The Post Hoc Trap in Procurement: Understanding Cause and Effect

Recently, I came across a fascinating concept in a newsletter by Vivek Kaul: “post hoc, ergo propter hoc”. This Latin phrase, which means “after this, therefore because of this,” describes a common reasoning mistake of assuming that because one event follows another, the first must have caused the second. This concept made me think about reasoning mistakes we often encounter in procurement. I wanted to share these thoughts with you, as I believe we all can benefit from recognizing and addressing these missteps. How often do we fall into this trap without even realizing it?

In procurement, where our decisions have ripple effects, this kind of reasoning can be misleading. We are constantly making changes — switching suppliers, adjusting processes, reacting to market shifts, and it’s easy to link cause and effect based solely on timing. But experience has shown me that doing so can lead to hasty decisions and even strained supplier relationships.

Consider a scenario familiar to many procurement professionals: we shift to a new raw material supplier with the aim of improving quality or reducing costs. Not long after, quality complaints start surfacing. The timing seems to suggest the new supplier is the cause, right? But in reality, quality issues often stem from multiple factors. For example, I’ve seen cases where seasonal variations in raw material properties or even changes in production team members have contributed to quality inconsistencies. Instead of jumping to conclusions, we may need to examine the entire process to identify the true cause.

Another situation involves logistics and delivery timelines, especially relevant in today’s supply chain environment. Many companies, particularly during peak season or under volatile demand, have switched to new logistics providers to meet tighter schedules. If delays still occur, we might assume the new provider isn’t capable. But external factors, like port congestion or evolving customs regulations, often play significant roles. A well-rounded approach would be to analyze these external influences before concluding that a new logistics provider is solely responsible.

These examples show why it's important to find the root cause in procurement. By looking at all the factors, we can avoid jumping to wrong conclusions. Root-cause analysis allows us to distinguish between correlation and causation (i.e. just because two things happen together doesn’t mean one caused the other), helping us make better-informed decisions.

Cost fluctuations provide another classic example. Let’s say a plywood manufacturer notices a rise in production costs shortly after switching to a new adhesive supplier. A quick glance at the timing might make it seem like the supplier’s price is to blame. But when the procurement team digs deeper, they could find that other factors, such as recent energy price hikes or increased maintenance needs, are driving the cost increase. This example underscores the importance of understanding the full cost landscape before making changes that might disrupt supplier relationships.

This brings me to an important insight: procurement doesn’t operate in isolation. Our suppliers are often influenced by broader market forces, like commodity price shifts or supply chain disruptions. Recent events have made this clearer than ever. Many industries, for instance, faced unprecedented lead time extensions and price increases for key materials during the COVID-19 pandemic. Procurement teams that took time to examine these industry-wide pressures were better able to work collaboratively with suppliers, developing contingency plans rather than attributing delays and cost hikes to supplier inefficiencies alone.

And let’s not overlook the importance of cross-functional collaboration. When we as procurement professionals bring in perspectives from production, logistics, finance, and other departments, they often uncover valuable insights. Imagine a supplier facing seasonal labor shortages that led to production delays. Without insights from operations or HR, the procurement team might attribute any delays to supplier unreliability, when in fact the issue is a local labor shortage impacting multiple suppliers.

Reading Vivek Kaul’s newsletter sparked this journey of exploration. In procurement, avoiding this fallacy is about valuing a thorough, data-backed approach and being open to complex explanations. When we make decisions grounded in full context, we foster stronger supplier relationships, reduce risk, and ultimately add greater value to our organizations.

Thank you for joining me on this journey! Let us commit to thoughtful and data-driven decisions that make procurement more resilient, analytical, and collaborative.

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