Procurement Challenges

Some acquaintances of mine think about procurement as throwing money – grabbing a product – and repeat the cycle. But this humble phenomenon is very pretentious, what if I say the art of selling is like flooding the market with produce and snatching the money from people, is it meek, Ah?

There are innumerable challenges involved, just like any other job that you do to get the things done. If I mean ‘challenges’ then you should know some of them however.

First of all procurement is NOT like buying; buying or purchasing is like daily getting bread & butter with a bottle of milk, so you could consume it in your breakfast; off-course you are paying, but what if I say getting a pint of soy milk from your everyday dairy shop? What if I say getting bagels from a grocery store in Iran? You got my point? Perfecto. Still unsure? Can you ask your everyday hairdresser to crop the wool from a herd of sheep in your backyard in first go? Procurement is the art of getting unmanageable – possible.

Possible in a realistic or feasible manner, off course you can’t boil the moon to swallow with a cup of black coffee in a cold night, an egg would perfectly go together with. Thinking of my hairdresser analogy a fallacy? It is achievable; that hairdresser might have a pair of heavy-duty hair trimmers, which he can use to crop the hair from sheep; the only thing that should be taken into account is how skilled he is.

Since you know I’m a procurement specialist; I face similar challenges each day. Especially in Pakistan where most of the trade is unregulated it is double than ordinary; plus it’s a seller’ market. Your procurement cycle is started from hunting the suppliers NOT the product, then you tailor your demand around the available product offerings.

Every procurement professional first have to ensure the interest of the government and then of its principal employer; shocked? What kind of procurement I’m doing, ha? Well this is not so strange who have had the experience of getting fake or counterfeit products which were actually smuggled or contraband items sold/brought in the past. The best way not to get your (and your employers) neck into jaw is to do/check this in foremost. It will safeguard your interest to some extent; but you know possibilities are endless, who knows?

According to law/principle it is customary to a buying company to with-hold some chunk of payment they made to get products or services as income tax from the suppliers; but that is where all the fun starts; do you remember that I told you that most of the business in Pakistan is unregulated? That was right; if you ask/tell the vendor (in our case supplier) that you would follow the binding duty to do this, they would start muttering or in the worst case they might tell you that they can’t do the business or they would cancel the deal. Why is this? Because most of them don’t want to disclose their income or they don’t want to pay the taxes, or I can safely say they challenge the writ of law or they want to say that they are special & above the law. Some of them come with a rather holistic approach; they would simply add-on this in gross payable; the buying company would pay supplier’ liability on its own expense.

That was the first part; people are not used to a more civilized/procedural practice. In the developed world procurement authorities raise RFQs (request for price quotes) through mass media, like internet listing websites, social networks or other modern and cost effective methods; but that is not the case here.

Most of the trading concerns or entities are either offline or they require all these using conventional methods. E-procurement is scarce in business circles across industries, very few companies have the corporate, industrial or office sales teams; and from that very few; little of them work hard to get the business; they have not untapped the potential in this modern era. People don’t respect the manners, so they respond unprofessionally; even few bother to quote the prices in writing on a stationery letter head.

Another factor is Pakistan and some of the under developed countries like-wise have scarce local manufacturing; as a result there are fewer options available. It definitely means there is much less competition involved; and where competition is low and demand is good, it becomes a supplier’ market, and this condition is not in the benefit of general public, especially procurement specialist face challenges due to enormous demands. This brings an opportunity to suppliers; they prefer selling without strings attached; whereas they sell to corporate institutions then they would have to pass-through the lengthy-lazy process; they go to a lucid and straightforward path; choosing first-one.

The long-run solution is to follow the Made in China model; but it would take decades unless some innovation brings a solution. One temporary solution is to import goods from any other market to coup with the local demand but is a short term hack; it has countless side effects and consequences at large; for taste take an example of trade deficit in terms of foreign reserves. Another imaginary solution is to end up usage of transactions involving cash; what if only possible way to do business is by means of banks? Yeah that too is another fallacy; but look how much it is complicated.

We are bound by our tangible means and sources; there is limit on everything; we are and will jiggle to have a perfect mix which would mutually benefit all. So what do you think? Procurement an easy task? Tell me in your comments, Thank You!

Shehroz