Author: Mark West
OK, I understand that I am mixing two wildly different topics and you might be asking yourself what could physics have to do with procurement. Bear with me for a moment though. As I think about procurement, as it has developed over the past 3000 years (according to many), it is a lot like nuclear energy.
If you remember from science class there are two ways to produce energy from radioactive material…fission and fusion. For years we have been using fission despite the obvious issues it presents, much like we continue to use the eternal “give me a better price” argument when conducting our procurement. The Buyer uses whatever methods available to them to secure a better price out of the Supplier. There is only one problem with this, just like with nuclear fission, it can’t last forever and there are negative consequences to its existence. With fission, you are relying on a constant supply of radioactive material, the disposal of a growing amount of waste material and the assorted safety and security issues, and one wrong step could spell disaster. With procurement, you rely on the supplier having a never ending surplus in their margin to provide you additional savings year after year, only problem is that another science (we call it mathematics) will tell you that eventually that excess margin will run out…the supplier will either go bankrupt or simply be unable to provide any better price.
So staying on the physics angle, what about fusion? The elusive other way to create energy which appears to have either no or considerably less negative attributes as its cousin fission. Well science is still working on that, but being the skeptic that I am, I would suspect, even if it were available tomorrow, we as a race would not wholeheartedly embrace it. We would rather stay with the norm, walk the beaten track of potentially dangerous but familiar nuclear fission. Same with procurement…what if someone were to come up with a way to make procurement not only potentially eternally self-generating, but also a complete win-win situation for both Buyer AND Supplier??? My guess…we would continue to use our 3000 year old method of Buyers asking year after year for savings that Suppliers can less and less afford to give.
So which is your money on? Physics? Or a better procurement system? Well as a student of psychology, you might say…we humans seem to be wired this way for some reason…save the occasional innovator that creates a new way to search or telephone or what not, we all get comfortable doing what we do, watching the same shows year after year, going to the same restaurants, and so on. We as a species are genetically not into trying new things…sorry to burst everyone’s bubble here. But my money is on the New Global Commerce…There is as a group called INNOVO that has shown a new way to do the whole buyer/supplier procurement dance that actually is sustainable AND provides real savings for not just the Buyer, but also the Supplier.
See for yourself…Martin Kelly, founder of INNOVO tells how his idea works:
So what do you think? Which will win the race? A new form of energy, or a different way to supply your business. You know where my money is…I dare you to prove me wrong.
Image courtesy of xedos4 at FreeDigitalPhotos.net