The eyes of a technical procurement professional on buying for a client
Movers and Shakers are some of the most expensive machines in the mechanical, construction and agricultural industries, hence their procurement must be perfect in all sense so as to avoid losses by delivering machines that do not meet their standard. The same considerations are made in procurement as standard procedures for successful procurement. Heuristics Media interacted with Bernard Mukundi, the Technical Procurement Manager and Kenya Airways who gave his insights on how to approach such procurement projects.
What is the mandatory strategic sourcing process that is considered by procurement professionals and units?
Sourcing is key as it determines the decision to go lean or wider on procurement. This is further determined by the kind of equipment that needs to be procured, all these factors control where you buy the equipment and how you buy them. Sourcing is greatly determined by the time of need of the equipment and the time of delivery that a buyer would want the equipment together with the logistics of the supplier for the same transaction.
Quality is given priority in procurement and should never be compromised by anything including costs with the aim of looking for the cheapest offers, specifications, and needs of the equipment. This goes hand in hand with cost and time.
Contracting is the other key issue that is considered in procurement in line with Terms of References (TOR) scope and other policies which are different in organizations. This is where we have open-ended and closed contracts where the risk factor comes in. The contractor must have a certain level of confidence with the supplier in terms of delivering the procured goods and services, e.g. the financial capability of a supplier, experience in the supply of particular goods and services.
Companies are advised to have a quality assurance team and policies that guide and define the quality of goods and services. After checking quality, then one can look at the most cost-effective offer from suppliers.
The quality assurance which falls under the execution of a procurement strategic process also involves checking goods and services offered as per the agreement and specifications that were agreed upon. This is greatly monitored by the inspection team of a buyer to ensure that the latter gets what he or she wanted from the supplier.
What are some of the factors that you consider while reviewing applicants to supply or offer movers and shakers, goods and services?
The major factors considered by buyers are technical capability, infrastructural capability in terms of human resource and manufacturing, financial and monitoring capacity of a supplier, determined by the level of their investment in the business and previous supply records. Their and legal bindings of the companies on how they were incorporated because it determines the understanding of the buyer of the company and how he or she can deal with it. It is also good to work with new entrants into the supply market but with caution because of the uncertainty of their consistency in supplying goods and services. It is also good to understand the regulatory and legal framework for a supply company, e.g. a certificate that allows a company to supply engineering equipment.
What are the common mistakes that are mostly done by suppliers while trying to secure procurement contracts?
Most suppliers give do not give the prices for their quotations. They give a cheap quotation to get tenders, not bearing in mind the procurement agency wants the best. They put themselves in the shoe of the buyer and fail to give the correct status of a procurement quote.
Most of them do not understand the buying entity in terms of their financial culture that affect the payment process, ethical issues related to the buyer and their systems. They also lack the understanding of the market and may end up conflicting the requirements of the buyer. Some suppliers fail to seek clarity on the qualities required, fail to clarify the market the buyer is working from and some go-ahead to develop products for clients before signing a supply deal. Some suppliers go wrong by replicating what other people are doing. Another factor that should be considered is that if an item that a supplier is selling is common, the supplier must play around with the cost, packaging and other marketing tools so as to win the contracts from buyers.
Some buyers on one side do not understand what market they want products from. This can result in an unintended compromise on quality and probably higher costs of procurement. For the case of movers and shakers, the procurement professional must understand the specifications needed and help the buyer avoid unintended purchases.
What can be done by suppliers to avert these common mistakes?
One must have a commitment to developing a product before the buying entity is committed do not tender without understanding the market, opportunities, and culture, e.g. one should know the preferred brands of movers and shakers by a certain company and deliver that.
Suppliers tend to be excited about the contract but do not check the other side of the procurement contract. It is advisable not to take stories but get all the details of the procurement and weigh in all options.
For those yearning to take procurement as their career, then that working as procurement will make you rich.
How have you benefitted from your career as a technical procurement professional and what do you value in the career?
It is one area that exposes you to all corners of businesses, an opportunity to network in sales and marketing. It a continuous learning environment, so do not be rigid. Benchmark with other people doing procurement in other industries.
Procurement will help you know the financial health of an organization and know how to cushion organizations while doing contracts.
Procurement requires an open mind with mastery and ability to execute technical, accounting, finance and other roles with expertise.
In fact, the CEO level is the highest level of procurement. Approximately 80% of budget in an organization goes to procurement and is spent via the department. A manager with procurement background can be a good manager.
“If you are a head of an organization and you do not understand procurement, you are doomed to fail. It helps.”
Is procurement and supply chain poorly managed in Kenya? How can transparency in procurement be improved?
I can say that procurement is one of the most transparent transactions you can have because one is talking about procuring products with specifications and documentation together with receipts will be available. This is all confirmed through quality assurance and expenditure records.
Though there are cases where the process is opaque, it can be improved by documenting the whole procurement process. Senior or influential people coming in to influence the end result of the process must not influence the procurement process. This is the source of all scandals we have and policies and regulations must be followed to the latter.
How would an organization ensure that cutting costs does not affect the quality and the procurement entity keeps expenditure within its budget?
Many companies think that the only way to make money is to cut costs, but we should ask ourselves up to what level they can cut costs. Companies must be logical on how they cut costs and must ensure that they get value but at a cheaper cost.
Organizations mostly focus on their unit cost but forget to analyze the transport cost. It is good to negotiate with customs to reduce their charges so as to enable them to use less and produce more.
Cutting cost must not get to the bones because one should understand that before you get to the bones, you have meat and all veins there, e.g. if you are sacking employees to cut cost, you musts considered the cost of sacking the employees, looking at the possibility of requiring the same number of employees later and if you will pay them the same amount of money of even more. The best option for this case is to open a smaller brand in the company and accommodate the staff who would have otherwise lost their job. This will create confidence from the buyers that the organization cares about its employees, hence taking care of the buying power.