What is the importance of the 5 Rights of procurement

Filed Under Blog 

In a recent consulting role, I was reminded by the rather bullish Managing Director that the “only” role of procurement is to save cost.

I wish I had a dollar for everytime that was put to me. We Supply Chain pro’s know that procurement is so much more than cost. But how do you get that message across and convey the potential and benefits of the supply chain engine room?

Well, one tried and tested method is to use the mantra of the 5 rights of procurement. Of course, you remember these from your CIPS days right? It’s a simple combination of the key deliverables of a successful procurement process

  • The Right Quality,
  • The Right Quantity,
  • The Right Price,
  • The Right Place,
  • At the Right Time.

While it’s a tad simplistic (c’mon Supply chain is waayyyyy more complicated than that) it conveys the fundamentals of what good procurement can be measured by. Whilst I agree Procurement is nuanced, to explain it succinctly the 5R’s hits the nail on the head.

The crux of this is, of course, is that the supply chain function, and procurement, in particular, needs to add value. Procurement often gets a bad press, costs escalate, the wrong suppliers get selected, service may be shoddy so it’s the 5 rights is a neat and simple way of reminding you what procurement should be doing.

But how do you meet the criteria of the 5 Rights, is it by an individual, by a group or by a process? The 5 rights tend to be the acid test of a functioning procurement team and how you meet the 5R’s tends to be a mix of process and personnel.

The 5R’s can be seen in both direct and indirect procurement. There most procurement teams would agree that there most buyers face a balancing act to play between the 5 criteria. For example, Right Quality might determine the price to be paid (which may not be palatable with budget holders). You may have a supplier that can only provide a certain economic order quantity in order to satisfy another criteria. The trick is to get the 5 criteria working in harmony to satisfy the business.

So, next time your boss tells you that procurement is about costs, introduce them to the 5 rights.

Comments

One Response to “What is the importance of the 5 Rights of procurement”

  1. maureen on April 6th, 2018 9:40 pm

    please a brief explanation of the 5Rs would be appreciated. Thanks