Agency expert Des Mclaughlin looks into the good and bad cops of procurement
I think it is safe to say those working in procurement are not the most loved of people. On a job popularity scale they probably rank somewhere between estate agents and traffic wardens. And yet they should perform a valuable role for both their company and the supplier community, so why is this?
Undoubtedly, some of the mistrust comes down to the nature of their role, which is seen by most as procuring a service or product at the lowest possible price.
A well educated procurer will know, however, that any contract has to be ‘win-win’ for both parties and should be the foundation for a strong working relationship going forward. And herein lies the problem. The quality of procurement varies so heavily from company to company that you never know whether you will be dealing with a friend or foe.
I have dealt with some excellent procurement teams over the years who truly see a contract as a partnership and are committed to promoting and working with the agent at every opportunity. They will always look to buy the best service for their company, not the cheapest. They understand the value of driving compliance and working with the agent to develop innovative solutions that will benefit their organisation. They understand that this behaviour leads to a greater success in managing and controlling spend and, as a result, truly value the agent.
Unfortunately I’ve also worked with some really awful procurement teams. They have had little understanding of our industry, often consider everyone’s services to be the same and force prices down to damaging levels.
I was involved in a tender for a leading retail bank where the buying decision was based purely on the amount of commission the agent was willing to rebate to them. The winning supplier agreed to give back 16%. Given the industry standard is 8-10% one suspects this deal swiftly became the venue’s problem.
The winning agent’s service proved to be very poor and their account management non- existent. The bank’s bookers rapidly lost faith in them and turned to other agents who provided a far better service.
The meeting programme quickly became a shambles despite procurement having given the agent a three-year contract. It will be interesting to see what, if any, lessons the bank have learned when they next tender for their meeting services.
So are procurement worth their salaries? Well, that really depends – some undoubtedly are, but others cost their company far more than just their salaries.