Sourcing Process Under Pressure

Last week SM reported on a new sense of urgency in public procurement. The European Commission called on buyers to use an existing “accelerated procedure”, to cut tendering times by 57 days and as a result help deliver major projects faster. The purpose is to improve the economy by helping suppliers win business quicker, something that could equally be applied to the private sector.

In my experience I have come across procurement functions all trying to speed up the procurement process in response to complaints from stakeholders that it takes too long. Such a response to this criticism is a reflection of the lack of professional confidence and status within the procurement profession.

It is now widely accepted best practice that organizations (public & private) should develop a standardized purchasing process. The benefits of this practice include:

Consistency of application by all practitioners
Facilitates automation – which can speed up the process
Reduces risk in the sourcing process

With this best practice in place the ‘process is the process’ and takes as long as it takes without prejudicing the process integrity and introducing unacceptable risk. This means all steps in the process must be followed in an auditable manner to meet business objectives. To miss a step out introduces risk and potential claims of incompetency against procurement at a later date. What can legitimately vary is the rigour applied at each step of the process. This will depend upon whether the buy is:

First time buy
Straight re buy
Modified re buy
The complexity and value of the product or service

Clearly, a first time buy for a complex product or service will require each step in the sourcing process to be completed with rigour – not to do so would be negligent. A straight re buy will not require the same level of rigour during the ‘requirements analysis’ or ‘supply market analysis’ stages, but will still require full due diligence during the supplier selection and contract implementation stages.

An experienced Category or Purchasing Manager should be able to lay down a detailed project plan to complete a given purchase and defend the time scales if challenged. Supply Managements role is not to deliver a contract to suppliers more quickly but to maximise value and minimise risk for their organizations. Instructions such as those issued by the European Commission undermine this role and demonstrate a lack of understanding of the procurement process. Supply Management must therefore stand up and be counted on the strength of their process to deliver value and reduce risk.

With a clearly defined organization wide robust process in place, legitimate process efficiencies can be sought:

1. Addressing organization inefficiencies:

Insufficient and/or inaccurate data
Insufficient resources
Lack of alignment in the business.

2. Utilizing process tools such as:

e-rfi’s, e-rfp’s, auction

3. Access to data:

Maintaining reusable RFI/RFP templates
Providing easy access to spend data

4. Pro active approach

Maintaining and updating requirements and specifications
Pro actively monitoring supply markets

Successful sourcing requires creativity and perseverance, drawing heavily upon:

Exceptional teamwork, collaboration and networking skills
Advanced leadership and communication skills
In-depth analytical and problem solving skills
Broad expertise on a variety of topics including project management, legal issues, and technical skills

Procurement is once again under pressure to deliver more value faster.

Nuff said …