Bovaird on 30 yrs of outsourcing & free access to this important paper.

It was with enthusiasm I approached this paper: Tony Bovaird has been someone I've know for quite a few years; the introduction of CCT was one of the key milestones in shaping my career as it elevated procurement to a strategic role, albeit with the objective of retaining contracts 'in-house'; and, the make/buy decision remains a big question I am faced with when discussing Target Operating Models.

Bovaird's paper can be expected to become a core reference paper but it should also be of interest to practitioners, public and private sector - particularly those in the NHS concerned with the debate on Agencies 'Ripping-Off' the NHS - who have to complete an options appraisal on which procurement approach is most appropriate.  Remember, an options appraisal, as Bovaird points out, is not a once and for all event but something which has to be regularly reviewed. 

Bovaird provides a review of the various strategic procurement options from the introduction of CCT (Compulsory Competitive Tendering) through partnership working, strategic commissioning, prime contracting, and then insourcing.  He clearly articulates the comparative benefits of the purchaser/provider split - the make/buy decision. He also highlights questions over the effectiveness of joint-commissioning although he does not expand that to discuss the role of consortia buying. 

One line which Bovaird uses is particularly worth wider reflection: " the age- old lesson that the search for certainty and tidiness in policy is likely to come at the expense of inappropriate decisions". At a time when there is frequent discussion on the role of procurement in innovation, we have to be prepared for managed risk which will in turn sometimes mean, with the benefit of hindsight, that wrong choices have been embarked upon - that's not a word of caution but instead a call for recognising that the appetite for innovation must be matched with a similar appetite to risk.

In concluding the paper we are presented with 10 lessons learnt from 30 years of outsourcing - if you feel you haven't time to read the paper why not take the time to read the lessons learnt.

Public Money & Mangement, in view of its potential impact have taken the unusual step of providing advance free access to Tony's paper which can be accessed here.

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.

Sourcing Portfolio Analysis: Book review

This is not bedside reading material though it is a book every procurement professional should read.

Set aside any preciousness you have for Krajlic, Porter's 5 Forces, and Category Management, be prepared to be challenged, and read this with an open mind. Here you have a hefty academic critique of existing ways of procurement thinking. It is a logical discussion which leads you to a better way.

I'm not sure how much rigour Kraljic put into setting out his model which is at the core of so many procurement strategies but Cox doesn't spare any punches in highlighting its weaknesses. To me, Kraljic works best as a simplistic approach to differential procurement management and is useful for engaging senior stakeholders. Procurement managers need to recognise that it is part of a toolkit as opposed to the only tool. I think Cox assumes that procurement professionals have actually taken the time to read and digest Kraljic's original paper - to me that is an unjustified assumption. So, for many, Cox's actual explanation of the Model may well be new. Disappointingly, at times Cox's critique looks very like 'cut and paste' and becomes a bit tedious - a little more focus on the narrative would have avoided what sometimes has the appearance of lazy writing.

Having said that, Cox appears 100% correct. He reiterates and expands on many of his previous discussions on Power and the need to recognise that an understanding of relative power is fundamental to effective procurement strategy - I agree with him. Sadly I rarely find practitioners demonstrating a thought process which considers power.  He sets out a matrix of strategies which flow from relative power positioning - this isn't the traditional 2x2 but 4x4 - that's a lot of positioning. I think I understand what Cox is saying but then ask myself how robust and objective the user's mapping can be anyway. Is it not true that although his method is robust and scientific, if the basic information which feeds it is lacking then there is no sound foundation.

I found the detailed setting out of his sourcing strategies exceptionally thorough and can't find any fault with what he says. Cox acknowledges the difficulties which practitioners face and sets out a good justification for pursuing his decision rules. Having said, that I would like to see some evidence that applying the approaches outlined deliver real tangible benefits beyond the existing rule of thumb approach used by many which is at the heart of his critique.

Where I really struggle is with the application of the detailed approach within a regulated public procurement environment. If I am correct, Cox is arguing that the relative power of all those the buying organisation considers to be 'the market' be established. Therefore multiple suppliers and the development of discrete strategies for each of them.  But within a regulated procurement, would that mean each of the potential bidders is subjected to relative power positioning, which then shapes the 'tender approach' within the competitive requirements of legislation? Perhaps, a way round that is better understanding of the relative power of the market per se, then developing an overall approach, then, for those who successfully navigate the competition, post-award discrete strategies tailored to the relative power? I could of course be wrong. Nevertheless, even if the detailed application isn't easily transferable to a public procurement environment, the need for understanding the relative power positioning is and managing suppliers conscious of that positioning and aspired to positioning is too.

Nevertheless, the book is a bit of a slog demanding a lot of thought but worthwhile. The book shouldn't sit on a shelf looking good but be used as a route map constantly referred to. I would like to see the paradigm shift which Cox calls for as the profession needs this sort of smart thinking.  Having said that, my experience is that many are still struggling with what to do after the completion of a spend analysis and Kraljic is only grasped at a high-level. We need the rigour of thinking which Cox applies and we need to apply his approach.  If power positioning and the associated strategies were applied I honestly believe better outcomes would be achieved and the profession would reach a new level.

While the book is remarkably cheap at £20 and certainly worth a buy, if you would prefer a taster have a look at Cox's white paper available at: http://www.iiaps.org/pdf/WP-PowerPositionSPA.pdf

NB I am grateful for receiving a complimentary copy of the book on which this review is based. 

CYOD - an opportunity for procurement

It comes as little surprise to me that one of the key strands of Digital Procurement Strategy, BYOD (Bring Your Own Device), has seen a loss in popularity and a shift to CYOD (Choose Your Own Device).

At a personal level, I never quite understood why anyone would expect me to buy my own device for work, and along with the loss of storage amongst others drawbacks, also find myself open to intrusions while on holiday, etc..  Of course on the plus side it meant reduced hardware having to be carried with me and avoiding some of the clunking kit which cost-focused employers seem to prefer.

CYOD appears to offer a reasonable compromise as it means employers will offer a range of options and employees will choose their preference.

Tip #3 of Lee Naik's CYOD post on LinkedIn however does give me cause for concern though:

Assemble the right team. Mobile projects should include members from IT, legal, HR, security operations and the business. 

No prizes for guessing why Tip #3 raises a 'red light' for me. What's going on that Naik's Mobile Projects Team excludes Procurement?  

To me there needs to be a policy encompassing CYOD and that needs to include constraints on the range of options, who is eligible, and approach to exception and alternatives. There needs to be a sourcing strategy. There needs to be a clear definition of the need. There needs to be a framework arrangement linked to a robust procurement process including the thorough commercial evaluation of the various offers. There needs to be a compliance and contract management approach supported by appropriate T&Cs. There also needs to be an exit strategy.

So it is disappointing that Naik didn't immediately think Procurement should have a 'seat at the table'. My suggestion is that if your organisation is developing a Mobile or Digital strategy, make sure your potential to add value is recognised at Day 1 otherwise it could be another opportunity missed.

Weathering the storm of justifying the need to buy at all

We are told the BBC are progressing through a tender process which means they will break their 93 year relationship with the Met Office since the Met Office haven't got through to the final stages. Already the advocates of a continuing BBC/Met relationship have started to cry this is bad value - the UK weather just can't be understood by 'foreign forecasters'!

It seems strange that critics of the likley procurement outcome refuse to recognise that if weather forecasting is a science, then suitably qualified forecasters, regardless of their origin, should be able to predict objectively.

I can only assume that the BBC have been following a robust, transparent and objective process. Have the Met Office been complacent in their bidding or are there genuinely better qualified competitors? If they want to throw stones at the BBC's procurement process would the critics not have been better to have criticised the selection process prior to its commencement. Perhaps the BBC should have carried out some stakeholder engagement in the process earlier and brought the advocates to the status quo with them.

Having said that, it seems logical that the Met Office would want the freedom to compete to deliver weather forecasts to other boardcasters too, without being subjected to nationalistic loyalty.  Why can't the defenders of the status quo recognise that for the Met Office to do that there has to be open competition.

However, my question is not about whether or not the weather forecast should be provided by the Met Office or not. Nor is my question about the selection and award criteria. or indeed its robustness.

To me there is a much more basic question, specifically the need for the BBC to spend money on providing a weather forecast at all. A lot has changed in 93 years. There are now so many sources of weather forecast open to the public, for example, apps on a smart phone tailored to specific locations. Just because there has been a 93 year history of the BBC providing weather forecasts doesn't justify a further 93 years of need to for the BBC to provide weather forecasts! But isn't that a common problem is procurement; a contract is due to expire so we need to relet. Wouldn't procurement improve its contribution and value by asking the much more relevant question: "Do we need to buy this at all?"

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.

Child labour and talk are too cheap - meaningful action is what counts.

David Cameron is using a platform in Vietnam today to announce the UK's initiative to stamp out child labour in supply chains. Don't get me wrong, I find child labour absolutely abhorrent and really do believe in the power of responsible procurement. However, I doubt Cameron's initiative to stamp out child labour, based on all companies with a turnover of over £36m publishing an annual slavery and human trafficking statement, will have any significant impact.

Does David Cameron actually believe that companies have that sort of supply chain visibility or even the skills? Does the public sector have that sort of visibility and skills?

The initiative will require companies to declare what checks they have in place. What would be considered acceptable robust checks? Will Cameron's minister who leads on public procurement be in a position to be accountable to parliament and the electorate for the steps public procurement have taken - if not it is a bit hypocritical to not to lead by example. Perhaps Cameron should add this to his wish-list of EU reforms - that will be popular but then isn't cutting red tape a big issue too!

How is the initiative going to be communicated to UK companies? August is unlikely to be the best time to raise awareness.

In companies which do become aware of the initiative who will have ownership and be accountable? Will it be allocated to the Health & Safety Officer like so much of environmental purchasing, the CFO as part of their accounting statements, the CPO who control so little of the budget decisions, marketing who will want to put a good gloss on whatever the reality is, or the risk manager who is often a voice crying in the wilderness? Whoever holds responsibility will be a good indicator of how seriously the initiative is taken - why doesn't Cameron insist there's a named responsible owner?

I assume the statement will need to be audited in some form, who will do that?

What if the companies don't comply? It appears the sanction is criticism! Is that supposed to be a serious sanction? I have previously discussed reputational risk linked with supply chain abuses and how it really doesn't seem to manifest itself  in the market. I have also questioned the conviction of politicians to see some of these great ideas through to the end rather than just looking for something to say in a speech.

So, do I expect to see some discernible change in five years against today's benchmark? Actually is there a benchmark against which progress will be measured?

PS 31 July 2015 - here's a link to the relevant section of the Modern Slavery Act 2015