The pressure is on to collaborate across government to address common needs and gaps.
Public sector procurement is more complex than it was even five years ago. Sourcing has gone global, exposing the supply chain to a greater variety of risks than what was previously imagined—conflict minerals, cybersecurity threats, international regulations and more—and the standards for spending transparency have risen tremendously, as evidenced by the adoption of the DATA Act last year.
The expectations for procurement have been set high. In order to meet these expectations, procurement organizations will have to break away from what they’ve always done and reconsider how they measure success. The technology, people and processes in place largely determine the success of such a transformation. Here are four actions that government agencies can take immediately to unlock the full potential of their purchasing activities:
- Analyze spending. Spend analysis, when completed correctly, provides a foundation for procurement transformation. Without having insight into your current cost structure, it makes it impossible to make informed decisions on where to cut costs or increase your budget. Once spending visibility has been achieved, it opens the door for collaboration and sets the stage for leadership buy-in—making spend analysis the first and most important step to a successful transformation.
- Develop talent. With the procurement landscape changing, it’s critical the team is well-versed in stakeholder management, data collection and analysis and finance. Relational skills are also important as procurement moves away from operating in a silo and increases internal collaboration across organizational departments. Continual development of talent and partnering with skilled procurement technology providers will be key for sustained sourcing success.
- Constantly collaborate. There are currently many opportunities to share and collaborate with other agencies. Public organizations are all on the same team, with the same mission, and peer-to-peer collaboration can make everyone’s jobs easier. Make it a priority to share tips, best practices, content and knowledge on a regular basis—it will help foster process innovation and ultimately give stakeholders better value for their money.
- Facilitate adoption. Successful public sector procurement teams understand the importance of making sure new users, both buyers and sellers, are educated on how to optimally use the new technology at their fingertips. A change management framework that outlines a training plan for the chosen solution and addresses each step of the transformation process is integral to the success of any modernization initiative.
The new model for public sector procurement creates a transparent, open bidding process, giving the supplier community full visibility into procurement activities and contract awards. Both suppliers and buyers get a one-stop shop for accessing the history of every procurement and supplier relationship, since all purchasing activity is housed in one system, which enables procurement to be much more transparent around public spending.
Using a common system across government also allows agencies to uncover common purchasing needs, discover fragmented categories and contractual discrepancies, and drive savings through volume-based discounts, allowing buyers to focus on more strategic initiatives like improving vendor relationships.
The bar has been raised for procurement, but the future looks bright and the results are definitely worth the time and resources invested in training, planning and acquiring the technology. The question is, are you ready to see the impact you can have?
Dan Warn is vice president at supply management provider BravoSolution.