What's Happening in Australian Procurement

Tuesday February 9th saw James Leathem, Managing Director of Magnetized Markets (Australia) present to dozens of procurement professionals at The Manitoba Club in Winnipeg Canada. James was a guest of Beyond Referrals and had some interesting research to share. The presentation was also broadcast live on Jon Hansen's Procurement Insight's Business Insights Internet Radio Show.

Procurement of professional services is a big beast and James found a way to make it a more manageable challenge. His firm chooses to focus on the middle space of procurement - projects too big for sole sourcing, but not big enough to require a full blown RFP. He called this the "three quotes" space. Typically this space is either under-serviced ("use who you used last time") or over-complicated (ie: a full blown RFP is used where that expense is not required).

There were a few key lessons that we can take away from James' presentation. First, the challenges around the procurement of professional services seem to be consistent between Canada, the US and Australia.

Second, while it may be easy to find vendors, it is very difficult to find the right vendor. Of the almost 300 companies that Magnetized Markets surveyed about their procurement processes, 54% stated that they were not confident in their processes ability to find the best match for vendors.

According to James' research when a tender is not required, 32% chose to simply use someone they, or their colleague, had used before, 50% used Google - which gave them millions of options but with little meaningful information other than poorly constructed web site information - and 18% used an informal EOI (or some watered down, but overly demanding and poorly supported version of an RFP).

And finally, James pointed out, the "three quotes" space is easy to overlook because it is usually a relatively small dollar value per project but when rolled up into annual spend it represents a significant cumulative dollar value.

The solution, according to Mr. Leathem is to help procurement to push down the buying responsibility for smaller "three quotes" projects to the end user - what he calls "the buyer" but to give them good tools so that they can manage the process effectively, and so that procurement can still be confident that there is an audit trail and reasonable compliance to existing procurement policy. This frees up procurement to focus on the big jobs that require a lot of their attention and time.

For more information about Magnetized Markets and their professional services procurement tool visit www.ifindconsultants.com

For a summary, and to listen to Jon Hansen's broadcast of the presentation visit Beyond Referrals.