Since the senior management of any organization must plan for and respond to any problems that confront it, there is a benefit in describing the types of problems that may arise.
Procurement is sometimes described as the lifeblood of the organization, at least by procurement people.
As I described in a recent article, writing and responding to RFPs efficiently can be the difference in winning or losing projects.
The problems encountered by an organization may be classified as operational, strategic, relational or technical in nature.
Technical problems are those that concern the interface between the systems and process employed by the organization to allow it to achieve its goals.
They involve some imperfection in the systems that are in place (e.g. an inefficiency in the layout of the production process, etc.) that prevents the organization from maintaining peak performance.
It can also impede the company from making steady incremental improvement in performance that should be possible given the resources on hand. Errors in execution also fall into this class.
The usual solutions to technical problems will include changes in routine and other adaptive solutions within isolated departments of the organization. Only rarely is it necessary to effect pervasive change at all levels of the organization.
Operational problems exist where existing systems are satisfactory for the task at hand, but where there is some flaw or deficiency in the organization itself that thwarts improvement of production or other vital aspects of the operation.
The most common problem of this sort is the shortage of resources, goods and services, because of the pandemic. In contrast to technical problems, operational issues cannot be addressed by changes in routine.
I have addressed this concern over the years that operational problems require fundamental changes in the organization itself. However, if such changes can be implemented, then the organization’s goals and plans for reaching those goals need not be modified at all.
An alternative approach is to redefine the mission of the organization so that it’s more in line with the resources on hand.
In contrast to technical problems, operational problems must be addressed at the higher levels of the organization.
Strategic problems are those that arise from a break or other disconnection within the organization itself (e.g. the loss of essential personnel) or within its environment (e.g. deregulation of an industry, the emergence of some new technology, or globalization).
Strategic problems render obsolete some critical aspect of an organization’s operations. For this reason, strategic problems can make or break both the organization and at least in some cases its competitors as well.
Fortunately, strategic problems are encountered relatively infrequently, except for organizations that are active in a highly unstable environment. Where pronounced instability is a feature of the organization’s environment, longer term planning becomes progressively less viable.
Accordingly, it is necessary for the organization to focus on more short-term goals.
Organizations that operate in highly complicated environments are those that are most prone to environmental instability.
Strategic problems require major changes to and within the organization. The organization must be redefined so that it is able to participate in the newly emerging markets or is able to shift into some completely different market.
Adaptive changes of this nature are wholly different in character from those that are required to address technical problems as they will normally require the development of new business and methods of operation, the learning of entirely new skills and the acquisition of new attributes, changes in values and the creation of new relational networks (e.g. of suppliers and customers) so that the emerging organization differs markedly from its predecessor.
It is critical to develop a business plan and make sure you execute the plan with precision.
Should the plan change during the fiscal year, all stakeholders should be made aware of the updates.
Stephen Bauld is a government procurement expert and can be reached at swbauld@purchasingci.com. Some of his columns may contain excerpts from The Municipal Procurement Handbook published by Butterworths.
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