Disruptive procurement - lessons from Azerbaijan election

I don't think I've never discussed Azerbaijan before and certainly never their Presidential election. Today justifies a change as there are lessons for procurement from the announcement of the re-election of Ilham Aliyev as President.

Firstly, we have the announcement of the results a day before the actual voting took place. Secondly, we had the allegation that fake candidates were included so as to confuse the electorate.

I'm sure you've had similar experiences to me: someone makes the grand statement that no one else can provide what they need or that no one else can beat that price. Effectively they've announced the result before the competition has even started - they've 'done an Azerbaijan! The funny thing is that whenever you disrupt their thinking, and introduce other potential providers, there seems to be a lack of loyalty to the earlier preference - does the specifier feel betrayed by the earlier preference? I think physiologists refer to that as cognitive dissonance. Regardless, to me, one of the key roles of CPOs is to get in and disrupt the 'foregone conclusion' - we need disruptive procurement.

Then we have the lesson of the fake candidates. Yes, we've all come across a list of potential alternative providers, some of whom haven't the capacity to take on the work, others don't have the capability and some are known to be significantly more expensive. This creates a veneer of going to the market when in reality it is nothing more than a sham - they've dome an Azerbaijan! Some years ago I introduced a system which enabled me to open the door to potential new suppliers by insisting that every time a new RFP was sought, a new supplier had also to be invited. The result was an opening of the market and better deals. To me that's another form of disruptive procurement.

Yesterday, I discuss the absence of challenge in business cases. That provides another example of where disruptive procurement could be effective. Had Procurement been involved earlier, 'disturbing the waters', so much reputational damage could have been avoided and money more effectively spent.

To be disruptive does not mean being aggressive. It requires winning 'hearts and minds' - it requires influencing skills not policeman skills. It also requires being involved right throughout the procurement cycle, from defining the problem which has to be solved.

Were a lack of controls the problem with e-Borders contract?

Two of the recurring themes I discuss are the need for a robust business case and external scrutiny. Yet, somehow I never cease to be surprised when another failure to address both comes along - today's report on e-Borders by the Independent Chief Inspector of Borders and Immigration provides the latest example.

As best I can understand it, there was a flaw in the business case failing to recognise the risks of incompatibility the EU rules. That meant the targets set for the contract with the IT supplier couldn't be met, and as a result of the supplier not being able to achieve the targets the contract was terminated. This was a £500m initiative how could they have got it so wrong? The Inspector has a lot more to say but that's sufficient for our purposes.

Too often it appears business cases are constructed to support 'a good idea' and lack robustness. Business cases have to be more cynical and adopt a more risk based approach. But those charged with constructing the business case are more often than not those who have a vested interest in the project going forward - it is not CV enhancing to say 'stop this madness now'. However, in the e-Borders example it looks as though the 'Home Office' failed to have an awareness of the external EU environment - how could that have happened?

One of the purposes of the Gateway Review process was to bring external scrutiny to projects through the eyes of  'critical friends'. The biggest failure of this initiative, too me, wasn't the failure to recognise the impact of the EU rules, but the failure of the external scrutiny to ask about the external environment and how those rules could impact on the proposals.

So, core lessons:

1. Be more cynical in the development of business cases - they should be more robust;
2. Assume that those producing the business case will benefit from external challenge and make sure that challenge is robust;
3. Recognise that business cases are about risk management.

So what's all this got to do with procurement? We a contract was entered into based on a flawed business case and that contract had to be terminated because the performance levels were unachievable. Had Procurement professional had a role in challenging the business case some of those weaknesses may have been averted. Had Procurement been able to challenge the performance standards being set for the contractor, more realistic standards may have been set and no doubt that would have been reflected in a lower contract price. Had Procurement involved the market in the discussions about the business case, the market may have highlighted the risk related to EU rules. If only ... the Inspector may have been praising a good procurement as opposed to the newspapers reporting a £500m waste of money. 

The Undercover Economist Strikes Back (Book review)

I'm a great far of Tim Hartford and his skill for making economics real and relevant to the man-in-the-street. I also thought Adapt, his previous book, was a 'must read'.

So I purchased this book as soon as it was published and looked forward to an excellent read. Unlike his other books this one is concerned with macroeconomics, something which I think virtually every foundation business studies course must cover in some way. Perhaps the book is targeted at that readership, and if that is the case, it is an excellent introductory text. It would also be ideal for anyone trying to get behind the jargon of current news stories.

However, the book just didn't work for me. It is comprehensive and Hartford, as usual, manages to demystify some big issues. But I found the style of writing irritating - it takes the form of an imaginary character conversing with Hartford and posing questions which he answers. That may appeal to some but I hope Hartford drops that approach.

'Adapt' was an excellent book and I could visualise myself reading it again. That's not an accolade I think 'The Undercover Economist Strikes Back' shares. Nevertheless, given Hartford's previous excellent track record as an author, I still expect to buy his next book.

PS I noticed that it's available as an airport edition at a significantly reduced price - so if you're travelling soon you could pick up lower price version on your travels.

Time to take a stand on UK slavery in supply chain management

This weeks cover story of the Sunday Times Magazine heaps more shame on retail supply chain management and the suggestion that UK supermarkets are best of bred. 

I've frequently discussed the issues of supply chain management and even advocated that we need 'undercover supply chain managers'. Horsemeat and pork of poor providence, foreign factories with unacceptable health and safety, and poor working conditions - we've discussed them all even though the Public Administration Select Committee were led to believe retail procurement is an exemplar.  

But there has to be something seriously wrong when the Sunday Times Magazine appears able to expose appalling supply chain behaviour of UK supermarkets. What we learn on pages 22-27 of the Magazine and also in the main paper is that some UK supermarkets pursuit of 'value' means slave workers, on 17-hour days, suffering beatings and sexual abuse, living in squalor, for £2.80 per day. That's a very perverse view of responsible procurement. A very perverse view of supply chain management. A very strange view of contract management. Yet these modern day slaves are not in some far flung outpost, they are working in the UK and part of the supply chains to us.

The Home Secretary plans to introduce an anti-slavery bill and Chris Byrant MP, the shadow immigration minister hopes to introduce a Transparency in Supply Chains bill. The Sunday Times has announced it is fronting a Britain's Secret Slaves campaign. The supermarkets can be expected to hold up their hands and tell us through a spate of full-page advertisements it will be address the issues after once again being exposed for poor supply chain management - but clearly the claims of learning the lessons of the past ring hollow now. 

Yet there is one voice which seems silent on these issues, CIPS. We love the glory which comes from the Purchasing Manager's Index being regularly being cited as an economic indicator - but where is CIPS actually taking a stand on retail supply chain management?  If CIPS don't take hold of this very quickly the whole profession risks being discredited.

Not taking note-taking seriously in procurement

I find the John McCririck case most bizarre - a man who appeared to take great satisfaction at being offensive, wondering why he may no longer be an acceptable payroll cost for Channel 4. Anyway that's not the point and has only marginal relevance to procurement. No, the interesting lesson is how Ms Jay Hunt, who was seeking to defend McCririck's sacking, has found herself criticised for note-taking, or should I say, not taking note-taking seriously.

Here's what the QC said to Hunt:

There are two possibilities. Either you are displaying breathtaking arrogance by thinking that you didn't have to have a written record of the decision regarding Mr McCririck, or you are seeking to provide reasons to this tribunal that were not before you at the time.

You could certainly recast that statement into many procurement decisions. Indeed, it was only a few weeks ago we discussed the Serious Fraud Office's inadequate minutes.

I personally find trying to take notes a terrible distraction from absorbing what is actually being said, so a minute taker is very useful. It is also important to make notes immediately after a meeting and ensure some sort of validation takes place. Clearly, in the McCririck case, Ms Hunt, didn't make adequate notes and the implication was that she was revising her account. It has the ring of those great statements by US officials, trying to emulate Houdini, uttering, "I have no recollection".

Some dosh, some dosh, my design for some dosh

In 1485 Richard III died in battle. His remains were recently found underneath a carpark and there's an argument still taking place as to where he should have his final, more fitting, resting place. This is the King linked to the conspiracy theory that he was responsible for the mysterious deaths of ‘The Princes in the Tower’ - the children of 'The White Queen' (remember the recent TV series). He was also a Shakespearian character. So it is perhaps fitting the the drama continues, but can procurement learn from this latest act?

The Richard III saga has now turned into a hostage crisis as a potential contributor to the cost of his burial now threatens to withdraw their offer of funding, if they don't get their way in the design of the tomb. Now Cathedrals can be accepted as knowing a bit about design (most medieval Cathedrals remain iconic today), so you'd have thought Rich's mates would have concluded: "let's just go with the flow". Not so.

The Richard III Society had offered to contribute £40,000 to the cost of the £1.3m tomb in Leicester Cathedral The Cathedral hadn't budgeted for the funding from the Society. So, to a certain extent, the Cathedral gang appear happy to say "keep your dosh".

This has wider implications for procurement strategy

Procurement needs to be concerned with planning permission risk

I have written before about the need to ensure that all relevant planning permissions are in place prior to signing a contract on which gaining planning approval is a dependency. Ironically we learn of yet another waste contract potentially wasting money as commercial agreements appear to have been signed prior to the appropriate planning conditions having been complied with.

So while the formalities of procurement seem to have rushed ahead, the dependent approval processes doesn't appear to have achieved the necessary signed-off. This failure in choreography could now prove costly and embarrassing. A judicial review will now establish what happens next but the key lesson, once again, is don't commit to commercial contracts unless you know you can progress to delivery. Contracts are expensive to exit prior to running their natural term. I am not remotely qualified to provide a legal opinion, but it does appear that those concerned should either have delayed signing, or alternatively included a 'get out of jail free' break clause which would have covered such an eventuality. Either of those routes may have helped but that assume someone would have completed a risk assessment and viewed those as risk mitigation - it looks unlikely that happened too.