interim placement services, who is that Principal and who is the Agent? 

Let's assume a headhunter contacts the CPO and asks if they would be interested in a potential new role, who is the Principal?  Is the Principal the CPO who will be represented by the headhunter or the organisation seeking the new CPO who will pay for the headhunter when a shortlist of potential candidates is provided? 

When the scenario is the placement of an interim CPO, who is the Principal and who is the Agent? The assumption of the buying organisation is that the 'interims' provided have been checked by the placement agency and that they have completed the relevant due diligence. Isn't it?

These questions were triggered by a report in today's Financial Times on Page Executive's approach. Page are alleged to be now taking a more cautious approach to the organisations they place candidates with. Not, it appears, to protect the buying organisation, the 'headhunted' or the interim. but to protect Page's financial investment should the buying organisation, which may be among those who, in Page's eyes "live week by week", default on Page!

If an organisation wants an interim CPO, perhaps because they realise they need a financial 'turnround', it implies Page will managing Page's risk exposure and not those who may have assumed they were the Principals, who have a lot of 'skin in the game'. Is this yet another change to the world of procurement as a result of the financial crisis?  Either way, it strikes me that before you jump to the conclusion that you are the Principal and the Agent is working on your behalf, perhaps reading the small print may prove advantageous and recalling: 'caveat emptor'. 

Can procurement learn from the tragedy of the Australian DJ prank

Let me put my cards on the table. I think the suicide which is linked with the prank call is a terrible sad tragedy. But I also grew up enjoying TV programmes such as Candid Camera which were based on pranks. It would therefore be hypocritical of me to point the finger at pranksters. Those, like me, who have laughed at pranks in the past must also be guilty of feeding the beast which lay behind this personal tragedy.

However, the tragedy strikes me as providing lessons for procurement.

Before explaining how I have arrived at that conclusions, I would encourage you to watch the YouTube recording watch the YouTube recording, then read the reported transcripts, for example here.  See if you can spot the difference?

If you compare the transcripts with what is actually said there appear to be some omissions.  In the YouTube there's an interesting response just about 10 minutes into the interview. At that stage there's a fascinating response from one of the DJs when asked about the approval process for airing the recording, the DJ answers: "I don't know the process, I honestly don't know the process".  

Procurement literacy

New research has highlighted that "Doctors' orders are 'too complicated for most patients'". Some of those in need just can't read or understand what they must do. Excuse the pun, but this is a very 'unhealthy' situation. Who's fault is that? Does it matter?

You could put this down to falling education standards or doctors having insufficient time to spend with patients. It's easy to say it's 'their fault'.

The art of conversation is significantly different from giving instructions. When I go into a doctor's surgery, the introductory conversation is about creating a rapport, helping me feel relaxed enough to share what the doctor really needs to hear from me. Before I leave the surgery I have to convey sufficient information of the symptoms for the doctor to have made the correct diagnosis or assessement. Only then can the doctor provide me with instructions (orders) as to the next steps in making progress - particularly what I have to do to improve.

If the doctor doesn't create the right rapport there's a significant risk that I will not convey all the relevant information; perhaps because I feel intimidated, embarrassed or too deferential. In that situation I would suggest the doctor is at fault in not creating the rapport. However, when I feel comfortable discussing my problem with the doctor but fail to convey all the relevant symptoms, then some of the blame must lie with me. If at the end of the consultation the instructions given to me are too complicated and I cannot understand what I have to do, then the fault surely must be with the doctor. The responsibility has to be with the person who wishes to convey information to communicate in a way which the intended recipient understands. It is the communicator who needs to test for understanding, and if necessary, reshape until such times that it is clear that the instructions are understood. If the doctor doesn't do this there is a loss of patient confidence - what's more, both are losers.

Has this anything whatsoever to do with procurement?  Yes, I think so.

The missed opportunity of P2P implementation

More often than not P2P implementation is being driven by a motivation to streamline and automate the Accounts Payable function – transaction cost reduction in the Purchasing and Accounts Payable administration is the focus. However, while the administrative costs need be reduced much more could be achieved, and potentially longer-term costs avoided, if a more strategic perspective were taken. Unfortunately, the involvement of some Strategic Procurement Units is not always recognised as being fundamental to the success of a P2P implementation and as a result their input is not sought. This is a serious mistake and Procurement need to ensure that this opportunity is seized for procurement improvement.

The starting position is that you should not focus on automating the existing process; the ‘As is’. Instead you should use the disruption as a procurement transformation opportunity. It is an opportunity to revisit Policy, Strategy, Procedures, and Structure.  It is an opportunity to introduce best practice strategic procurement. It is also an opportunity to demonstrate to the market that you should be treated as a preferred customer and to get the market to make the necessary financial investments too.

Automating the existing processes may sound sensible, but it is far better to take a longer-term perspective. Implementing a new IT system and then having to change again in the short to medium term is costly – staff and suppliers can understand managed change but their patience will be quickly exhausted if you subsequently want to make changes which, in their view could be been predicted at the earlier implementation. 

So it is wise to clearly define how procurement will be carried out in the future and design the implementation to reflect the future ‘To be’ state. This will require agreement on the future Procurement Strategy. Included in the Procurement Strategy will need to be clarity on whether you intend to increase or reduce your Vendor Base.

Your P2P system will not work in isolation of

Three compassion, please

“Three compassion, please.”  No, I haven’t taken leave of my senses, I’m just trying to think about the implications of the new three year vision and strategy, announced today by the Chief Nursing Officer. 

My mother has advanced Alzheimer's and is completely dependent on care. In fact without that care she is a risk to herself, others and even compassionate staff. So I fully applaud the call for putting compassion centre stage.
But I also see that the current system is totally dependent on a heavenly host of temporary 'bank workers'.  While it is may be considered comparatively easy to take steps during the recruitment, training and staff appraisal processes to embed the principles of the vision and strategy, has any thought been given to how this will be reflected in the procurement? Buying compassionate care is going to be a real challenge in an environment where bank staff are called in at short notice and low paid.

It will also be interesting to hear if any discussions have taken place with the key providers on how the principles will be embedded into existing contracts - I assume there isn't any extra budget available.
Another ingredient will be the number of nursing staff on wards. While I agree that there needs to be good visibility of nursing staff, it doesn't strike me that there is a surplus of staff on the floor. Extra staff,  assuming they are available, will increase cost while the NHS is trying to reduce budgets.
So there are some interesting discussions which need to take place:

1. How will 'compassionate care' be reflected in new contracts for bank staff?
2. How will existing contracts embrace the vision and strategy? 
3. Have provider discussions started?
4. Is there an available supply of additional bank staff?
5. Is there additional money to cover the additional costs?
6. Will all this come as a surprise to the Chancellor's Budget Statement? 

Opportunity Knocks but can the NHS shine in buying music lessons?

Personal Budgets have been around in local government for some time.  They are now to be rolled out so that anyone within the NHS Continuing Care programme will be able to request their own Personal Health Budget. What does this mean and are there implications for procurement?

In theory Personal Budgets are the lowest form of devolved decision making you can arrive at and they maximise user choice. The person in need of care, rather than being told 'these are the services you will receive' is given a budget to purchase what they think is most helpful to their personal situation. This could include buying a dog for company, paying for music lessons, or, ... . Theoretically there is no reason we couldn't have the next Choir of the Year made up of recipients singing a song on their experiences of Work Capability Assessments!

£2.7bn a year will be spent on the programme - but could it be spent more effectively and will procurement expertise be drawn upon?

I would like to see commissioning, social services staff and those closest to the future recipient to help design the potential shopping list of services which may be required. I would then like framework agreements put in place which the recipients could access. If the 'price is right' and the quality matches the users need, then the recipient could 'call off' the framework.

Of course for recipients ease of access and visibility of the catalogue would need to match their experience of online shopping - could the NHS beat the best in the use of social media functionality for Personal Budget purchasing?

You may ask:

Effective contract management is consistent service delivery to standard

Supply chain management, Paralympics, IT, sponsorship, risk management, assessments, Glasgow 2014 Commonwealth Games, design, sponsorship, supply risk management, and contract management are within the interesting mix of tags I could have used for this blog. What's the link?

Blurred by media discussion on the DWP Work Programme and the Leveson Report, November also saw the release of the Harrington Report on Year 3 of the Work Capability Assessment. SCM features.

You may be familiar with the WCA and the furore over Atos sponsorship of both the Paralympics and Glasgow 2014. Atos are the public facing part of the DWP Work Capability Assessments. Atos are the perceived 'bad guys' who say whether disabled are fit to work and therefore should lose their benefits. Atos get the blame. It is on 'profits at the expense of disabled' cry that they are not deemed a suitable sponsor.

Therefore, Atos are a contractor who is 'perceived' to hold the power of 'yay' or 'nay' for benefits. To the claimant Atos are not only DWP's representative on earth, they may as well be the DWP. Perceived poor Atos performance reflects not only on DWP but on the Government's welfare reforms. That's where the supply chain meets the customer (in this case the claimant). But upstream are the actual decision makers. Atos are caught in the middle. Given that key role in a supply chain one would expect to see very tight contract management and client led performance management.

Bad Pharma - procurement book review

I suspect that Ben Goldacre's 'Bad Pharma' would not immediately come to mind as a recommended procurement read. Let me correct that misconception. While the book is primarily about the pharmaceutical industry, it has a sub-plot of market manipulation of buyers. It highlights how sales-forces, conferences, professional bodies, advertisements, magazine articles, and even academic journals are used to manipulate, within strategic marketing plans, to deliver sales. It is a book which should be read by every procurement manager, regardless of industry - all those who touch the edge of procurement decision making need a healthy level of scepticism, if we are to deliver the best deal. If you are in doubt about its relevance, then I would ask you: 'how have you have formed opinions about the percentage savings anticipated, the basis for selecting some procurement solutions, and the judgements on perceived 'best practice?'

However, the book, like Goldacre's earlier 'Bad Science', should also be on the reading list of anyone undertaking research or involved in the peer review process. I have no doubt that rigour, reliability and validity in research would be improved. A good thing all round.

On the downside

Policing police procurement: Suggested questions for Home Affairs Select Committee

Scrutiny of public procurement is a good thing but it also needs to be informed and pragmatic. I'm not aware of any impact assessment having been carried out on the required publication of local government expenditure, but it appears far from achieving its original objective cost effectively. We now have Police and Crime Commissioners, it will interesting to see how they address procurement.


However, Tuesday 27th will bring the Metropolitan Police procurement spend of £35bn under the scrutiny of the Home Affairs Select Committee.

Unless care is taken, there is a real danger of the Committee diverting its focus to what's been bought rather than was it bought well. Looking in the rear view mirror trying to understand why £500k is spent clearing horse manure may well set the pulses racing but this shouldn't be a version of scrutinising MPs expenses but something fundamentally different.

In an earlier blog I suggested questions the Home Affairs Select Committee might ask in its inquiry into the Olympics Security debacle. I suspect they missed that blog. Nevertheless, in the spirit of citizen participation (and also helping those in the Met prepare), I would suggest MPs focus on the following:

"... You can't have one without the other": Responsible procurement & Supply Risk Management

Over the last few weeks I have devoted quite a few words to Supply Risk Management. However, SRM has a partner, responsible procurement or CSR (Corporate Social Responsibility) - the two go hand in hand, as the old song goes "you can't have one without the other".

The news that at least 112 factory workers have been killed in Pakistan is a terrible shame. However, it is also a terrible inditement on supply chain management if these workers lives were sacrificed as part of the quest of cost reduction. I discussed a few weeks ago the Health and Safety issues associated with an iPhone5 strategic supplier.  I hope those turning a blind eye to SCM worker safety will remember that procurement can be responsible for bringing about change, and potentially reducing the risk to workers lives who may not otherwise have had a voice.

On Social Impact Bonds

Social Impact Bonds are quite an innovative 'payment by results' approach which includes up front investment - you can find good explanations of SIB on the Social Finance and  Young Foundation websites

However, you could paraphrase SIBs as: 'PFI meets Big Society'. Similarities being the drawing in of investment to drive an outcome-based delivery which, had the public sector not been starved of cash, would normally have been public sector funded and managed. They should encourage innovation and be user focused in design (something which we have discussed over the last few days).  Of course investors expect a return, which they are due if the designed intervention works. That return can be a long way away.  Some big issues must be that:

Designing to fail

Theory: To design better public services, listen to service users, hear their pain and happiness, and let them shape the service. Pilot, or better still prototype and test. Learn from the pilot. Refine. Make sure you have allocated sufficient funds. Risk assess and manage risks. Train users and and deliverers.

Practice: Announce shift to Universal Credit benefits system from October 2013. Plan to pilot in April 2013 (i.e in Spring and Summer). HM Treasury state in 2012 no more money will be available to introduce new system - NB before the pilot. Base delivery design on an unrepresentative sample, namely "reflect the experience of working people". Acknowledge that those delivering the service do not have the manpower or skills to teach users how to use the internet, even though the deliver channel is internet.

Dependencies: Appropriate IT system.  User/IT interfaces fit for purpose. Potential outsourced delivery partner with capacity and capability to handle big bang roll out.

Risk: High risk of voter dissatisfaction. High risk of displacement of problem from one budget to another. High risk of service users not being able to access service on run up Christmas 2013.  High risk of users not having access to services in as winter weather approaches

Time of impact: Just as users, friends and relatives start to think of who they would want to govern them for the following five years.

Outcome: Potential design to fail case study aimed at providing useful lessons for the future training on:

"We were trying to get them to think about products from a supply chain and user-experience point of view rather than in terms of policy roll out."

We're on a road to nowhere ($3.7m cost)

Great song that it was, if you happen to be in the area of Clare County Council, I suggest avoid singing Talking Heads' 'We're On a Road to Nowhere'. They happen to have provided one of the most interesting examples of stupid sourcing I have come across - a case study which will just keep on giving.

The cash strapped council invested $3.7m on a road (450m in length), most of which was completed three years ago, yet so far it has seen no traffic. The council didn't have all the cash to hand at the time to fund the scheme, so funded $3.2m of it through an overdraft. I'm sure you can guess the overdraft facility was not cheap.

It's not that the road is actually going nowhere, on the contrary it is going in the direction of an Information Age Park, but stops 200m short.  That 200m is to be paid for by the developer who, surprise, surprise isn't making any profits.

The big idea at the time was that the Information Age Park would create 4,000 jobs. But the developer needed funding from the council to temporarily fund the road construction - temporarily, in that the developer would repay the council from the income generated through the Information Age Park.

That's my understanding of the report in the Irish Independent  (21 November) - you just couldn't make it up.

Where do you start in drawing the lessons?

1. Was there an economic appraisal?
2. Was a risk assessment carried out?
3. If there was a risk assessment, was risk then managed?
4. Were gateways reviews used?
5. Was the price paid for the road a good rate?
6. What undertakings were received from the developer?
7. Was due diligence carried out on the developer's proposal?
8. Would the council be better paying for the remaining stretch of road?
9. What has happened to the Information Age Park?
10. Who was best placed to finance the risk?
11. ...

This appears to be a particularly bad example of public procurement, let's hope lessons are learnt and that it is not something we see repeated as the public sectors reduces its headcount of professional procurement staff.

Designing better services

I sometimes think what's lacking in government policy making is a really good institutional memory and a broader outlook. The real benefit wouldn't be in recycling old policies but in 'ah we tried that before and if we want it to work this time we would need to ..."

The reason I say this is that I have now learnt that senior civil servants recently received training from the Royal College of Art in the hope that they would be more creative and think about how public services could be better user focussed in design. One of the speakers has been quoted as saying:

"We were trying to get them to think about products from a supply chain and user-experience point of view rather than in terms of policy roll out."

A good starting point could have been considering the success of the Nesta Creative Councils initiative or indeed what happened with Innovation Nation. So, learning from those successes and failures would point to: 'ah, therefore, this time we would need to ...'.  Isn't that what you would expect from good policy advisers?

Although I may be doing them an injustice, I suspect that the attendees are not personally known for creativity and design in either their public or domestic lives. I also suspect that they have a civil service centric approach to design - by that I mean 'we can best interpret what the user needs and wants in service delivery'. So while they may have left the training with new colouring books what they probably needed most was a blank notebook and the removal of their pens - were that to have happened they would be dependent on others stating the problem and writing the solutions.  Hold on, haven't we been here before, isn't this specifying by outcomes!

If we want to be creative in service delivery, we need to

Big Data, Fukushima and applied research to support procurement

There haven't been many procurement lessons learnt from the Japanese Fukushima disaster. It is also rare that we hear of any useful applied research in SCM and Procurement. So when both converge in a Financial Times report on the work of Manchester Business School with BMW my attention was grabbed.

The background report itself is an interesting story relating to Supply Risk Management and development of an innovative tool. Specifically, following the Fukushima disaster, one of BMW's tier one suppliers couldn't deliver due to a lower tier subcontractor being within the Fukushima fallout zone - as a result BMW identified a need for greater supply chain insight. That need seems to have led to the students developing a tool for analysing internet content (Big Data), which could help with supply risk management. The tools being tested at the present are reported to: "read, search, sort and select large amounts of information in a systematic way, building up real-time profiles of each supplier and sub-supplier". That strikes me as a clever tool.

Of the examples cited one identified a risk of a supplier being unable to pay wages through content found in a local newspaper, while another relates to identifying a new supplier in Mexico.

It is not clear whether MBS are developing a marketing plan for their solution, but hat's off to them and the potential to reduce their student debt.

If it's broken reach me a hammer, an antibiotic or procurement strategy

Some of my earliest memories are of my grandfather's approach to technology fixes. Despite seemingly being able to fix any problem with bicycles, motorcycles and cars; when the TV appeared to have a fault his first solution was to give 'the box' a delicate 'tap', well, aggressive thump. Surprisingly his solution seemed to work! I didn't inherit his DIY expertise, except that I do frequently view a hammer as the solution to whatever is broken - sometimes it is the right tool for the job but on other occasions it has cost me a lot to have my solution rectified!  

Over the last few days we have learnt of the medical equivalent - the prolific medical and self prescribing of antibiotics. Now I have a personal affection to Penicillin. When my father was a child his parents took a risk with the experimental drug being used on him - there was everything to gain as he was expected to die. This time last year I was having as many antibiotics administered as my system could cope with. But Alexander Fleming warned about overuse of antibiotics - using the same solution could be expected to reduce its effectiveness. Now his prophesy is being fulfilled. 

While we recognise these flaws, how good are we at recognising that there is a tendency to do the same thing with procurement strategy. We tend to one approach and that's the answer, regardless of appropriateness. Sometimes the solution is much more extravagant than is required, but yet provides some satisfaction to the advocate. Sometimes the solution is inappropriate and others would have been more appropriate.  Sometimes, because there is a trend within the profession to adopt one approach, we follow the pack, yet, pursuing the opposite approach may actually deliver a superior result, for example, buying spot frequently beats the framework price! 

I am not advocating being a maverick. I am advocating competence in a wide range of procurement tools and being sufficiently astute to carry out a wide options appraisal of those solutions prior to selecting the most effective tool for the job. It may be a hammer, it may be an antibiotic but too much of a good thing, or using the wrong approach can end up being a very, very bad thing.

Did procurement bring down BBC Director General?

I have been a devotee of Newsnight for many, many years - I would even go so far as to say it is my favourite viewing. So the debacle related to its handing of child abuse scandals is really disappointing - but was this a Supply Risk Management disaster waiting to happen?

Let's rewind. The BBC has been on a cost reduction strategy for some time; outsourcing programmes, contracting with its front-line 'names' as opposed to employing, and now it has all the appearance that it may have outsourced quite a bit of its investigative journalism to the Bureau of Investigative Journalism.  It was the BIJ who appear to have had the commission from Newsnight and led most of the investigation into the abuse claim and it was a BIJ journalist who sparked the Twitter flurry which has ultimately led to the resignation, last night, of the BBC's Director General.

Newsnight appear to have outsourced one of its strategic assets: investigative journalism. That may have been fine had they not also failed to quality assure the outputs and manage the contractor's opportunistic pursuit of glory through the posting of 'The Tweet that did it'. While we recognise that the DG appears to have had a remote approach to delegation, when you are managing such a strategic issue as the potential credibility of an innocent, high-profile politician, who must have been in the inner-circle of Conservative politics at the same time as the BBC Trust's Chairman, you are really putting yourself out on a limb.

I really hope Newsnight will not be sacrificed in the witch-hunt, but there is a procurement lesson here: be careful what you outsource/partner, identify and manage the risks, and always remember that a lack of Supply Risk Management can bring down even the top guy!

Tarzan leaves no stone unturned in pursuit of growth: even in procurement

Chapter 4 of Michael Heseltine's report, 'No Stone unturned in pursuit of growth' may come as a surprise to some, in that he recognises procurement is strategic to a national growth strategy. It represents a significant step forward from Vince Cable's Vision which I have previously discussed.

Although quite late in the chapter (para. 2.21), Heseltine answers the exam question I wish CIPS would ask, namely, 'What is public procurement for?'  I couldn't agree more with his view:

The simple answer is to secure value for money for the public purse. Who can argue with that? The problem is that it is often equated with short term, lowest cost procurement which ignores the issues about the country’s industrial base – the exploitation of R&D, the skills we need and the creation of jobs. It also ignores international practice. No country of which I have any knowledge takes so simple a view. Although crucial in major policy areas such as defence or aerospace, the same issues are everyday challenges for ministers whether they are placing contracts for high speed trains or new IT systems. We are concerned about the destiny of our manufacturing sector but we do not spend enough time exploring the ways government can work to support it.

Heseltine is also brave enough to express views others may not have, for example,

Apple in the PRM blender yet again

Regular readers will recognise that I have been following a Supply Risk Management train of thought for some weeks. Linked with that is a forthcoming debate piece in Public Money and Management - I hope you will find that interesting, particularly those in the public sector.

However, you will also recall that I have been considering the SRM implications for Apple and specifically the iPhone 5 (you can pick you the blog trail here and here). The SRM issues for Apple just don't seem to be going away - today we learn that the Chairman of Foxconn, a strategic supplier, has announced:

"We can't really fulfil Apple's requests. Our shipments are insufficient ... given the huge market demand"

 Shares in Apple have, not surprisingly, fallen!

Meanwhile what will happen with the supply chains and shares of Sony and Nokia?  Have they alternative sources of supply? Who, in the customer pecking order, will Foxconn favour in terms of customer preference?  How will the various buyers, who compete in the marketplace and supply chain, have positioned themselves as preferred customer?  Which of the competitors has best positioned themselves in terms of SRM? While some believe that Foxconn has excess capacity elsewhere, what due diligence was completed on the basis of potential aggregated demand?

This is a fascinating saga which has implications right throughout the mobile technology world, but the lessons learnt should ring out for all CPOs.

When procurement strategy meets drugs war

I've discussed suppliers holding buyers to ransom as a result of the financial crisis (for example Comet and Lotus) but I never thought I would discuss pharmaceutical suppliers holding cancer victims within a country to ransom. Yet that is exactly what is happening as state run hospitals in Greece are deprived of bowel cancer drugs by German pharmaceutical company, Merck.  Of course Merck have a justification in that the pharmaceutical industry are owed £1.4bn by Greece and there is an hint of corruption about how the Greeks have resold previously supplied drugs.

On the other hand we also know that the pharmaceutical companies have a history of harvesting excessive profits and are not without questionable morals.

But will this lead to an increase in health tourism and Greek patients travelling to other EU countries for treatment?  Will that merely displace costs from one country to another and have a detrimental impact on the health delivery in those countries?  Equally, will the EU have to pick up additional costs as patients who may otherwise have been treated have require more expensive support?

The personal price to patients and families just couldn't be calculated and whole life costs take on a much more literal meaning.

This is really high-level European Procurement Strategy and a much more worthy topic of debate than whether or not Channel #5 is dangerous.  An innovative response is required and the leverage of all European country health budgets brought to bear before lives are lost unnecessarily.