Professor Arjan van Weele, NEVI-Chair of Purchasing and Supply Management, at Eindhoven University of Technology and doyen of procurement strategy is quoted as describing procurement as "the acquisition of goods or services. It is favorable that the goods/services are appropriate and that they are procured at the best possible cost to meet the needs of the purchaser in terms of quality and quantity, time, and location"
There is a dangerous trend amongst a plethora of companies to believe that their efficiency, growth, competitiveness and profit will grow through transferring traditional buying processes over to the Busy Work division also known as 'Procurement'. It beggars belief why any private sector business should want to copy and emulate a public sector practice or policy unless of course, you are a vast financial institution. In which case, you are already divorced from any semblance of common sense.
I read that there is going to be an announcement on the fourth NHS procurement strategy in 10 years. I can only presume that this is because the others have not worked. Yes, of course, I am a passionate believer in the importance of persistence. The greatest example being Edison who, in his creation of the light bulb, went through 3000 prototypes before finding a solution. I am not sure though, that 'persistence' is a good enough rationale for the NHS to hang in there attempting yet again, to get our billions of purchasing pounds more efficiently utilised. I am confused as to why they have got it wrong three times already and who has paid for these apparent wasted exercises?
The traditional trained, skilled and experienced buyer is and will always be, in my opinion, a most valuable asset to corporations. Having trained thousands of sales people over the years, many have feared the 'professional buyer'; I reassure them every time, that it is a great pleasure and can be immensely rewarding to meet, sell to and build valuable relationships with professional buyers. Apparently, it is now a common corporate policy that staff, other than Busy Work personnel, should not meet third party suppliers as they could be influenced into buying decisions, which may be driven by considerations other than price. I am not aware of any of the big retail chains from supermarkets to clothing outlets that have dispensed with their buyers and handed over the process to procurement. How can someone in procurement, who never use the term 'customer' in their dealings, have enough inside knowledge or real understanding of their end users needs?
At my Leadership and Sales Master Classes, frustrated managers share countless case histories and examples of the procurement team having not only simply lost customers, but who also have created significant customer dissatisfaction and complaints.
The issue is simple enough, procurement are positioned too far away from the real needs of the end user and/or the customer. Whether the customer is internal or external, you cannot measure their requirements against a set of criteria that may at first glance appear in the best, immediate financial interests of the business. Purchasing then becomes merely an academic abstract exercise that is in tune with the 'bottom line' and not aligned with who, what, where or why. Smart buying must be about relationships, an understanding of how and why a 'widget' is going to be used, as well as an intuitive instinctive component built on expertise, experience and understanding. It is this latter piece that has been lost in the procurement process and the challenges I mention above spring directly from the absence of simpatico with the wider business needs. The end result can mean fractured relationships both internally and externally, as well as long term and significant negative impact financially and corporately.
Rebecca Howard of ADR International, one of the world's leading procurement consultancies, tells us that, '"In the challenging world of procurement it can be difficult to feel that you are making a difference." I wonder why?
If any readers of this blog have experiences or thoughts on procurement, I would really appreciate you sharing your stories with me.success@denny.co.uk