A recent discussion with procurement consultant, Bill Young, caused us to reflect on the use of ‘supply positioning’ as a model for developing strategies to add value through procurement. We considered the possibility of positioning procurement projects rather than purchase items or supply categories. I concluded that this application had potential but also had practical difficulties. The use of supply positioning by Procurement, without the engagement of other stakeholders, is dangerous. As supply positioning is often misapplied, I thought I might share my thoughts here. Continue reading
Recently I commented on a LinkedIn discussion, “Presently I am looking to devise a simple classification structure for my supply base – something that will allow my suppliers/providers to know where they presently stand from an engagement/expectation perspective and that shows them what they can work towards…. Does anyone have examples of such structures that they can share?”
My reply (edited): Continue reading
A recent post in Purchasing Insight, “What can game theory teach us about Financial Supply Chain Management?” highlights the overall financial impact of paying suppliers as late as possible. The key point is that the working capital cost to supplier usually far outweighs the savings to the customer, thereby increasing the overall cost to the supply chain. The post got me thinking about a much bigger issue: how businesses manage their supply chains – a cross-functional collaboration or a collection of functional silos? Continue reading
PAC report has relevance to public and private sector procurement.
The Public Accounts Committee (“PAC”) published its report last week, ” Cost reduction in central government: summary of progress“. The report may be of interest to procurement stakeholders in both public and private sectors :
- Procurement is critical to achievement of deficit reduction and provision of (maintained) frontline services.
- The report contains messages that apply to any organisation seeking to make savings through procurement initiatives.
- The PAC makes observations and recommendations regarding the approach to achievement and measurement of savings. Continue reading
A recent article in Procurement Leaders magazine, “Are e-auctions all they are cracked up to be?”, concludes “by taking the personal touch out of the bidding process, you’re losing the opportunity to leverage your face-to-face skills to get really [to] know a potential supplier.” The article seems to be founded on the premise that e-auctions (reverse auctions) might typically be run in circumstances where buyer-supplier relationships are important.
I have been a long-standing critic of indiscriminate use of procurement e-auctions. Reverse auctions do have an important place in the procurement toolkit but are often misused. So, what constitutes misuse? What can go wrong? And when is it appropriate to use reverse auctions? Continue reading
This article is the second in a series written specifically as guidance for project managers.
Many projects suffer from the late involvement, or absence, of the procurement professional. It is the Project Manager’s responsibility to determine the requirement (or not) for specialist procurement skills. The series sets out to educate project managers in the essential considerations, and to inform the PM’s decision as to the need for specialist procurement resource.
The first article (Part 1) answered the question, “When and why do project managers need supply planning?” This article covers three key elements of supply planning – requirements analysis, supply market analysis, and risk management – and six tools and techniques used in the supply planning process. Continue reading
This article is the first in a series written specifically as guidance for project managers. Superficially the requirements of projects and ‘business as usual’ may seem different. For the experienced practitioner, procurement for projects has much in common with other procurement practice, ideally drawing on a range of techniques from a comprehensive tool set.
Many projects suffer from the late involvement, or absence, of the procurement professional. It is the Project Manager’s responsibility to determine the requirement (or not) for specialist procurement skills. Irrespective of the makeup of the project team, it is most important that the procurement cycle is considered and planned from the project outset. This series sets out to explain why, to educate project managers in the essential considerations, and to inform the PM’s decision as to the need for specialist resource. Continue reading
In a recent exchange on Twitter, I was asked if I had any writing on procurement in the context of projects, as there is very little coverage about this topic for Project Managers.
Is procurement for projects different from other procurement?
There are opposing arguments, on the one hand that procurement for projects is very different from other procurement, on the other hand, that the ideal approaches to procurement are very similar whether for projects or not, and that the approaches become different only as one makes compromises. Such compromises would arise as a consequence of differences in objectives for projects and ‘business as usual’ (BAU), and from constraints in the capability of the procurement resource. Compromises may also be forced by late involvement of appropriate procurement expertise. Continue reading