Processes That Drive Wrong Behaviour

Posted 11/04/2014

Forgive me if I'm jumping to the wrong conclusion but the folklore about councils getting busy in February/March to spend the budget before year end seems to be correct in my local village. There are 4 routes out of the village and 2 of them are closed due to roadworks! 

Perhaps April is the perfect time to dig holes and put down new Tarmac, perhaps April is the time when the workforce is at a loose end, perhaps these roadworks are just at the end of an annual timetable and its coincidence they're happening now. And perhaps not! 

I appreciate a business needs budgetary forecasts - I just wonder whether the way in which compliance to these are managed is always helpful. Compliance that drives behaviours such as: 

·         Spending now because you've got money left

·         Spending now before it's taken off you

·         Spending now because your bonus says you have to be +/- x% of the budget 

As procurement professionals it's our job to ensure that the most appropriate sourcing decision is made - we need to consider make or buy, challenge business requirements, analyse costs and potential suppliers and understand market conditions and the perfect time to buy (If demand/supply has anything to do with pricing I'd assume it’s cheaper to Tarmac a road in April?). Compliance to financial budgets may not allow the organisation to make the right choices nor to undertake this level of activity. 

How do you manage this conflict of interest and ensure the potential pot holes in your road are filled in effectively?

Tagged by topic: Business & Stakeholder Engagement , Category Management , Cost Reduction , Procurement Leadership , SRM

  by Alison Smith

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