Published January 23, 2012
Provider “A” presents a new and highly effective spending control and TCO (Total Cost of Ownership) reduction to an industrial facility in the Southeast. The facility can realize a 20-25% spend recovery in a major spend area.
Corporate headquarters hears of the proposal and directs the Purchasing department to go out on a quote for the process.
First, the process is unique in its application and cannot be duplicated by traditional processes. Second, the company is over 65 years old and did not conceive of a change nor did any of their suppliers offer a change. Now, these other suppliers will scramble and do a “me, too” and offer their versions.
The effects: A delay in the benefits by 4-6 months (the time to create and process the RFQ, Request for Quotation) and the selection of an existing supplier (“B”) that did not conceive of the idea and is forced into the process with little knowledge or experience … a design for failure.
Provider “A” has lost incentive to continue to provide pro-active ideas to save money for clients. Provider “B” failed, which caused the corporation to reject the concept and fail to realize cost recovery dollars. Eventually, the company sent significant operations overseas in an effort to cut costs. This loss of American jobs could have been avoided if Provider “A” had been given the opportunity to provide the TCO benefits necessary to sustain the corporation.
These situations contribute to inaction so that innovative ideas are buried and America continues to lose advantages to foreign competition. What to do about them?