Procurement – Pulling the plug on new ideas?

Does procurement kill enterprise?

I really must stop travelling by train on my own, as it gives me time to think and yes, sometimes even fume.  My latest, and I will let you decide if it’s a rant or a reasoned argument is how procurement or to be more precise the process of procurement appears specifically designed to stop SME’s competing against the big boys. Having provided services to the Financial Service Sector for more than three decades, I smiled (inwardly) at our sectors’ preoccupation with the need for procurement services.

Of course everyone understands the corporate appetite for due diligence, and no-one wants to invest time and effort in developing a supplier relationship with an organisation that fails to meet standards, or presents a risk in other ways, but is procurement often using a sledge hammer to crack a nut?

I have had 3 conversations in as many weeks with clients or potential clients who are looking for occasional claims services, or management of their Employee Health, in certain cases contemplating a modest annual spend, (in one case no more than about £7k), but the rules seem to be that no provider can be instructed unless a formal contract is in place.

Simple, one might think, put a contract in place? Easier said than done in this world, at least in my experience. First of all, it is necessary to have satisfied your potential client of the viability of your own organisation, talked about how much you will charge for what service levels, and answered some other fundamentally necessary and sensible questions pertaining to how a relationship would work going forward, such as, for example, demonstrating your operational ability to fulfil the services requested.

For smaller value relationships, one could be forgiven for thinking that this was enough to form the basis of an agreement. But no, next typically comes the IT Security Questionnaire, a potentially terrifying 15-page spreadsheet asking questions that a small company would have no hope of ever understanding, let alone answering.

Then we get to answer questions on data security, impenetrability of your office, who empties your bins, what charitable activities your staff undertake, and what steps you take within your organisation to offset your carbon footprint.

How many organisations have and promote a SME-friendly procurement policy?

Not every company requesting a contract has a team of CIPS (Chartered Institute of Procurement & Supply) members in place to complete the vast array of questions and documentation, indeed quite often it will fall to one individual to complete what on first glance is a highly complex set of questions and many SME’s will simply surrender and moan about how the ‘dice were loaded’ against them. Of course the interests of the buyer must be protected, but there also has to be a way which also affords the supplier half a chance of meeting the requirements without spending more than the contract is worth just to get an agreement in place.

I asked one of my colleagues to help me with this article as he has some knowledge of the procurement process, in fact one of the reasons that he is with us is because he ran, in my opinion, one of the best SME-Friendly procurement projects for one of his clients.  I accept that bias does creep in here as we were successful in landing that client.  I’m not saying it was a simple process, but it wasn’t designed to exclude providers based on the size of their tender response team, it was fair, straightforward, with relevant service delivery questions at the core of the process, finishing with a ‘board-style’ Q&A sessions with the shortlisted providers and the client.  This allowed full due diligence, checking on how the providers would implement and deliver the service requested, the service cost structure, client data security, and our IT systems.  We were all asked to present a case study and to provide live reference sites of a similar service/client.  All completed without fuss or angst in less than 2 weeks!

So come on Procurement Professionals – don’t kill us smaller companies with an excessive appetite for detail and information. Don’t force your claims departments to abandon looking for external professional services because your processes and requirements are too time-consuming, onerous and expensive. Give us a chance to get back to doing sensible business, your service buyers are professionals and managers – surely they are eminently capable of making decisions, especially for smaller contracts?

It should not be beyond our collective wit to come up with something sensible for everyone.  Let’s not pull the plug on good practice, new ideas and true cost savings but above all allow the SME to compete.

Source:

CIPS – The SME Engagement Handbook