There are three levels of decision making that today’s procurement professionals can reach: basic, advanced, and expert. For the purpose of this series, we will be examining three characteristics of procurement decision outcomes at each of those levels: cost, supplier performance, and degree of innovation.
Today’s post will explore what it means to be a good procurement decision-maker at the basic level. Future posts will cover good procurement decision-making at the advanced and expert levels.
Rookie procurement professionals are often caught off guard when suppliers invoice them for various “over-and-above” fees such as shipping, installation, fuel surcharges, and the like. Only after their supplier selections are made do they learn about these charges. They then realize that, had they been aware of those charges during proposal analysis, they very well may have selected another supplier.
At the basic level, the good procurement decision-maker will effectively capture and analyze all fees that suppliers can charge and will never be unpleasantly surprised by over-and-aboves.
At the basic level, the procurement decision-maker will be working with categories of products and services that are (a) relatively common and/or (b) not critical to the ongoing operation of the company. If the delivery or quality of those products or services is not satisfactory, they could be procured from other sources without harm to the company.
Nonetheless, the good procurement decision-maker at the basic level is effective at avoiding supplier performance problems by using fundamental principles of supplier qualification and making sure that the supplier has performed reasonably well in a few similar situations.
At the basic level, the procurement decision-maker generally does not work closely with suppliers on innovative ideas. Occasionally, the procurement decision-maker will introduce an idea for improvement, but those introductions are anything but systematic.
Stay tuned for my next post, describing good procurement decision-making at the advanced level.