The Twelve Procurement Days of Christmas

transcript

Spend Matters UK/Europe

The 12 Procurement Days of Christmas

Peter Smith

December 2014

Part 1 - Introduction

The Real World Sourcing Series 2014 is a series of 6 sessions covering hot topics for procurement professionals.

The Real World Sourcing Series is promoted and supported by BravoSolution, and developed by Peter Smith (Spend Matters) and Guy Allen (Real World Sourcing Ltd.)

Peter Smith started his procurement career with Mars Confectionery, then was CPO for Dun & Bradstreet Europe, the Department of Social Security and the NatWest Group. He is now a consultant, author, non-executive director and editor of the Spend Matters website. He was President of CIPS in 2002/3.

What you may not know is that Professor Smith is also one of the leading musical anthropologists in the UK, with a particular interest in the origins of medieval folk music of the south-west of England

Today we’re going to look at the Twelve Days of Christmas

“The Twelve Days of Christmas" has a Roud Folk Song Index number of 68, showing its ancient origins.

The best known English version was first printed in English in 1780 in a little book intended for children, Mirth without Mischief, as a Twelfth Night "memories-and-forfeits" game,

The tunes of collected versions vary. The standard tune now associated with it is derived from a 1909 arrangement of a traditional folk melody by English composer Frederic Austin, who first introduced the now familiar prolongation of the verse "five gold rings".

On the First day of Christmas my true love sent to me, a Partridge in a Pear Tree.

How many species of Partridge are there?

46 listed in Wikipedia!

Never mind Pear Trees....

So it is important to make sure specifications are unambiguous and as precise as possible

Clarity is vital – whether the specs are technical, input, output, outcome based ...

QUIZ - question 1

Which TWO of these are NOT a genuine type of partridge?

a. Szechenyi's Monal Partridge

b. Sand Partridge

c. Chinese mountain partridge

d. Smith’s Partridge

e. Chestnut Bellied Partridge

On the Second Day of Christmas, my true love gave to me, two Turtle Doves ...

On the Third Day of Christmas, my true love gave to me, three French Hens ...

On the Fourth Day of Christmas, my true love gave to me, four Calling Birds ...

There are a number of critical procurement lessons in this:

• Aggregation - where can we reasonably aggregate spend volume?

• Standardisation – where can we reduce the number of variants?

• Demand management – do we really need to buy what we’re buying?

QUIZ - question 2

a. Which bird became extinct on September 1st 1914 just 50 years after it was one of the most numerous in the world?

b. At its peak population, how many were there in the world (allow +/- 25%)?

On the Fifth Day of Christmas, my true love gave to me, five Gold Rings ...

Tactics such as

hedging and trading

are used to smooth

prices and give

certainty

Do you understand

which of your spend

areas are driven by

commodity pricing?

QUIZ - question 3

What is the highest price per ounce that Gold has ever reached?

a. $1,913

b. $ 759

c. $2,390

d.$1,573

On the Sixth Day of Christmas, my true love gave to me, six Geese a-Laying ...

What are you really buying?

• Are you buying the geese – the means of production?

• Or do you really want the eggs? And do you want them raw or processed? Albumen or yolk?

• Some interesting questions here of “make versus buy” – or vertical integration as Henry Ford would have seen it

On the Seventh Day of Christmas, my true love gave to me, seven Swans-a-Swimming

Risk Management

• The Queen owns all unmarked Mute Swans on the Thames and surrounding rivers

• What are the risk aspects of what we are buying?

• Do we understand who our suppliers are? How they work?

• What are the consequences if we get it wrong?

QUIZ - question 4

Who apart from the Royal Family are allowed to eat unmarked Mute Swans ?

a. The cast of TOWIE

b. Members of the Order of the Garter

c. Fellows of St Johns College, Cambridge

d. The Worshipful Company of Vintners

On the Eighth Day of Christmas, my true love gave to me, eight Maids-a- Milking

Buying services

• Again we can ask – what do you really want?

• Do you want eight milkmaids? OR do you want the “service” of having the cows milked?

• If so, specifying the outputs or outcomes is usually better than defining the inputs

• Encourages innovation, different approaches

QUIZ – Q5

MILKMAIDS (well, Farm Girls)

On the Ninth Day of Christmas, my true love gave to me, nine Ladies Dancing ...

Back to risk management!

• The Bribery Act - an organisation must prove it has adequate procedures in place to prevent persons associated with it from bribing another person

• So what exactly do you want the dancing girls for? Are customers involved at all?

• Procurement not immune here

On the Tenth Day of Christmas, my true love gave to me, Ten Lords-a-Leaping ...

Buying Professional Services

• Are you buying the individuals or corporate capability residing in the consulting firm?

• Are you buying IP or arms and legs?

• Do you understand what you are getting?

• How do you measure performance (how high will they leap)?!

QUIZ - question 6

Which TWO of these are NOT hereditary peers still sitting in the House of Lords?

a. The 31st Countess of Mar

b. The 26th Baron Mowbray

c. The 2nd Viscount Eccles

d. The 3rd Baron Brabazon of Tara

e. The 12th Earl of Chorleywood

On the Eleventh Day of Christmas, my true love gave to me, Eleven Pipers Piping ...

On the Twelfth Day of Christmas, my true love gave to me, Twelve Drummers Drumming ...

Buying Music Rights – about as complex as a complex service can get!

• Who owns what and how do you pay for it?

• What will get you sued?

• How do you generate some negotiating leverage?

• Read Richard Kirstein on the subject!

QUIZ – question 7

• Pipers piping – identify these tunes and the artists who made them famous with songs featuring “pipes” of some sort!

• I can’t play a recording of the songs because we haven’t bought the rights – 8 bars only of live performance allowed!

So ... We have covered;

Specification , Aggregation, Standardisation, Demand Management, Commodity Buying, Hedging and Trading, Outsourcing and vertical integration, Risk Management, Outcome and Output based contracting, Ethics / Regulatory matters, Professional and Other Complex Services!

• It seems pretty clear that “The 12 days of Christmas” is nothing to do with the gospels or religion.

• It is the 18th Century version of MCIPS ...

• A superb training course for aspiring and experienced procurement professionals!

THANK YOU!

Please feel free to contact me on

psmith@spendmatters.com

The Twelve Procurement Days of Christmas

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