How to Use Tenders to Grow Organisational Understanding of Procurement

0

Author: Tony O’Connor

The travel category is interesting in several ways. It’s complicated and opaque. The supply chain is dominated by intermediary TMCs. It has a large IT component. It affects the morale of the company’s most valuable people. Costs and services vary dramatically. And, procurement of travel often involves a range of people from outside the procurement team, including EAs, financial, HR and IT managers and sometimes senior management. It’s not often you get these people all in the one room, or even in the one process. This is an opportunity.

Procurement activities that engage various other staff members in a consultative process enable not just the dissemination of good procurement practice, but also the spread of understanding and appreciation of the value of procurement.

In some sales driven companies you hear the dictum that “everybody is a salesperson”. Well, in every organisation most people are buyers, even if indirectly.

In running many airline, card and TMC tenders over the years, it has struck me how procurement ambassadors can be created in the process. The contributions of the “outsiders” are usually of value. But the greater benefit has often been the improved change management enabled by these ambassadors of the process. They’ve seen the issues, the competing outcomes and the complexities. They’ve seen the care taken for end users; the concern for the coalface as well as the balance sheet. But more importantly, the value and activities of procurement generally are better understood. The trickle-down benefit to procurement’s position in the organisation can be substantial.

This was particularly the case in some of the tenders we ran for universities, where senior people such as faculty heads were included in the assessment teams. Attitudes to procurement; the process and the people, in some cases transformed from disdain to respect, or at least to positive acceptance (even for the consultant!). And the procurement department went from being incompetent meddlers to specialist helpers. Really.

The procurement process is often slowed down a little when you include outsiders. Just getting everybody free on the same day can be a challenge. But the change management and ongoing compliance benefits will outweigh these initial costs.

Back to my home turf of travel … This category lends itself to running a broader assessment team because so many people care about the outcomes. I think a team of six to eight is about right. They only need to actually meet a few times. Their involvement should be sufficient to make them fully aware of the detail and good process without imposing a large work burden. When it works it is “sweet”, and it’s pretty easy to make it work.

And then, to keep the internal love happening, the same people and maybe some others can be involved in your periodic performance and strategy reviews with the suppliers.

The default approach taken to reporting up on projects to the CFO or CEO or suchlike seems to be a bit defensive in my experience. More often than not when I’m asked to help here I’m asked to help the procurement manager to “justify” the process, its costs and its outcomes. There is almost an assumption of “poor ROI guilt”. If you could be confident of proper understanding at the top this wouldn’t be the case.

The attitude of senior management affects not only day to day support for the procurement managers but also their fate when the financial winds blow icy. Cost reduction experts are often more needed in harder times but can be among the first to see the outplacement consultant. You might not be able to include senior managers in tenders or reviews very often, but the organisation-wide understanding of your role that you develop by including various staff in your processes will build a culture of appreciation that cannot but help your cause when times get tough.

Oh, and another benefit of inclusion is that more people will actually comply and buy better, and help to keep profits healthy in the first place.

Tony O’Connor has been Director at Butler Caroye Asia Pacific (independent corporate travel management consultancy) since 1998. For more information, visit: www.butlercaroye.com.au

About Author

Leave A Reply