Wednesday, 16 January 2013

PR disasters and procurement

It's not just Tesco that has found horse DNA in their burgers but unfortunately they are the company making the front pages today. You realise don't you that there, but for the grace of god, could go any organisation - if you don't believe me read on.

I'm sure Tesco just like other organisations before them (RBS, LOCOG, Britvic, UK Govt etc just last year) believed they had the appropriate steps in place to effectively manage their supply chain. I'm sure supplier assessments, risk assessments and quality audits had been undertaken. Yet they failed. The reasons for the failures will be many. I'd just like to add a few suggestions of my own:
  • the process of procurement is not understood by project managers/senior managers/leadership teams
  • the procurement department under takes it's activities in isolation from other internal stakeholders
  • once contracts are placed other departments, not necessarily involved thus far, pick up management of the contract, relationship & suppliers or for delivery, auditing, payment, and so on
  • communication with suppliers is limited 
  • objectives for cost reduction are more about "here's the cost reduction I need don't tell me how you'll manage it just deliver it" than undertaking cost analysis and understanding the implications of cost reductions asked for and offered.
  • people keep their heads down when they see the cliff edge approaching - after all who wants to speak up? As I wrote in a blog last year after RBS's supplier management PR disaster.
These reasons have very little to do with application of best practice procurement and more to do with fostering a culture of collaboration and understanding between all managers within an organisation.

Next time you have a meeting why not learn more about the work being undertaken by others within your organisation so you may all start to understand more about how the whole system is working rather than your own isolated parts.  

Alison Smith
The Purchasing Coach
Inspiring change in purchasing one person at a time

Tesco picture source: via Alison on Pinterest

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