coverstory
By Nicholas Seiersen
While lottery and gaming operations only spend a small proportion of their operations’ costs with suppliers, getting the right goods and services at the right place and the right time, and on the right terms is very important to their success. Supply Chain managers can be great facilitators, or they can be gatekeepers; in fact, they must be both. Gaming businesses work under stringent regulations that add significant administrative complexity on their operations and vendors, which can reduce the field of companies willing to supply the industry. Successful gaming organizations help vendors navigate these hurdles with howto guides, help lines, etc. Some go as far as to pay the registration fee to encourage a competitive landscape. Nonetheless, the background checks required by the regulator can be burdensome and, of course, there is the traditional litany of procurement challenges that all organizations deal with. The two most prevalent being: • A lack of clarity of responsibility/ownership of individual process steps in the Procure-to-Pay overall process can lead to process rework and delays; both users and procurement staff feel the other party is either not doing their own job, or second guessing the other person’s job. This frustration can lead to users failing to appreciate and benefit from the full value that procurement staff can offer, if only they had asked them to help. So, they forego the rigor and predictability of the outcome of a good procurement process, the experience of what works and what does not, how to get the best deal from the market, how to handle the suppliers’ usual tactics, how to defuse the incumbent’s advantage, and how to quantify a “value sell.” They also fail to tap the knowledge of contract and commercial law, the understanding of typical process risks, the insight of how long it will take, and what has to be done before the deal closes. Users sometimes circumvent the procurement organization
and engage directly with suppliers to develop specifications, terms, and other specifics. When it comes to negotiating an agreement, there often remains limited competitive leverage. • Under-investment in enabling technologies (eProcurement), results in data entry errors, and low productivity. Procurement can become known as a clerical pool of administrators who spend their time checking, asking unnecessary questions, and policing rote compliance. Because procurement resources are tied up in tactical/administrative tasks, they are chronically understaffed and cannot provide higher value services, such as commodity analysis and providing insight into competing suppliers and their value propositions; they are not always able to contribute strategically. The organization may fail to leverage its spend across the organization, establish formal supplier performance and relationship management disciplines, and is not able to manage poor supplier performance or leverage strategic supplier capabilities. Good procurement practices may seem selfevident to many, but, in such a mature discipline, it helps to have a roadmap to assess those that apply to your organization, and how and when you wish to implement them. We use a Capability Maturity Model to help our clients (see insert). Don’t Strangle Your Suppliers Right Now The recent surge in supply base fragility and a drop-off in business with the economic downturn haven’t helped organizations feel sure that they are getting the best value for their purchasing dollar. Deals were sealed when the economy was buoyant, Canadian Gaming Business | 11
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