How Can You Negotiate After the Deal is Done?
“Imagine This: a requisitioner commits to a deal with a supplier without your involvement or approval. Now the supplier believes he’s already won the order and you’ve lost the upper hand in any negotiation. This can be one of the toughest situations you will ever face in procurement.”
Network Member Question, January 12, 2009
Like the person who refuses to seek proper medical attention for fear that the doctor may actually find something wrong, many corporations look at compliance investigation or analyses as a sign that the system has somehow broken down and therefore casts a negative “light” on both the individuals involved and the company as a whole.
As a result, non-compliance for which there can be a wide range of root causes from poor authorization procedures, to disparate platforms within largely decentralized enterprises to yes, even unethical practices both intentional and unintentional, is often delegated to the hushed recesses of ancillary background activity. This can significantly limit the potential effectiveness of any undertaking to implement a much needed resolution.
To effectively address issues of non-compliance it is imperative that an “autopsies without blame” approach which was first championed in Jim Collins’ book Good to Great, be an essential foundational element of any verification process.
Similar to the innocent until proven guilty edict that governs our legal system, a well designed compliance verification program looks to identify and solve problems rather than simply assigning blame. This of course paves the way for true cooperation and collaboration, as well as full disclosure.
Other than situations in which there is a deliberate attempt to mislead such as in the case of a former vice president of merchandising and operations for Fry’s Electronics, who has recently been indicted for allegedly embezzling $6 million through a kickback scheme, the majority of breakdowns are the result of misaligned practices.
In fact in many instances, issues of non-compliance are reflective of the onerous or laborious conditions associated with traditional processes and related technologies that have the propensity to actually hinder a buyer’s ability to maximize or achieve a “best-value” outcome. This is usually due to an over reliance on automation versus process understanding and refinement in which intentions to reduce cycle time actually increases operational workloads on the front line. This in turn creates a non-compliant work environment especially in the area of supplier engagement practices as many supply chain/procurement initiatives artificially limit buyers to deal with a core group of “known” suppliers as a means of meeting requirement timelines while simultaneously adhering to the unrealistic procedural standards of an automated system.
In these scenarios, it is important to balance a firm but sensitive approach that removes or corrects the offending practice versus admonishing individuals for poor performance.
And it is this very ability to create the right level of trust that both highlights and distinguishes BC Compliance Group’s (BCC) methodology and deep industry expertise.
Hidden Under a Mountain of Paperwork?
Like the Acres of Diamonds fable, in which a farmer expended both energy and resources to scour the world in search of a cache of diamonds that ultimately turned out to be hidden beneath the soil of his own farmland, the opportunity to uncover hidden profits from within the confines of an organization’s existing operations is tremendous.
From recuperating “thousands or even millions of dollars of lost profits,” to introducing and incorporating a properly aligned set of “best practices and policies” which are designed to truly support management’s goals and objectives, a compliance verification initiative provides an objective lens through which key stakeholders can fully assess the opportunities for organizational improvement.
I am not talking about an overarching Lean, Six Sigma type undertaking spanning months or even years, although programs such as these do help in establishing the framework for a holistic transformation over time. What I am talking about is an acute, precisioned effort in which a more immediate return can be identified, captured and realized on a company’s financials.
Simplified and streamlined, the compliance verification process works within current operational infrastructures to effect an immediate and positive result on a cost (and time) sensitive basis, while minimizing the impact on day-to-day business.
While the pursuit of your organization’s hidden diamonds is a worthwhile endeavor, especially when the overall economy is contracting, there are nonetheless numerous challenges to be addressed before tangible returns can be realized.
Creating Trust and Respect
Pursuing a program that some might consider contentious at best, and an unwarranted inquisition at worst, the initial engagement methodology will establish the tone for the entire exercise.
Therefore it is important to identify and engage internal stakeholders who are capable of creating a collaborative team where the goals of the initiative are clearly defined, fully understood and ultimately pursued with a balanced view of the enterprise’s people and its capabilities.
Unlike the much maligned “internal affairs” structure, the emphasis should not be placed on who did what in the past, but how “we” can fix it on a go forward basis. If there are procedural inefficiencies or contradictions, it is a problem to be solved not assigned to any one individual. If conflicting platforms create silos of non-compliance then efforts must be made to both unify and reconcile participation with corporate objectives. If there is malfeasance, then every effort should be made to confine responsibility to the appropriate party or parties, and therefore avoid “painting everyone with the same brush.”
In the end, the key element for success is communicative understanding where the issues that originally led to non-compliance including the associated challenges they present to individual stakeholders at each level of the organization are recognized and addressed on a collective basis.
Why BC Compliance Group?
For those of you that are part of my regular readership, you already know that an important tenet of the Procurement Insights Sponsorship Program (which includes these profiles) is my total commitment to neutrality. And as such I will continue to leave the assessment surrounding the viability of the BCC value proposition in your hands, (as always, I will direct you to the Link To Our Sponsors and Sponsor Presentations Sections of the PI Blog to investigate the BCC solution in greater detail, and at your own convenience).
What is interesting about the BCC organization is that their approach is based upon what they refer to as “The Relationship Matrix.” Specifically, BCC considers and respects the interests and sensitivities of the relationships between both internal as well as external stakeholders.
This disarming approach means that the process will never be reduced to an accusatory exercise, but instead will focus its energy on expanding, and where necessary establishing more effective channels of discussion and review (i.e. checks and balances). In essence, and whenever possible, solidifying the foundation for an even stronger and a more productive relationship between stakeholders.
Backed by a “No Financial Risk” guarantee, which clearly states that there will be no financial “obligation” for the client until a “measurable” benefit is “realized or received,” speaks volumes about BCC’s confidence in the firm’s methodology. And it should also provide you with the confidence and comfort to challenge the effectiveness of your current processes to recover as well as realize the hidden or lost value within your organization.
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