Supplier Selection and the US Presidential Selection

Suppliers are selected by people in organisations every day. Some suppliers meet expectations, and others don't. Some suppliers even go on to exceed initial expectations.

That said, the impact to the organisation of these three potential outcomes depends on the goods or services being purchased. Many may moan for example about a late delivery of a pen, but it's never going to be as important or potentially as fatal as a late delivery of an epipen.

Buyers in organisations are making these assessments every day, and I wondered what organisations could learn about supplier selection from the current presidential selection in the US.

Know what you want - what’s important to you – not subjectively but objectively, and certainly in writing. After all, many in the recent brexit vote were quoted as saying afterwards “that's not what I thought I was saying yes to”. The same can be said for buying goods and services too. This Pinterest board shows the cost of getting procurement wrong (i.e. the horror stories) – the unintended consequences of not paying enough attention to what they did want. I also wrote a blog on getting your business requirements right.

Identify which are go/no go criteria. That is, identify the needs that would mean a supplier gets deselected. The earlier in the process the better to save wasted time, and potentially the exclusion of more appropriate suppliers who are able to meet and even exceed your needs and wants.

Weight your requirements. Which requirements are more important than others. It's no use getting caught up in a requirement that only contributes 0.005 % of the decision, and ignore requirements that deliver 30% of what’s important to you.

Assess how the suppliers meet these needs and wants objectively – using an excel spreadsheet if needed. Is this supplier 5/10 compared to another at 6/10 for a requirement. That might not seem such a big difference, but when used against a number of weighted requirements it will provide valuable information on which supplier is best able to meet your requirements.

Don't make your requirements so restrictive that they only allow for the mainstream suppliers. Consideration of more inclusive, diverse and open criteria may encourage smaller, and yet equally capable candidates, sorry suppliers, to participate.

Do appropriate research and analysis of the market to understand who all the potential suppliers could be, and encourage them to engage with you. After all you might not get what you want if you allow the suppliers to self select, or only include suppliers your MD wants you to consider.

Check the efficacy of the information you're being provided. You may be very surprised with the outcome if you believe everything you're told by the supplier, or fail to understand that your selection has been heavily impacted by a big marketing budget rather than detailed analysis of the data. You only have to watch this Darren Brown video to get a sense of the possible with respect to the unconscious messages we’re subjected to.

Check the reason a supplier wishes to dish the dirt on another supplier rather than focus on what they can deliver. 

Don't get too bogged down in the bureaucracy – if it doesn't feel right to reduce the shortlist so early - don't. A flexible process allows you to keep your options open as you explore the ability of the suppliers to meet your needs.

Don't just follow the crowd – just because everyone else seems to be buying the new technology doesn't mean it aligns with your organisational mission, culture and values. 

Ensure the contract terms clearly identify what breach looks like (for both sides) so that you're not stuck with an inadequate and failing supplier for the next 4 years (or life time if we use the recent Brexit vote). You may also want to make it clear in the contract what the ramifications are of them making statements that you use to select them, that later prove to be false.

There's many differences between Politics and Procurement but, as with any metaphor, sometimes we can learn more about how to get it right in one area by looking at the insights from another totally unrelated area. You may even have noticed that the use of metaphor meant you were more engaged with the procurement process, in a way that you might not have been without the metaphor :-). Although I more normally use gardening as a metaphor for supplier selection and management.

How can you apply your assessment of the US presidential elections to an aspect of your life to ensure you keep on track rather than go off the rails! 

Alison Smith

The Purchasing Coach

Inspiring change inside and out

Follow hypertext links in the text to other blogs I've written on that subject. 

More on the services I provide can be found here.

Buywise 40-1 outsider

One of horses running at today's Grand National here in the UK was called Buywise, which eventually came in 12th. Had Buywise won I would have taken home £205, but instead I lost £5.

I wonder if that's what happens in a lot of organisations? They aspire to buy wisely but it doesn't turn out as they expect, and costs increase instead? 

I think that might be because it's too easy to put all our money on chasing the price reductions, and ignoring the other opportunities, and obtain value more broadly through reducing costs, increasing revenue or reducing risks. 

Who will you put your money on - Buywise or the other 11 runners who came ahead of it in today's race? 

How are you getting to know the buyer?

Yesterday I shared more about the services the Purchasing Coach delivered in 2015, and obviously still can in 2016. One new additional service for 2016 is 'getting to know the buyer' workshops and coaching - aimed at helping suppliers understand more about dealing with purchasers.

That is helping suppliers understanding more about:

• Purchaser's objectives
• Category strategies - and knowing where your category fits  
• The processes, tools and techniques purchaser's use
• Negotiating with purchasers
• Tenders, and responding to them
• Criteria for selection 
• Answering other questions you have about buyers

For more information about attending a session do please get in touch.

I look forward to hearing from you.

Alison Smith

The Purchasing Coach

Inspiring change inside and out

+44 (0)7770 538159

alison@alisonsmith.eu

The cost of getting purchasing wrong

The hardest task I and my procurement and purchasing colleagues have is convincing our stakeholders and other managers of the positive benefit to the business of applying more rigour to how they purchase. The skills I have developed over 27 years are seemingly discounted with a belief that goes something like "anyone can purchase" or as someone said the other day "it's just shopping."

Until it goes wrong that is when the realisation starts to dawn that we might have helped them avoid the hole they're now in.

How we get around the problem I really don't know - we've been trying for so long and yet the profession doesn't really seem any more well recognised than when I started, other than in the larger corporates.

So here's how I'm going to try........ I've set up a Pinterest board and when I find examples of the impact of purchasing gone wrong I'll add to it. That way we'll all have an expanding visual reminder of what effective purchasing can help businesses avoid.

Today I've added examples of buyers going to jail, project overspend, contract termination, accusations of wrong doing in the media, delays, cancellation costs, ministers apologising on your behalf and complete service failure! And that's just been in the media over recent weeks! oh yes and one company's share price slumped due the cost implications of a product recall.

The most bizarre decision made of the examples found so far has to go to one authority who felt it acceptable to claim a deduction of £84,450 for a mousse that was 24 hours out of date. No wonder the court upheld the ability of the supplier to terminate on the grounds of breech of contract. Just think though of the cost to the business of retendering - one reason for getting it right first time I'd suggest.

Alison Smith
The Purchasing Coach
Sowing the seeds of effective purchasing in your business

Share price picture Source: bbc.co.uk via Alison on Pinterest

Are your suppliers servicing the Olympics

There's been a lot in the media about minimising the disruption of the Olympics to your business by encouraging staff to work from home etc. There's even a 'planning information for businesses' document that helps identify some of the possible impacts to your business. The emphasis, however, has been on the disruption to transport impacting staff and deliveries. Unless I've missed it there's one potential impact that seems to have been missed:

Are your suppliers providing goods or services to the Olympics?

If they are then I would suggest you may be negatively impacted unless you've taken steps and been given assurances you won't be.

One supplier I was talking to has a significant number of their senior management involved in providing services to the Olympics. This means they won't be available to do the work they normally do - supporting customers, completing tenders, resolving staffing issues etc.

It won't, of course, just be the supplier I was speaking who's involved in the Olympics but a whole range of suppliers, that I can't even begin to understand the breadth of, but is likely to cover the supply of:

Catering, Transport, Security, Maintenance, Food and Drink, Printing, Uniforms, ATM's, Cleaning, Media, PR, Hospitality, FM, Temporary labour etc

And don't just think that because your suppliers aren't based in London you're off the hook - many who rely on temporary labour may find their supply significantly reduced across the country as labour is bused into the capital. In addition there are venues holding Olympic events from Weymouth to Glasgow.

It's important to understand what plans your suppliers have in place to minimise the disruption to your business and ensure your contingency plans are updated to include the higher risks over the coming months.

Here's to many records broken, anthems sung and tears shed and an event everyone in the UK can be proud of with minimal disruption to normal service.

Alison Smith
The Purchasing Coach
Sowing the seeds for an undisrupted business during the Olympics

Olympic picture source: london2012.com via Alison on Pinterest

Reducing your costs isn’t just about negotiating lower prices!

If I ask business owners and managers about their purchasing they normally reply by proudly telling me that they always get 3 quotes and then negotiate down to the lowest price. This process is likely to have involved some banging of fists on desks and exclamations of “HOW MUCH?” & “Lower Lower.”

Perhaps a little stereotypical but that’s certainly what most people think procurement/purchasing/buying is all about. Yet if it’s the only thing you do then I can assure you “your total costs could be lower.”

Why - because negotiating the price only takes place about 90% of the way into the buying process! It’s the 90% before the negotiation takes place where you will have been adding cost into the provision of the goods or services. It’s no use thinking you’ve done a good job in negotiating a 5% reduction when the real costs savings could be 30% if you’d only taken the time to fully and rigorously apply best purchasing practice to the item or service.

The 30% cost reduction might come from:

• Revisiting the specification – is it over specified, can it be standardised or redesigned

• Understanding and consolidating or even reducing your volumes

• Better forecasting
• Reducing your supplier base

• Process reengineering – taking wasted time and material out

• Reducing stock holding

• Moving to more efficient suppliers

• Finding more financially secure suppliers

• Understanding the needs of your suppliers

• Understanding the cost breakdown for the item – materials, overheads, profit etc
• Negotiating with others within the supply chain
• Improved payment terms
• Improving delivery times
• Reducing quality issues
• Improving customer service – theirs and yours

And that’s just a list for illustration purposes.

Next time you ask for 3 quotes I’d suggest you check you’ve done the work before hand to ensure that what you’re asking for, and from whom, has been adequately investigated. Otherwise you might as well be pouring your cash down the drain!

 

Alison Smith

The Purchasing Coach
Sowing the seeds for cost reduction in your business
alison@thepurchasingcoach.co.uk
+44 (0)7770 538159

Money down drain picture source: businesscloud9.com via Alison on Pinterest

Sowing the Seeds to Cost reduction in your business

How much do you know about purchasing - and I don't just mean the banging your hand on the table shouting "Lower Lower". I mean the 90% of the work that was undertaken before that discussion with a supplier took place.

Unless you've had some purchasing training or read purchasing books I assume you may know more about gardening than you do about purchasing. Why - because whilst you may not be a professional gardener most of us at some point or other have had a garden, visited gardens, watched the multitude of gardening programmes, read gardening books, visited garden centres (if only for a cuppa) or simply sat in someone elses garden. That's a whole lot more exposure to effective gardening than purchasing.

That is, we all understand that plants in a garden need pruning, cutting, mowing, feeding, planting, composting, moving. Yet we forget to do any of these with suppliers and just expect them to grow where they're planted and look after themselves - and hope the weather gives them what they need as we certainly won't be!

Here's why I think we can learn a lot about purchasing from gardening:

Why do you want a garden?
Just as a garden might be low or high maintenance, for children or adults, for BBQ's, games or for lounging then purchasing has the same considerations. No use putting in place a garden that’s high maintenance if you’ve not got enough gardeners.

It's the same for procurement - what do you want it to deliver?

It’s nothing without design
Once you know why you want a garden you still need to consider the design and management of the garden. Will you have one gardener or a number and who’s in charge. Will you be needing a greenhouse and who will have keys for the tool shed? What type of plant will you be putting in that shaded area at the end of the garden under the trees unseen from the house - it had better be a plant that doesn't need much care and attention.

In procurement the problem faced is we've often got all the managers in the organisation thinking they can help with the gardening too. Capability Brown who designed Chatsworth Gardens was a professional gardener, and just like Chatsworth's garden doesn't let it's visitors do its gardening for it - organisations should leave procurement to the professionals.

What’s in your tool shed?
It’s not only about the number and types of tools in the tool shed but maintenance and replacement of them too. In some smaller gardens it might be ok to use the spade for many different uses but once the garden gets bigger and certainly once the garden is open to the public then the maintenance of the garden will become more important and more specialised tools are needed. You don't have to look far to see all the multitude of new tools available and realise that whilst many might be more for show many can and do save time and your plants. See this blog with visual representation of the different tools needed for buying, purchasing and procurement gardens.

Many managers and leaders in organisations assume there's only one tool to use in procurement, and they just want to use that, all the time. Our job is to ensure they understand the full breadth of tools in the procurement toolkit, and that their effective use is in the hands of the professional. You can't just let anyone loose with a chain saw!

Plant selection
Even for each type of plant there are different varieties each with their own unique characteristics – some needing direct sun, other partial shade, some needing nutritious soil and other being happy with their roots in clay! Matching the variety of plant to the characteristics of your garden is essential in ensuring the plants flourish and the time needed to care for them minimised. Of course once you know what variety you want and have decided whether you’ll grow them from seed or not you then need to decide where to source them from.

Suppliers are the same - choosing lowest cost every time, not doing risk assessment, nor understanding the supply market, suppliers, cost breakdowns, business requirements, supply chain analysis etc are just like picking a tree and then being surprised when it grows too big, blocks out the light, and its roots start to impact the house's foundations.

You’ve got to have a Greenhouse
If you live in the UK then there will be seeds and even plants that need some tender loving care (TLC) first. Time in the greenhouse to get more hardy before they’re planted out into the garden. Sometimes when we unexpectedly end up with snow or frost in May, or the west winds threaten a gale force, we may need to bring plants in.

When did you last review the performance of your suppliers and consider how your actions are contributing to how well they are flourishing? What would giving a supplier TLC look like?

Planting
You might be lucky and a plant might survive if you just dump it in a corner and forget about it. And whilst that might seem unthinkable in a garden it’s certainly what many businesses do to suppliers – no perfect position, no careful planting out, no watering, no feeding, no staking. Plants will certainly survive and flourish and even multiply if given the right care and attention - suppliers too.

Garden Maintenance
We’ve all heard about jack’s bean stalk or the perils of Japanese knotweed - maintenance is certainly needed to ensure the plants stay within the area originally designed for them. Turn a blind eye and weeds can take hold and smoother or even kill other plants. It’s also useful to have someone with knowledge about plants doing this otherwise it’s easy to uproot a perfectly healthy plant and leave the real weeds behind.

Isn't that the same with suppliers - we need to mow, feed, prune, cut back and compost suppliers. Otherwise one of these horror stories of procurement gone wrong could just be your organisation!

In conclusion
Healthy supplier relationships are no different to healthy plants – next time you start thinking about introducing a new supplier just think about whether you have the skills and environment that will enable them to flourish in your organisation. For more analogies between procurement and gardening see my Pinterest Board on the subject.

Alison Smith
The Purchasing Coach
Sowing the seeds so your purchasing garden wins best in show
alison@alisonsmith.eu  +44 (0)7770 538159

Post Script Jan 16:

I'm surprised I didn't mention that I've used this metaphor with a number of organisations, and delivered workshops to over 200 managers using gardening to enable them to understand the benefit procurement can add.

Related posts written since this post was published, that may also help explain more, include (just follow the hypertext link):

• Why using metaphors works
• Unconventional tools I use in procurement training and coaching and why
• No seat at the table - exploring the metaphor within the statement to provide a solution
• More video blogs exploring what managers can learn about procurement from gardening  
• More about soft skills because influence and persuasion are based on our competency in people and communication skills. (In 2015 I wrote an index of blogs written on soft skills - I do however need to update it.)