Tesco - late payment scandal

So Tesco have been rapped on the knuckles for late payment - see BBC here.

Almost a year ago I was writing about this here. 

Let's be clear - this was a deliberate breaking of agreed contracts by a large customer taking advantage of smaller suppliers.  Tesco are claiming they are undertaking "reorganising, refocusing and retraining our teams".  This is disengenous.  They knew exactly what they were doing, and they did it as a deliberate policy.  If they are serious about the apologies they need to sack the managers responsible immediately - all the way up to the board.  Don't pretend they have already gone, or did not know what was going on.  Fraud is a hard word but what else do you call signing contracts you have no intention of honouring?

People could have (and may have) lost jobs and businesses so that Tesco managers could claim inflated profits and cashflow, and falsely claim bonuses.  Those bonuses must be recovered, and the victim businesses compensated.

In the end the accouting scandal of which this is part might cost Tesco £500m in fines.  Was it worth it?

Procurex North: Manchester 8th March 2016

Apologies for the lack of posting, but I have been rather busy on a number of rather interesting training programmes that I hope to be able to tell you about later.  They should be continuing throughout this year (and maybe next) so I do hope to get clearance from the client.

One thing I can mention though is that I shall once again be presenting at Procurex North in Manchester on 8th March 2016.  I shall be running one of the training zones (not sure which one yet), but more importantly Sally Collier Chief Executive of the Crown Commercial Service will be giving one of the key note speeches.  I'll forgive you if you listen to her rather than me.

Hope to see you there.

Preparing Perfect Tenders - Leeds, 4th November 2015

Been on holiday, and so not much notice for this one.http://www.passprocurement.co.uk/topics/preparing-perfect-tenders/

Ideal for me because it is just around the corner in Leeds.  And about one of my favourite topic - how to win tenders.

Bit late but still room for any latecomers.

One day on Project Management in London

Tomorrow (21st October 2015) I shall be running a one day course in London for LMC covering some issues in Project Management.  A bit late for booking for this course (sorry) but they do have a lot of other interesting courses available at their website www.lmcuk.com

And now I shall retreat back to fuming about my bank declining my card for my hotel in London because "hotel transactions are sometimes fraudulent".  Indeed, but as a frequent traveler they are also rather essential.  My hotel took the opportunity to decline my early (discounted) booking in favour of more lucrative clients.  Luckily I have found a replacement that is only a bit more expensive. 

Procurex Scotland- Tuesday 6th October 2015

Pretty much straight after the weekend I shall be going to Glasgow for the annual Procurex Scotland event, on Tuesday 6th October 2015 at the SECC.  Some very interesting talks - which I may well miss because I shall be presenting in one of the Key Event Zones.  You can't say you haven't been warned.

Hope to see you there - always an interesting event.

If Scotland is a wee bit far there Procurex events in 2016 in Wales, Ireland, and the North and South of England (some of which I shall not be at, so you can pick and choose).

Power Corruption and Lies: Volkswagen compliance

The Volkwagen cheating on emissions testing scandal is not on the face of it a Procurement issue, though it is rather similar to an old Procurement problem: lying about compliance.

Suppliers can and do fake certificates of compliance.  Part of the job of Procurement is working out when it is worth doing our own investigations into compliance.  Sometimes it is, and sometimes it is not.  Sometimes the non-compliance is just cutting corners...

This is not.  This is a deliberate and calculated fraud.  VW has already allocated $billions to the anticipated fines and law suits.  Is this enough?

In Procurement we would find a deliberate fraud a good reason for blacklisting the supplier (if such a thing is allowed, and let's be clear probably even it if is not).   Who could trust such as supplier ever again?

Standards and certification are sometimes seen as job killing and industry damaging.  Surely the market will deter bad behaviour?  In reality they are there to protect us all and prevent a race to the bottom in a (generally positive) drive for profit.  And so wrong doers are fined.

However the fines are not enough.  For a business they are a cost of doing business, and can be set against the profit and loss account.  They are, in short, a calculated gamble.  If it pays off and you don't get caught great - if you get caught, pay the fine (or in the case of Goldman Sachs agree to pay a fine without ever actually admitting to wrong doing).  That is not enough to deter fraudsters.  Not nearly enough.

We look at some of the great business scandals (Enron, Lehman, Libor, VW, Goldman Sachs, RBS) and can ask how many people went to jail?  Not many.  Literally on the fingers of one hand (mostly from Enron).  With those odds we are not detering wrong doing - the balance of risk and reward is too strongly weighted to doing whatever it takes.  Handing back your knighthood is not a risk of consequence.

If we want to change the risk balance we need to ensure that more corporate fraud is dealt with by jail time.  A nice cozy jail no doubt, but still jail time.  Nothing else will make managers think twice (and it will not make all of them do so either).  This needs to be a regular result too, not just a one off. 

We have to make managers aware that there are real personal consequences - not just corporate ones.

Bidding for HS2

The Chancellor, George Osborne, has attracted a bit of flak for inviting Chinese companies to bid for contracts for the High Speed 2 rail link from London to Birmingham.  A figure of £12bn has been bandied about, and there are complaints that he is being cynical in talking to potential suppliers before the legislation has passed in Parliament and that he should be promoting these opportunities to British businesses rather than Chinese.

Well, he is a very political beast and so we can assume that this is part of a bigger political plan (which appears to be to build better links to China).  From a procurement point of view it probably makes sense.  This is a very big project.  The Chinese have great expertise, having built far more miles of high speed rail than we have in Britain.  However they may not be aware of a decent project possibly happening on a small island on the other side of the world.  I cannot believe that there are any British (or European) potential bidders who are not aware of the project.

So it makes sense to do a bit of pre-market engagement, and effectively fire the starting gun for the competition.  A competition that will no doubt follow OJEU procedures, which will give an advantage to EU companies used to complying with them.  But it will remind them that there are competitors.  Competitors who now will have time to consider whether they would like to be involved when the time comes.  And whether a Chinese company could actually win.  The Chancellor must hope to convince them that they can... whilst fervently (and powerlessly) hoping that they don't.

Politics, eh?  Give me Procurement anyday.