Procurement Explained to a Seven Year Old – Keeping it Simple
I was recently asked to explain procurement as if explained to a seven year old. It is interesting that when we are always in the midst of what we do, we expect everyone else to know what we do. We think everyone else is on the same page, speak the same language and understand what we do. Procurement is no different. It is hard to explain procurement in simple terms. Yet it can be done and has to be done. Procurement explained to a 7 year old – how to go about it?
The beauty of explaining anything to a child is that you have to go back to basics. You must keep it simple. It requires going back to the what, the who, the why and the when.
What is procurement explained to a 7 year old?
When you want to buy or sell something (whether it is a product or a service) people in procurement help you to:
- find as much of it as you need/want,
- when you need it,
- at price that fits with how much money you have to pay for it;
- in the way you like it, and
- on the right terms.
It is really that simple. We can make it far more complex but at the heart of it, procurement is what it is.
Who is involved in procurement?
Everybody really. We all do procurement in its simplest form – every time when we go to the shop to buy food, every time we buy stationary in our business or book a business trip.
We decide what we need, when we need it, how much we need, how much we are willing to pay.
Whether you do it yourself or you get the help of a procurement specialist, depends on the value, difficulty, how often you need it and whether you are better off delegating and concentrating on doing what you are good at.
Why would you involve procurement?
There are many reasons, to list but a few:
- You don’t know how to do it yourself or have not done it yourself before;
- Doing tenders and buying/selling take you away from doing what you are meant to be doing to grow your business;
- You want to learn how to do it yourself;
- It adds value both financial and non-financial;
- You want to explore different commercial options;
- It protects your interests;
- Specialist advisors know how to develop and submit tenders;
- You want the best value for your money.
In the end, for me it is all about time. How we value time and where our time is best spent.
With the right procurement assistance, you should be able to buy back your time at a cost that is less than what your time is costing you, trying to do procurement yourself.
It is all about finding the right balance on when it is time-effective to do procurement yourself and when it is best to delegate or outsource.
You should ask yourself:
- Are you sacrificing your time by taking longer to do procurement yourself?
- Are you not successful in getting the best value for your money?
- Do you spend days to complete tenders?
When we do procurement in the right way, it buys you more time and gives you better value for money.
When to involve procurement?
Buying/selling services or goods to me are similar to crossing water. The volume of water you have to cross, determines whether you need procurement support or not.
The included infographic explains the different procurement paths. Procurement explained to a 7 year old – it uses simple terms and pictures.
If your procurement is uncomplicated, does not take up too much time, delivers results, it is similar to crossing a puddle or a creek. When you are more experienced, it may even be similar to crossing a river. You may get wet, fall down occasionally but you will learn and next time, will know better. The lost time and money do not have a massive consequence in your business.
When your procurement becomes similar to trying to cross a flowing river with steep falls and rapids, it really is no picnic in the park and it is time to get the right procurement support.
- Would it be smart to go whitewater rafting without the right training, equipment and support?
- Would you cross the Grand Canyon and your own?
Procurement is no different. When you have complex transactions, difficult contracts, you have to deal with difficult parties and do not have the time or expertise required then it is time to get the right procurement support.
When your procurement requires crossing the Grand Canyon, you need your own team. Your team will not only consist of procurement but procurement will an important cog to make sure that the right goods and services are procured to build the bridge.
Procurement does have value and will add value. But most of all, with the right support, you buy back your time.
Time is money.
Procurement explained to a 7 year old – I enjoyed the challenge. The request was for a 7 year old, but it reminds me of what Albert Einstein said:
“If you can’t explain it to a six year old, you don’t understand it yourself.”
Please feel free to contact me for a 1 hour free consultation to evaluate what is the best way for you to manage your procurement. I will keep it simple.
Have a great day!
February 2016 Newsletter
Celia Jordaan is procurement and risk consultant at Ichiban Commercial Solutions, Perth Western Australia. With over 20 years experience, Celia has worked in different countries, locations and cultures in the areas of procurement, supply chain, contract management, law and risk. She has also worked in the area of risk management, contractor management and safety.
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