Poker Playing Procurement

In amongst the debate on bombing Syria, you have missed the news that a requirement from the Prince of Wales for TV channels to sign a 15 page contract in order to have an interview with him has possibly backfired. It has led to one interview being scrapped and some of 'the market' collaborating in a potential refusal to sign. What happens next and who is the loser in this game of poker?

In the long-term it is impossible to believe that neither the media nor Prince Charles would want a stand-off. So will the Royal Household relax the requirement or will the media simply give in? If I were an advisor to the media I would advocate that they stand their ground in the belief that ultimately Prince Charles needs the media more than  the media need him - after all the Royal Household must have a communications strategy and 'closing down' one option is counter-productive for someone with such strong desire to express personal views.

One of the things I have become more conscious of since leaving the practitioner world of public procurement is the amount of investment potential bidders put into qualifying potential bids, in other words, calculating the likelihood of success compared to the cost expended in the bidding process. It is not taken as a given that because a buyer has invited an RFI that a bid should be prepared.

Bidding is always a gamble for the bidder. Having said that, onerous conditions placed by buyers don't make the contract any more attractive, in fact more often than not the opposite. The illustration of Prince Charles pre-contracts serves well to demonstrate that sometimes preferred suppliers may just say 'no thanks' - indeed those suppliers may never know that the buyer had a preference for them.  

Let's remember that when a buyer goes to the market, they generally have a required need and the worst of situations is when the market says 'no thanks'. Yes, you can have a great brand name,  you may even have Chartered status, yes, you can have great structures and policies and procedures, and even a seat at the top table, but if the market opts not to deal with you, you may also be a loser.

Even ISIS have a procurement process

ISIS have wreaked havoc across the globe as we clamour to find a solution to their terror machine. Their sophisticated use of social media is far more advanced than most western businesses and governments, but what about their procurement processes?

Give some thought to how you would go about managing a supply chain which copes with the insatiable demand for bullets, guns, suicide vests, IEDs, etc. to the front line - thousands of bullets alone every day. The consequences of not getting the 'right thing, to the right place at the right time' may also have a heavy price to pay in personal accountability. While we discuss airstrikes, effective disruption of the procurement process would be a useful strategy as it would demoralise the 'frontline' and seriously degrade ISIS impact - it has to be explored and exhausted. 

The Financial Times has provided insights into how the procurement system works.  

Blackmarket arms dealers are 'licenced' by ISIS commanders, following approval by two members of the security services, and provided with stamped IDs which provide freedom of movement on the condition that ISIS are the sole customer. 

A 'pull' system is in place from the front line; effectively a requisitioning process. Requisitions are received by 'centres' - various tools are used to communicate the requisitions. The 'Committee' provide price lists to the 'centres' for common items. The dealers also receive  price lists.

Amazingly, they have also adopted a strategic approach in that since prices having been rising, they have issued more dealer licences in an effort to encourage competition reduce prices!

Governance of the process is a top table issue, understandable given the risk of failure.

There's something fascinating about this procurement process, isn't there: requisitions, price lists, approvals, making markets work, governance, speedier transactional processes. We can't tell if compliance is an issue or even quality control, but the next time you hear someone arguing that the procurement process doesn't work for them, spare a thought to how easy it all could be.

A procurement puzzle for the weekend - What is procurement best practice?

Our newspapers provide plenty of puzzles to pass the time and 'brain train' - my preference is for KenKen, Sudoku and finally, although I lack a great deal of success in completion, Crosswords. I am quite frequently asked 'What is procurement best practice?' More often than not I am asked by someone who is very well placed to know procurement best practice and is actually doing some benchmarking research to help shape their own organisation's procurement strategy.

Perhaps you disagree with me, but I think each organisation should concern itself with what is appropriate for them as opposed to copying what may well be right for others, but sometimes is actually no more than an aspiration.  Anyway, it is useful to have an idea of what a scorecard could look like, consider what is appropriate for you, decide where you are now, and then set out a strategy of how your going to make the prioritised journey to 'best for you'.

So, with all that in mind, here's a puzzle for you for the weekend.  Below is a view of procurement best practice: What's missing and what's wrong?

No need for answers on a postcard - a comment will suffice!

• Centre Led Action Network with Internal Consultancy service
• C-level procurement leadership
• Clarity of Vision for Procurement
• Contribution beyond CQID to Strategic Goals
• Aligned procurement strategy
• Top table performance management
• Top Table procurement risk management
• Legal Compliance including, Bribery Act & Modern Slavery Act
• Strategic Make/Buy leadership
• Participation in NPD with Supply Innovation harvesting
• CPO inclusion in non-procurement strategic project teams
• Programme and Project Management skills deployed
• 100% influence over spend (from ‘Defining Need’ to ‘lessons learnt’)
• Intelligent benchmarking (CQID x-sectors)
• Supply Base Policy & Strategy, including Supplier Engagement, Supplier rationalisation and making markets)
• Integrated S2P system
• Digital Procurement Strategy & implementation (Cloud, Social, Big Data & Mobile)
• Category Management embedded and moving to Market Informed Sourcing
• Global/Regional/Local right sourcing
• Appropriate use of power
• ‘Right mix’ procurement outsourcing e.g ‘Tail spend’
• Competitor partnerships in supplier development
• Ethical & Responsible SCM
• Global TNA and Skills development plans
• Standardised & optimised processes with robust adherence systems.

Lessons on the cost of musical chairs at Westminster

Tucked away, understandably, in The Sunday Times was news that "MPs squander £140m on empty office" and typical finger-pointing that "a bunch of muppets" had been involved in this procurement decision!

The story in itself is easily summarised: a lease for 15 years (up until 2029 with no break clause), costing approximately £6m per year, has been taken out on a new office block on Victoria Street, less than half a mile from the Palace of Westminster, while renovations take place at the Palace of Westminster.  The plan had been that the new office would accommodate parliamentary staff currently housed in Millbank, and MPs would move to the former parliamentary staff offices at Millbank. Yet, a year later the offices remain empty and costs of £4m are being incurred for rates and services, allegedly because of fears MPs travelling from Millbank to vote in the House of Commons  could be vulnerable to attack.

(There is no mention of what the decanting costs associated with the musical chairs would have been or why the MPs couldn't move to the new Victoria Street office as opposed to Millbank!)

Now part of the solution appears to be that Department of Health staff move to the new offices, presumably so that the MPs can move to the DoH current HQ.  I assume there has been some risk assessment that suggests the journey up Whitehall is safer that the the journey along Victoria Street.

I certainly recognise, particularly in the light of the barbaric attacks last Friday in Paris, that there is a risk to MPs safety, but is it not true that MPs always have to travel to and from the Palace of Westminster, and also that they spend a lot of time in their constituencies 'out and about', so why is this particular journey so risky and ultimately costly?

There are some interesting questions which procurement could answer, for example:

1. Why was the contract signed and long before the MPs had agreed to move?
2. Why is there no 'break clause'?
3. What was the business justification for securing the new office accommodation so early?
4. Was there a risk assessment which recognised and mitigated against MPs reluctance to move to Millbank?
5. Is the contract for the Palace of Westminster renovations already signed and does that contract anticipate a completion date of 2029, allowing for the further decant of MPs back from their temporary locations? 
6. Is it reasonable to assume that a completion date of 2029 represents good practice - it seems a very long contract for renovations?
7. What contract management arrangements and contingencies will be put in place for the required complete date?
8. Prior to signing the lease, were all the relevant stakeholders consulted, including those responsible for MPs security? 
9. If effective stakeholder consultation took place, are "the muppets" not those who said the MPs journey from Millbank carried a manageable level of risk?
10. Had the Finance Committee, some of whom now find the contract "completely outrageous", had any scrutiny of the proposals before they were committed to?

The whole thing looks like a remarkable mess, yes, but perhaps it serves as a cautionary example of why procurement needs to be involved in this type of decision, and that a full options appraisal is required and risk assessment, prior to signing a contract.

How to minimise the risks of Conflicts of Interests in Clinical Commissioning Groups

It was really only a matter of time until we had some significant exposé on the Clinical Commissioning Groups and Conflicts of Interest. Indeed it is no surprise, since we discussed this very risk many months ago.  Today The Times and BMJ informed us that GPs have awarded at least £2.4bn to their own companies.

I don't think there is much to be gained from revisiting the previous discussion but I think the Department of Health may want to consider their response to The Times and BMJ findings.

There is little mileage in asking for evidence that there was a conflict of interest in the award of the contracts - let's just start with a presumption that there will be. But isn't the real test to be found in whether or not subsequent value for money is delivered? Therefore I would suggest the Department of Health adopt three policies:

1. Create a benchmarking service which publicly shows the table of rates paid across the various CCGs;
2. Place an obligation on providers to demonstrate how they provide on-going value for money, not unlike the previous local government Best Value for Money obligations;
3. Place an obligation on CCGs to publish how they are performance managing their contracts to ensure the required quality of service is maintained, if not improved.

Not rocket science but may help overcome the downsides of Conflict of Interests.

Let Procurement's internal customers drive eProcurement Strategy

For a number of years I have seen P2P briefs which include reference to internal stakeholders desire for an 'Amazon like' user experience. Exposure in domestic life to how easy the 'electronic shopping experience' can be through the use of Amazon has raised individuals expectations of what the procurement process could be within the business environment. Having said that, even with that domestic experience, it still surprises me when Procurement staff tell me that the 'AsIs' process for Requisition to Purchase Order takes on average two weeks - my response is "Why aren't you aiming for two hours max?". What I see and feel on the ground is evidence that internal customers are pushing for change as opposed to Procurement staff shaping driving the change.

I have also met opposition from Procurement staff to the use of eAuctions. However, when you ask the individuals concerned if have they used eBay - the 'lights go on' and you can start to help them understand how eAuctions could deliver benefits in a business environment. In parallel, I've discovered that internal customers of Procurement have a greater appetite for the use of eAuctions than their Procurement Team.

Tonight I was delighted to see an advertisement on television for MyCarNeedsA. Perhaps some of you have been aware of this site for some time, regardless, it is a domestic electronic RFP solution. The domestic car owner specifies what work is required for their car and bids are then invited. I'm sure, given what I have outlined above, you will not be surprised that I have experienced opposition from Procurement Teams for the use of eSourcing tools. So I am delighted that internal customers of Procurement will now have an opportunity to experience eSourcing within a domestic environment and then hopefully push for their adoption within the business environment.

We have recognised for many years that individual's domestic experience influences their work expectations.  Of course there are many understandable reasons why Procurement staff may want to oppose the use of eProcurement tools but I find it disappointing that Procurement are not pushing harder for improvement and adoption of what are now basic tools.

Procurement should encourage internal customers to cry louder for the transfer of domestic eProcurement tools into the business environment. Procurement should see the domestic tools as part of a skills development plan. Yes, why not let Procurement's internal customers drive hard for an eProcurement Strategy. Would that not help Procurement?

My 10 Desert Island Books on procurement

A number of blogs (for example Stephen Ashcroft's) have appeared on favourite procurement reads. Often the books which have really influenced my thinking aren't mentioned. So, I thought I would take a slightly different line and list the 10 books I would take with me to a Desert Island to read again based on the assumption that I plan to return and be better at procurement - something I've been working at since 1973.

When I started to think what the Desert Island list would look like I realised that it to a certain extent it reflected my own journey too. Don't be surprised that this spans a long period and that some of the books are probably out of print as I have included my 'golden oldies' too'. Here's my choice and why:

1. Purchasing Principles and Management
2. It's a Deal
3. Beyond Partnership
4. Strategic Procurement Management in the 1990s
5. Revolution in Purchasing
6. Profitable Purchasing Strategies
7. Business Success
8. Transform your Supply Chain
9. Strategic Procurement in Construction, and 
10. Complex Contracting.