IACCM research has revealed widespread concern about the integrity of the bidding and negotiation process. Contracts and Legal practitioners recognize that this is the phase when foundations are laid for future claims and disputes. A recent survey suggests that failure to properly describe, understand or respond to requirements accounts for 40% of failed or troubled contracts. Other data implies that the percentage may be as high as 65%.
from Commitment Matters Blog March 7th, 2011 Post Truth In Bidding by Tim Cummins
Can I get an AMEN from everyone!
Tim Cummins has dared to say what most in the profession have for so long known but failed to speak about. Specifically, that the bidding and negotiation process employed and automated by organizations in both the private and public sector is an exercise in anything but delivering a best value result.
This disconnect in the supplier engagement process is something that I had originally written about in a December 13th, 2007 post titled The Bands of Public Sector Supplier Engagement. In what is still one of the most popular Procurement Insights blog posts (the other is Public Sector Procurement and the Wal-Mart Effect), one of the most contentious points that I had raised centered on my observation that “There is a general perception that the RFx process is ultimately little more than an elaborate fact finding mission that is geared toward bolstering and justifying a pre-ordained outcome. Otherwise known as an exercise in decision justification”.
The ramifications of such a perception is that suppliers become increasingly cynical, especially when pursuing government contracts, to the point of no longer coming to the table. This in turn reduces the competitive field and with it the likelihood of a best value outcome, as good suppliers opt to pursue opportunities in which there is a higher degree of confidence resulting from a properly aligned acquisition process.
What Tim’s post raises is the troubling prospect of the universality of misaligned acquisition processes within both the private and public sectors. Citing a number of factors ranging from Changes in personnel and the constant drive for innovation, there is certainly merit in the sounding of the alarm as process improvement that is usually centered around automation more often than not creates what Colin Cram recently referred to as being a crutch for non-imaginative buying practices where adherence to belt with suspenders, risk averse rules often times takes precedence over best value decision-making.
The question is how do you fix it?
In this regard, Cummins suggests a more integrated approach, which can best be driven by the customer and will require executive leadership to implement. At the 10,000 foot level this of course makes perfect sense. However, it is at the execution level, in the trenches, that such changes ultimately have to take shape. This means that executive leadership must first experience a dramatic change in attitude where the view that purchasing professionals are little more than order takers waiting to receive the proper direction must give way to a new found collaborative respect that rectifies a situation similar to one experienced by the CPO from Nestle.
Conversely, procurement professionals must get beyond the Rodney Dangerfield “I get no respect” mindset by becoming more proactive in seeking said involvement including the fine tuning of skill sets through the market relevant curriculum offered by Universities and a growing number of associations. This is already happening on a gradual , organic basis as the up and coming generation of purchasers are choosing to be in the profession versus just falling into it as the majority of buyers did in the past.
Without these changes occurring within the buying organization Cummins hoped for open and honest dialogue between customer and supplier will remain an elusive quest.
In terms of Cummins’ reference to innovation, there are most definitely a variety of tools that can also help to augment the transformation within the buying organization, provided that they are not looked upon as being the answer in and of themselves. Far too often, technology has been used as a shortcut to try and fill the void caused by misaligned acquisition processes, producing little more than unrealized savings while simultaneously exacerbating supplier cynicism. In short, the historic problems with failed automation initiatives have little to do with the actual reliability of the technology, but instead in how it was utilized.
Think of it this way, a Mercedes Benz is a great car only if you actually know first how to drive. If you do not know how to drive you are likely going to run off the road or have a terrible accident – which ironically is the word that is often times used to described the many failed e-procurement initiatives. However, once you have acquired and continue to develop the skill sets, this is when the features of the car come into play as an extension of, versus being a replacement for, your driving skill and experience.
With the increasingly globalized marketplace in which we now operate addressing the issues raised in the Cummins post become even more critical and yes, complex when you take into account the various governance models of a geographically expanded supply network.
This brings us right back to where we started today’s post in that the importance of a recognized leader such as Cummins standing up and saying in an Emperor has no clothes on manner that the biding process doesn’t work, will hopefully shine a long needed light on a problem in our industry that very few have wanted to acknowledge even existed. To this I say AMEN!