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Procurement and Tendering

It is clear from many reports in the media that procurement is important for two reasons:

• Managing procurement needs to be effective
• Suppliers need to be chosen with a long term view

All organisations require procurement, both of external and internal resources. Poor procurement results in unnecessary costs. A small improvement in managing procurement can boos the bottom line by much more. If you could save between 2% and 5% through better processes, and these lead to up to 19% improvements to your bottom line, would you be interested?

And these improvements can be achieved through more effective procurement.

A project to change procurement processes could lead to substantial improvements to organisations of all sizes.

Would this be worthwhile for you?

Effective procurement – or not

We understand that the current approach to the procurement of expert support in some organisations requires a three month rolling review. Is this effective?

• The organisation’s commitment to its goals are unclear: for real success the timeline, quality and cost all need to be aligned with the client’s strategy and goal. Short term approaches rarely are.

• The incumbent for three months has little clear commitment from the client. Their contract can stop at any time. They should therefore always be ready for a new one. They will spend time trying to provide for their future. This could waste their client's time. And the new assignment could be with someone else somewhere else,
• Management of the contract requires continuous effort in ways that a longer term approach does not:
  1. The threat of a contract being over is no better than might be experienced by adolescents in their relationships. How far away is this approach from dumping by text? This is not a good thing for reputation for either party.
  2. Negotiation of new contracts requires time and effort by both parties, as well as any intermediaries. This is an unnecessary and expensive overhead which could be avoided
  3. In some cases there are multiple intermediaries. The more, the more the increased expense
  4. If the supply chain changes, there are additional management overheads involved in ensuring that there is a full handover to any new team members.
• With a weak approach as outlined above, the real benefits from the assignment will take longer to achieve. Delays cost money not only at the time, but in their consequential effects on staff morale, supplier morale, and in delivering the benefits.

In conclusion, if your organisation needs to achieve real benefits from a long term investment, put the effort in up front, gain the commitment of your entire team including your suppliers, engage in constructive rather than repetitive management, and enable early delivery.

For support in setting up your projects and assignments please contact us.

Procurement Best Practice

In 2012 I co-authored, with a former colleague, a procurement paper:

“A model to manage the water industry supply chain effectively”, by Neil MacKenzie and Barry Tuckwood is in the August edition of Management, Procurement and Law, published by The Institution of Civil Engineers is available at

http://www.icevirtuallibrary.com/content/article/10.1680/mpal.11.00022

The authors propose a model for best practice procurement in the utilities industries and a step-by-step set of actions for improving performance. The proposed model begins with a strategic appraisal of procurement activity across an organisation focusing on overall objectives and desired outcomes leading to an effective operating model including the end-to-end management of the supply chain and the policy, resources and enabling technology required for successful delivery.

This model of procurement explicitly requires change within the organisation and its supply chain and stakeholders to obtain benefits from a shared understanding of each other’s aims and objectives, capabilities and needs.

For successful change to supply chain management, many of an organisation’s functions will need to be engage if best practice procurement is to be achieved.

For one organisation the strategic changes affected the supply chain for a revenue stream exceeding £1 billion/year.

For another, on the supplier side of procurement change management, more effective and efficient processes for responding to tenders reduced response effort and time by at least 50%.

Summary

There are enormous opportunies for you to improve efficiency and effectiveness through a review of your procurement processes.

To discuss procurement please contact us