Saturday, 6 October 2012

Grease was the word, now it's 'procurement'

Once upon a time, if you said you worked in procurement, no one really had a clue what that meant.  All that has changed: the Prime Minister, at the height of the political conference season, finds himself compelled to discuss procurement. Even the Undercover Economist has started to discuss bid evaluation.  I am not going to add to the rail franchise debacle debate, save my previous blog.  My concern with the franchise is not that mistakes were made but that reassurances were wrongly given to ministers that the procurement process was 'robust'  when it was not - that is inexcusable and, to me, does more damage to the profession than the making of the actual mistakes.  Of course this isn't an isolated mess, it comes hot on the heels of the Olympic security fiasco.

However, rather than let public sector procurement take all the flack, private sector procurement has thankfully shared the load and also managed to grab the headlines.  Once again Apple's iPhone 5 sole supplier is in the news.  I recently discussed the issue of supply chain risk and the dependency which Apple had on one supplier for the new iPhone.  In that blog I referred to riots which had taken place at the Foxconn factory and how that may have adversely impacted on share price and customer experience.  Today we learn that there are more problems at the factory - this time specification quality standards are at issue: fights between workers and quality controllers, contributed to a strike yesterday.  While Apple is a household name, synonymous with quality, their supply chain dependency is becoming a regular news item.  The behind the procurement story is one of the relative power the key supplier's workforce over the delivery of iPhones, and the negative impact on share price and customer experience. Supply chain risk management must now be a boardroom topic.

It is often said that there is 'no such thing as bad publicity'.  In spite of the negative headlines of the last few weeks, I believe some good may come out of this.  For too long there has been insufficient boardroom discussion on procurement strategy, insufficient robust challenge of award recommendations, and a lack of concern with supply chain risk management - expect that to change.  There has also been a tendency for procurement staff to be appointed in the absence of real scrutiny - expect that to change too.

For good or bad, the next time someone asks what you do for a living, and you reply, "procurement", expect an informed discussion as opposed to a blank stare.

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