Tuesday, April 20, 2010

A few notes on procurement



Every once in a while I have to deal with a formal (public) procurement situation. And as a technical guy, this hurts. A lot. It is enough to make you want to pull out your hair and scream in pain.  
(dear customers & contacts, if you think this post is about you specifically, it is not - I am venting steam about all procurements I've been involved with. Also, I have come quite well out of several of these procedures. It is just that it hurts!)  
Procurement goes something like this. Somewhere in a company is a guy who needs a banana.  But, because of the scale of the company, or simply because they are like that, he can't simply go out and buy a banana.  
So, he has to involve the procurement department. This department is filled with legal people, and folks otherwise uninterested in the details of bananas. But they do want to do a good job, so they get down to work.  
Questionnaires are drafted. What constitutes a good banana? Is a banana the only choice? Will the supply of bananas be guaranteed? How can we store them? For how long? If the banana fails to please, who is responsible? How will we deal with defective shipments? If the bananas are stolen in transport, but the invoice has already been sent, should it be paid? These are not trivial things.  
Eventually, this process ends up with a REQUEST FOR PROPOSAL FOR SUPPLY AND DELIVERY OF SELF-CONTAINED AND PEELABLE NATURAL PRODUCT PROVIDING SUSTENANCE.  
In this Request for Proposal is a list of items the delivered product should comply with ('the compliance matrix'). It has such vital requirements as:  
  • Product provides lasting sustenance
  • Product must preferrably be yellow
  • Product should have limited variability in color
  • Product can be transported
  • Product will be delivered in a suitable vessel/container/ship/boat/car/train
  • Product remains edible for 1 hour
  • Product remains edible for 1 day
  • Product remains edible for 1 week
  • Product remains edible for 1 month
  • Product remains edible for 3 months
  • Product remains edible for 1 year
  • Product remains edible for 5 years
  • Product shall comply with RS232 standard for serial communications
  • Product shall not require specific temperature ranges for storage
  • Product must comply with ISO-32423-2 humidity requirements
  • Product must not cause allergic reactions
  • Product must be peelable
  • Product must be clearly identified with a sticker
  • Product must have a non-edible peel
  • Product must optionally be delivered in a bundle of products
  • Vendor must describe shape and form of product, including typical curvature ratios
  • Vendor should provide guidance on disposal of product, including, but not limited to possible slipperiness of peel
  • Etc, etc
Update: it happened for real! Thanks to Peter van Dijk for spotting this gem:


Update: And another one!
Because banana is too mainstream

This compliance matrix will often contain hundreds or even thousands of items. The matrix is affixed with a little note that informs the reader that the procurement process will favour 'lowest cost compliant solution'.  
This matrix is then mixed together with no less than 200 pages of general terms and conditions, vendor assessment forms, environmental statements, non-disclosure agreements, ethical statements, delivery and payment conditions.  
A variety of fruit vendors receive the Request For Proposals and some shrug their shoulders, but in other places bidding teams will be formed. Such teams often number dozens of people.  
These people wade through the hundreds of pages of legalese and requirements, and finally consult an actual farmer, relaying the demands of the procuring party.  
This poor guy is then asked if there is a fruit that complies with the requirements, and after a while he might figure out that a banana would suit the bill. Probably.  
Then attention is turned to the compliance matrix, and the little note about the importance of full compliance.  Yes, the product remains edible for one hour, and usually 1 week, maybe a month, but definitely not 3 months.  
Sad faces all round - so we are not compliant? Well says the farmer, if you take a banana off the tree real early, it might be edible after three months, but not for the first two. No matter says the bidding team, and enters 'COMPLIANT' for 3 months!  
Next up, how about a full year? No says the farmer, no way. Ah, but the legal eagle of the bidding team has discovered that the matrix does not provide for who the 'product' should be edible! Would a rat eat a one year old banana? Definitely! COMPLIANT!  
But now.. 5 years? Dare we say it? This is where the farmer draws the line, but at a stroke of genius, the legal team okays a statement that says 'PARTIALLY COMPLIANT (*)' and adds wording that after five years of fermenting, bananas can stimulate the growth of nutrient-rich mushrooms!  
Next up are the really odd questions. RS232 compliance? Does the customer really want that? Or did he copy paste that in? Much soul searching ensues. The RFP document quite clearly states that the vendor may only contact the procurement department of the procuring party, and that any other contact will lead to disqualification. Clarification requests will delay the process, possibly to such an extent that the response is no longer admissable.  
Finally the team cops out with a general statement that RS232 compliant connectors can optionally be supplied.  
And thus it continues - the bidding team navigates the ethical boundaries ('no allergic reactions?  put down COMPLIANT!'), and finally delivers an equally astounding 200 page response, including its own (competing & conflicting) general terms and conditions, delivery and payment instructions and whatnot.  
Over at the customer, these responses are now marked by the procurement people who disregard all notes and other things, and simply count the number of 'COMPLIANT' requirements.  The most honest responses are immediately disqualified, since they mostly came in as non-compliant ('our banana remains edible for 3 weeks, tops').  
Over a thousand pages of responses are now forwarded to the original guy asking for a banana.  The only thing he cared about is getting some really good bananas, and if he would need to pick them up himself.  Oddly enough, the document only asked for pricing per ton, does not specify if the bananas will be delivered, and while it contains a lot of wording on curvature ratios, the actual taste of bananas remains undiscussed.  
In the meantime, the farmer would really really just like to ship a crate of bananas as a sample and get down to business. 
And the original guy?  He already works somewhere else, and in the end not a single banana was sold..

2 comments:

  1. You completely fail to mention the plight of the original guy's replacement who is now trying to figure out a way to make a wheel of cheese work when a banana would be the ideal solution to the problem.

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  2. Great stuff, and a sadly accurate picture of my ~25 years of experience seeing these things come across my desk.

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