A Procurement Project whether for Transactional, Category, Strategic or Transformational has many stages. For each of the different types of Procurement structures, the process will be longer or shorter, depending on the desired outcomes.
In Transactional Procurement, we need to confirm that the company is who they say they are and that they will be able to deliver what they said they would, when and at the price agreed. So the DD is going to be short and not too in-depth.
Category & Strategic Procurement, normally encapsulates all of the “same” goods and services in a Category and taking that to market for reasons such as cost reduction, supplier consolidation, robust supplier network, leveraging (additional) spend and/or size of the organization, etc. It covers more often than not, business critical goods and services. In this case a more thorough DD process needs to be applied because if there is a supplier failure, the impact to the business is bigger and can be potentially catastrophic.
I have managed a lot of Categories. So when it comes to a business critical category or when the outcomes require a full suite of auditable documents, is sponsored by a top management supporter or if it will be used as the blue-print for future similar project, I am going to go all the way and create the following Tools for the Project.
Sid’s Procurement Toolkit/Playbook
(1) Project Plan with supporting evidence for Project (Spend Analysis, Size of the Prize, Project Objectives, Stakeholder Maps, Category Plan, Key Stage Timelined Plan, etc)
(2) Internal Communications Plans (RACI, NDAs) & External Communications Plans (incl. NDAs)
(3) RFP
(3.1) RFI
(4) Risk & Issues
(5) Contract
(6) Weighted Scoring Matrix (for 3, 3.1 and 5 above – then short-listing)
(6) DDP + WSM (DDP incl. “Discoveries” Output)
(7) Bidder Presentations + WSM (then short listing)
(8) Negotiations* (with final 2/3 bidders)
(9) Sign-off decision documents by Top Management Supporter/CPO/ Finance/Shared Service/Operations/Function
(10) Contract Award + Communication/Feedback Plan for Winner and Non-Winners.
For each stage of decision making, I would advocate you have a decision making process (WSM) to narrow down the list of bidders and also to continually keep all internal stakeholders engaged with and keep ownership of the process.
Reasons for an in-depth DD process
As stated earlier the DD process can be quick i.e. a “one way” process from you on the supply partner (D&B checks, etc). When dealing with Category or Strategic Procurement Projects the DD process (aka Deep Dive) needs to be more extensive and comprehensive. The DD Work-stream document should be a shared document between yourselves and your bidders. No surprises. I would divide the DD into different Work-Streams: Legal, Operations, ISR, Procurement, Finance, etc. This DD is for both parties to discover more about each other’s organizations, get clarification on the full extent of delivery of goods and services. It is normally at this stage where there is no more hiding anything from each other. Also, this is where the bidder will get to understand how your organization really works, they get to know your people and their drivers, odd things that your company does because of legacy, laziness, archaic processes etc. I have found that bidders usually, when formulating their RFP bid submission, will have made assumptions and drawn conclusions that may not fit with reality. Get all of these unknowns out on the table now as no-one can turn around later saying “we did not know/you did not tell us”.
Your organization’s DD process covers all the Work-Streams, but you, as the customer, also have to include site visits, delivery tests, penetration testing, proof of process, etc. These cannot be skipped for lack of time or resource commitment. Hammer home to your internal stakeholders that participation in this phase is critical for them getting their supply partner of choice. Your role in Procurement is facilitator, Captain, Herder and Cheerleader – No one said it was easy.
I would normally advise this process take from 2 to 4 weeks for both sides to do the DD actions and to deliver and discuss their “Discoveries” document. This document lists all the additional things/bear traps that you have uncovered. It can also be where ISR confirms that bidder’s security needs remediation etc. The document can also be used as a basis for resubmission of costs, additional services or operations that need to be added, etc. The more you can discover at this stage, the better. You do not want a situation where the bidder isn’t allowed to do a DD that they discover things that could have an impact on their pricing or where they can walk away from the bidding process, it’s better to know it here when you still have a good field of bidders than when you award it to a supplier and suddenly prices go up, they fail to deliver or they just do not start the contract because now they see that they underestimated the amount of work that will be required.
Forewarned is forearmed!
*”Negotiations” happen at each stage of the process, but this is just the formalized dotting the I’s and crossing the t’s and final schedule additions to the contract.
