Procurement, The Heart Of A Business

In the first part in a six-part series, Rod Brasington, Chief Executive of Prosper, formerly known as NE Procurement, discusses the importance of good procurement principles and maps out the things tenderees should consider before publishing a tender.

The role of the procurement team within an organisation has, for as long as I can remember, been based on process management, negotiation and numerical analysis. Yet procurement is about so much more than buying products, materials or services at the lowest possible cost.

The debate around price versus quality has become a hot topic of conversation in recent years, but what if we focussed our attentions more on price and delivery? Yes, the price of something might be right, and the quality of a product might be of a good standard, but if the project doesn’t go to plan or isn’t delivered as originally agreed and extra work is required, then it’s likely than original costs will creep anyway… As a landlord, if you were looking to get a set of new boilers for a number of your homes, why would you just look at the upfront cost and pick the lowest? Yes, that might save you money in the here and now, but what happens if the bracket you have in your homes don’t fit that boiler and you then need to buy new brackets to support them? Or what if the boilers don’t come with a manufacturer’s guarantee and a year later, you need to spend money repairing them? Or what if their lifecycle is a maximum of five years but you need them to last for ten? Maybe rather than needing one member of staff to fit them, this particular boiler needs two, which increases staffing costs? For me, good procurement is about assessing the full package, with whole-life costs naturally considered, and the quality of the product or service involved, and details of the delivery of the project, combined to become the firm decision-maker of professional procurement.

As a public-sector procurement consultancy, at Prosper we see daily the impact good procurement can have. There’s a pre-conception that procurement is a really difficult process carried out by people who sit in a dark room somewhere tucked away. In reality, we see procurement as being a very straight-forward, yet comprehensive process, that can have a real impact on a lot of people. To ensure that a tender produces the mosteffective results, there are two things a tenderee should always consider.

Firstly, everybody involved in the process should sit down and identify exactly what the tender needs to achieve so that everyone is clear from the off what the project scope is. Secondly, once you know what you want to achieve, clear, unambiguous specification should be set so that everyone is costing the project likefor-like and so that no project creep can occur later in the process. In our near decade of working, we’ve found that if you get these two steps agreed right at the beginning, then it makes the whole process a lot easier to work with and evaluate when results start coming in.