Why Procurment Keeps Stuffing It Up
(And what smart operators are finally doing about it)
and yes, the typo was intentional!
After 20 years working inside the procurement functions of some of Australia’s biggest companies, I’ve seen the same pattern play out over and over again.
A new Head of Procurement arrives, full of energy. A transformation begins. New systems. New categories. New promises.
12 to 24 months later?
They’re gone.
Savings haven’t materialised. Operations are frustrated. Finance doesn’t trust the numbers.
And leadership is asking the same question for the tenth time:
“Why doesn’t procurement ever deliver?”
Let’s be clear — the problem isn’t the people (well, not all of them).
The real issue?
Procurement is trying to play rugby using the rules of chess.
The Manufacturing Mindset That Won’t Die
Most procurement functions — whether they admit it or not — are still running on a manufacturing-era mindset.
It’s built for a world of linear processes, predictable volumes, and well-defined inputs.
In that world, you buy 10,000 identical widgets, beat the supplier down on rate, and call it a win. Job done. KPI ticked. Dinner’s ready.
But here’s the thing:
That world doesn’t exist anymore.
At least not in Australia.
Most of what we spend money on now is services — not widgets. Not steel. Not pallets of identical gear.
Services are fluid. Messy. Intertwined with the operations.
And they don’t follow the clean logic of a manufacturing line.
Volumes shift day to day
Scope creeps in by the hour
One contract influences another
Supplier behaviours drive downstream cost — often invisibly
Try to squeeze savings from one contract and the cost just pops up somewhere else — like trying to flatten a stress ball with one hand. You get bulges in other places.
And yet procurement keeps using the same tired tools:
Rate pressure
Panel refreshes
Overworked category managers with no view of the business model
It’s no wonder things fall apart.
Real-World Example #1: The mine that changed my mind
Almost 10 years ago, we started to flip this mindset during a project at large Austraian mine.
Instead of obsessing over contract rates, we began looking at:
How services were actually being used
How costs moved across the value chain
What operational variability meant for commercial performance
And how supplier pricing structures could be re-engineered with incentives
The result?
Big savings. Real alignment.
And less finger-pointing.
That experience laid the foundation for what we now call the Services-Led Procurement Framework™ — a practical, operations-first model for how procurement should work in service-based businesses.
Real-World Example #2: The Classic Trainwreck
A few years ago, I saw a team renegotiate a contract for train maintenance.
Great rates. Good paper. Smart-looking deal.
One problem:
The trains had been decommissioned six months earlier.
They signed a take-or-pay contract for something that no longer existed.
Millions wasted.
No accountability.
Procurement ticked the box and moved on. “Dinner’s done.”
What Good Looks Like
Smart companies are starting to break the cycle.
They’re shifting away from “category management” and toward something closer to commercial engineering.
They’re:
Aligning contracts to outputs (like cost per tonne), not just unit rates
Analysing how one supplier’s performance affects others in the value chain
Understanding supplier cost structures and how their behaviours respond to commercial levers
Designing procurement around operational rhythms, not corporate templates
And guess what?
They’re not getting 3% savings.
They’re getting 20–80% cost reductions on services that had supposedly already been optimised.
So What’s the Fix?
It’s not another system.
It’s not another restructure.
It’s a new operating model built for the real world — where services dominate, complexity is the norm, and value is contextual.
We call it the Services-Led Procurement Framework™, and it’s built around three pillars:
1. People
Not just buyers — but value chain commercial leads who understand how the business works, how suppliers make money, and how cost behaves across operations.
2. Processes
Not tendering for the sake of process, but engaging suppliers in value chain optimisation, commercial model design, and outcome-based incentives.
3. Platform
Analytics that put cost into context — not just rates, but how spend maps to operational metrics, where inefficiencies hide, and how decisions shift value.
Why It Matters (Especially in Heavy Industry)
Operations, in particular, are complex ecosystems.
Every outsourced service — from camp management to maintenance to transport — has ripple effects.
If procurement doesn’t understand those interdependencies, it’s just playing whack-a-mole with rate cards.
Worse, it leaves senior leadership holding the grenade — forced to explain why costs went up after procurement claimed they went down.
It’s not good enough.
And it’s time we did something about it.
Want to See It in Action?
This isn’t theory.
We’re rolling it out now — one contract at a time.
Starting with renewals.
Then moving to entire business units.
And eventually transforming the entire procurement operating model.
If this sounds familiar — or if you’re tired of fixing the same problems every year — we should talk.
No pitch. No fluff. Just 20 years of hard-won lessons that finally make sense.
