Three things that we all agree can fix procurement.
There’s a war raging in procurement at the moment. Like most wars, often the people trying to get on with their day-to-day jobs are caught in the middle. The ultimate irony is that both sides are fighting for the same thing. Let’s bring some sense into this dispute and focus on the three most important things that suppliers and clients agree on:
1. Cheapest price is not the best value. Suppliers want to win contracts based on the value they offer, not risk the lifeblood of their businesses on tiny or negative margins. Clients want durable, innovative, high quality solutions - not some cheap and nasty cowboy solution.
2. Risk needs to be managed properly, not dodged. Clients don’t want to be hit up with extra costs due to suppliers mid-handling risks. Suppliers don’t want to be held accountable for events that are outside their control. In either case, money is wasted, and nobody wants that.
3. Capability in procurement is a big issue, and it’s exacerbated by short timeframes. Suppliers are frustrated by unclear, unfair or inefficient processes, inappropriate weightings and irrelevant questions that don’t drive Value for Money. Clients are frustrated by hastily assembled generic tender responses, lack of useful information, mistakes, inadequate risk assessment, and prices that are too high, unsustainable or flawed. And nobody has enough time (or energy!) to develop quality solutions to these fatal flaws.
With those priorities agreed, we can all work together to fix procurement. Everyone wants procurement to be fair and transparent. Everyone sees the value in well-designed procurement tools - from effective procurement plans, to RFT documents, evaluation plans and TET Reports - to thoughtful tender strategy development and supplier responses that add real value to public asset management.
Suppliers and clients both want processes that are cost-efficient - that don’t waste their time on activities that don’t drive value. And part of that is recognising that one size doesn’t fit all, for either client-size procurement processes and documentation, or for supplier tender responses.
Getting the best value shouldn’t be a blame game. And it’s far easier to achieve alignment in procurement than many people think. It’s about educating our procurement practitioners and our suppliers in how to generate fit-for-purpose, targeted solutions that focus on the aspects that will drive value for money. And encouraging them to work cooperatively and be open to constructive comments on how to improve.
Fast improvement in these areas won’t be achieved by yet another talk fest, or an auditing tool, or a new procurement directive, strategy or policy document. We’ve been churning out a plethora of these, often with mis-aligned and varying directives issued from all sides, for decades. But the improvement is marginal at best.
What will help, is training, templates and tools that guide procurement practitioners through procurement planning to develop effective RFT documents and evaluation processes. Both MBIE and NZTA both have some good tools to offer - what a shame that they are not (yet!) aligned. Once we have a single practical model for best practice procurement (like the blended model that’s covered in the NZQA Procurement qualification) then we can set about to educate suppliers that generic responses and cut-throat prices are not the way to win work.
Kiwi taxpayers and ratepayers - like you and me - have a right to be confident that our public money is spent wisely, and that false economies proposed by cheap and risky suppliers won’t cut the mustard. That tender evaluators won’t be put under undue pressure by elected members or managers cutting corners in order to get re-elected. That contract risks will be discussed and managed effectively, by whichever party can control them. And that our procurement processes will be fair, transparent, fit-for-purpose and cost-effective for both sides.
It’s not difficult. Let’s make that happen.
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