Where have all the experts gone? Despite the major improvements of technology in our day and age, experts are harder to find than ever. Procurement agents can rarely find vendors that can deliver projects on time and on budget. There is always something that goes wrong with a project, whether it be a technical, a political or a contractual issue. These issues always result in higher costs, lower quality, more time, and unsatisfied clients. It leaves organizations and clients wondering, why have all the experts left? The answer is price based procurement.
Price Based Procurement
The majority of companies and organizations that make up the current industry have a price based procurement approach. Price based procurement has the following assumptions:
- The manager is more of an expert than the vendor who is doing the work.
- The owner can control the vendor by means of a legal contract.
- Vendors can understand and can deliver with consistency exactly what the buyer is expecting.
- The Best Value [lowest cost and service (all the services are exactly the same) is the lowest bidder.
- The owner or owner’s expert then manage, direct, and control the vendor to receive the service.
Results of a Price Based Procurement
The assumptions of price based procurement are inaccurate. This type of environment assumes that vendors have no expertise and treats all vendors like commodities. Owners would rather manage, direct and control vendors instead of utilizing expertise. As a result, companies end up hiring inexperienced, cheaper vendors to do work because they can’t utilize the expertise of the expert vendors. Since these expert vendors are not valued, they are simply leaving the industry. In essence, we see an exodus of experts due to price based procurement .
The only way to raise the level of expertise in our current industry is by having visionaries that understand these concepts. These visionaries need to make a push towards the value based approach that utilizes expertise. We have found it to be impossible to implement this approach in a large organization. So, we propose that visionaries create a small core group that understand the problem. This core group will be an entity inside your organization. It will only operate on projects that expertise really matters. Consequently, your company organization can stay the same but can also gain the benefits from using experts.
Experts have been diminishing in our current industry today. The price based procurement approach is a main contributor to eliminating experts, and decreasing expertise. It results in higher costs, more time, and value deviations on projects. The only way to stop the diminishing of experts is to find visionaries that understand these concepts. These visionaries need to create core groups where expertise will be utilized and vendors will be valued. By utilizing the expertise of vendors, the diminishing of experts will be curbed. Moving towards a value based procurement approach is the only way to save and improve the expertise of the industry.