Procurement teams often spend some much time working on sourcing strategies in their offices they can miss the key issues.
As seen on Procurement and Supply Australasia (PASA).
Tom and Pete were sourcing specialists for their company’s procurement team.
One day, Fred, their manager, informed the two that one of them would receive a promotion for their hard work. He told them that the promotion would be based on the quality of their next Sourcing Strategy. Fred then gave both men the same procurement category and said, “The main contract for this service will expire soon. Go and create the best sourcing strategy you can and, when you come back, explain to me how we should procure the category this time.”
Locking themselves in their own offices, Tom and Pete slaved away for weeks working on their sourcing strategies. They did lots of market research on the suppliers, spent days pouring over the spend data from the last couple of years, and then modeled exactly how much it was costing the supplier to provide the service.
At last, it was time for Fred to review their strategies. Both were great, he found, but he found it hard to choose which man to promote based off of them. Just as he was trying to make the decision, Fred’s boss, Charlie, the Chief Procurement Officer, walked past.
“Fred,” he said, “you look concerned. What’s the matter?” Fred explained his predicament and Charlie reviewed the strategies. “Hmm,” he said, thinking hard. “Tell Tom and Pete to go out to our operations and help the catering team for the next few days. They’re a few people short.”
Fred was puzzled by this order, but he did as he was told.
When the men returned, Charlie asked them to join him and Fred in the board room. As Tom and Pete walked in, they saw their sourcing strategies on the board room table.
“How was the catering?” asked Charlie.
“Fine,” said Pete, “but I felt a little under-utilized for my skill level.”
Charlie nodded and turned to Tom. “How about you?” he asked.
Without saying anything, Tom stood up, walked over and picked up his sourcing strategy document. He then proceeded to tear it up.
“Well done!” said Charlie. “You get the promotion!”
“What?” Pete said, astonished.
“I don’t understand,” added Fred, confused.
Tom explained: “I spent weeks creating this strategy, but I did it from the confines of my office. Within two days working with the people at our operations who most relied on the service we were procuring, I realized we didn’t need that service any longer.”