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!