Purchasing management is systematic when it pursues either one goal or a coherent, integrated package of consistent goals. It follows that one of the most effective tools that a purchasing professional brings to the table when assisting in a purchasing project is the ability to identify clearly the goals of the project.
At least in the case of major procurement efforts, each procurement project should focus on a goal, which should exactly describe what the project is to accomplish.
The project description should employ action words such as design, build, implement and the like. The goal should be limited to those essential elements of the project that communicate the purpose of the project and the outcome expected.
Using the Vancouver Olympics to illustrate the point, the goal of any Olympic organizing committee is to put on a sports event.
It is not to carry out a broad program of environmental rehabilitation nor correct all manner of social ills.
The purpose of setting a clear goal is to provide all participants with certainty as to what the exercise is intended to accomplish. The process of abstraction has at least one important practical implication — such goal setting can reduce the tendency towards scope-creep and the confusion that often sets in between proper process and the business rationale for a particular project.
A goal is tied to the business rationale. The intent of a focus on goals is to confine the steps that are taken in carriage of a purchasing project to those measures that further (or, at the very least, are consistent with) that business rationale.
It is axiomatic that the overall project and the interim goals must be attainable.
On the other hand, “attainable” is not a synonym for taking only the easy, time-worn path.
As much of my work is done in the private sector, such companies as Toyota, Honda, Ford, Harley-Davidson, Black & Decker, Motorola, Bose and Xerox have found that improved performance in the purchasing area, through working more efficiently with suppliers, has led to improvements in the time and cost associated with product design, development, manufacture and distribution.
Development times have been slashed by as much as 40 per cent, inventory turns have increased from six to over 50 a year, and the cost of purchased material has been reduced by between 15 and 35 per cent.
Many of the recent initiatives in the public procurement area have had the objective of trying to spend money more efficiently as their principal goal — but the better ones have also taken into account a further goal of facilitating delivery of programs and services to the public.
Some procurement projects are far more ambitious than others and involve criteria of success far beyond the simple matter of trying to spend money more wisely.
A realistic project may push the skills and knowledge of the people working on it, but it should not break them. However, a project is not realistic if it cannot be carried out using available technology and methods, or if the cost of carrying it out exceeds the capacity of available resources.
The particular responsibility of the procurement department in a goal-oriented approach to procurement is to confirm that the methods that are being followed in relation to procurement are consistent with commercial reality and that they offer a workable method of carrying the project into effect while generating best value for money.
It is also to see that municipal concessions to suppliers in relation to procurement matters are matched by corresponding reductions in prices.
Purchasing “management” requires a focus on measurable results. Anything that cannot be measured, cannot be managed.
Stephen Bauld is a government procurement expert and can be reached at firstname.lastname@example.org. Some of his columns may contain excerpts from The Municipal Procurement Handbook published by Butterworths.