6 Things Procurement Methods and Farming Have in Common
What does procurement methods and farming have in common?
In my life I have always had a connection with farming somehow. As a small child, we owned a lifestyle farm. We had a lifestyle! We had no electricity, it had an outside toilet and we used candles and lanterns at night. Over time I had family own farms and friends farm for a living.
I have seen farming success and I have seen failure in farming.
Many of the procurement methods and logic remind me of farming. Procurement requires hard work and one sees both success and failure.
You sign up for the journey and you do it for the love of it. Not because you want to be loved.
We provide a service after all.
So, what are the 6 things that procurement methods and farming have in common?
- A long term vision, strategy and plan with the ability to adapt and be agile.
- Simple, purposeful systems of work
- Technology that pays for itself
- Valuing key business partners
- Dare to be different.
Procurement Methods and Farming – how do we make the connection?
1. A Long Term Vision, Strategy and Planning.
Although in farming you have to learn to deal with nature and what nature decides to deal to you, you still need to know:
- why you are farming,
- where you want to get to and
- have a plan as to how you will get there.
Over time, you adapt and change but you always need to have that long term view and strategy.
- about rotating crops and nurturing the soil in order to get the best results;
- that notwithstanding the best plan, there are factors that you cannot control.
You cannot control the weather or what mother nature sends your way.
Procurement Method #1: Adapt and Be Agile
Same in Procurement – Some things cannot be controlled and stuff happens.
In procurement we often work reactively.
When you work in an organisation where you have to react all the time, it is hard to be proactive, have the time to plan and know where we would like to go.
However, making the time to understand your why and decide where you want to go, you will be able to plan.
Being proactive allows you to:
- move from a position of being pulled
- to a position of pushing business towards value for money and finding innovation.
Plans will adapt as we go along.
But most important we need to have a long term vision and strategy.
“Life on a farm is a school of patience; you can’t hurry the crops or make an ox in two days.”
2.Without the right systems of work, you will not get far
Owning a farm in itself does create a harvest.
You can own a huge farm but without:
- the right people,
- cashflow and
you will not be able to turn your farm into more than a veggie patch.
Procurement Method #2: Simple, Purposeful Systems of Work
Even when you have all of the before mentioned systems of work, you will face interesting challenges. Therefore you need people and partners with the right attitude and aptitude, who will be taking the journey with you.
And you need to reward and recognise along the way.
I have seen in the past that procurement can be the forgotten tribe.
Procurement can become very transactional rather than outcomes focused.
No, it is easier said than done to move from transactional focus to a outcomes or results based focus. Especially when we don’t provide the right training and mentoring and even worse not the right systems.
We make it hard to achieve an outcome, yet we expect great results.
The leaders within an organisation requiring the services should learn to empower rather than enslave procurement.
Leaders in procurement should work to find the right people with the right attitude and aptitude.
3.Technology does make a difference
When I first arrived in Australia, I lived in a very small town.
This was an interesting farming area. One farm and farmer stood out head and shoulders above everyone else. He was young and had not been a farmer as long as the others; many of the original farmers had to clear the bushland before they could even think of farming. The young farmer was the first to plant and the first to harvest. His crops were always better than the other farms, even in the times when it was too wet or too dry. He maximised his harvest by using the latest technology – with his technology he did not guess what to harvest, he optimised his harvest. The young farmer achieved results as he used the right technology. The technology paid for itself. It even allowed him to expand his farming activities.
Procurement Method #3: Technology pays for itself
Procurement is an area where we cannot afford to go manual and focus on transactions rather than outcomes.
It is no different to trying to plant 1000 hectares by hand with only a fork. It is an absolute waste of time. Unnecessary transactions limit procurement’s ability to find opportunities and provide a value for money service. Resourcing and technology however often where business sacrifice capital.
Technology pays for itself.
The next time a budget cut impacts on the improvement of a procure to pay system, think of procurement and farming and keep in mind:
you reap what you sow.
4.You can milk a cow dry but you cannot milk a dry cow
In the current economic climate, there is a huge push for procurement to find more and more cost savings.
Often these initiatives are very short term focused, has to be done in an aggressive manner.
The push drives no further than today’s survival and fails to consider what happens to our business partners.
When some of my clients tell me that they have had a third letter to ask for yet another 15% cost cut, it makes me wonder:
how anyone can possibly cut 45% from their price and survive?
Procurement Method #4: Value Key Business Partners
Coming back to having a strategy and a plan. Procurement has the opportunity to:
- work with their key business partners to find innovative solutions along the journey, and
- push towards innovation rather than pull away because of the declining markets.
Did you know?
You can increase a cow’s milk production by increasing the milking time?
It is possible.
You will get more milk because the cow’s brain will look for ways to produce more milk, but it gets to a tipping point where you will milk the cow until it is dry.
Once the cow is dry, you will not get it to produce milk again. A more manageable strategy is to increase the milk production but also invest in getting more cows. Economy of scale.
Same goes for procurement.
Asking for 45% cost cuts over time, is really only trying to milk a dry cow.
You can be great at milking but that is a fruitless exercise because you will not get the milk.
5.You may have to make hay while the sun is shining
A wise farmer will inspect his crops regularly and learn from doing this. My friend’s dad owns a wheat farm. He regularly checks his crop throughout the season.
One weekend they went away and guess what?
This particular Saturday morning, they had an unseasonally cold morning.
A few weeks later he realised that the wheat had not started to make heads, the frost damaged the growth cycle. The crop was green but there was no wheat.
He called his neighbours but since the crops were looking nice and green, no-one really thought there was an issue.
However my friend’s father decided that too much was at stake immediately started making hay.
The rest of the community decided to wait and that year, it was a failure.
Making hay was not as great as having a bumper crop but it allowed them to recover the cost of planting at least. It was a very brave thing to do when the rest of the community decided not to harvest.
Procurement Method #5: Value Mentoring
Too often do we keep ploughing on with a contract that is not working whilst we are better off to change course and cut our losses.
Experience is not only picking the issue but finding a way to make the issue work for you.
We need to mentor more procurement leaders in order to be able to make hay while the sun is shining.
6.Knowing when being different, makes a difference
The young farmer was different to the other farmers. We always use to joke that in this particular community you were only regarded as a local when you have lived there for 20 years. So really only the original farmers classified as locals.
The locals had great equipment, red shiny toys but they still used the same old farming techniques.
The young farmer not only used technology, shiny toys with GPS and learned about weather patterns, but he farmed differently.
Once the harvest was off, he did not allow the livestock to graze in the paddock and chew up the stalks and stems left over from the harvest. Neither did he really work these back into the soil.
No, he left the stalks and roots because when he next planted, these little stalks and stems acted as his natural irrigation and let the rain water soak into the soil.
He planted early and harvested early. No-one else really did it.
His crops were amazing because he dared to be different.
Procurement Method #6: Dare to be Different
In procurement, we fall into the trap of doing what everyone else is doing. It is daunting to be different.
I recently read an interesting report about procurement and the transformation it is undergoing. The 2015 ROSMA Performance Check Study was released in December 2015. The Building a Bolder Legacy – The Procurement Mission Is Under Way Report contains the surveyed feedback from 226 executives from the UK, Australia, France, Germany and the US. It showed that the top performers in procurement delivers 7.5 times their cost in value for money solutions. However, the average performers and the stragglers were not as effective and did not deliver the same return. I have been fortunate to be a “top performer” although it was never my aim. Top performers worry less about being a “top performer”.
We look to find value for money solutions that are total cost of ownership solutions.
Total cost of ownership solutions focus on finding the right like-minded partners to work with to find innovation or solutions as part of a long term journey. I focused on total cost of ownership solutions, long before the pull came from the business to find cost savings.
In order to be different, procurement will have to transform.
I prefer to be the disrupter rather than be disrupted – that is why I like working with procurement managers who are disrupters rather than be disrupted.
Procurement Methods and farming
Procurement methods and farming have many more things in common. However, the areas mentioned above are the key areas where we need to focus on.
We need this to be able to disrupt and to build a procurement intelligent community using the right procurement methods and focus.
Success requires resilient professionals with the right attitude and aptitude.
Procurement leaders who have not only the ability to spot the change but lead the change.
Procurement is a journey that is not for the faint hearted.
We cannot hurry the crop or make an ox in two days. But we can apply the right procurement methods to ensure that we fulfil our core requirement – provide a service to our customers.
Leaving you with this quote from Albert Einstein:
“Look deep into nature, and then you will understand everything better.”
Please contact us for advise on the best procurement methods for your organisation.
You can also learn more about our procurement leadership and mentoring packages, here. We mentor and coach both procurement leaders and teams.
To read more about the 2015 ROSMA Performance Check Study: Leading in Procurement.
To read more about disruption in procurement: “A Culture of Disruption in Procurement”.
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. She worked in the areas of procurement, supply chain, contract management, law and risk.
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