The human side of procurement

I spent a recent break with friends. Picnics on the beach, barbecues in the forest, and long conversations over joint family dinners. Seemed idyllic. Until I heard about working life from an entirely different and sometimes horrific perspective. My friend works in procurement for a major hospital, and she astounded us with the problems, pressures, and trauma created by the covid pandemic for those responsible for procuring desperately needed vaccines, medications, gowns, masks, and respirators.

Corners were cut due to the urgency, scarcity of supplies, and competition with other health organizations. Supply chains vanished. Buyers accepted extreme risk.

In one case, an operational department found a supply of desperately needed surgical gowns and snapped them up without first checking with procurement. When they advised of the order, my friend inquired how many of each of the 5 possible gown sizes they purchased. Turned out no one thought about sizes. Now the hospital has several hundred thousand extra small gowns in storage that may never be used. This is only one instance of many. The competition among previously cooperative groups, over-bidding, secret offers, secret deals, and hoarded resources created desperate responses to desperate times. Extra gowns and expired medication are just the tip of the iceberg.

In another instance, a competitor organization paid $1 million for a large, complex device, only to later find that the transport bill was $3 million.

These aren’t the typical previous procurement horror stories that typically involve bribes, lies, gross incompetence, fraud, shady brothers-in-law, false invoices, or expensive jewelry. This story is about reasonable people under pressure, acting in good faith, and making honest mistakes.

Many organizations were not using procure-to-pay systems when covid struck. Now there’s a greater recognition that technology supports people to do their jobs better and streamlines inherently messy operational processes and complex services.

The risks of choosing a poor supplier, a fraudulent supplier, cost overruns, quality deficiencies, and compliance policy breaches can all be managed better with a centralized and efficient system. Good software provides visibility and enables updates in real-time as events change, even in desperate times, perhaps, especially in desperate times.

Maverick spend is always difficult to prevent and track, and results in increased costs that are difficult to record and report. The answer is to automate spend management. By installing a proper procure-to-pay system businesses record every transaction to reveal the maverick spend, whether you’re procuring insurance services, construction, legal services, or any other goods or services.

My company creates software that procures and manages complex services for our customers in legal services, insurance and construction. In a changing world, clever software approaches to managing the procurement of complex services are the last frontier and an antidote for desperate times.