An Olympian challenge for sustainable procurement and user satisfaction

In a drawer beside me I have a suite of NIAAF medals, yes, surprisingly, some years ago I was an international athlete!  The medals have personal memories attached to them; I can remember something of each one of those races even now, over 20 years later.  The medals are also something of a tangible legacy which I have always viewed as worth passing to my children and grandchildren.  When I received them, even though I wouldn't be able to retain my fitness, I never gave a second thought as to whether or not the medals wouldn't be durable.

I never had any illusion of being able to win an Olympic medal but I'm sure those who have done assumed their medals would last the distance.  Now we learn that somewhere in the region of 7% of the Medals awarded at the Rio Olympics are starting to wane. It is somewhat ironic that the medals were celebrated for their sustainability - materials used included recycled silver and industrial waste.

Olympic medals are unlikely to have been included in the high cost/high risk profile but that doesn't mean they shouldn't have been subject to a risk assessment and evaluated on the basis of fitness for purpose. That fitness for purpose should have included something of the users perspective too.  It can only be assumed that evaluation didn't take place or, if it did, wasn't given a great weight. The Rio Olympics procurement has once again become a talking point for all the wrong reasons.  Wouldn't it have been easier to have got it right and managed the reputational risk!

But the damage through this lackluster procurement also casts a shadow over the approach to sustainable procurement - instead of acting as a role model it now will serve as an impediment. Sustainable procurement doesn't need to compromise fitness for purpose and shouldn't.

Perhaps the lessons from this are:

• Consider the specifications others have used, perhaps through consulting with peers; 
• Place performance and functionality in the perspective of the user;
• Consider the risks to functionality in the specification and award criteria;
• Remember the potential for reputational damage in your risk assessment;
• Test functionality perhaps in the lab;
• Don't compromise performance and functionality for the glister of sustainable procurement PR.

Trump's Procurement policy dividend?

Trump and Brexit have certainly reinvigorated the old PEST analysis and no doubt are yielding plenty of university assignments at the present. From a procurement perspective there's plenty to think about.

It's a few months since I last discussed Trump's procurement strategy. Whether it is a clever strategy is yet to be judged but today's New York Times carries a report that Indian company Infosys will take on 10,000 US hires to deliver to US clients.  This is directly linked to Trump's Hire American Policy.  It demonstrates the potential power of procurement, but while it may make short term political sense and play to the gallery, does it really make good business sense?

Clearly Infosys have decided it is expedient to be seen to be doing the right thing and making noises about hiring American.

The reality that non-US companies have been winning contracts in the past suggests that they have had a competitive advantage, most likely to be in price (labour being the main cost) or quality.

Assuming that US staff will not be prepared to work on the same rates as their Indian counterparts delivered on, will that not lead to bid and contract prices rising.  In the service economy, will US citizens and organisations be prepared to pay the additional costs?  Could the US start to see double bids from companies, one US labour based with a parallel non-US based labour price?

Are the necessary skills available in the US market and is there sufficient capacity to match the demand. We are led to believe that Indiana has offered Infosys $500,000 in training funds and tax credits for new jobs. Of course that is attractive but the implication of the need for investment in training is that the skills do not at present exist.  There will be a lead time in training.

Let's assume that some US citizen now takes up the training - will they be handcuffed in some way to remaining in the US or will they find their new qualification is there ticket for seeking out pastures new, in which case is that not a loss to the US?

Of course, it may well be that Infosys' announcement is opportunistic and they would have been hiring local staff anyway.  That would make more sense to me - take the grants, make the announcement and do what you would have done anyway!

While I do think this is a useful example of procurement demand driven policy change, which I have long advocated in terms of sustainable procurement policy, I don't see this as being a clever strategy for the US economy.  Equally, for the average US citizen, I don't think it will create any new job opportunities, but increase their costs.

If Google and Facebook then ...

How on earth did Google and Facebook fall for such a basic and traditional scam that they have lost $100m by paying false invoices?  If they could, could you also be vulnerable?

I've discussed this type of fraud so often it almost makes me doubt reiterating, yet surely the evidence from both Google and Facebook is that the lessons are not being learnt? If they are being learnt is there a loophole which yet remains unplugged.

1. There needs to be a clear separation of roles between Procurement, Finance and receipt of delivery;
2. Procurement alone should have the responsibility for adding new vendors to the database of creditors;
3. Ensure due diligence in validating creditors bank details;
4. Every invoice needs to be cross-matched with a Purchase Order;
5. Have a regular spend analysis which flags up where the money is going and use that to establish where there are strategic contract gaps;
6. Have contracts on an integrated S2P system or at the very least linked to the P2P;
7. Use the P2P matching to manage creditors payments;
8. Have a strategic approach to procurement risk management.

Let face it, if it could happen to Google and Facebook, it could being happening to you.

You can read more about establishing vulnerability to fraud at the TCS blog or my article. 

Songs of Praise procurement and avoiding unnecessary discord

Outsourcing has now hit the religious broadcasting arm of the BBC and not everyone is singing a happy song.

Some time ago we discussed the BBC's change of weather forecasting provider and the storm of criticism that brought criticism based on whether a non-UK provider could be up to the mark - let's remember that the BBC didn't produce the weather forecasting, merely the transmission of it.

Now the BBC has exposed the production of its flagship 'Songs of Praise' programme to competition, and as a result, it will be outsourced. There does not appear to be any suggestion that the Christian orientated programme will be produced by heretics. No, only that it will not be produced in-house.

Bectu, the union, are "[demanding] better transparency over how this happened"; others fear the loss of specialist expertise in worship broadcasting.

These concerns suggest that perhaps there was a lack of engagement with key stakeholders in the procurement process, and if that was the case, I think that was a mistake. Songs of Praise has built up a strong brand and loyal following since 1961, tampering with that could have been expected to have encountered resistance.

The BBC would be in a stronger position to address criticisms if it had:

• Agreed with the key Church representatives the outcomes to be delivered from Songs of Praise in the future and how it could be improved;
• Discussed with Bectu how best to deliver the desired outcomes in the future and provided some opportunity for the in-house provider to match those expectations within an agreed reasonable time;
• Included Church representatives in the development of its sourcing strategy, development of its award criteria, and tender evaluation;
• Consulted with Bectu on its proposed sourcing strategy and evaluation model;
• Thoroughly debriefed all the bidders and Bectu on the outcome of the tendering process.

Big commissioning changes need to be supported by a change management plan if you want harmony at the end.

Is there a lesson for procurement in Tory's forgotten manifesto?

The suggestion that the Chancellor's advisors simply "forgot the manifesto"  may well be a symptom of incompetence or just contempt for previous commitments but it does have lessons for procurement leaders.  First let's think about the purpose of a manifesto - it sets out the basis on which the political party seeks election and says "if you elect us, we'll do this".  It is a bit like a contract commitment with the electorate. It is a commitment, through choice, to pursue a particular strategy. Simply 'forgetting' that policy commitment and strategy is a serious breach of trust.

So what's the 'forgetting the manifesto' lesson for procurement? Well, I have long since stopped being surprised when I find out that procurement staff are oblivious to the higher-level policies, and even their own prior commitments, which are supposed to shape their decisions.  For example, a commitment that all staff complete anti-bribery training - when you ask the staff when they last completed it they were unaware of such a commitment.  Then there's the Fairtrade commitments, the sustainable procurement commitments, prompt payment commitments, .... need I go on? Breach of all these 'policy' commitments represents a reputational risk at the very least.  Let's face it the commitments are rarely made without a lot of deliberation and business case justification.

Many of those commitments are voluntary but there are also statutory commitments - surprisingly there appears to be little external policing of those, for example, the Equality Act, Modern Slavery Act and Bribery Act.

Strange thing is when you interview staff for a position, quite frequently they can trot out all the relevant commitments!

Is this a case of selective memory or perhaps just ignorance? Both could be factors but they are unlikely to be the only causes.

My suggestion to ensure there is no 'forgetting' is that:

1. Complete an audit to identify and catalogue external and internal commitments;
2. Embed within risk management, yes, even at the top table;
3. Raise awareness; 
4. Ensure no commitments are overlooked through the use of checklists for both strategy and tactical decisions. 

The UK Prime Minister and Chancellor of the Exchequer now appear to have to backtrack due to 'forgetting the manifesto' - surely there's a lesson for procurement risk management to make sure there isn't a similar carryover in your organisation.

Procurement 0.4 - are you at risk of relegation?

An excellent Pilot Study into Procurement 0.4 has recently been published by Fraunhofer Institute for Material Flow and Logistics (IML) and Bundesverband Materialwirtschaft, Einkauf und Logistik e.V. (BME) - fortunately it is also available as an English translation.

Procurement 4.0 goes way beyond spend analytics and Cloud hosted S2P - perhaps we will come to view them as 'entry grade'. In layman's terms Procurement 4.0 relates to how businesses will harness the opportunities provided by the digital revolution.  I say 'businesses' because one of the casualties, if the profession don't quickly start to think in terms of Digital Procurement Strategy , may well be the traditional Function which could be digitised as a non-value adding function out of existence.  Of course, that threat can be turned into a very real opportunity and help shift the wise to being recognised as indispensable due to their valuable strategic contribution!

Nevertheless, back to the IML/BME report, it's based on interviews with leading German procurement managers.  Interestingly, none of whom think it is desirable for Procurement to take on the role of being a 'follower' in driving forward Industry 4.0!

The report envisages Procurement 4.0 will bring significant changes in:

• Technologies and systems;
• Organisation and processes;
• Management and people; and
• Business Models.

Basically a transformation of the function or a relegation of a function?!?  This is radical stuff and I would love to see us see us seizing the opportunity as opposed to being viewed as part of the problem.  A good starting position would be reading the IML/BMW report or my own whitepaper and having a discussion with colleagues to develop your response.

UK Industrial Strategy and more procurement bluster

Today the UK Government released for consultation its new Industrial Strategy.  As has become the norm with this type of business document procurement gets its place in the sun; this time with seven pages.

You can find a summary of the commitments on page 77 of the document but don't be getting too excited; there are only two new commitments, namely, the rollout of a balanced scorecard approach, and the trailing of different aspects of supplier feedback. There are proposals on page 72 on what the Government hopes to do to make use of procurement as a tool for innovation, and to be truthful I quite like the suggestion of 'innovation review points'. But I don't actually see anything which jumps off the laptop at me and shouts "WOW!'. Actually, perhaps it does merit a "wow" but only because of frustration and despondency.

There is almost a necessity for Government's to make a fashion statement creating the illusion they plan to really use procurement. Sadly, then there is a complete lack of accountability and performance management to make sure it is implemented. It takes on the feel of smoke and mirrors and political rhetoric, then, all too often is forgotten.

Perhaps, now is the time for CIPS to grab the bull by the horns and, rather than a submit a politically correct and polite consultation response to shout loudly, "Just Do It".  Even better if CIPS could be part of some sort of performance management structure for the procurement chapter's implementation!

The Government pose the consultation question: 'is there more can be sone through public procurement to support innovation?'  For what it's worth I made recommendations on how procurement could contributed to a manufacturing strategy four years ago, back in February 2013. Perhaps some of those recommendations were too adventurous but of my 18 recommendations, I think one stands out:

Revisit Procuring for the Future, Innovation Nation and the Department of Health's National Innovation Procurement Plan implementation, establish what impeded uptake, what worked and address the lessons learnt - my own impression is that they lacked a supporting change management strategy and the associated resources.