Grenfell Tower: Could procurement help reduce the current risk?

Few could fail to be affected by the tragic disaster of Grenfell Tower. Understandably there has been a clamour for a quick response to reduce the risk of a repeat, but I wonder if the potential use of procurement as a speedy risk mitigator is being overlooked.

Attention is being given to having the cladding on something like 600 tower blocks tested and fire inspections carried out.  While that will provide some comfort and be politically expedient it there may be faster ways in providing reassurances to those potentially at risk.

Let's face it for cladding to have been installed there needed to be a specification, a contractor and a completion. Would it not be possible to use make use of that trio for providing a quicker response:

1. Each landlord checks the specification for cladding to see if, with the benefit of hindsight, it satisfies today's safety requirement; (If landlords don't have the capability then perhaps some central support could be provided to QA the specification);
2. If the specification is considered 'fit for today's needs' we then ask the contractor for a written undertaking as to whether they fitted the specified cladding. Failure to give that undertaking could be place the contractor on a 'naming and shaming list' and potentially be taken into consideration in the award of future contracts. Health & Safety legislation and Contract Law could be used to address those who feel short in delivering the specification;
3. If the specification is no longer acceptable then at least we have a short list to progress for further prioritisation;
4. Where the specification is appropriate and the contractor provides an undertaking that they complied, then you can provide some reassurance to residents and move those site visits further down the queue;

If I am correct, this strategy could provide reassurance in hours rather that weeks. Document analysis and quality assurance is at its core rather than the much slower inspection and testing. Is what I propose over-simplistic or have I missed something?

I'm not suggesting there will not be a need for a comprehensive response of testing, inspections, and review of Building Regulations, but that can happen against a background of the proposed prioritisation

Of course, the finger may well be pointed at construction procurement anyway, for example, poor specifying, poor contract supervision and management are obvious potential vulnerabilities, as will be allegations of fraud and corruption!

Pirates of the Specification

Buying ships shouldn't be such a big deal if you've a legacy of being one of the great naval nations of the world; you'd have had experience of buying ships to cope with the ice of the Antarctic and the dealing with the Pirates of the Caribbean. Therefore, for many it will have come as a surprise that £1bn of warships are breaking down in the Gulf since the water is too warm, leaving crews vulnerable!!!

The contractors claim the MOD didn't tell them about that particular potential usage, even though the UK has been engaged in flighting there since 1990, if I am correct, and in truth we could go back centuries. Have the MOD locked themselves into a strategy which requires a portfolio of ships which can only be used in restricted climates?  If that was the case, the old news stories of warships being redeployed from various parts of the globe to potential conflict areas will be no more, for the simple reason they wouldn't work.

Setting that aside, now it looks as if a refit of these particular Destroyers will be necessary.  

I assume the courts will have to decide who picks up the cost but already it looks as though the contractor is trying to escape liability by resorting to the technical specification set out by the MOD - in other words Rolls Royce complied with the letter of the specification so it's not their fault: 

Are the conditions experienced in the Gulf in line with that specification? No, they’re not. So the equipment is having to operate in far more arduous conditions than were initially required (Tomas Leahy of Rolls Royce).

I assume we will hear eventually if the MOD used a solely technical specification, but this must serve as a warning to all those who do that using a solely technical specification shifts the burden of functionality to the buyer. To me there will always be a basic need for technical specifications but they need to be accompanied with functional and performance specifications; and when a service is involved, outcome specifications.  It certainly looks, at face value, as if the MOD set aside the functional and performance aspects, and, if that is the case, why?

But there's another question here, what about all the talk of supplier partnerships and innovation transfer - was that a one-way street from the MOD to the market without reciprocation? The relationship between the MOD and its strategic partners now looks as if it has suffered a major set-back and will take some time to recover.

To me there is one lesson for all procurement professionals here: never resort solely to a tec spec.

Another misreading of relative power in buyer/supplier negotiations

Once more we learn of what looks like another misreading of relative power in buyer/supplier relationships; this time M&S.

There's no need to retell the whole story which was published in today's Sunday Times, but it appears M&S, by pursing a responsible sourcing strategy, reduced its potential supply base and therefore ease of switching suppliers. Then, in response to the weakening exchange rate following the Brexit vote, refused to work with suppliers in addressing their cost increases, but instead said they were going to consolidate the supply base, therefore exerting power over suppliers yet reducing suppliers long-term 'skin in the game'. Then, facing potential loss of supplies (relative supplier power) have now had to backtrack on their earlier assertion and accept supplier price rises.

Not only has M&S lost face in this foray they have needlessly sacrificed supplier goodwill and trust, and quite possibly lost credibility in their narrow interpretation of responsible sourcing.

I do not understand why procurement strategists appear to spend insufficient time thinking through potential scenarios and likely supplier responses; they would benefit a lot from game theory by considering "how might our suppliers respond". M&S don't seem to have thought through potential outcomes prior to pursuing any of the above approaches.  'Power' appears to be viewed solely as one-way and risks dismissed.

As we start 2017 I doubt this will be the only example of misreading power in buyer/supplier relationships - why is that; why are we so poor at learning lessons for others?

Gove turns his guns on procurement and programme management

One time thought to be a contender to become PM, former Secretary of State for Education, and Secretary of State for Justice has set his sights on public sector procurement and programme management professionals today, in a Comment piece in the Times. I will watch with interest the Letters section to see if CIPS reply.

Gove does a fine job of cataloguing procurement and programme management disasters. Indeed, many of the cases he cites are those I have blogged about in the past and/or used as case studies when training.  I will spare you an echoing of the cases; the average man or women on the street is familiar with many of them anyway.

While it is interesting that Gove has put pen to paper on a subject dear to many of us, what is particularly interesting is who he considers to blame - the 'Sir Humphrey's but not the Ministers.

Gove calls for a shift to weekly reporting on progress to Parliament of procurements and programmes. Would there be enough Parliamentary time and, if there was the time, would we see any interest from MPs?

Controversially he also wants to

see the names of civil servants responsible for these programmes to be published, their explanations for failure (or success) recorded and those who've failed be removed while those who can demonstrate clear, measurable, success get promoted. I know this concept- let's call it accountability - may be somewhat revolutionary for our civil service.

This is an interesting notion but isn't Gove missing the point about why we have Ministers in charge of government departments?  It is the democratically elected politicians who have to call those in their own departments to account.  It is the democratically elected politicians who have to rein in the pursuit of unrealistic political timescales.  It is the democratically elected politicians who have to develop the skills to scrutinise and manage professionals to ensure that they deliver on their objectives. Yes, perhaps civil servants need to use a louder voice in explaining to politicians the risks of pursuing some projects. But you can't just point the finger at the civil servants without recognising a failure of political performance management.

Also worrying is the implication that civil servants are being influenced by lobby groups. Can he really believe that, and if he does, why doesn't he blow the whistle on what really amounts to corruption.

This, one time, very influential political may well have lost a lot of his power, but should he ever regain it, CIPS will have a major problem if they don't educate the former Secretary of Education now.

  

Thoughts on Leadership - politics, football and procurement

The UK appears to be in meltdown. The Prime Minister has resigned primarily as a result of not being able to bring the UK, as a whole, with him on the Referendum. Now the Conservative Party are engaged in their own nomination process for a leader, to not only replace Cameron, but also to lead negotiations which will bring about an exit (perhaps) from the EU and at the same time unify a very divided country.

Meanwhile in the Brexit fallout, the Labour Party Leader, Jeremy Corbyn, is at odds with his fellow MPs - his Shadow Cabinet have resigned en masse and he faces a vote of no-confidence today which is likely to force a Labour leadership election. Corbyn has stated his intention to be a contender in that election, and, it may well be that the Labour party electorate will return him in spite of the Parliamentary Party.

So between the Conservative and Labour party disarray we can expect a leadership vacuum for the foreseeable future.  

At times like these one may have hoped for some sort of solace in the European Football Championships.  Anyone watching English fans leave the stadium last night, the forlorn look of the players at the end of the match and listening to the dissection of the game by the commentators would be forgiven for thinking how can it get worse.  The team manager Roy Hodgson promptly resigned. I wouldn't know if Roy Hodgson had been a good leader or not - it seems hard to question his credentials in reaching the pinnacle of his profession.

The last week clearly has lessons to be learnt on leadership. But then again I had previously discussed some lessons on procurement leadership resulting from the Harmeston (ex-Coop CPO) case.

One thought in my mind is that leaders do not always have to win to be viewed as successful. Take, for example, the experience of both Northern Ireland and the Republic of Ireland football teams in the Euros, both of whom exited the Euros at the same stage as England. Yet, Northern Ireland and Republic of Ireland fans are in triumphant mood, proud of their achievements. There's is a celebration of leadership. Those leaders instilled a belief of what 'could be' achieved as a opposed to 'would be' - they didn't over promise, exaggerate or understate the scale of the task ahead. Yet they brought people with them - it strikes me that today's leaders, whether in politics, football, or procurement success can only be measured by their ability to win the confidence of those being led and trust that they can deliver the vision.

Lessons for procurement change from the Common Agricultural Policy Delivery Programme

The Public Accounts Committee has just released its report on The Common Agriculture Policy Delivery Programme which could be the basis of an episode of 'The Thick of It' on change management. Indeed The Times uses the wonderful headline: "Civil servants' row with Mr Fancy Pants costs millions".

The report is short so you can quickly read it but some salient points are:

1. If you want a programme to be delivered successfully you need clarity, consistency and ownership of vision. Those supposedly driving this programme had competing objectives which hampered progress.
2. Make sure those bringing about the change and the leadership of the organisation to be changed can work together. 
3. Make sure the organisation is ready for the change. It appears the department concerned were neither ready nor adequately supported in the change.
4. Make sure the approach is pragmatic. A digital solution was being pursued even though the users lacked the skills and even the required broadband coverage.
5. Sometimes you need to go native. In this case the mistake was as basic as the change agent turning up in a very formalised setting dressed as if they could have been going to a beach party - the old saying 'clothes maketh the man' may sound trite but sometimes an unnecessary explicit culture clash can be perceived as arrogance and work against success.   

Let's remember that the failure in delivery cost money, £60m.

Are there any lessons for those seeking to bring about procurement change/improvement, yes, don't make the same mistakes!

What can we learn from Deloitte's procurement leaders?

Deloitte have now published their 2016 Global CPO survey
which is worth a read and perhaps even using as a benchmark. Remember it isn't a state of the world but based on the views of an abnormal sample of 324 procurement leaders. Nevertheless some key findings jump out at me:

• Cost reduction remains a key business strategy for the next 12 months for 74% of the respondents. I do not think it is fair to assume that the other 26% do not see cost reduction as a strategy, but perhaps the question was misunderstood and answered from the perspective of primary objective?
• 62% of 'procurement leaders' believe of their team do not have the skills to deliver the procurement strategy. While we all know there is an overall skills deficit, what concerns me here is why CPOs would be producing a strategy which they don't have confidence can be delivered - a good CPO will recognise the constraints of people and produce a strategy shaped by those limitations. Of course a good procurement strategy will address skills development too. (As an aside I expect to pick up on the issue of producing a unachievable procurement strategy in a future post so keep watching)!
• 40% have a clear digital procurement strategy addressing cognitive analytics, crowdsourcing and digital reporting - aka 60% don;y have a strategy! 40% appears to be surprisingly high to me and when I consider only 16% are engaging through the use of social media and 42% with mobile technologies, I suspect there is a misunderstanding of what a digital procurement strategy should comprise (see my white paper). 
• Given the recent procurement disasters the suggestion that only 25% are 'fully involved in the management of risk' is not only disappointing but a bit scary, remember the respondents are 'leaders"!
• While I frequently hear claims of high procurement influence over spend, the report appears to contradict that, for example, only 66% involved in make/buy decisions. Now if you are a procurement leader and 34% of make/buy decisions are passing you buy - big spend decisions - while I think you may well be honest, how on earth do so many of the 'procurement pack' claim they've influence over ≥ 70% spend?

Sadly, the report didn't pick up on many of the indicators of leading practice I discussed before, but my big lesson is, there remains plenty of opportunity for procurement to improve procurement contribution but first we need to be honest about where we are at the present.

Grossly excessive fees?

There was a fascinating story in yesterday's Times  and Mail online on a leading surgeon being referred to the General Medical Council for charging "grossly excessive fees". £12m was charged to a member of the Brunei royal family for breast cancer treatment.

If the report is correct, it begs a number of questions:

1. Do the GMC have policies on fees?
2. What constitutes "grossly excessive"?
3. Is there a difference between "grossly excessive" and "excessive" fees?
4. What constitutes fair and reasonable fees?
5. Would the view be different depending on whether or not the treatment was effective?
6. Does the relative value to the recipient have a bearing on the view?
7. Did the recipient have the option of an alternative provider?
8. Is there ever a situation where the surgeon is paid by results?
9. What's the GMC's view on fees charged to private patients in the UK by comparison to those a surgeon is paid by the NHS for like-for-like treatments?
10. Should the principle of accountability and unacceptability of charging "grossly excessive" fees be applied to other professions?

Marketing Procurement as a service - the issues

I hear and read a reasonable amount about the need to transfer Marketing principles over to Marketing the Procurement function as part of Procurement's transformation and repositioning.  Procurement Branding is all very well but a Brand is more than a streamline or logo, it's about the mental image conjured up in the potential customers head and that is often shaped by a perceived bad past experience.

It often strikes me that we tend to forget that Procurement is not a product but a service, and that brings with it unique problems. In Marketing the Procurement function needs to be aware of some of those problems if we are to effectively overcome them. Having said that, at some stage in the future I may discuss the Procurement Product Offerings, however, what are the problems:

1. The Procurement service is inseparable from the person receiving the service, viz, the internal customer of Procurement. You cannot separate the service user from its delivery/provision - their involvement is central. For example, let's say they can't help in shaping the specification or evaluation criteria, then how can you be sure it will fit there quality needs? Let's say they refuse to use you nicely negotiated framework arrangement, it really won't serve its purpose. Let's say they just don't want to take your advice, then regardless how good that advice is, it has little value in that particular procurement;
2. The Procurement service is heterogeneous, the person who delivers the Procurement 'Product' is a factor in the quality of the outcome. Let's say the Procurement Advisor gives poor quality advice, then the procurement is compromised - quality control is difficult because it depends on the quality of the procurement person and what's more it depends on how they are on the day. Let's say, the Procurement Advisor is caught up in dealing with a willingness to help an internal client, how can you be sure, in their enthusiasm to be helpful, they don't stray beyond their area of expertise and give an inappropriate answer? Let's say the person is just having an 'off day' then they may not give their best; 
3. The Procurement service is perishable - while the internal customer may be able to make use of FAQs on an intranet, they can't keep you in a drawer and only pull you out when required. Let's say you answer a query from an internal customer over the phone  - the minute the call is over you're vulnerable to whether the advice is misinterpreted or even forgotten. But let's say you were advising based on certain constraints unknown to the user, and the advise provided is wrongly applied by the user to a different environment. Really, once the service is consumed, it can't be reused as the same repeatedly. Equally, really good professional service could be quickly forgotten as a result of some minor bad experience or perceived bad experince;
4. The Procurement service is intangible - you can't place it on a shelf and say "look what I got from Procurement, would you like one for your Birthday?" . 

Of course we can devise strategies which might overcome these problems, for example, ensuring appropriately qualified staff, placing letters before and after our names, certificates on walls, etc. but if we want to really address Marketing Procurement a good place to start is understanding some of the issues.

Fifa's "Unfavourable" contract should be a warning for all Board members

I'm sure many of you heard the news this morning of the latest PR disaster to befall FIFA, namely, that its President signed a contract "unfavourable to Fifa" and in doing so "violated his fiduciary duties and acted against the interest of Fifa...".

I have to admit this is the first time I have heard such a phrase used so I'l have to watch as the story unfolds to learn more.

I assume a contract can be unfavourable to an organisation under the following circumstances:

• Contracting for something which is not required;
• Contracting on contractual terms which place more power than is necessary with the supplier;
• Contracting on commercial terms which do not represent value for money;
• Contracting for a longer term than makes commercial sense.

However, the news reminded me of one of my early jobs which included the signing and sealing of contracts - way back in 1974 when I was a mere 17 year old.

Let me first tell you about 'the Seal'. The was stored in a strongroom. The key for the strongroom was kept in a safe. That key was used to open the main strongroom door - which was really heavy to move. Then a separate key was used to get through the next door which looked like prison bars. Then  a further two keys were used to unlock what looked like an enormous vice. Only then could you seal the contracts by placing each of the signed contracts in the gap between the vice and closing the vice - the contract then had the imprint of the seal embedded on it.

However, prior to sealing the contract, I first had to get the contract signed by the Town Clerk. I'd make an appointment, fold and mark each of the contracts so that the place for signature was clear and then place each of the contracts before the Town Clerk while he signed, in all probability multi-tasking by drinking a cup of coffee or reading other papers. Success, for me, was minimising the amount of time spent by the Town Clerk signing the contracts.

The contract signed by the Town Clerk then had to have the Lord Mayor's signature too.  Once again an appointment was made, I sat with the Lord Mayor and we made small talk as I placed each contract before him for signature. The objective: get in, get the contracts signed, and out as quickly as possible!

That's a lot of formality for a reason (and from memory the threshold at which contracts had to be sealed was as low as £15,000) but yet there was virtually no scrutiny. The contracts were signed by both the Town Clerk and Lord Mayor without their reading on the assumption that those in the Town Solicitor's Office and Purchasing had spent time making sure everything was in order prior to signature.

I wonder will Sepp Blatter use a similar argument as his defence, that he was merely completing a formality on the assumption that the due diligence was completed by others as part of their 'day job'?

But let's remember that those who 'sign on the line' do so for a reason, only they have the authority to commit the organisation to contracts. They are representing those who placed them in power and gave them the authority to commit on their behalf. Whether or not Sepp Blatter manages to exhibit the skills of Houdini is secondary, the allegation that he signed an unfavourable contract should serve as a reminder to all those Board Members who sign contracts of the need to protect themselves, if not their organisations.

eWorld30 Procurement & Supply: Celebration or a cause for concern?

Today it was Happy Birthday to eWorld Procurement & Supply - the free to attend conference. Always worth attending in these days when so little is allocated to training budgets.  Anyway, here's my selected view of the day which overall represents a good day.

Way back in 2006 I delivered a presentation on 'Selling Procurement Internally'.  I was amazed to hear the Keynote address from the Hackett Group's, Chris Sawchuk, still found it appropriate to deliver similar messages - okay, my presentation was to a public sector group but is it really okay for the profession to still struggle gaining internal ownership? That should be a cause for concern!

I then attended an excellent presentation from Simon Dadswell of Proactis. Now some headline statistics were revealed which are also a cause for concern:

• Only 28% of organisations are using Contract Management eProcurement solutions;
• 13% of organisations are using supplier management procurement solutions;
• 51% have P2P;
• 61% feel constrained by Policy!

Do you not find that startling? How long have we known about the business justification for eProcurement solutions - is it less than 15 years? What's the obstacle?

You can make our own judgement on Sawchuk talking about the need to adopt internal marketing approaches and Dadswell's eProcurement implementation statistics. Some may find it a wake-up call, others may find it reassuring that they're in amongst the laggards, while others may just let it all pass them by.  I think we really need to say that by this 30th eWorld Procurement & Supply should be a line in the sand and that by this time next year there has to be a transformational improvement. If not what are the real benefits delivered through attending eWorld?

Don't consider me to have a negative view of eWorld. I did actually attend other more encouraging presentations. For example, Conor Mullaney from exceleratedS2P shared some excellent lessons learnt on the need for an integrated approach to S2P - I think his credentials shone and he presented a compelling case. In a nutshell, lot's of interfacing of solutions within Source-to-Contract and Purchase-to-Pay but the future requires more integration.

Sam De Silva seemed to have had too many quadruple espressos as he raced through Legal Matters. His content is always first class but perhaps he would benefit from trying to say less and making the audience feel as if they are in the Dock. I noticed many using mobile phones to take pics of his slides. This is a man who certainly knows his subject and his enthusasim shines like the Pharos of Alexandria.

Finally I attended a double session workshop led by Lisa Malone of Procurious on '5 ways procurement should start to use social media'. I detected a lot of honesty among the attendees and an enthusiasm for moving forward - I even witnessed one delegate signing up to Twitter during the workshop. Digital Procurement Strategy, I think, will deliver a paradigm shift in procurement - hopefully eWorld will ensure that eWorld31 helps accelerate that shift and that Procurious continue their leadership.

3 simple lessons when relying on reports

The Kids Co demise has been well documented and some of the lessons for procurement have already been drawn out by Peter Smith, for example, the need for contract management and sufficient reserves. However, today we have learnt that two separate  'independent' reports were cited as evidence of the good work of Kids Co which we can also learn from.

The reports were cited by Kids Co and probably swayed some funders decision making. I would suggest that perhaps funders may well have been naive and that those who based decisions on 'evaluations' need to look much more deeply before being influenced.

The first question worth asking was 'who funded the report'? Well one of the reports was funded by Kids Co and the other appears to have had Kids Co covering the costs. It's not unreasonable to see the potential conflict of interests.

Next, 'what was the purpose of the report'? Neither of these reports appear to have been outcome evaluation reports or indeed value for money reports. One was written by a Professor and leading psychologist who benefited from studying "the language of love". The second focused on the children who used the services of Kids Co.  The reports may well have been fit for purpose but that purpose was not one of commercial due diligence.

Thirdly, 'what was the approach to ensuring rigour'? I could be wrong, but neither of these reports seem to have been subjected to peer review which would have considered the research approach, reliability and validity.

Those three simple tests may have shone the spotlight on the weaknesses of relying on the reports. While it is easy to see the weaknesses we also need to reflect on those same points within a procurement environment, for example, when commissioning reports, when drawing on reports as part of a bid evaluation process, when taking the advice of 'independent' experts particularly in preparation of specifications. Caveat emptor as they say.

First procurement themed issue of Public Money and Management

The latest issue of Public Money and Management has just been published on line with the hard copy due mid February - it is a procurement themed issue. Not only is it the first in the history of the Journal but it is truly international with contributions from The UK, The Netherlands, Brazil, Ireland and Australia.

There are some really useful articles in the issue which provide surprising findings from previously unpublished research. If you would like to read a free copy of my editorial which provides insights into the articles covered - the first 50 can access a free copy at this link

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?

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.

"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.

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!

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?

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.

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.