Few days ago I read a LinkedIn post published by Sam Achampong with a new metric proposition, metric named:
TCR - TOTAL COST OR RELATIONSHIP - what a catchy name!
original post here
I have a few thoughts about proposed TCR formula, let me share with you:
From my perspective such metric should be named as a ➡️TCC total cost of cooperation/collaboration
and can be useful to empower decision-making in procurement.
Nevertheless as a soft skills and human dimension in the business freak I don't see a possibility of creating metric for procurement professionals which will give us "the power" for relationships measurement.
Take a look at demands for competences of procurement professionals
🎯we need to learn how to build our efficiency not only by meeting metrics, but by engaging others (stakeholders, suppliers) to help create a value for companies we work for.
🎯TCR as a TOTAL COST OF RELATIONSHIP formula mistakenly assumes that there are repeatable measurable elements which will show us how our relationships looks like and what value they bring.
🎯In my opinion there are at least two assumes which make such metric dangerous for managing relationships in procurement on daily basis:
1. Total - means total - everything is included. Is it? Check original post (link above)
2. Total cost of relationship - relationship is an intangible area, that can be "anticipated or evaluated only by the specialist."
The point is that in our procurement world so far (till COVID-19 pandemy) 'no one' thought that soft skills are crucial and can have influence on the procurement results. It's relatively 'easy' to create a formula as TCR, but how to ensure the value of using it?
Most of Procurement professionals (I stick to my experiences, no offense!) are analytical, have problems with building relations and keeping an eye on savings in the same time.
➡️There is a risk with metric named as TCR that we will build in some people's mind a conclusion that they effiently manage their relations because they use TCR metric(!)(Raise a hand if you have metrics in your company which are marked as 'green' and do not reflect a real situation😊)
🎯Proposed by Sam elements are crucial for tracking sourcing effiency, it's not equivalent with the final result (better conditions, handling orders or directing exceptional offers or limited goods in the first place), so TCR≠V
🎯Doesn't reflect time spend for making good cooperation - calls, negotiations, meetings, workshops or even successfully implemented correction plan after some failure (who had such situation with his supplier knows that it means more that the best year of great cooperation. The relationship goes to a higher level, if the engagement of both sides is managed).
🎯It also assume that each of procurement professional have an ability to 'feel'/'see' relations not only in figures.
To sum up - it's worth to play around it but without 'relationship' in name. For me it's around cooperation/sourcing efficiency,
TCR - total cost of relationship - it's a catchy name,
but can be more confusing than good in promoting the right approach to relationships management.
ul. Święty Marcin 29 lok.8