How Things Can Go Wrong In Procurement… And Badly

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Author: Margaret Gilbert

A recent client discussion showed how misunderstandings occur. The buyer and supplier met and had a discussion concerning rent reduction – led by the supplier – and was asked to provide a business case providing the reasoning for such a rent reduction.

It was understood by all parties what was required – or so I thought. Two months later and after several follow ups a further meeting was held.

The day before (late in the day) a communication was received from the supplier which was, in effect, a wish-list but no reasoning or relevant information to back up the claim.

The meeting itself went through the issues, what was asked of the supplier at the previous meeting. The suppliers could not and was not prepared to provide information apart from a wish/demand which was explained was not sufficient to prove their case.

The supplier was given three days to provide information but decided not to do so. The rental price was agreed to leave as is which was followed up by email. The contract was updated to reflect minor changes and sent to the supplier for sign off.

Four days later the supplier emailed indicating that they were not prepared to sign the contract.

What lessons can be learnt from this?

  1. The need to communicate clearly.
  2. Reasoning has to be provided which is more of a ‘wish;
  3. Delaying is not helpful.
  4. Assumptions are not helpful.

What I found interesting was that the buyer would accept such a request without backup on facts to prove the case.

The end result was not a good one for either side  This shows the need for supplier education.  Equally, the supplier has to inform themselves and provide relevant information – and not take two months to do so.

In this particular instance the ‘wish’ led to termination of the contract which had been in place for some time. Equally, the shortsightedness led to ongoing and new upcoming work. This does not make sense.

In the middle of all of this was conflict of interest issues, the supplier acting as a staff member rather than as a supplier. Recent monthly meetings were put in place, the supplier was asked to sign in when for years this was not required.

This shows that there was fault on both sides – there was no enforcement of anything and it was the supplier controlling everything. How was this possible? The supplier was married to one of the senior management team.

This whole issue could have been handled better if it was clear about expectations of the supplier and the buyer took some action around the conflict of interest issues.

The end result to a large degree could be seen to be predictable.

It was interesting to look at this from an observers perspective and to wonder: why would the buyer accept a reduction of rent without any reasoning. Equally, how a supplier could assume that asking would automatically work and not be prepared to put in the work to support the claim.

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