This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, and was published in the February 2019 edition of Supply Professional magazine.
If they want to deliver procurement projects with speed and precision, public institutions need to take a procurement-centric approach to business process improvement. That process improvement should integrate strategic planning at the start of each project and apply proper project management practices to solicitation drafting, bid evaluations, and contract award negotiations. This discussion explains how purchasing departments can overcome institutional misconceptions and technological assimilation, and build real business process change that embeds strategic execution into the front end of the procurement cycle.
Advocating for Strategic Procurement
Strategic procurement advice should inform the business planning decisions that drive project scoping, pricing structures, and contract development strategies. That advice should also inform the procedural transparency standards that define defensible evaluation criteria and award procedures. To meet these standards, public procurement advisors need to integrate themselves into the start of the project to advise on initial strategic design planning.
However, due to deeply engrained institutional misconceptions, procurement departments are typically not viewed as strategic partners in the planning process and this leads to significant lost opportunities. Project teams tend to cut procurement advisors out of strategic discussions, viewing procurement departments as, at best, tactical and operational service providers and, even worse, clerical cogs who create bureaucratic barriers to project success. After being cut out of strategic discussions, those same procurement advisors are then asked to execute on flawed strategies and are often blamed when projects fail. This then re-enforces the decision to exclude them from the strategy table on the next project. Procurement departments need to stop this cycle of failure by advocating for the implementation of strategic procurement within their organizations.
In recent years, public institutions have drifted into the enterprise-wide automation of their business operations. These “end-to-end” initiatives do not end well for procurement departments, since generic business automation typically traps procurement advisors into their stereotypical roles as clerical cogs in an underperforming procurement machine. These generic automation exercises impede strategic execution since mass-produced software platforms were never designed to meet the unique challenges of public procurement. Those public institutions that depend on external supply chains to deliver their broader public mandates make a massive strategic error when they assimilate their procurement processes into generic software applications, since this reduces procurement to a clerical, non-strategic procedure. This assimilation is an exercise in futility.
Since strategic procurement was never in the DNA of mass-produced business process software, no number of costly configurations and customizations will overcome the defects in the original source code. At best, these generic “business process improvement” exercises can placate procurement departments with minor and marginal improvements to the flawed standard business processes embedded in the applications. Rather than tinkering with these marginal improvements, procurement departments should resist this software assimilation and champion the change to strategic procurement. For public procurement, real business process improvement means that outdated procurement processes need to be torn down, rebuilt, and rebooted. This requires a top-down mandate that enables the creation of a new operating system powered by procurement-centric business process improvement priorities. Once the procurement process is properly redesigned to enable strategic execution, then different smart procurement technologies can be leveraged along the critical project path.
Leveraging Project Management Disciplines
While project management principles may already be applied on some public sector projects at the post-contract award stage of the procurement cycle, by that point it is too late to make a strategic impact. To enable front-end strategic procurement, public institutions need to execute an institutional rapid action plan that redesigns internal business processes and embeds a culture of project management from the outset of a project. This means mandating strategic execution in the designing and drafting of solicitation documents, in the bid evaluation process, and in the negotiation of contract awards.
These front-end stages can then be divided into separate sub-projects. Each sub-project should have a specific project manager that organizes each sub-stage and coordinates activities along the critical path, since someone needs to lead project teams through each stage and navigate any external factors that are blocking the road to contract award. This allows procurement advisors to be engaged from the start of a project so they can provide the strategic advice needed to accelerate downstream execution, while also adding enough float time to deal with unforeseen delays. Project leads can then manage the free float and make tactical decisions on how to spend their extra buffer time during solicitation drafting, bid evaluations, and contract negotiations when delays are encountered. This strategic planning is critical to success, since starting a project with no strategic design plan and no float time sets a project up to fail before it even begins. By building winning conditions along proper business process paths, the science of time management enables project teams to practice the art of strategic execution.
With the right leadership, procurement departments can bring real business process improvement to the procurement cycle and embed the project management disciplines necessary to launch projects on a trajectory to successful contract performance.