Daily Archives: March 22, 2016

Consumer Sustentation #71: Government

As per our damnation post, everyone, or at least everyone in sales, wants the government as a customer because once you’re in, you’re in, and it’s almost impossible to get thrown out unless you do something really, really egregious because the process to replace you is so long, arduous, and painstaking that no one wants to do it, especially since management will likely┬áchange half-way through the process and put all projects on hold until a new assessment is done. They sign the contract, sit back, and rake in the commission year-after-year as the evergreen renewals keep coming in.

But Procurement doesn’t have it so rosy. Not only can government customers be very demanding, and require you to work extensively with Engineering, Manufacturing, IT, and the Supply Chain to design custom solutions to meet their needs, but they can be quick to pass on the blame to your company even if it’s not your fault. Plus, now many government agencies mandate that you provide bill of material data, shipping manifests, country of origin determinations, quality inspections, and other information with every product that you provide the government so they can meet their accountability mandates. And if that’s not enough, if the government runs out of budget and can’t get agreement to run a deficit, there can be an indefinite spending freeze while the situation is resolved.

Governments can be your organization’s best and worst customer and Supply Management’s biggest point of leverage and largest risk. So what can you, as a Procurement organization, do?

1) Regulatory Compliance

It is critical that you can show you were in full compliance with all of the requirements when you bid, when you signed the contract, and when you delivered the goods and services — at any time. The day after signing. The year after signing. Two years after delivering the last product. You never know when someone is going to rain down fire upon you to deflect the blame from themselves.

2) CRM and Communication Management

Make sure all interactions and communications with the government customer are logged, project and changed plans signed off on by the appropriate authority, and full audit trails always accessible. This is the key to good relations and problem avoidance.

3) Complete Supply Chain Visibility

The key is to always know:

a) what comes from where, all the way down through the components and sub-components down to the raw material (for labelling and country of origin)
b) CSR and Sustainability monitoring for all suppliers in the government product supply chains so that you can insure you are always in compliance to the best of your ability

4) SCF: Supply Chain Finance

Your suppliers need cashflow, so be sure to do your best to arrange Supply Chain Finance / invoice factoring that they can take advantage of any time that they need it.

5) Contract Completeness

Be sure to have any services you deliver deemed as “essential” in the contract as many spending freezes will exempt “essential” services.

And, above all, maintain good relations with the stakeholders at all times.