… and why you need to understand them if you want to source better.
Over on Spend Matters UK, the public defender recently gave us the fifth in his Five Principles of Sourcing. Designed to mimic the philosophies that underpin many of the biggest and best firms in the world, the public defender‘s five principles were designed to inform good practice that is fundamental to procurement success, regardless of vertical, region, or category.
In this post we are going to review the five principles, discuss how they are relevant, and explain why you need to adopt them as a foundation of your n-step sourcing process, whatever n may be.
The five principles are:
In the words of the public defender, coherence means applying an end to end logic and consistency to the whole sourcing process. That means understanding the aims and goals before you even start engaging the market, and having that “thread” running through all the stages of the process, including critical elements such as the evaluation methodology and process.
This is a key to sourcing success. If you haven’t figured out the desired end state, you shouldn’t even issue the first RFX. You need to figure out the products you need, the services you need, the specifics of the provision, and any other requirements from the supplier. Only then can you define the initial RFI where you ask questions to weed out suppliers you wouldn’t do business with (due to sustainability practices, lack thereof, financial stability, and so on). That can be followed by a detailed RFP which focusses in on product/service/solution requirements, and only then will an RFQ be issued to the remaining subset of suppliers that should be good-to-go should they win.
This is perhaps the most obvious of the principles. Being open to new suppliers, new ideas and new solutions is fundamental to the concept of generating competitive advantage for the organisation through our procurement and sourcing activities. Openness is key; working on the principle of sticking to what we know is simply a guarantee that a competitor will in time do it better. That openness means not just seeking out new suppliers, but allowing suppliers (new or existing) to express their preferences, innovative ideas or options, rather than the buyer dictating to them.
Remember that insanity has been defined as doing the same thing over and over again and expecting different results. If you always invite the same suppliers, ask for bids on the same products, and don’t change any service requirements, then why should the bid for this event be any different from the last? The only way to get new, better, results is to open the event up to potential new suppliers, potential new products, new service offerings, and so on. Openness is a fundamental requirement of success.
Rigour is about treating the sourcing process with respect, applying diligent and rigorous planning, appropriate processes and analysis to it. Rigour means having a focus on the professionalism of the sourcing process, which for most organisations also reflects on the professionalism of the procurement or sourcing function, team and individuals.
Simply put, rigour means making a plan and sticking to it. No results will materialize unless the sourcing plan is adhered to. No allowing a supplier to the next stage if they fail the first stage. No skipping a stage. No negotiations outside of the defined negotiation window. No negotiations outside of the negotiation team. No picking the incumbent unless they win with the agreed upon ranking system. The only way to truly get results is to make a plan, share it, and stick to it — no matter what happens.
Come back tomorrow for Part II where we continue where we left off.