Jason Smith- Why Procurement is a Nightmare

Jason smith

Kevin Price, Host of the Price of Business on Business Talk 1110 AM KTEK (on Bloomberg’s home in Houston) recently interviewed Jason Smith.

About the interviewee
Jason Smith, Founder and CEO of operatingcosts.com. Mr Smith works with procurement professionals in 30 separate offices – these officers manage bidding, auctions, tenders and complex procurement transactions. Our procurement officers are responsible for contract negotiation, vendor management and issuing of large purchase orders.
Tell me about your firm (number of employees, location, type of companies you work with, etc.).  
We are partnered with over 30 offices across the United States and Mexico. The type of companies with whom we work with are generally those with annual revenues of between $10MM and $1B; Our Senior Procurement officers are located in:

Louisville KY,
Atlanta, GA,
Austin, TX,
Buffalo, NY
Chicago, IL,
Cincinnati, OH,
Dayton, OH,
Denver, CO,
Detroit, MI,
Indianapolis, IN,
Springfield, OH

What type and size of companies do you have as clients?
We work within many industries including non-profits, health and beauty manufacturers, community banks, large regional law firms, heavy equipment manufacturers, private colleges, food distribution companies, convenience store chains, nursing homes, hospitals, even regional airports! As long as the company or non profit has a minimum annual revenues of $10MM we can usually are able to with them and save them money.

Tell us what the procurement process means to your business?

Procurement for our business is an 7 step process:

Step 1
Using our client’s supply purchasing data, we categorize expenses and develop a realistic savings estimate.

Step 2
We take time to meet with key department heads to define supplier “must haves”, build buy-in and identify challenges before they arise.

Step 3
We collect detailed spending data and contract commitments to build the best possible bid specifications.

Step 4
We leverage our market knowledge, national purchasing agreements and unique subject matter experts to get the best deal possible. But it’s not just about price – it’s about quality, service and value, too.

Step 5
We review the details of our analysis with our clients and their team, discussing options and seeking input.

Step 6
We handle most of the details of price changes with incumbent suppliers or new suppliers.

Step 7
Once implementation is complete, we audit purchases regularly to ensure that savings are being realized.

What are the challenges of procurement for most businesses?
With money, anyone can buy what is needed, but for most businesses the challenges of buying efficiently are exaggerated by not having the expertise, tools and experience. Procurement is not simply about buying, or buying at a lower price. It is about ensuring the most efficient processes are in place, it is about confirming savings on an ongoing basis, taking into account hidden charges, and understanding why and when prices may increase.

We have Subject matter experts (SME) in place – experts within a particular procurement industry like telecommunications or insurance. Our SMEs generally have decades of experience buying within that industry and this gives us an advantage that most businesses don’t have. Why would a business employ a telecommunications expert to just procure and negotiate telecommunications needs? It doesn’t make sense for them to do so – but it does make sense to use this level of expertise when needed.
Contact information:

The wesbite OperatingCosts.com is for sale ; contact me if you have interest in purchasing it. Price $1,500 

Jason Smith lives in Louisville KY and enjoys horses and fishing (not at the same time!). Living in Horse Farm Country he works from home as a Website Designer as well as a Louisville Restaurant critique.