A few weeks ago I rode the London to Brighton Bike Ride in the company of 27,000 other brave souls.
After the expected congestion of London, the route became even more crowded in the Surrey hills as a result of narrow roads and the combination of increased gravity and rusty machinery (both human and metal).
As I swerved around a cyclist dressed as huntsman, who in turn was chasing another dressed as a fox, I narrowly avoided another dressed as a French onion seller (complete with garlic and odour), who then disappeared into the verge.
I pondered the similarities between my predicament and that of a buyer in a crowded market where demand is high and supply limited.
I have seen this scenario before, in a past life at international development specialist Crown Agents. In the aftermath of major disasters, aid agencies and relief organisations would scramble to react and provide shelter to those affected, with their procurement teams chasing dwindling and increasingly costly stocks of emergency supplies and tents, in particular. We did try various methods of preventing this scenario, but the only one that really worked was to ‘buy forward’ and contract for these stocks ahead of the requirement for them.
At the Olympic Delivery Authority we, along with the other bodies involved in hosting the London 2012 Olympic games, are facing the possibility of similar market issues in event-related equipment and personnel. As before, there is only one certain method of avoiding escalating prices as buyers compete against each other and that is to determine the requirement now, run the procurement and enter into a contract before the market becomes congested.
Of course this isn’t easy and procurement has a key role in driving the businesses it supports to make key decisions on what it will require well before these decisions would normally be made.
In these situations, it is often better to make a decision – even if it turns out to be wrong in parts – rather than wait for requirement certainty, but then face a difficult market. This may not make us popular within the business in the short term, but it will help to prevent markets like those Surrey hills and make them more like the fast and open roads of Sussex that thankfully followed.
