Procurement’s 7 Deadly Sins. Part I: Blindness
I want to share with you some thinking I’ve done around, what I call “Procurement’s 7 Deadly Sins”. It's a little bit tongue in cheek, but as a CPO for some major companies, I wanted to make sure I gave you essential information that you could surely apply. What I want to do in upcoming blogs is talk about each one of these problem statements - each one of these sins - and specifically what can be done to mitigate each of those sins. I will be making a blog for each one but if you want a sneak peak, contact me.
The 1st of what I call, “Procurement’s 7 Deadly Sins”, is Blindness -
“You can’t source what you can’t see”
“Focusing on getting this right in every instance that matters first.”
As a procurement buyer, have you ever had your customer call you at the last minute about something they needed yesterday? If you have, you probably didn't have enough time to actually do your job. That's one artifact of blindness. It is a deadly sin and I'll share with you as we go through this, the things that can be done to mitigate each of these particular problems.
The other artifact of blindness is people not following the procurement policy, not involving you on spend, pursuant to the policy - for example: greater than $100,000 - and basically just doing the deal without Procurement and the professional buying expertise we bring.
So the million dollar, or maybe tens of millions of dollars, question is - “Can you see all of the sourcing opportunities that you are supposed to be actioning with enough time to actually action it?” If you can't, or if you don't know the answer, I would suggest to you that's the first place to start. Finding a way to engage your stakeholders is critical to eliminating blindness.
Poor Stakeholder management by Procurement drives Maverick Spend and costs business’ millions of dollars per year in missed sourcing opportunities. The highly respected supply chain consulting firm, Hackett, did a fantastic survey on Maverick Spend in 2019. Below summarizes what they found:
When I started in Procurement decades ago, the way you were supposed to or manage this is with something called “Relationship”. Relationship today is as nebulous now as it was when I was a novice procurement guy and remains as elusive today as it was decades ago for me. In fact, more often than we want to admit it our stakeholders are calling us today about a contract they urgently need yesterday. The result is a massive, missed opportunity for your business.
The global COVID-19 pandemic just likely made the already bad maverick spend problem even worse by the work-from-home mandates. Procurement now has to service stakeholders from their homes. At Allergan, we went form 30 locations to tens of thousands of locations overnight. It is time for Procurement Functions to Pivot to “Process” over Relationship and finally embrace a SaaS process that works for this long-standing chronic problem.
This can be fixed today by a next generation tool called EP-Squared, launched by a novel SaaS company called Pierpont Holdings LLC. Procurement folks, isn't it about time that we “PUT AN END TO MAVERICK SPEND ???