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13

Aug

Taking the pain out of procurement

One thing I have been considering for a while is the procurement process and how it could be made easier for all involved. Having been involved with hundreds of proposal submissions over the last 10 years, I must say that it is the most stressful aspect of what we do, often because you are running behind time and have minutes to go before cut-off (with the printer running out of paper/toner or just not working!).

There must be a better way. Not that I’m suggesting that there shouldn’t be contestability - far from it. Salespeople are usually very competitive by nature; they love a challenge and the proposal process is a challenge up with the best of them. The problem is that the process can be long, involved and is usually loathed by both parties. I’m not sure about you but the idea of starting a relationship/partnership by going through a loathed process can’t be good. More on my reference to relationship/partnership in a future blog posting - not enough time and space this time.

Being based in Wellington my comments are centred more towards Government than the private sector, however to a lesser degree it does apply to the private sector as well.

It’s great to see a focus from both the industry and the Government on making this better. An example of what I’m referring to is the new initiative from the ICN (Industry Capability Network). This has involved the appointment of David Sheppard to make the process better for all involved, specifically to help New Zealand industry. Knowing and having worked with David, I respect him for his frankness and experience with how to make this work better.

Why do I think the process doesn’t work? Lots of reasons and everyone will have their own, but a summary of mine are:

  • Typically they are run in a hands-off manner. Often you are restricted to asking questions via email. The ability for the proposal team to really engage to find out business drivers/issues doesn’t exist, especially when they are given three weeks (or less!) in which to do it alongside other work. I don’t know of any organisation that has or could afford to have a proposal SWAT team sitting waiting for the RFP to hit the streets. The commitment is usually balanced with other work.
  • Innovation is often limited by the very nature of the process. Having a dictated format that requires a point by point response allows little scope for innovation. The responses often dictate the required solution before the supplier has had a chance to engage and find out exactly what they are trying to do, or even if there are potentially other ways to approach the solution.
  • Pricing is usually required to be fixed. I’ve seen dozens of organisations who are more than happy to hire truckloads of expensive contractors with little regard to what they deliver or to their overall value or commitment to a project, and who usually end up cancelling or refocusing projects when the money runs out, yet they are not prepared to engage with suppliers for an initial scoping phase. I’ve recently seen various models which, under the right circumstances, should work well. This includes an Agile approach where functionality is delivered in priority up to a set budget or a sliding pricing scenario whereby there is a mutual risk reward factor (i.e. in an overrun situation both organisations share the cost and in an under-run both organisations get the benefit).

From a supplier’s perspective there needs to be more use of a pre-evaluation process which can be achieved by free and frank discussion, supported by a good RFI process. Something that focuses on what you are looking for from a partner or organisation and that keeps it brief. A reduction in the amount of work required to respond will help ensure that credible bidders aren’t scared off by the workload – a particular issue when resources are scarce as they currently are.

Combined with better qualification by suppliers, this should result in less work for customers as well as better quality responses. Reducing the amount of proposals being submitted means the quality of the bid can be improved and, as we all know, if you are going to put your foot forward you need to make sure it is your best foot.

In addition, preferred supplier relationships save a lot of hassle because they enable all organisations to focus on the delivery aspects, rather than the selling/buying, eliminating concerns such as whether the bidder has the capacity to be a good partner or whether you are always going to be struggling to get scarce resources.

Preferred supplier relationships need mutual work, much like a marriage. This should include regular meetings, communication and parties prepared to raise positive and negative feedback. Once again, a topic for another blog posting.

So - lots more to blog about in this area and comment/feedback is welcome, I’m sure we can all make it a better process.

Posted by: Wayne Forgesson | 13 August 2007

Tags: Procurement


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