Listening to and supporting your stakeholders, understanding and controlling your spend and avoiding "volume creep" are vital when managing demand for complex services, a Supply Management webinar has heard.
Jonathan Self, IT and professional services category manager at Britvic Soft Drinks, said complex services, which include categories such as temporary labour, professional services and legal services, involve a myriad of departments and factors including: strategy, HR, recruitment, legal advice and change management.
Stressing it was critical to understand the company’s specific business requirements, Self emphasised “one key mistake is to try and have one hat that will fit all”.
He added requirements need to be clearly defined including when demand would be needed and how long the service would be required, for instance a few days or over a 12 month period. “A repeat demand requirement on an ongoing basis will have different contractual arrangements, performance management and cost models,” he said.
Self told listeners procurement needed to “seek to understand how critical each requirement was and how it supported your stakeholder’s strategic priorities". He emphasised “challenging constructively not destructively” and said the relationship with stakeholders was about “not adding unnecessary bureaucracy”. “Clarify what the company needs not wants,” he added.
Jon Milton, business development director at the webinar's sponsor Comensura, emphasised the importance of having a “mandate from a senior level”, of challenging “scope creep” and having the ability to challenge stakeholders to use alternatives or shut down the spend. He emphasised the need to have "visibility over spend" and having ways to measure output-based buying.
He said businesses could be relying on policies and demand that were losing them money and that overspend could happen through inadequate specifications and alternatives being overlooked, systems being easy to bypass and volume creep. Milton added many businesses buy complex services at the last minute, therefore “panic replaces value for money”, which often makes them expensive.
Procurement needs to understand the spend, re-procure if current contracts are not fit for purpose, encourage customers to plan, look at the specifications and make sure they are suitable, analyse how many requisitions are rejected and challenge decisions where required, even “customary spend” where it seems excessive, he said.
Maria Beattie, business manager, operational services at Network Rail and the CIPS young professional of the year, said the firm had historically implemented frameworks to contract this spend, which was “not always the strategic view”.
She was tasked with “exploring the options of moving away from zero-value frameworks to committed value”. Network Rail’s ongoing requirement for workers means dealing with providers that contract with workers with specific skills for working on the rail networks. Beattie said it was important to realise what it was actually buying was “a person who we wanted to work with in a safe, compliant way. They were a strategic part of our business but there was no trust”.
She said Network Rail had wanted boost the levels of trust and commitment so a code of conduct was introduced, and the company committed to a level of spend, calculated at a local level based on previous and anticipated spend. “Our labour requirements were complicated by regional differences for instance with big competition in London because of available work on other rail projects, the Underground or in construction, while in Scotland we face a lack of resources that needed to be managed.”
The commitment resulted in increased productivity and staff retention with no-shows at work decreasing. Beattie added: “If we want to manage the complex areas in the supply chain, and in the suppliers’ supply chains, we need to recognise that no one-size approach fits each category of spend”.
“The question asked should be ‘why not commit?’ rather than ‘why commit?’,” she said.
☛ A replay of the webinar, Demand management for complex services: What it is and how to do it, is available by clicking here