Ah, yes. I’ve been there.

Found today on Kuensel Online: Bhutan’s Daily news source

Seems the Bhutanese government is working on writing a procurement manual.

Which always sounds like a good idea…on paper.

The execution of which is always, always, always painful. You get a fabulous document (usually in a ubiquitous binder that us Procurement folks seem to *love*) that becomes a moving target.

SOMEONE has to be responsible for updating that piece o’ work. Handing out updates. Maybe finding a way to store it online in a place no one will go to read it.

And for our procurement colleagues in Bhutan, just to make the whole process feel like driving nails into their own eye sockets, they have invited the suppliers to help them write the manual.

All kinds of fun ensued!

“… the problem between the two parties was that they ‘did not trust each other at all’”

Well. Right. That’s how you got to this situation to begin with!

Now, in reading the article, I’ll do something I rarely do…I’ll agree with the suppliers that the government might be asking for a bit much.

Then again, they are government! Never known for being reasonable, no matter what country you are from.

And I’ve found if suppliers say they won’t abide by what the government wants, there are other, shoddier, suppliers who will gladly step in and take the business.

Hence the $12 hammers and jacked up infrastructure found ’round the world!

I wish my colleagues luck in this process, they are gonna need it.

Twisting my brain

I think that I think about Procurement too much. Hazard of the job, I suppose. I spend 40+ hours each week thinking about procurement, how it can be done better, more efficiently, or cheaper. Even more so when an odd commodity is presented, how to structure the deal.

It may have infected my brain.

Last week, I was watching a baseball game. They were celebrating the anniversary of the day that Jackie Robinson made his MLB debut. So on that day, April 15th, every player in MLB wore the number 42, Robinson’s number while playing with the Dodgers.

This got my mind going. I understand that the clubhouse manager is responsible for getting unis for the team. I believe each guy has about three of each uniform, home and away. If they tear or indelibly stain the uni, it gets replaced and they plenty of backups.

Cool, ok. So in Spring Training they measure everyone and order up the stuff.

Pretty predictable. Put that on a blanket order and you are off to the races.

Then you have special events like Jackie Robinson day, the military day in which the San Diego Padres wear camouflage unis. Or when the San Francisco Giants wore the word “Gigantes” on their uniforms to celebrate Juan Marichal.

So how do you negotiate that deal? You have this standing order for all the sizes and numbers sewn on, but then you do these one offs.

Do they take an existing uniform and rip off the number and sew 42 on there, then rip that off and sew back on the old number? Something tells me no. I suspect they get a whole new uni with the special features that is only worn once.

Sometimes they auction off those one offs for charity, sure.

Cost savings aren’t likely a goal of the clubhouse manager.

Oh the money I could save an ailing franchise or two!

Ah well, odd ramblings bringing my favorite pastime and my daily grind into one happy space….

Oh, I’m good.

Protests over Defense Department contracts up 23 percent in 2008

Bet no one saw that coming…

Oh really?

Where oh where do we belong?

Age old procurement question: In what organization should MRO (i.e. not direct) procurement reside?

Most common answer you will get is “finance”. That’s a view I happen to share. I think the procurement and finance roles are two facets of the same job. One is the vehicle for payment, the other makes payment, and sticking close together bring efficiencies.

Unless it doesn’t. Unless procurement and finance fight. Which they do. Often.

The next most common answer? Operations. Operations usually means manufacturing which means direct side procurement. There is a pretty good argument to keep ALL of the corporation’s procurement function together, direct and indirect, under one roof, one strategy, one leadership.

I understand that, too. It’s just been my experience that buying stuff that doesn’t go into the product, thus driving revenue, means you get roundly ignored by the powers that be. Which can be fine, until you *really* need their help and they can’t be bothered.

Then there are the companies that value the procurement process as an essential part of their daily lives and they make an actual C-level position to govern procurement and give them their own organization, their own right. But the number of sizable companies I know that truly have a CPO can be counted on one hand.

I’m not sure I have the right answer. I’ve lived in finance, I’ve lived in a variety of ops organizations, and I’ve reported to an executive VP of procurement. All have their ups and downs.

This topic is on my mind lately since the recent purchase of my employer. We just got word we’re being reshuffled from finance over to ops. In the case of The Company, this is actually a good thing. Remember that bit above about procurement and finance fighting?

The COO here used to be the head of procurement at a former company, so he’s at least vaguely familiar with the fact that it takes different effort to buy a million piece parts versus a million dollars worth of software.

So we’re on the move again. Right now I’m just wondering if I still have a job. Maybe tomorrow I’ll worry more about the pros and cons of being an indirect sourcing person in a manufacturing world.

Mind. Boggled.

I’m not the most politically astute of people. I glance at the headlines on Google and listen to the newsbreaks on the radio. But I do kind of keep up with the world, and when I hear things, I think about how they apply to my life.

So on these pages I’ve been spending some time talking about how the Procurement profession has been affected, and should respond, to the current economic climate.

If you look at *any* of the press regarding Procurement (here’s a hint, go to Google news and plug in the word Procurement), there’s a lot of discussion about the industry, the downfalls, the changes and how this is an opportune time for Procurement to help companies weather the storm.

So I was left agog when I read this today:

“69% of purchasing professionals are yet to examine the impact of the last six months on their supply management strategy, leaving them exposed to potential long-term problems.”

WHAAAAT?

I’m embarrassed for my profession. We have no one to blame but ourselves. We’re often accused, by both The Client and the supplier reps, of being “out of touch”, in the “Procurement Ivory Tower” or just plain not strategic.

I usually bristle when I hear that as I work very hard to establish deals that make good business sense, based on both the internal and external environments. But this…this is embarrassing.

I have no defense. Other than to tell all my Procurement people to READ THE NEWS! Set up a Google alert. Think a little.

Source.

Changes in attitudes

Sorry to gratuitously steal from a Jimmy Buffet song. It just sort of worked, so let’s roll with it.

As documented here, I made a job change after almost ten years with one company. Four months later at the new gig and I finally know how to navigate my way to the cafeteria and sometimes don’t get lost going to another building.

So now that I’m better settled in, I’m really starting to analyze the procurement process here.

And by “procurement process” I mean none at all.

My former employer was cutthroat, the supplier is the enemy, never take their initial offer, or any of the five more you make them do. Grind them down then get 20% more.

Negotiating deals was not a quick hit but an arduous process.

I was rewarded, quite handily, for beating down the sales rep.

So imagine the gear strip I’m experiencing at my new “kinder, gentler” company.

A place where they will hardly ask a supplier to issue a correct invoice, much less push back on pricing.

My first month here, I sat in a meeting where an over-privileged, overpaid catering vendor told us that if we want to do online orders, that *we* could develop the website and backend engine and they’d be happy to take our orders.

And I questioned that. Oh did I question.

And got a reprimand for my troubles.

In an all staff meeting, one of the sourcing fellows I work with said that we’re “not old school, we partner with our suppliers.” In other words, we are very much old school, we let our suppliers have their way with us.

I could imagine sales boys around the state feeling a tingle in their briefcase at the prospect (and by prospect, I mean *prospect*).

So here I am, not sure how to balance my “take no prisoners” background with the “can’t we all just get along” new employers.

I do know this…our little enterprise was just purchased by a competing company. And the CPO of the new joint is a military man by background. They even have a procurement manual!

My life may take on an interesting balance here in the coming months….

Rule of Thumb

Was in a sourcing training class today and bestowed upon us were a few “rule of thumb”-type reminders. All good, but one in particular stuck with me.

“By the time your client has described what they want you to buy, they have already encompassed at least eighty percent of the cost.”

So when they say “custom” or “build to order” or “the off the shelf model won’t work”, you, as the Procurement Hero should be hearing the sound of a cash register in your head.

And then you must employ the best and strongest tool in a Procurement Hero’s arsenal.

You. Must. Ask. Questions.

When the going gets tough

Then tried and true starts looking awfully good.

Knowing what you know now, which looks more appealing? A thirty-year fixed mortgage or a short-term interest only?

Investing in high risk/high return equities or sticking with index funds?

Right.

So I was surprised the other day when one of my coworkers had occasion to sneer at hardball negotiation as “old school” and “not what we do.”

Ok, maybe the might bottom line at all costs is sort of passé, but in this economy, true negotiation makes sense. Cut the deadweight, negotiate with the top providers. Streamline, cut costs, get lean.

Seems Siemen’s agrees.

“Siemens plans to cut business relations with 20 percent of its suppliers this year to gain flexibility in procurement.“

Cutting one in five suppliers is a tough goal, but it sure sends a message, doesn’t it?

I have my own row to hoe here at my employer. They have the “we partner with our suppliers, they are our friends” philosophy right now. But with new owners and greater than ever focus on budgets, “old school” might just be what can carry us through this rough patch.

No one wants to hear it. Change takes time.