Could Overly Rigorous Procurement Processes be Hindering Business Growth?

By Candice Lambert

The procurement function is vital to the success of any project and many organisations have strict processes in place to ensure the selection of the most suitable supplier to implement and deliver within their established budget and timeframe. Inadequate procurement processes can lead to costly mistakes that can bring an entire project to a standstill if the required deliverables are not suitably met. However, the procurement methods of some companies can swing to the other extreme of being excessively stringent, with similar (if not more) damaging consequences.

In my nine years of experience at Progression, consulting to corporates and negotiating projects, I have found that the procurement practices of most organisations tend to follow the latter model. Some clients pursue an extremely rigid “tick box” approach, often linked to a list of B-BBEE and cost requirements which need to be achieved, above all else. My experience has been that oftentimes with big multinationals, the process is driven and “owned’ by the Procurement Department who seldom have a clear understanding of the finer details of the project and the precise requirements of each of the stakeholders involved.

Cost is clearly a significant factor when selecting a service provider, however the challenge is that without a thorough and consistent examination and comparison between competing suppliers of all aspects of a project, including cost, we aren’t comparing apples with apples. Focussing solely on price greatly increases the chances of selecting a supplier who lacks the required expertise to deliver successfully.

Very often, the Procurement person tasked with managing the process does not possess sufficient knowledge of the bigger picture surrounding the project in terms of the motivation for embarking on it or the desired impact and outcomes. They are therefore unable to provide the supplier with adequate information or direction to allow for an accurate analysis of what is required. I can recall a number of projects where we were only able to determine the client’s exact requirements and provide an appropriate and successful proposal after insisting that we meet with the relevant stakeholders within the business (e.g. the HR Department) who could provide the necessary guidance and answers. In many instances, the project may need to be adapted and customised in order to meet business requirements as well as the needs of all the stakeholders involved, including specific departments, managers, learners, etc.

In terms of B-BBEE requirements, it is unfortunate that the emphasis is placed mainly on the ownership element of businesses applying for contracts and tenders as this does not tell the full story, particularly when it comes to skills development and transformation projects. The reality is that even though a supplier may not fulfil the ownership requirements in terms of B-BBEE legislation, the people whose lives are impacted and will benefit the most from these projects are invariably the most marginalised and disadvantaged in our society.

In light of our current situation with the national lockdown and the bleak economic climate, it is imperative that we change the way we do business going forward. Once the lockdown is lifted and the economy is reopened, it is critical that those small businesses that have managed to survive this period are allowed to operate in a less rigid and more enabling environment. This crisis has provided us all with an unprecedented opportunity to stop, reset and reinvent ourselves and our businesses. We will all need to change what wasn’t working in the past, adapt and embrace a more flexible approach in order to succeed post COVID-19.

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