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Greed is good - Particularly for Procurement

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As a Sourcing and Procurement professional, I can put my hand on my heart and say that I've been driven by greed to get highest value on my spending and I'm not ashamed to accept that. What about you?

In the famous 1987 Hollywood movie "Wall Street", Gordan Gekko, played by Michael Douglas said "Greed, for lack of better word, is good". Douglas went ahead won an Oscar for that role.

Now I don't know how much of that 'greed' was responsible for the Oscar but some people say that the financial downfall of west was definitely caused by too much Greed. "Stop the Greed" signs are all over the streets and internet. But I have a disconnect with this whole idea of categorizing a normal human nature as a bad thing. Greed can actually make employees and organizations achieve amazing heights.  It depends on how employees act and what ethical/non-ethical choices they make when they get greedy.

Over last few decades the procurement function has shifted from a back office clerical department to a strategic one, creating value for shareholders. There are new tools and techniques available to understand the spend pattern and leverage the power of internet through e-sourcing, e-procurement and value networks. The Supply markets have changed from Local to Regional and Regional to Global. There is continuous pressure on CPOs to do more with fewer resources. In this changing scenario, 'Greed' or 'a nonstop appetite for tangible results' is actually a desirable attribute for procurement function.

Take Reverse Auction for example; it is a classic case where buyer's greed for price reduction, seller's greed for getting more business and a technology platform, all three come together and create value for their respective organizations. But some critics feel that Reverse Auction is not good because it creates lack of trust and damages buyer - supplier relationship. This is often mixed with biased assumptions and misleading claims due to half/no knowledge about right e-Sourcing process. I believe these notions are similar to branding 'wall street's greed' a cause for 'Global financial distress'; and we all know that's not the truth.

As a Sourcing and Procurement professional, I can put my hand on my heart and say that I've been driven by greed to get highest value on my spending and I'm not ashamed to accept that. What about you?

Comments

I have been greedy all my life ... and I'm proud of it too ;)

I believe that Greed is not good but Ambition is.
The difference is in semantics. One can replace the word greed as ambition and it makes more sense.
The main quote of the movie is given below:
"The point is, ladies and gentleman, that greed, for lack of a better word, is good. Greed is right, greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, knowledge has marked the upward surge of mankind"

Greed happens when there is no limit to ambition and no concern to what happens to others. Ambition is about walking the middle path. One has to stay in the middle and check the betterment of all. It is not about giving in to Greed or giving away everything one has. It is about breaking silos and working to the betterment of the whole. In case of procurement, if the buyer is only greedy on price reduction, very soon business will wither away when the quality falls. If the buyer is increasing the benefit to the end customers by lowering prices and higher quality, everyone wins.

In case of Dell, when their supplier kept giving lower prices for getting more and more business, greed took over and they had outsourced just about everything to that company and kept the prices the same to have huge profit margins. Very soon "that company" became the company which drove Dell out of the market - ASUS.

These are just my two cents. Would like more discussion on this.

Good point of view in todays cut throat market. I think you make a good case of greed with ethics (rather than without)

Reverse auction engines are really useful to drive competition between shortlisted suppliers and avail potential value opportunities.
But I had one thrilling experience in case of TACO Group (Tata)for reverse auction of packaging commodity. After reverse auctions and evaluation business was awarded to new supplier.
Selected supplier had first delivery of goods at TACO but present supplier of TACO group had bitten the driver of that vehicle in between the delivery route and stolen away the goods. Police case was registered against present supplier.

Hey Durgesh, Thanks for redefining greed in the procurement context and in such apt manner. I am proud to be greedy and making a number of my clients/prospects greedy too from last so many years.

Good one there Durgesh. I agree with you. But I disagree too, because the other part of the story cant be ignored. (my automotive analogy as usual!!) Sustainability is important too. Why did Delphi go bankrupt; why did Visteon shut down plants across the world? GM never gave a price increase based on a material linkage agreement to suppliers (fair deal right?) even when aluminium and copper went through a 100% increase. Somewhere Toyota forgot to look into a major braking component in the race to surpass a 10 Million cars volume. So, sustainability is important too.

I am not as unostentatious as MK Gandhi but there is truth in what he said: "this world can satisfy every man's need, but not every man's greed". As a purchaseer I would always root for the highest possible reduction but not the highest reduction.

A well written article there and certainly eye-catching! My two cents:

Yes a well placed greed can drive you initially towards achieving additional savings. However, in my experience striving towards a win-win situation is the best approach from a long term quality and supplier relationship perspective instead of keeping both eyes on mere cost savings.

For instance, reverse auctions, being a powerful tool that it is, is also susceptible to manipulation in cost break-down, especially where its upfront visibility is not there.

@Jyoti :-)

@ Varghese: thanks for the complete quote and I agree with your point that greed has a negative connotation but the difference between ambition and greed is the intensity greed has. Concepts like “follow the middle path” look good only in theory and are impractical to implement at individual level. Regarding Dell’s example, Let me quote from your blog “the goal of any commercial organization is 'To make more money now as well as in the future'”. I guess that’s exactly what Dell was trying to do. The point is, many organization have failed in past and many will continue to fail in future. The reason is not greed but the choices they’ve made after they got greedy.

@ Bipin: You are absolutely right. Ethics come first without saying.

@ Sameer: The incumbent suppliers got a little too greedy :-)

@ CK: Thanks CK and it’s our responsibility to show our clients the right path.

@ Prashanth: Agree with you completely on sustainability but I don’t think GM’s sourcing function was solely responsible for their suppliers’ downfall. After all, suppliers signed for those contracts.

@ Ashima: Thanks. A win-win situation is good. The key to achieve it is to apply the right sourcing tool in the appropriate situation. Reverse auction is definitely not a one size fit all solution.

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