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Can Real Human Beings Be Good at Procurement?

This guest post is part of The Procurement Revolution. To share your thoughts or join the conversation, use #ProcureRev on Twitter or use the comment functionality below.

 

I'm Ovidiu Slimac and I am from Timișoara in the western part of Romania, a beautiful town which was just declared the European Cultural Capital for 2021. 

 
I have worked in procurement for 15 years now. And yes, I'm human. I'm a human being. And if we believe what the researchers and scientists say, all of my purchasing activities and buying decisions are made with an emotional input – even the ones I made for my company. The question is: does being human disqualify me as a good procurement professional?

Because I want to do a good job, I start each purchasing process with a few key data points and the goal of obtaining the best price possible. I also follow a logical set of steps or a documented procedure. It’s not as though I'm going shopping without knowing what I want to buy, what budget I have allocated, what color it must be, the desired quality and quantity, and if there is any chance to have it delivered to my home for free. And yet, it is hard to stay focused on the purchasing process without allowing my attention to be drawn to other factors that may ultimately affect my purchase.

For example, take how people shop in the supermarket. Some shoppers are very attentive to the shopping list in front of them. Others are on their phone while they are moving the trolley around the store, and in many cases they are being given instructions about what to purchase by the person on the other end of the line. The more closely they follow the instructions they are given, or their own notes to themselves on their list, the harder it is to allow new (and potentially relevant) information to be included in the decision making process.

Today we are in the supermarket with a defined need: we want to buy salami. The CEO – whether that is the person in charge of our company or the person ‘in charge’ on the other end of the phone – told us to buy salami and that if we also found eggs, to buy 10 of them. But because we can only retain so many details, we got back to ‘headquarters’, not with salami and 10 eggs, but with 10 salami. A person just following orders will sometimes make mistakes that a person with a deeper understanding, a person fully involved and with full awareness of their environment, will not make.

The same goes for making subjective decisions about the quality of a product. When we are shopping for ourselves, we know what our budget is and we know the quality that will meet our needs given our available funds. Beer has to be cold, wine must be old, and meat must be tender. Perhaps for our biscuits we make the decision not to buy the popular, cheaper brand, but instead a slightly more expensive one with a special taste. We can allow ourselves to consider product and brand marketing and make a cost / value decision that meets our needs and constraints – all while making us happy.

Purchase terms and conditions require value judgments as well. Let’s say we make the decision to pay a little bit more for all of the things we need from a source that will deliver them to our home for free. Being good procurement professionals, we know nothing is actually free, that the cost of the delivery has been added into the cost of the products, but we still make the decision that this provides us with a good value and we accept the higher prices. We may also have the opportunity to earn bonus points or special offers that will provide us with benefits later in time – this can be hard to quantify, but as human consumers we are able to make the decision about whether each offer has a good value for our money.

Without allowing our ‘humanness’ into the procurement process, I think we will be too focused on technical procedures. In order to be drivers of change we must see the similarities and differences between what we do when we shop for ourselves and when we are simply following the procedures outlined by CPOs.

My suggestion, therefore, is that we need more ‘social’ procurement processionals. I don’t mean social in the context of being focused on sustainability or green procurement, but rather in a way that allows us to make the same value judgments for purchases made in a corporate setting as in our personal lives.

As long as we obtain a good price, at the correct time, and from the current source, we are technically managing procurement the right way. If we are able to add the benefits of our human ways to those purchasing decisions, we will both achieve greater satisfaction from our work and create greater value for the company as a whole.

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Tuesday, 19 September 2017