Procurement Transformation Blog

Procurement Transformation Blog

Opinions expressed on this blog reflect the writer’s views and not the position of the Capgemini Group

Compliance Management - The Alternative View

Category : Contract management

I can hear you yawn, remembering the last time you needed to buy something and became so frustrated with the corporate procurement process that you ended up buying the goods or service yourself or alternatively found a workaround.  Trust me you are not alone.

Much of my career has been spent on airfields, where “robbing” parts from aircraft that have just been bought is common practice so as to ensure planes on the front line could be up and running quickly without compromise.

Each time someone looks at the procurement process, the most obvious suggestion is to put an end to such malicious “robbing.”  Surely it is that simple.  From an efficiency perspective how can it make sense to take parts off one plane to put it in another, only to have to order another one to replace the part that has been ‘robbed’ and on a new place !!  It can’t.  Yet, I have yet to see a supply and demand line where variation on this theme is not the norm.

Looking at the efficiency of the procurement process, we can all say that this practice simply smacks of poor discipline and rigor.  However efficiency in procurement should not be translated purely as operational efficiency.  Efficiency should not just be measured by cost, or reduction of inventory, the traditional and easy to measure KPI’s – indeed if we were discussing an outsourcing environment the supplier would be ensuring that the KPIs were never compromised.  In this sense driving compliance is not at the forefront of any soldiers mind, yet there is a continued lack of of it. Front line troops are not stupid, their KPIs are significantly different from your typical sourcing or procurement manager with a normal focus on reliable equipment being deployed immediately into combat.  If robbing parts takes 30 extra man days but gets three pieces of equipment out the door today then a soldier’s KPI is met.

Interesting to note are variations of this theme -  when the procurement compliance process becomes too heavy or is managed using secondary measures to those running the operation, equipment has a habit of disappearing.   Whilst working in the military, I continued to hear soldiers tell stories of planes being hidden under tarps or even in one case, Jeeps being driven and hidden into a dormitory, on the belief that stashing parts was an essential practice.  As I was reminded, when men are under fire, a good soldier won’t let ‘the rules’ get in the way.  If sleeping with a Jeep is required, then a Jeep it is.  In the context of our clients and customers, the problem isn’t necessarily so business or mission critical, yet the principle remains.  The context may very well be computer power supplies, mobile phones or even paper but the same paradigm applies; a ready supply of parts is essential to the smooth running of an operation and they are often those goods that we do not want to be without.  Individuals known for keeping things running smoothly inevitably have a hoard of spare materials.

While the issue is perhaps at its most extreme in the military, the necessity of workarounds highlight the need to balance the need for purchasing compliance and business continuity.   It reminds us that we should always build a compliance framework in such a way to work cohesively with the procurement process knowing full well that processes which will track non-compliance and workarounds.  This, provides a much better insight and long-term efficiency than a heavy-handed, no exceptions approach to compliance.  The subsequent and nowadays necessity to provide completeness of tracking can also provide insight into an organisations’ real Procurement KPIs .

Standardising procurement measurement and reporting, and ensuring tracking relative to the overarching corporate goals ensure the reporting is relevant and effective.  Designing a system that is global and inclusive can be used to align the traditional goals of procurement (cost management and commercial compliance) with the more strategic goals of the wider organisation (profitability, reputation management and business continuity).

Whilst compliance is an opportunity for procurement and the core business to show their success, innovative solutions that support the business can be incorporated into everyday practice.   The reality is that practices of robbing and stashing exist and will remain, however can be better managed if tracked. The trick is in gaining the trust of the organisation such that if reported the information will be used to support the business process not punish the effective practitioner.  The overarching goal should be to develop a compliance practice which is effective and supported by the wider organisation.

Lucy Steinert

Senior Consultant

Procurement Transformation

United Kingdom

About the author

Lucy Steinert
Lucy Steinert
Lucy Steinert has with long experience in Complex and Strategic Procurement. She has a broad background across categories in public and private sector and has worked on some of the largest contracts ever let. Her great love is practical strategy implementation, and has a skill set which allows her understand and identify the key issues which need to be addressed a successful implementation. She holds an MBA from Columbia University and a BA from the University of California, Santa Cruz.

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