There are myriad of statistics available to suggest that only a small percentage of projected benefits from a given procurement initiative are actually realized. Worse than this, many procurement projects are “indefinitely postponed” or abandoned altogether. From the purchase of Air Force Tankers to improving the process of buying nuts and bolts, no procurement initiative is safe from the all-too-common fate of being derailed or permanently placed on the shelf. Below are some common procurement pitfalls and tips to prevent purchasing professionals from falling victim.
Corruption
While every company will surely tell you they take all precautions they can to avoid conflicts of interest, the procurement arena is fertile ground for “gray areas”, “exceptions to the rule”, “shady business”, and flat-out kick-backs. From suppliers that will subtly wine –and-dine, to those who will lay a bribe right on the table, most procurement professionals will find themselves in some sort of compromising situation throughout their career. Having anti-corruption policies in place just is not enough. As the saying goes, “On a long enough timeline, the loser will win and the honest man will lie.” It is important that companies create a procurement infrastructure that fosters accountability, measures outcomes, and creates a system of checks and balances. Though it is a sad fact, greed will often prevail if left unchecked.
Bureaucracy
While corruption is a pitfall more malicious in nature, bureaucracy is far more common and just as nauseating. I recently had the privilege of hearing Bill Clinton deliver the keynote speech on project management at the PMI Global Congress. One of the key themes in his address was that the success of a project rests not in lofty ideas and political interests within the company, but in the ability of people to define a goal, create a plan, and execute that plan. While red tape is certainly a necessity to keep organizations in line, the “cover-yer-rear” mentality in bureaucratic organizations creates dysfunction that impedes productivity and stymies cross-functional synergies. If a procurement initiative is going to be a success, it must be given the priority it deserves across the organization from top to bottom. It is important that leaders in the organization communicate the message that the organization-wide value of the project’s success trumps any personal or departmental agendas.
Data Accessibility
When the strategy for a procurement initiative is originally developed, leaders often make assumptions about the data they will be able to gather, synthesis, and put to use. Even today, with all of the highly advanced information systems, many companies find themselves in a situation where their data cannot be as easily converted into workable information as they had originally assumed. Sometimes systems don’t speak to each other the way we’d like. Sometimes data is inconsistent, and sometimes the data just isn’t as robust as we would like it to be. To prevent this, managers making the initial strategic decisions need to familiarize themselves with their organization’s systems and its ability to manage data. After an honest assessment of an organization’s data utilization capabilities, it may prove wiser for some companies to engage in an information systems overhaul before even considering taking on a project that is data-intensive.
Sloth
I purposely left incompetence off of this list. In its most empirical form the term “procurement professional” assumes that the person in the position, at the very least, has the competence to cultivate a fundamental understanding of the things a given organization may purchase. If you ever hear a procurement guy say “it is what it is” or tell you there’s “no way of knowing”, they are really saying, “I don’t feel like understanding the nature of a situation” or “I don’t feel like coming up with a plan to extrapolate the data and make the necessary assumptions”. Too often procurement projects stall because someone makes a convincing enough case that they have tried everything they could to figure out an “unsolvable” problem. The truth of the matter is that admitting any problem within an organization is “unsolvable” is just plain ludicrous. With enough critical thought, effort, and commitment any problem can be solved.
Corruption
While every company will surely tell you they take all precautions they can to avoid conflicts of interest, the procurement arena is fertile ground for “gray areas”, “exceptions to the rule”, “shady business”, and flat-out kick-backs. From suppliers that will subtly wine –and-dine, to those who will lay a bribe right on the table, most procurement professionals will find themselves in some sort of compromising situation throughout their career. Having anti-corruption policies in place just is not enough. As the saying goes, “On a long enough timeline, the loser will win and the honest man will lie.” It is important that companies create a procurement infrastructure that fosters accountability, measures outcomes, and creates a system of checks and balances. Though it is a sad fact, greed will often prevail if left unchecked.
Bureaucracy
While corruption is a pitfall more malicious in nature, bureaucracy is far more common and just as nauseating. I recently had the privilege of hearing Bill Clinton deliver the keynote speech on project management at the PMI Global Congress. One of the key themes in his address was that the success of a project rests not in lofty ideas and political interests within the company, but in the ability of people to define a goal, create a plan, and execute that plan. While red tape is certainly a necessity to keep organizations in line, the “cover-yer-rear” mentality in bureaucratic organizations creates dysfunction that impedes productivity and stymies cross-functional synergies. If a procurement initiative is going to be a success, it must be given the priority it deserves across the organization from top to bottom. It is important that leaders in the organization communicate the message that the organization-wide value of the project’s success trumps any personal or departmental agendas.
Data Accessibility
When the strategy for a procurement initiative is originally developed, leaders often make assumptions about the data they will be able to gather, synthesis, and put to use. Even today, with all of the highly advanced information systems, many companies find themselves in a situation where their data cannot be as easily converted into workable information as they had originally assumed. Sometimes systems don’t speak to each other the way we’d like. Sometimes data is inconsistent, and sometimes the data just isn’t as robust as we would like it to be. To prevent this, managers making the initial strategic decisions need to familiarize themselves with their organization’s systems and its ability to manage data. After an honest assessment of an organization’s data utilization capabilities, it may prove wiser for some companies to engage in an information systems overhaul before even considering taking on a project that is data-intensive.
Sloth
I purposely left incompetence off of this list. In its most empirical form the term “procurement professional” assumes that the person in the position, at the very least, has the competence to cultivate a fundamental understanding of the things a given organization may purchase. If you ever hear a procurement guy say “it is what it is” or tell you there’s “no way of knowing”, they are really saying, “I don’t feel like understanding the nature of a situation” or “I don’t feel like coming up with a plan to extrapolate the data and make the necessary assumptions”. Too often procurement projects stall because someone makes a convincing enough case that they have tried everything they could to figure out an “unsolvable” problem. The truth of the matter is that admitting any problem within an organization is “unsolvable” is just plain ludicrous. With enough critical thought, effort, and commitment any problem can be solved.
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