Posts Tagged ‘procurement’

on inventory counts

At work we have just had one of our periodic stock counts and this triggered a memory from just over thirty years ago. It was the beginning of April and I had just taken over my first significant operational command; three warehouses on one site plus part of the office block alongside. I had just over 350 people working for me and, just to add some spice, the computerisation of the operation went live on the morning that I took over.

It was not a great start because the computer system had been poorly specified and it ground to a halt halfway through the first morning, partly because the results of the stock count over the weekend were still being input. By the afternoon we had the first results back from the data input and whilst two of the three product categories we about right the third was showing us a little more than £30M over the expected figure.

One of the problems when you count stock is that the unit that you are counting may not be obvious. For example take a item that comes in boxes of 200 and where 56 such boxes constitute a full pallet. What does that full pallet get recoded as? 1, 56 or 11,200? My own team would have known the answer, but the annual stock count was always done by a professional team of valuers to ensure probity and so errors were always possible. The discrepancy of £30M was going to be down to either an error in the count unit, how that had been interpreted for data input or just an input error.

We set up a report to run on overnight processing (that’s how it worked in those days) and called it a day. The next morning we found that our friends in IT had not checked the paper level on the computer room printer and it had run out about 20% of the way through the report (these were the days of the piano lined paper reports). My colleague the Finance Director had assigned his Chief Accountant to assist and my head of the product category was leading from our side as we searched for the discrepancy, but with so little of the stock report available they were a little hampered.

After lunch thinks improved when we found one error and got the discrepancy down to £22M. The IT team told us that processing the report that we had asked for and printing it would take 10 hours and so we shut the computer system down again and set it running the report in mid-afternoon, this time with a new box of paper. Then I got the call to go and see the MD…

My colleague the Finance Director, I’ll call him Dick, had decided to duck any blame and dump it on my team, so when I walked into the office there he was looking smug and there were a few of the other senior managers around the table to watch the new boy get shafted. The MD was apoplectic and wanted someone fired. He was a bully, but iike many such people he was also a coward and he was frightened that, if this was a genuine overstock, his neck was on the block. I was the new kid in town, but I needed to fight my team’s corner and to show that whilst I was a new arrival, I hadn’t just come in on the turnip cart.

Looking around the assembled faces I could have suggested that the Purchasing Director might like to see which of his team had bought all of the excess stock, if it did exist, but there was no point in starting a new fight as they all knew who had convened the meeting and why and so I decided that as “Dick” had tried to drop my team in the smelly stuff I would have to take him on.

Smiling, I asked if Dick was happy that the previous year’s count had been accurate. He was so I proposed that, if we did have all of the extra stock, the additional purchases must have been made since then. He agreed again, but slightly hesitantly. I asked if had he not noticed any unusually large invoices, for his team would have been invoice matching against deliveries before paying the bills and the sort of value we were talking about must have stood out, surely? After all, such invoices would have been at his level of authority to sign off. Was it not also the case that we would have gone over budget and would he not have picked up on that at the time? Perhaps if he could remember any such event it would help us to narrow down where the problem was. Blood drained from Dick’s face as the MD switched his ire from me to him.

All of a sudden Dick was backing away from blaming my people and agreeing that the problem was either a stock unit error or one of data input after all. I could have gone on to suggest that, in the latter case, that was his fault too as the data input had been done by his team, but the initial crisis was over and it was agreed that we would review the situation the next afternoon. I had made my point.

The next morning we had the full report that we needed and found the main error in minutes. By the end of the day we had found a few more and were within 0.02% of where we expected to be, and all of the errors were due to data input bar one where the wrong stock unit had been used. No-one got fired and I went on to enjoy three good years in that job.

We got the computer system working too, I later married the lady that the MD was threatening to fire and, all these years later, we are still together.

I like happy endings.

musings on performance reporting (again)

My loathing of KPIs is well documented amongst previous scribbling here, but recently I felt the bile rising again when I was asked to provide some comments on the Crown Commercial Service framework for Facilities Management.

I know well the old adage that if you can’t measure then you can’t manage, but almost everyone that I have heard trotting that line out couldn’t manage anyway, at least by my book. Of course you need some metrics to manage by, but which ones? The best data is that which comes when recorded from the act of performing the work because it is free. In many situations you can look at almost any aspect of your operation and see what you are doing, where, when and how often. This is great as long as you don’t spend too much time looking at it.

But all too often there is a contractual requirement to report on things that you need to collate and compile information of and doing that takes time, and therefore money. Now I don’t mind spending money if I am investing it wisely, but I don’t like wasting it and all too often I have had to throw cash away on producing KPIs that have been little more than an excuse to waste more time talking about.

In the brief on the new CCS framework there is a reference to holding monthly meeting to report on, amongst other things, a raft of Social Justice activities. In other words people are going to be asked to demonstrate that they are obeying the law and other regulations. This is a principle that I first remember coming across in the bribery and corruption regulations a few years back and basically this requires you to prove that you are innocent. That is wrong on every level, but it seems that our civil servants don’t think so.

It is a fundamental part of due diligence during the vetting of contractors during the tender phase to ensure that they have appropriate compliance processes in place and, once the contract is placed there is no reason why the client should not seek to check these processes. But to have the contractor report on how they are applying them monthly is just ludicrous.

We should be cutting red tape, not adding to it and I think that this sort of thing is a national scandal. This year I reach my three score years and ten. So far the Grim Reaper has had his hands around my throat three or four times and yet I have wriggled free each time. If the above is the way that the world genuinely wants things then if the bloke with the scythe was to knock on the door now I would rush out screaming “Take me, Take me now.”

on negotiation, part three

One of the things I talked about last time was avoiding painting yourself into a corner because you need to keep at least one exit route available to you: Once you are trapped you are going to have to take whatever the other side offers. But whilst you want to avoid boxing yourself in it is to your advantage to help the other side doing it to themselves. Read more…

on negotiation, part one

The Brexit negotiations rumble on and regardless of where you stand on the UK leaving the EU I wonder if you have given any thought to the practicalities of those who are handling the problem from either side for it is not like any negotiation that I have ever seen or taken part in. Read more…

on laughing at life

Last week I spent a day with a longstanding business associate helping him choose a new alarm, access control and general security package for his shop and warehouse. My preferred way of working on these projects is not to the traditional way of having the potential suppliers come to us, but for us to go to them. There is much to be learned from visiting your suppliers; are the offices tidy, do they give the impression of efficiency and organisation, do the people that you meet or see there look like they care about what they are doing and more. I always ask to go and meet the people that will answer our calls if we have a problem, the people who will be managing our installation and the people who deal with invoicing us. It all gives a picture of what you are really getting that the sales team can never convey in their pitch. Read more…

Musings from the facilities front #2

Service Level Agreements; where would we be without them? A lot better off in the case of most of those that I have inherited and I would like to tear them all up. Read more…

outsourcing: getting it right

At an industry forum last week we were posed the question; has outsourcing shown rel long term benefit? s the first panellist began to answer I was framing my own response as yes, I think that it has. Read more…

the myth of centralised procurement

The arguments for centralising activity, procurement or otherwise, can be very persuasive, but so many of them are built on selective use of numbers, as may well have been the case in the recent media frenzy for they, too, are only trying to sell you a story. I am not procurement bashing here for I am one of their number, and nor am I media bashing either for I am also one of them in a small way. No, I would like to try and present a balanced view based on what I have seen and experienced over the years. Read more…

you get the supplier relationship that you deserve

How to have a good working relationship with your suppliers; it’s a topic that comes up often when talking to clients and buyers. Read more…

it’s not scope creep; it’s business as usual

My dislike of management speak is well documented here, but I still have to deal with its use on a daily basis and one such expression that has cropped up a lot over the last couple of weeks is Scope Creep. Read more…