Common Sense

Editor’s Note: Beau Grant, CPPO, is a master instructor for the National Institute of Governmental Purchasing (NIGP) and president of Beau-Geste Enterprises. Readers can reach Grant by e-mail at: [email protected]

Despite the move to E-commerce and all the advantages and enhancements it brings, there are still millions of taxpayer dollars invested in government stock shelves and surplus-property warehouses all over the country. Government employees are still “going shopping” at local stores (on government time) to buy things that are already in stock at the warehouse. It makes you wonder.

Despite the move to E-commerce and all the advantages and enhancements it brings, there are still millions of taxpayer dollars invested in government stock shelves and surplus-property warehouses all over the country. Government employees are still “going shopping” at local stores (on government time) to buy things that are already in stock at the warehouse. It makes you wonder.

I’m reminded of the government employee who bragged about buying an extension cord at one of the local stores for 20 percent less than the cost of extension cords already stocked in the warehouse.

The cheaper item did not meet the quality and safety standards of those stocked in the warehouse. In reality the employee spent what he paid for the cord he bought plus the cost of the already stocked item. He spent 180 percent of the stock item cost for an inferior item that could turn him into a crispy critter. Brilliant!

I remember doing a review of a small county utility company and finding over two million dollars in stock items in its warehouse. When I asked why there was such a large inventory, the warehouse supervisor (who had been there since electricity was discovered) said, “I’d rather be looking at it, than looking for it.” He then proceeded to brag about the fact that he had a 100 percent order fill rate to ensure that the “lights never go out” in the county. That immediately told me he was overstocking. The optimum fill rate is 98 percent without overstocking. Further investigation revealed that he had not checked his inventory or purged his obsolete stock for over three years, and he had not standardized his high-use stock items (as evidenced by numerous brands and price ranges of the same types of items). His justification was that the technicians tell him what they want, and he buys it for them. He always stocks a “few extra” to make sure they do not run out. He thought that was JIT (Just in Time) warehousing. I told him it was JIC (Just in Case) warehousing and very expensive.

As you may have surmised by now, the warehouse was run independently of procurement. Surplus property was also handled by someone else in the organization and not affiliated with procurement. Interestingly enough, there was a high incidence of “midnight requisitioning” of surplus property, causing it to mysteriously disappear before it could be auctioned or redistributed within the organization.

The utility company eventually failed, leaving its customers in the dark. The utility services were privatized at a considerable rate hike to the consumers. The two million dollars of inventory stock was sold as scrap at eight cents on the dollar (bought by the private utility company). The newly elected Board of County Commissioners have pledged to make things right. I wonder if they even realize how a little bit of training and reorganization by a public procurement professional could have changed the outcome. Or will they too just stay in the dark? I wonder.