By: Mickey North Rizza
Recently, Dr. Douglas Boateng, CEO of the PanAvest Partnership and a CIPS Fellow,noted, “For governments, procurement must be more than a number-crunching exercise and should ideally not report to the Treasury in order to harness its economic developmental potential.” Interesting that Procurement is not recognized as a valued contributor in Government. Yet, according to the Center for International Development at Harvard University, “Government Procurement of goods and services typically accounts for 10-15% of gross domestic product (GDP) for developed countries, and up to as much as 20% of GDP for developing countries.” The opportunity to utilize procurement best practices and save taxpayer money is absolutely astounding.
At its basic level, Procurement saves money. But when you add in transformation activities, coupled with the basics of spend analysis and visibility, sourcing centers of excellence, working and fixed capital objectives, and category and supplier management strategies, procurement becomes a power house. Yet, public sector procurement does not capitalize on best-in-class Fortune 500 business procurement practices. My colleagues expressed it well in ‘Ten Strategies for Best-in-Class Public Sector Procurement’. They found public sector procurement can become best-in-class when ten strategies are employed:
1. Transform the purchasing culture
2. Start with spend analysis
3. Drive political and local government initiatives
4. Elevate supplier selection
5. Make a firm supplier commitment
6. Centralize procurement and sourcing
7. Collaborate and share best practices
8. Facilitate technology and process adoption
9. Move beyond the technology: focus on the people, process and skills
10. Partner with the right team
Most of the above are utilized by best-in-class Fortune 500 businesses today, with a slight variation on number 3 to accommodate customer and stakeholder initiatives. The old adage “knowledge is power” has some truth, but if you look deeper, you recognize “knowledge further empowers those who wish to improve their position.” For public sector procurement, it’s time to harness business procurement best-in-class practices and improve procurement for your taxpayers benefit.