Public sector procurement needs profile

5 Jun 15

The public sector procurement function does not enjoy the status that it does in the private sector. This needs to change if we are to continue to drive efficiencies and add value

It is puzzling that despite an unprecedented focus on cutting costs and delivering greater efficiency in the public sector, the way many organisations go about procurement appears to have seen little change.

Public spend has been under the microscope and no doubt procurement teams have been tasked with penny pinching wherever possible. But that’s very different from taking the steps required to allow a procurement function to fulfil its strategic potential.

World-class procurement – seen more often in the private sector – has a handle on every single aspect of spend. It fully understands the markets being purchased from and it is a key player in driving forward an organisation’s commercial strategy. It’s the backbone of securing not just better value for money or a higher quality of service from the supply chain but the future financial security of the business.

Contrast that with some practice in the public sector. In a few local authorities, government departments and public agencies strategic procurement can sometimes be relegated to the sidelines as opposed to taking its place at the heart of the operation.

At times, traditional approaches still dominate, with staff performing what is largely a sourcing, transactional role, patrolling the actions of other departments to ensure they are playing by the rules. These are essential tasks but they represent just a fraction of the part procurement professionals could play.

Having worked in the food and drink industry for more than 20 years and in NHS procurement for seven, I think the key difference between the private and public sectors can be summed up in one word: profile.

Successful businesses view procurement as integral to their operation, it’s represented in the boardroom and carries clout throughout the organisation. Procurement directors are consulted on high-level business decisions because they are seen as key players.

I joined Anchor Trust, England’s largest not-for-profit provider of housing and care for the over 55s, to bring that kind of profile to its procurement function. Senior staff wanted the purchasing team to help boost the organisation’s growth; increasing revenue, improving value for money and driving up service standards for customers.

Social landlords – like other bodies in the wider public sector – are under increasing economic pressure and must find ways to reduce overheads and deliver value for money. By raising the status of procurement, Anchor has brought a fresh focus to the way it purchases goods and services and in doing so has not only saved money but also secured a better deal for customers.

The benefits of applying best practice from the private sector and giving procurement a greater voice is something I’ll be debating at procurement event PfH Live next month. For example, reducing the number of suppliers you have in one particular area allows you to build stronger relationships with those contractors that will ultimately deliver better value for money. It’s an approach we have taken with Anchor’s procurement of property services.

Steps like this are part of a journey that not only empowers procurement teams but also raises awareness of the importance of purchasing across the organisation. Ultimately, procurement must be represented in boardrooms and decision-making committees to reflect the crucial role it plays.

For those charged with delivering public services this is a no-brainer; the quality of your purchasing and contract management has a direct impact on the level of service you provide. As a social landlord, we’re judged by the way we manage homes and support tenants and as far as our customers are concerned the buck stops with Anchor – whether it’s something delivered in-house or contracted out. You can outsource a service but you can’t outsource the responsibility.

The changing nature of public service delivery simply heightens the need for a more commercially minded approach. We need to overcome the multiple pressures facing public sector bodies and unshackle their procurement teams so they can not only drive efficiencies even further but also add extra value in the shape of better quality services.

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