Tuesday, 16 December 2014

When actions speak louder than words

Sadly tonight, yet again Newsnight gave a focus to procurement - this time under the spotlight were 2 Sisters Food Group. 2 Sisters Food Group have a commitment to sustainability, and that is supposed to include responsible business. From a procurement perspective, here's what they claim on their website:


Our vision - We partner with our suppliers to our mutual benefit and engage in the development and implementation of responsible sourcing standardsOne of the great sustainability challenges of our generation will be feeding 9 billion people on the planet, many of whom will be achieving increase in wealth. The growing population and increasing middle class bring bigger demands on land, what is produced and how it is produced. The potential impact on sensitive ecosystems is huge, and we will work with suppliers to prevent this through use of responsible sourcing standards. We are already certified to RSPO, are members of RTRS and UTZ, and supply MCS fish. Where relevant we will continue to support and champion responsible sourcing standards and develop approaches where they do not exist in the market.
A big challenge we face sourcing from over 50 countries is ensuring we protect people from exploitation and abuse. This is a complicated area, with many different challenges across the world depending in the size of suppliers, cultural differences and ways sectors operate. As members of SEDEX we are championing this to our supply chains, and have made a commitment to use this system to assess, risk rate and take action where required.  We will provide support to suppliers to ensure we can implement effective solutions that ensure the sustainability of both supply chains and 2 Sisters.
- See more at: http://www.2sfg.com/sustainability/#procurement

Later this week, on Thursday, we have another BBC exposé related to procurement, Apple's Broken Promises:

Apple is the most valuable brand on the planet, making products that everyone wants - but how are its workers treated when the world isn't looking? Panorama goes undercover in China to show what life is like for the workers making the iPhone 6. And it's not just the factories. Reporter Richard Bilton travels to Indonesia to find children working in some of the most dangerous mines in the world. But is the tin they dig out by hand finding its way into Apple's products?

There's something ironic that the profession is celebrating a name change and the ability to award individual Chartered Status while the media is pouring shame on our peers, sorry highlighting the shame of our peers. What I also find strange is how CIPS are being left out of any of the media discussions - are they part of the solution?

Sunday, 7 December 2014

Premier Foods procurement strategy going from bad to worse

Last year I wrote about the procurement strategy of Premier Foods which has suddenly become a hot topic and now looks as if the chief executive has been coerced into setting aside.

Initially the rationale of the Premier Foods procurement strategy was to supplier reduction and a focus on strategic suppliers. The objective wasn't necessarily wrong but the implementation was flawed in both rationale and implementation.

Now to add to that confusion the chief executive has said "in my view that is just one of many kinds of discounts. It's an investment on growing our business and that's entirely appropriate". That seems a massive shift in last year's justification! Did the chief executive understand the 2013 rationale? Was there any Board buy-in to the risks of what could happen and the potential fallout which has now led to adverse national press and media converage?

Gavin Darby, the chief executive, to me, has made things worse by stating:
If the optics of this scheme for some people feel uncomfortable, I'm happy to move on and move the scheme to a more traditional discount .. we would just say we have an invest-to-grow campaign, we want people to come with us to invest in our business and that would be reflected in a discount soon the terms they have offered in the past.
If Premier Foods had wanted "[suppliers] to come with us" they should have thought a bit more about how they would bring the supply market with them.

Darby seems to forget that some of last year's suppliers appear to have now chosen to opt out of supplying and some who did pay-to-stay never received any business anyway. How will Premier Foods go about negotiating the new discounts with those firms? Let's face it Premier Foods have now lost the initiative and common sense would suggest that suppliers should just refuse to budge on discounts.

Setting all that aside, we have yet another example of procurement damaging brand value and I assume adding to remedial costs associated with retrieving reputation.

Then we have the issue of do they really understand the concept of strategic supplier management? Sadly, I fear, Premier Foods are working to their own recipe and it has a remarkably bad taste.

Wednesday, 3 December 2014

Is it responsible to start procurement without having the funding?

Is it responsible to start procurement processes without having the money? I suppose the answer depends on what you mean by procurement. 

I ask the question as Danny Kenndy, the Minister for Regional Development in Northern Ireland, is reported to have stated the procurement and planning process for several [road] schemes was "well advanced", but "then we need the money".

In the procurement cycle which starts with defining the need, I would be happy that the business case stage ensures the money is available, and if that is what is meant by the procurement process, then so be it. It could also be that the Minister is referring to soft market testing and establishing the budget robustness - that would be okay too provided al the relevant stakeholders are clear on what is happening. However, if, as I suspect in this case, 'the procurement process' is really the tendering process, then, while I think there is a need to have the necessary planning approval, I do not think it is responsible to start a procurement process before confirmation the required finance is available.

We've heard so much about making it easier for SMEs to do business with the public sector and reducing the costs of doing so, but surely starting a tendering process without the required funding is placing an unnecessary risk and burden on the bidding community - that's not responsible. The only circumstances in which I think it is justifiable to place that cost on bidders would be if the buying organisation agreed to cover the cost of bidding should the procurement process not be progressed through to award. Would the NI Assembly be prepared to accept that cost?

Tuesday, 2 December 2014

The dream of the Stonehenge tunnel procurement

As we approach the Winter Solstice (and the next election) it has been announced that a new road is to be tunnelled near Stonehenge - a world heritage site and one of the wonders of the world.  As I understand it no one actually knows the origins of Stonehenge and I doubt they know what is actually underneath or surrounding it - the new tunnel may turn into an archaeological discovery mission.

But a modern myth is also being told, after all this scheme dates back to 1995! Are we being sold a dream which can easily be set aside in future spending cuts? We have the mystical belief that the UK has the skills and money to delivery such an ambitious project - on what basis? It could create jobs but when and how sustainable will they be? It will require money but when will the money flow?  Is there a justification for spending so much money on a road tunnel when we have people in the UK reliant on food banks and there are potholes in virtually every street?

Was it only last year that we learnt that a third of major projects were over budget or late? Could we have an update on the lessons learnt which will be transferred to the Stonehenge project?

Dominic Cummings, in today's Times claims the civil service lacks skills in budgeting, contracts, procurement, legal advice, and project management.  If he is right, and history provides plenty of examples, what are the chances of effective project delivery of the tunnel? Perhaps euphoria over the award of the east coast rail franchise has been a cause for a vision of such a landmark project. Perhaps it is easier to visualise completion of the Stonehenge tunnel than something which may impact on the lives of people today.

The amazing thing is that 5,000 years ago someone conceived and delivered Stonehenge - whether it was to time, cost and quality we haven't a clue, but for all our sophistication, it strikes me that they had skills which are not common and are urgently needed.

What I would like to know is, will anyone be accountable for the delivery of this dream?

Tuesday, 11 November 2014

Lean is supposed to about getting rid of waste

I could barely believe my eyes when I read today that public sector managers are now going back to school, gaining an FICiPS en route, to learn about 'lean'. It's not that I don't agree with the need to implement 'lean' thinking in the public sector, indeed back in the 90s I was writing about the application of lean supply in the public sector. No, my concern is that the UK government have been preaching the 'lean' message for years too - indeed we have the 'Lean sourcing: The standard solution'.

What has gone wrong with their recruitment that they now need to invest in training for these managers - did the recruitment process actually let staff through the system without checking their understanding? Are we to view this as an admission that central government is 30 years behind the curve in management thinking?

My suggestion is quite simple: give each of the managers who require training a copy of either The Machine that Changed the World, Lean Thinking, or Systems Thinking in the Public Sector get them to research why the Japanese local government has struggled to implement 'lean', and then set within their personal objectives an appropriate objective to pilot a 'lean' initiative, reporting on the difficulties, how they overcome the difficulties, and the lessons learnt. No £17,000 training course, no mercy, if they can't deliver chase them - I can't see that after so long any other approach will work.

Thursday, 6 November 2014

"Purchasing: Can we bridge the gap between strategy and daily reality?"

A new academic paper is in press at the moment for publication in Business Horizons: 'Purchasing: Can we bridge the gap between strategy and daily reality' by Knoppen and Saenz which I think is worth a read. The paper is based on the survey findings of the International Purchasing Survey - over 600 usable responses from North American and European purchasing professionals - and a few anonymised case studies.

At first I wondered why the paper wasn't published in one of the mainstream procurement journals, then I decided it may be the reported findings quite possibly jar against the message their editors generally want to accept.

Nevertheless the findings are important and certainly merit further debate and validation.

I am not going to steal the paper's thunder, but the key messages include that 47% of the respondents believe Purchasing (I take that also to cover the Procurement function) is not included in the strategic planning process, and 56% the purchasing are not focussed on long-term issues that involve risk and uncertainty. Furthermore that organisational structure tends to be either centralised or decentralised with little development of hybrid models.

Those findings certainly act as a reality check on the rhetoric but, I have to say find some resonance with what I have all too often seen in big household name companies. If the findings are reliable we need to stop the bluff and really get down to asking the serious question of why is Procurement still suffering from an identity crisis, despite almost 30 years of procurement's potential contribution having been identified, the financial crisis, and even the recent spate of procurement related supply chain risks manifesting themselves? Why are simplistic structural models still prevalent despite the benefits of hybrids? Is the problem that with the profession of those who look at the profession?

However, leaving solving the world's problems for another day, and getting back to the paper. In answering the core question the authors pose: Can we bridge the gap between strategy and daily reality? The authors use the case studies to demonstrate the answer is 'yes',  and identify key pitfalls in bridging the gap, namely:

  1. No time for reflection;
  2. Lack of scale;
  3. Lack of scope;
  4. Unaligned incentives. 
While I may question some of the content and approach, and feel there may be an over-simplification of the discussion and recommendations,  I encourage you to give some thought to the findings.

Thursday, 23 October 2014

NHS England Forward View appears procurement blinkered

Today NHS England launched its Five Year Forward View - of course it is no surprise that the NHS faces an enormous financial black hole, around £8bn!  What is surpassing though, faced with money needs, is that in 38 pages procurement/purchasing only get two mentions. The first relates using purchasing power to improve the 'health warning on labelling, and the second, the grand IT system procurement failures:
... So for all of these major health risks – including tobacco, alcohol, junk food and excess sugar - we will actively support comprehensive, hard-hitting and broad-based national action to include clear information and labelling, targeted personal support and wider changes to distribution, marketing, pricing, and product formulation. We will also use the substantial combined purchasing power of the NHS to reinforce these measures. 

Part of why progress has not been as fast as it should have been is that the NHS has oscillated between two opposite approaches to information technology adoption neither of which now makes sense. At times we have tried highly centralised national procurements and implementations. When they have failed due to lack of local engagement and lack of sensitivity to local circumstances, we have veered to the opposite extreme of ‘letting a thousand flowers bloom’. The result has been systems that don’t talk to each other, and a failure to harness the shared benefits that come from interoperable systems.
This strikes me as a terrible indictment, that in addressing such a financial shortfall, procurement gets such a 'bit part' and that one is about the woes of an ill-conceived and delivered IT strategy.

Has NHS England decided it has exhausted the 'procurement opportunity pot', has it decided getting the value from 'the pot' is too hard, or has does it just overlooked the 'procurement pot of gold'?  I know there are some great people and ideas in NHS procurement - why has their contribution been overlooked?  

Tuesday, 14 October 2014

Is the Tesco storm indicative of a governance & policy failure?

Today's news that allegedly three more Tesco staff, who have links with procurement, have been suspended continues to rub salt in the wound and negatively impact on reputation.

While I have discussed Tesco's procurement many times, I now find myself asking: "is the weakness in the governance and policy as opposed to the people?"

If the press are correct, those suspended now include: the commercial director, the food commercial director, three category directors (group wine director, director of convenience foods, and director of impulse purchases) and someone responsible for sourcing.

It seems impossible to believe all those suspended are mavericks or indeed that they were pursuing a strategy concealed from those with strategic oversight. If that is possible, then how many other areas of Tesco's governance lacked scrutiny?

Nevertheless, it may be a good time to gain insights into the procurement governance and policy of Tesco. If that was a fault, you can hardly blame the staff. Even if Tesco replace the staff, in the absence of addressing governance and policy failures, the corrections will only be cosmetic.

It may also be a good time for those charged with procurement governance and policy to ask, "could Tesco's woes be replicated here?".

Sunday, 12 October 2014

More Teswoe's - and thoughts on the linkage of Marketing & Procurement Strategy

With the slogan 'Every little helps' Tesco are also sure to understand the drip, drip, drip of every little piece of negative publicity also counting. I have given considerable attention to Tesco's approach to procurement over the years and how it may not have been just exemplary as others argued.

However, today's Sunday Times article drew my attention to an aspect of Tesco procurement strategy that I previously hadn't considered, namely, minimising customer choice. I just hadn't considered that the strong arm of Tesco's buyers were suspending products from the shelves - customers were being deprived of choice by Tesco. Of course the suspension also had a painful impact on suppliers. Ironically Premier Foods lost £10m in three months. I say ironically as you may recall, some months ago, I referred to Premier Foods bizare approach to defining strategic suppliers.

While these case studies are of interest to the procurement world, to me they are also of interest to those interested in Marketing Strategy. Did Marketing in Premier Foods position Tesco as strategic - clearly Tesco's Procurement Strategy didn't position Premier Foods as strategic. And what about the reputational damage caused by Tesco's Procurement Strategy - never mind that a number of the Tesco staff are now suspended, how much will Brand reconstruction cost. Wouldn't it be interesting to read the brief for the procurement of that Brand agency who have to undo the damage caused by Procurement!

Sunday, 5 October 2014

Marvel at the superheroes of central government procurement once again

Today's Business Section of the Sunday Times carried an interesting piece on the work of Bill Crother's in central government - he has clearly taken on the mantel of a superhero. What caught my eye was Crother's statement: “Where we have come from four years ago, we’ve made great strides, but there’s a long, long way to go.” 

I do not deny that significant progress may well have been made, but what I think we are all due is an explanation as to why the situation was, and continues to be so bad? When I reflect on the last 20 years we have had many in central government also implying they were procurement superheroes and often adopting quite an arrogant stance telling the NHS and local government 'how to do it'. Where are they now and what dod they actually leave behind - if Crother's is right, a mess. I will not start to name the names, but surely there is a need for some 'calling to account' as to what they actually achieved from their lofty positions - was it all rhetoric? It would be quite easy to do a trawl of Supply Management, for example, and read the how the superheroes of the past were going to sort out public procurement. They were held up as exemplars but never fell. They were never to blame, but sorting out a mess they had inherited! Sound familiar? 

As I see it we are likely to see this repeated over and over again because there does not appear to have been any meaningful performance management system which the incumbents answer to, nor any retrospective personal accountability. Call me a cynic, but before you do, tell what's actually changed over the last four years and how the latest superhero will be called to account?

Tuesday, 23 September 2014

Ed's pledge on government procurement

Today Ed Miliband set out his six national goals for a Labour Government. Within the speech was a commitment that Ed will make it a requirement for every firm awarded a major government contract to offer apprenticeships. We have seen the creation of apprenticeships being part public sector contracts before, largely in local government, but will this commitment deliver?

First, we have a problem of definition: what is a 'major contract'? Will it be defined by the EU threshold or a definition of the service? If you are an SME you would have a different difinition of what is a 'major government contract' than, say, a large out-sourcing organisation.

Will the requirement be solely on central government contracts or will it also apply to devolved and local government? Will it be for services, supplies and/or works?

But then again, what is a 'requirement to offer apprenticeships'? Doesn't the shaping of the offer dictate the likilhood of uptake? Will there be wiggle room for those drafting and committing to contracts?

Will there be the requirement explicity state the apprenticeships have to be established in the UK - surely that wouldn't be legal?

Does a single apprenticeship on a multi-million pound contract represent compliance? Having said that, is there a threshold of what would be an unacceptably high dependency on apprentices in the delivery of a contract?

Regardless of all those questions, won't the cost of apprenticeships increase the cost of contracts - will budgets accommodate those potential additional costs?

Central government contract management has become an oxymoron - how on earth will this be contract managed?

Great to hear that Miliband recognises public procurement has a part to play, but can public procurement play its part?

Monday, 22 September 2014

That's another fine mess for Tesco procurement

There was a time when Tesco was held up as the exemplar for procurement; that changed with Horsemeat. But today things just got significantly worse and a strategy of late payment for suppliers paralleled with charging suppliers for prominent placement seems to have led to 10% fall in share price and significant reputational damage. Euphemistically this is referred to as 'profit overstatement'. Will CIPS' condemn this as unethical and flex the new disciplinary process?

But while the big news story was on Tesco's 'overstatement', tucked away inside the Times was a related story about one of Tesco's suppliers, Moo Free Chocolates. Moo Free Chocolates have named and shamed Tesco in a late payment dispute - Tesco, it is claimed took five months to pay £6,000 while no such problems were eencounteredwith Sainsbury's and Waitrose.

Wouldn't it be interesting if the main political parties, who are now holding their Conferences, announced, that if they win the election, they will introduce a naming and shaming register of late payments - perhaps that would be the single best thing they could do to help SMEs!

Wednesday, 17 September 2014

Scottish Independence and a lesson for procurement

Regardless of whether or not you would vote 'Yes' in tomorrow's referendum for Scottish independence, few could disagree that there has been a frenzy in trying to persuade voters that they would be 'Better Together'.

But that has included the reshaping and re-spinning of a 'No' vote as representing a vote for a version of home-rule which creates a new quandary: what if you want neither independence nor 'home-rule'. Voters are now deprived of the option of 'no change'.

Setting that aside, the Westminster fear of losing has manifested itself in the generation of new arguments. I remain sceptical about the motives behind much of the 'Hug Scotland' rhetoric. I am also sceptical when I hear the word 'might' used in arguments because I immediately find myself saying "and might not". Then I wonder who in Scotland would be swayed by the likes of David Beckham's plea and justification to stay together.

What I do like, however, is the development and strengthening of the relative merits of both sides arguments. More robust discussion has taken place and the pros and cons seem to have been thoroughly aired. In the procurement world that has included the spectrum of independence being good for SMEs and bad for SMEs - can time prove which side was correct or will be faced with the "if only ..." excuse.

Yet, when I consider options appraisal as part of the procurement cycle, too often I have seen the reluctance to have a robust approach to options - procurement options appraisals have often been self-fulfilling prophesies. We would do well to learn the lessons of the Scottish debate and spend more time arguing 'why not', generating alternatives and even saying 'convince me'.

Monday, 15 September 2014

Phones4U rings out a need to understand power/dependency

The news that Phone4U has been forced into liquidation as a result of its strategic suppliers opting to no longer supply means that nearly 6,000 workers will understandably view any talk of a recovery with significiant scepticism. The market and government tend to forget that failed businesses bring personal traumas and scared memories. Phoens4U struck me as great on customer service and providing a useful offer - I have had many phones through them over the years and was always impressed by the staff who dealt with me - my heart goes out to them.

But the decisions of Vodafone, O2 and EE to no longer contract with Phones4U demonstrate the importance of understanding and recognising the power/dependency relationship in procurement. Clearly those big providers have developed an alternative business model of cutting out the middle man questioned their added value. But how did Phone4U addresses these former partnerships over the years? Did they view the partnerships as not only a significant procurement risk or even they recognise the potential for the supply chain to close the firm?

We can only hope that negotiating strategy of Phones4U was not a major contribuor to its demise but when O2 withdrew as a supplier back in February warning bells must have sounded. But warning bells must also sound for all those businesses which are dependent on those providers for delivery of their services - do you consider your business as preferred customer of, for example, Vodafone, or are you merely dependent on them?

Sunday, 14 September 2014

FIFA corruption and bribery tells us warning shots just aren't enough

How on earth could the gift of a watch valued at £15,000 be viewed  as 'symbolic or trivial value'?  Of course, what value is considered 'trivial'? Well, thanks to another exposé in today's Sunday Times we now know that all but three of FIFA's leadership are so out of touch with reality, greedy and/or so immune to probity that they seem to think acceptance of such gifts within 'goody bags' is fine. We don't know what else was in the 'goody bags' perhaps a pencil, a memory stick which set out FIFA's ethics policy and a eraser?

FIFA had previously become completely discredited after the farce of the Quarter World Cup award, so you may have assumed they'd have been wary of a further scandal, but that just doesn't seem to have registered with them.

It's strange but 'goody bags' seem to be expected - should event organisers now state they are no longer to be issued or should the contents of the bags be published on event websites? Should all 'goody bags' include a declaration relating to potential conflict of interests? Let's face it those who sponsor the items in 'goody bags' would not do so if they had not first of all established the business benefit anticipated.

Yet, we see similar attitudes in the world of procurement. Stand outside any procurement conference and observe the 'goody bags' walking away!

But like FIFA, I have seen organisations where there had been corrupt behaviour in procurement, yet they believed they have 'lanced the boil' and all is now well. FIFA's greed reminds us of the need that such complacency is unfounded. We just can't assume all will be well. We just can't assume it won't happen again. We just can't assume our organisation will be immune. I just wonder how often we highlight the need for vigilance and caution.

Friday, 12 September 2014

For want of a compelling strategy

I must have read hundreds of Procurement Strategy documents, many of which were 'cut and paste' of another organisation's. The Strategy document sets out the directional plan for the coming period and signposts to the future desired state, it also provides the framework for making operational and tactical decisions. In getting ownership of the Strategy, the author, or their champion, needs to negotiate and 'sell' to key stakeholders. Of course we recognise that there is frequently a gap between the documented 'intended' strategy and what subsequently happens, the 'realised' strategy. The truth is that many of the documents I have read actually lack any To-Be, indeed many lack an ambition or need for change.

It is against that backdrop I read with interest that Dunelm have chased their chief executive, even with an increase in profit, over failure to reach agreement on strategy. The Directors wanted a more ambitious strategy and the CEO failed to set that out. It is also interesting that the Directors didn't like  the realised strategy which led to criticism that: "The stores look a bit more organised, a bit clearer, a bit easier to wheel a trolley around ...".  We do not know whether or not the Board had previously endorsed that strategy or whether the realised strategy differed from the agreed intended strategy.

Regardless, I wonder how many CPOs need to take heed of the example of the Dunelm example, ensure they have an ambitious strategy with the endorsed ownership of their Procurement Strategy and an implementation plan with appropriate KPIs to ensure implementation.  

Wednesday, 3 September 2014

Does your procurement strategy address Economic Crime?

Thankfully there now appears to be a move to widen the reach of the existing UK Bribery Act to embrace economic crime. My own opinion is that the Bribery Act has not yet had sufficient impact, partly because no prosecutions have taken place, partly because 'bribery' is only part of the problem, partly because of denial, partly as a result of ignorance and partly because of a lack of understanding of the need to take steps to prevent bribery.

Anyway, yesterday we learnt that the journey to an crime of economic crime is underway with cross party agreement. Therefore the election is unlikely to be an impediment but finding time in the parliamentary calender could be an issue. We also learnt that the government plan to publish its first anti-corruption plan - that should be of interest and no doubt procurement will have more than a passing reference.

This is all good news to me and provides an opportunity for CPOs to make use of today's press coverage to place the issue of procurement risk management on the Board's radar - perhaps that's an opportunity worth taking before you become the first case which receives the bite of the current and future legislation.

You may find my related whitepaper of interest

Monday, 1 September 2014

'Cut the Cards: making SAP work' - Book review

At first glance you may wonder what relevance this book could have to you. Don't be put off by the title as it is not a book for SAP 'techies'; it is much more and I would view it as recommended reading for anyone on an MBA course or with an interest in PRINCE2. I suspect those who would benefit most though would be those designated as Sponsor of an ERP implementation and those charged with an oversight or scrutiny role.

Donnelly has produced an easily readable book on what could be a very dry subject and his black humor works very effectively. Having said that, assuming there is a second edition, I think the addition of section headings would be beneficial.

In a forensic analysis of public and private sector IT implementation disasters, Donnelly provides a diagnosis of what he believes really went wrong: cash-flow, poor leadership, self-serving partners, poor project management, poor risk management, and poor contract management are all there.  Key lessons for me are the need to modify SAPs standard processes as little as possible, so change management should be concerned with moving from the As-is to the correct SAP process, having the correct governance in place and use PRINCE2 methodology.

Also covered, although indirectly, is SAP's marketing strategy - a good case study in itself.

But what's there for a procurement practitioner? If there's an ERP project the CPO needs to have a seat at the table as part of the business case development, specifying, contract drafting, selection, risk management, change management and contract management. Then the CPO needs to be engaged with Blueprinting the To-Be - I have previously discussed how that should be an opportunity for procurement transformation, yet too often is missed through automating the existing, yes, that still happens!

Wednesday, 27 August 2014

Procurement policy, hubris and the cloak of invisibility.

I suspect this week is not the best time to discuss the Christmas Party at CCS given the press attention to IT procurement. Saturday had an excellent feature in Times2 on why government IT projects go wrong, then today's Times had four separate pieces on the Aspire Debacle, for example: here.

To me the big issue isn't yet another IT procurement debacle, it's the issues of procurement policy, hubris and invisibility . 

The political leader of UK government procurement, also famous for his Jerrycan approach to 'bottleneck purchases', is Francis Maude, the Cabinet Office minister. Earlier this year he decreed that IT procurement policy was that there would be no contracts over £100m - small was considered beautiful regardless of the risks!

Now in spite of a long history of not implementing procurement policy, it seems this 'small is good policy' is going to break the mold and actually be implemented by splitting the major HMRC Aspire project into smaller contracts. I need not join the chorus of those who argue this is high risk, but included in that chorus are some notable voices from the CBI, Public Accounts Committee and Public Administration Select Committee.

A Cabinet Office spokesperson is reported to have said though "HMRC intends to break this contract into packages which is entirely in line with our new approach and will ensure competition from the widest possible  range of suppliers". There is no admission that this may be a demonstration of procurement hubris or even stupid sourcing, just that it is in line with policy. Nor was there any confirmation that discussions with the market have provided confirmation that SMEs will indeed be willing and able to bid! 

Nevertheless, since it's in line with policy, it must be okay? What we have not heard is the voice of the Government's CPO providing an endorsement for the procurement approach. Does he agree with it in this particular case? Does he disagree with it but can't publicly say that? Does he believe that in spite of the accepted positioning of such an IT procurement as 'strategic' within a Krajic model, he has a better recommended strategy which the rest of the 'procurement pack' have yet to see? Then again, what about the Major Projects Authority - haven't they a role in disaster avoidance or do disaggregated contracts of less than £100m avoid their radar?

There's another interesting quote from an HMRC spokesman: "We will renew our IT contract within Cabinet Office guidelines and on time."  Is that a buck passing statement to the effect that if it all goes wrong the HMRC only followed Cabinet Office guidelines? The pedants among you will of course have noticed that the only commitment is to delivery of the 'IT contract ... on time' which does not necessarily mean the actual functional delivery of the service being procured. Isn't it wonderful that the project is called Aspire! 

Wednesday, 20 August 2014

'The Value Chain Shift: Seven future challenges facing top executives' - Book review

The sub-title of this book is really the important point to consider with this book - it is targeted at 'top executives'. An impressive list of contributors set out to answer the 'seven challenges' against a timeline of 2020.

So what are the seven 'future' challenges identified?

  1. Measuring corporations' cost and contribution to society; 
  2. Managing resource scarcities; Scale and speed; 
  3. Traditional multinationals versus emerging market firms; 
  4. Optimising IT-enabled process and systems in the value chain: 
  5. The role of governance; The organisation design shift; 
  6. How speed affects risks, opportunities and new business models in the value chain; 
  7. Corporate social responsibility: Moving from compliance to value creation in value chain relationships. 

Are these really future challenges, and if they are, are they the biggest challenges? Actually I recall some of them being included in Farmer and Taylor's 'Corporate Planning and Procurement' published in 1975, yes, 39 years ago! More recently we could compare New and Westbrook's (2004) 'Understanding Supply Chains', and Brindley's (2004) 'Supply Chain Risk'. So I would have liked to have heard the authors views on what they would put as a compelling argument, to the sceptical top executive on: "if these challenges have been around so long, and a laissez-faire approach has worked so far, what's so different?"

Setting that aside, let's consider some of the chapters. Say the chapter on IT. While I recognise the problems of geographic standardisation of processes and systems, and am currently working on a similar problem, I am really surprised that the whole digital agenda with the imbalance between marketing's adoption and that of the supply chain isn't viewed as a challenge.

I did, however, find the chapter on 'optimal speed' thought provoking and something I hadn't previously considered.

Sadly, I found many of the chapters more like an introduction and lacking in depth - I wanted more.  
You could classify them into three categories: 'A statement of the blindingly obvious', 'We wanted to create a model, so we created a need', and the really valuable, 'Have you thought about this?'.

In fairness, let's remember the book is targeted at top executives. If the book is read by top executives and they progress to addressing the challenges, then it will be really beneficial, but for me, and the average procurement specialist, I doubt it is worth £22.15?

Saturday, 16 August 2014

CIPS warning of a pending supply chain crisis points to a bigger concern

I nearly fell of my seat when I read in the latest issue of Supply Management that CIPS CEO warned of a potential supply chain crisis based on a CIPS survey which "found around 80% of supply chain professionals in the UK cannot guarantee there is no malpractice in their supply chain".

Was this a typographical error, a badly constructed survey or misreporting?

Just pause for a moment, does this mean that CIPS, and the 20% of the 'senior business decision makers and supply chain professionals' who responded to the survey actually believe they can guarantee there is no malpractice in their supply chains?  If that's what they are saying then their understanding of risk in supply chains appears to be flawed - they are either delusional, lying or fooling themselves.

CIPS' concern shouldn't be with the 80% who acknowledge the risk but the 20% who don't!

If someone came to me and said they could provide such a guarantee I think I may pose the following questions:
  1. How do you define malpractice in supply chains?
  2. How could anyone possibly know there is no malpractice in their supply chain?
  3. How can you give such a guarantee?
  4. Would you stake your job on that?
  5. Are you responsible for supply chain risk management?
  6. Could I see the risk register as I think there may be a need for concern?
When CIPS' CEO warned "that British businesses could be "sleepwalking into another supply chain crisis"", I think he linked that with those who couldn't guarantee no malpractice - conversely, I would caution that the crisis is more likely in the organisations which think they can guarantee there is no malpractice.

Friday, 15 August 2014

CIPS Global Standard for Procurement & Supply gets the thumbs up.

CIPS have firmly positioned themselves in the world of 'Procurement' as opposed to 'Purchasing' with the release of the Global Standard for Procurement & Supply.

Some may argue that it is a bit revisionist to describe this as "the first of its kind" -  I could cite other antecedents, even endorsed by CIPS. Yet, setting that aside, this is a useful resource and credit is due to those who have created, what appears to be a very thorough piece of work.

Sadly though it does little to support the claim that commissioning is synonumous with procurement. Regular readers will know I disagree with that argument anyway. But how do public sector procurers, with social care being a critical spend item relate to the Standard?

I was also surprised, given the rise in Vendor Management Offices in the private sector, that the associated roles, and even the term Vendor Management, weren't included or specifically named within the framework - I think CIPS missed an opportunity there. Yes, I recognise the similarities with Contract Managers but aren't Vendor Relationship Managers slightly different?

Setting those issues aside, one of the great virtues of the Standard is that it can be viewed as objective. So if you first gain acceptance of the Standard, then you can have a more reasoned depersonalised discussion on matching the standards.

I recently had to complete an evaluation of some staff and their competencies, and then develop role descriptions for new posts - the Standard would have helped a lot and I recognise that I will draw on this in the future.  I can also see its role in completion of Training Needs Analysis.

On balance, the Standard gets a 'thumbs up' from me and a thanks to all those involved in its development.

Tuesday, 12 August 2014

Can the Major Projects Authority deliver?

The Financial Times reported this week that John Manzoni, head of the UK Major Projects Authority,  has now lost critical expertise due to outsourcing and now lags "five to eight years behind business". He also implies an absence of execution and delivery skills - that's not a big surprise as I have frequently discussed the gap between policy and implementation. A related article then talks about the scarcity of skills in Whitehall to deliver big programmes.

Let's be honest, the average man or woman in the street could have said that.

But the average man and woman in the street wouldn't be in a position to understand that there have already been many, many, many years investment in MSP and PRINCE2 training over the years. There have been no shortage of methodologies and training opportunities, either - reflect on the former Civil Service College prospectus.

While I support the notion of the Major Projects Authority, my prediction is that it will just join the plethora of other good but failed ideas.  Sadly, it too, will in all probability, fail in delivering the desired outcome. Why? Well quite simply, we don't need school lessons on why projects fail. We need  a breed of managers who are brave enough to say to politicians: "No - this isn't the best approach", "We're not ready yet",  "We haven't sufficient resources", etc..

The problem is that those good writing and negotiating policy are politicans echoing what Politicians want to hear - they are diplomats as opposed to change managers. Perhaps they see implementation as 'lower down the food chain". Rewards, in the form of promotions aren't for delivery, they are for political nous not the bravery to speak truth.

Can the Major Projects Authority itself deliver? I don't think you can change the DNA of those who have been groomed in risk aversion. Nevertheless, let's revisit this blog in five years time and see if I am wrong.

Tuesday, 5 August 2014

Ecclestone issues for procurement bribery

"Broadly, the [Uk's Bribery] Act defines bribery as giving or receiving a financial or other advantage in connection with the "improper performance" of a position of trust, or a function that is expected to be performed impartially or in good faith."

Given that definition it seems somewhat ironic that the German courts have accepted a payment of $100m to end the Bernie Ecclestone bribery trail!  That means no decision was reached on the allegations and Ecclestone is considered neither guilty nor innocent.  It is the ultimate 'Get out of jail' card with a potential ten years imprisonment wiped off the slate. Of course, in the eyes of UK law he is obviously innocent as not proven guilty.

While $100m seems like a gigantic amount of money, when that is set against Eccleston's estimated wealth of  $4.2bn, it is a mere drop in the ocean, but a gross waste of money if he would have been proved innocent. 

What interests me though is whether this creates a precedent for future bribery trials? Would a proportionate amount be acceptable to 'close' the case in a procurement bribery case? Would it be worth corrupt firms setting aside such monies rather than going through the courts and being 'blacklisted' from future contracts? Would the precedent apply to individuals facing allegations of bribery? 

Friday, 1 August 2014

Strategic procurement programmes: Before and after

We're all familiar with the 'before and after' images which so often paint a picture that suggests 'after' is more attractive than 'before'. If only that were the case with strategic procurements.

After years of 'before' trumpeting the anticiapted aspirational success of the NHS National Programme for IT, a programme which appeared to be the offspring of political egotism, the first signs of faltering, and the cosmetics of a name change, now politicians want answers:

"There has to be a reckoning. We have to know how much money has been squandered and what could have been done instead."
"If the people letting the contract have made a catastrophic, gargantuan mistake then there is an opportunity cost. It is the taxpayer who has to fork out money for what should have been spent n services they need."
To me the NPfIT was clear who was leading and the governance structure to be used. But back in 2011 I asked what happened to the application of Gateway Reviews on the Programme. Of course MPs received NAO reports on the Programme's progress too - they were not ignorant of the risks.

So when the Public Accounts Committee and the Public Administration Select Committee sit down looking for answers, I hope they start by considering their own role in oversight - didn't they have a responsibility to the electorate? They could ask about political pressure that that was exerted and if civil servants 'pushed back'? They could then ask about who was getting paid for Programme leadership, where, when and why it went wrong? Then they could get the detailed findings of the Gateway Reviews? Then look at the risk register, how it was reviewed and when and what actions were taken? Then they could look at similar debacles, of which there are many, forget the political rhetoric and posturing? Finally they must ensure an environment exists which ensures there are very real penalties in place for those who should have blown the whistle on this and similar programmes yet didn't - did they lack the knowledge or the spine?

Unfortunately the 'after' looks fairly ugly for this Programme but perhaps the Beast could spawn some Beauty's for the future.

Wednesday, 30 July 2014

Royalty vulnerable to procurement fraud, bribery and corruption

One of my enduring memories of The Tutors TV series was the gruesome tortures meted out for any form of causing Henry VIII displeasure - a quite literally had to turn my head away from the screen on occasions. In medieval times I suspect the mere thought of the potential punishment and extraction of evidence was an effective deterrent to procurement fraud, bribery or corruption.

Today's Monarchy do not lead in such a culture of fear but news of a palace official facing £100,000 bribery trail demonstrates that even some of the most security conscience 'firms' can be vulnerable to procurement fraud, bribery and corruption.

The allegations are that building ,heating and energy contracts for royal palaces were awarded as a result of bribes. The bribes didn't were not just cash but work done at employees homes 'free of charge'. Needless to say the work, is alleged, to have been completed at inflated rates, some of which subsequently channeled to the defendants.

This case demonstrates no-one is invulnerable to procurement fraud, bribery and corruption. You can read more about your vulnerability here.

Tuesday, 29 July 2014

Releasing procurement shackles worries for Labour

It surprises me how rarely we actually hear how procurement
will shape the next UK election manifestos. Yet today Sky News, The Financial Times,  and The Times all gave notice that Andy Burnham, the shadow health secretary, will demand an immediate freeze on new contracts between the NHS and the private sector.  The logic of the argument appears to be that Labour do not want to be shackled by 5 year contracts let under the coalition, should Labour come into government next year. If that's a prelude to the manefestos I dread to think how robust the forthcoming policies will be.

However, is Andy Burnham's call sensible? 
  1. Burnham needs to provide clarity on which contracts should be ring-fenced for freezing. You clearly can't stop NHS contracting completely if you want to make sure the Service functions under a business as usual for users during a future change in political leadership, anyway it would be bonkers to suggest the NHS shouldn't have IT licences, for example, in place. 
  2. The NHS contracts register should be shared with Labour, and the other Parties, so that they can have visibility of which contracts are coming up for review over the coming year. The parties could then policy access those contracts for impact and agree which can proceed As-Is.
  3. Potential contracts which could be impacted by future policy can then reviewed in more detail with Politcial Advisors to ensure their interests are protected, for example, break clauses could be included and means for sharing the cost of uncertainty to providers estimated.
It strikes me that Andy Burnham couldn't possibly be calling for a blanket ban on the award of contracts but perhaps those in the NHS and his advisors need to provide clarity how to protect his interests while avoiding NHS meltdown. Pragmatism is required as opposed to rhetoric. 

Tuesday, 22 July 2014

is procurement a better route to peace than sanctions

Like so many I am appauled by the deaths of those on flight MH17 who just happened to be
passengers in a plane, in the wrong place at the wrong time - it would be difficult to see any justification for this slaughter of innocents.

Yet the West's response is based on a single tool philosophy, namely, apply sanuctions on Russia, even in the absence of robust evidence that Russia is directly responsible. There appears to be absolutely no evidence that sanctions against Russia work and to a certain extent the West could be both 'cutting of its nose to spite its face' or perhaps in the longer term demonstrating a lack of ability to make any meaningful impact on Russia. Is the objective to penalise or prevent perceived bad state behaviour in the future?

It is also clear that sanctions could backfire and perhaps inflict pain on the 'sanctionor' just as much, if not more, than on the 'sanctionee'.  Perhaps it is therefore time to consider other alternatives.

For centuries the tool of trying to bring about world security and avoid conflict was marriages between the Royals of potential enemy states. The days when that strategy was effective have long gone. I wonder if an alternative would be, rather than impose sanctions, to develop stronger procurement interdependence between states, for example, contracts which create greater reliance on 'buy' from other inter-dependent states who have competitive advantage rather than 'make' within a protectionist independent strategy. Surely in such a strategy state inter-dependence would increase the stakes of conflict, and the greater the inter-dependence on strategic contracts, the higher the stakes. Such a radical idealist approach to the aspiration of 'world peace' would shift from reducing inter-regional trade barriers, like those the the EU to reducing barriers across separate economic trade regions, for example between Russia and the EU, and the EU and Latin American countries.

As I watch the daily news I feel as if we are sitting on the edge of a precipice with potential lethal alliances appearing all over the world. Sanctions have had little impact on so many of the major areas of conflict and are unlikely to have a major impact in the future. We need to consider alternatives beyond the existing toolbox, perhaps procurement and contractual inter-dependence is a tool worth considering.  

Monday, 21 July 2014

Public sector food procurement target - smoke and mirrors or easy win?

David Cameron must be quite excited announcing tha public sector canteens will now be ordered to buy British. And I'm sure the author of The Plan for Public Procurement, Peter Bonfield, is also quite excited. After all the public sector is a major buyer of food and, as we know from the horse meat scandal, wasn't that diligent about ensuring sources.

But hold on a second, we've been here before - wasn't there the Public Sector Food Procurement Initiative launched in 2003 which set out in a report some great achievements? Was that evaluation telling fibs?

So, is the Plan for Public Procurement just recycling policy? Is it a challenge to the public sector that the previous Initiative wasn't embedded? Was the previous Initiative sacrificed during the spending cuts? Have the targets already been achieved? What will be different?

As Cameron and Bonfield annouce the 'new' perhaps they should shed some light on the 'old'.

Tuesday, 15 July 2014

Talking rubbish

I've just returned from a great holiday but whether for good or bad had no internet, therefore no news and no blogs. Hopefully I will be able to share with you some of my holiday observations though over the coming weeks.

Today's news in The Times that 'Councils waste £200m on rubbish bins of all colours' naturally caught my eye. The headline was supposedly based on a report 'Wasted Opportunities' by the Circular Economy Task Force. Too bad the report doesn't provide the evidence to back such a claim up.

But The Times write-up also quotes one of the Report authors, Dustin Benton, who said that "analysis of 40 councils' policies on procuring wheelie bins showed that only two had co-operated on purchasing".  Surely the assumption that councils waste £200m is not based on such a small sample, or was it based on muliplying a potential saving in one council by the number of councils in the UK - sadly we aren't told.

It is also surprising that Dustin (Bin) expected find the answers as to how councils procure wheelie bins through a review of policies on wheelie bin procurement - I have never seen such a policy but have seen the evidence of many councils making use of consortium buying for bins. Why didn't the author ask the question of the local government consortia: "how many councils buy their wheelie bins through your arrangements?"

So yet again council procurement is presented as incompetent - shame that more reliable evidence or a defence wasn't presented.

Saturday, 21 June 2014

Plot gets thicker on police procurement

On Tuesday I discussed potential procurement corruption in the award of a contract for vehicles with the Police Service of Northern Ireland.  Now it looks as though the investigation has been extended to another contract and spread and led to the suspension of West Yorkshire"s Chief Constable

Those leading the investigation need to recognise that the reputation of the police in the UK is at the present quite low. They also need to avoid falling into the trap of not being seen to be doing the right thing or providing an easy exit for those implicated.

However, if it is subsequently established that there has been procurement bribery, fraud and corruption, it will be most unlikely that it will be isolated to just vehicle contracts.  The investigation will need to review:

  1. The procurement governance structure;
  2. Which other areas of spend the culprits have been involved with and how vulnerable those areas were to abuse;
  3. Which other public sector organisations have been supplied by the supplier/s involved - it is unlikely that the supplier only found one area of vulnerability;
  4. Consider the history of dealing with the supplier/s involved and how long the abuse has been going on;
  5. Which other police forces, and indeed public sector organisations, may have been following the same 'failed' preventative systems;
  6. etc..
There also needs to be a due diligence of the procurement processes to establish vulnerability to procurement fraud, bribery and corruption. The Bribery Act requires organisations to put in place processes to prevent bribery anyway.

But if it is subsequently proved that contracts have been wrongly awarded as a result of corruption other relevant issues may arise. For example, 
  1. Assuming the contracts were awarded through the Public Contracts Regulations, surely there must have been a breach of those laws?
  2. What about the suppliers who would have been awarded the contracts had there not been corruption? Would those potential suppliers not be entitled to compensation for loss of profits? That would open a major can of worms as all those award evaluations would potentially be exposed to scrutiny and who knows how robust they would have been.
What will the next instalment be?