Do we have a serious plan or intent to formally tackle the management of how Australia Pty Ltd procures goods and services, or shall we continue just to talk about it?

A recent “GovernmentNews” article published alluding to poor procurement practices costing the government $2.50 billion; the equivalent amount of a second Sydney airport.
Major utilities organisations announcing job cuts as (sole?) means to mitigate reducing energy sector costs.
A recent survey of SMEs pointing to a serious lack of or knowledge or understanding of how their procurement costs stack against company revenues or how to adequately manage this function.
A resources organisation not paying due care and attention to management of 15% of a huge multimillion dollar annual spend due to business awards figures in that bracket being below the radar for any ‘real’ procurement work.

Although differing circumstances, the common denominator is that Procurement doesn’t appear to figure at all highly in their business management portfolio as a contributor towards best managing resources.

…..and then Australia Pty Ltd whinge about being regarded as high cost and uncompetitive?

Appetite

Is Procurement taken seriously as a profession? Have we ever had the appetite to research and do what needs to be done to contribute towards removing this ‘Cinderella’ stigma or do we just continue wearing it like a badge of honour? Are we prepared to get down and dirty; operate in the gloomy depths of lower tier industry if needed, or are we just happy to be seen at high visibility events posturing with major organisations’ CEOs or Chairmen and to be seen smiling in to cameras? Meanwhile Rome burns!

Collaboration

We have business institutes which role is to represent or protect the better interests of Australia Pty Ltd (public and private sectors). We have Procurement institutes that are meant to be representing the best interests of Australia Pty Ltd (public and private sectors). Do both sets talk to each other? Do they engage in cross institute dialogue? Are they even aware of each other? Do the Business guys have procurement on their agendas when engaging with their private or public sector company clients when discussing grant funding or improvement assistance? How and at what level do the Procurement institutes engage with industry and how far down the tiered food chain are they prepared to descend? How visible do they wish to become?

What’s Needed?

Top Down

Work needs to begin at the top of the food chain. The major (tier 1) organisations chain must play their part when auditing their existing (tier 2) suppliers systems and processes and when selecting new ones. They themselves by and large have (or should have) structured procurement functions and processes and staffed by-and-large with qualified and competent procurement professionals or practitioners. In turn they should expect their suppliers to have the same, or if not have a plan to do so. It should be a pre requisite of supplier qualification; a core part of a qualification program. They are the ones that award huge business; set the ground rules for the game therefore require to ensure their suppliers are capable to play and hang around. And it doesn’t stop there; ongoing and similar work further down the chain with tier 3 – 4 etc. suppliers.

What or how can the industry bodies support or mandate this need with their registered companies? It could be to ensure that procurement is staffed with qualified and licensed professionals. Companies employ licenced or qualified accountants, engineers, legal professionals. Procurement also now has degree qualified and licensed practitioners: mandate the same! The management of at least 50% of a business’s revenue demands it!

Bottom Up

How do the Procurement guys get involved? There needs to be engagement with their industry counterparts to understand what’s happening in Australia Pty Ltd, jointly agree on where to target time and resources, then work very closely with them to put in place the necessary strategies and tactics to get the message out to all tiers of the supply chain. Road shows in targeted industrial/cluster concentrations is one way. Business magazine / journals adverts is another. The holistic contents must also mention the existence of and increasing requirement for tertiary qualified licensed practitioners in procurement (CIPS especially). The vast majority of business won’t know anything about any of this. Whose responsibility is it to let them know? It shouldn’t be left to a small band of (1-man outfit in some cases) consultant companies with (loose) affiliations to one or other (or all) institutions to get this message out. There requires to be proper, professional, structured management of this. Business institutes should be involved and able to assist in this regard however not to be left solely up to them! Muhammad requires to go to the Mountain!

Objectives

Business Institutes: get Procurement on your agenda!
Procurement Institutes: include professionally managed procurement in your posturing agendas!
Both Institute bodies: make your introductions. Get to know each other. Work together.

Incentive

What can $2.50 billion buy for Australia Pty Ltd without any requirement for state funding?

That should be incentive enough!