This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide.
Instead of being marginalized from the planning process and then asked to execute on a flawed strategy, procurement advisors need to be integrated into the early planning stages of a project so they can help enable strategic procurement. This discussion explains the importance of raising institutional awareness about the proper role of procurement and discusses why procurement departments need to take the lead in promoting that institutional awareness.
Keeping the Clerks Away from the Strategy Table
In Strategic Procurement Planning in the Public Sector, Clifford. P. McCue and Barbara R. Johnson warn that “procurement can no longer be seen as a clerical function.” As the authors observe, due to long-standing institutional misconceptions, public sector organizations tend to devalue the role of procurement in the strategic planning process since “procurement professionals are not typically viewed as strategic partners in the development and delivery of public goods and services.” Rather, the authors note that these institutions tend to view procurement as a “service function”, relegated to “clerical staff”. In this narrative, procurement departments are “commonly seen as institutional gatekeepers and bureaucratic obstacles that inhibit the effective management of organizational resources”, and procurement staff are simply “inhibiting change and promoting rule-driven bureaucratic structures.” This results in a lack of appropriate resourcing and support to procurement departments. As McCue and Johnson warn, “procurement organizations confront declining resources, higher demands for flexibility and operational responsiveness, and limited strategic support within the organization”. This is a troubling trend since the same institutions that rely on successful procurements to achieve their broader objectives are short-changing their procurement operations and, thereby, undermining those strategic objectives. However, this situation will not change unless procurement departments lead the change by advocating for the implementation of strategic procurement practices within their organizations.
Rising to the Strategic Challenge
Enabling strategic procurement within an organization requires a greater organizational awareness of the importance of the procurement process as a means to achieving the end-objectives of the institution. As McCue and Johnson observe, “public sector procurement professionals are realizing that, as an integrating function within organizations, it is their responsibility to step forward and take the lead in linking the planning process to the acquisition of goods and services”. This integrating function is critical to institutional success since, as the authors state, without this missing link, “the procurement function can become disjointed, irrelevant and ineffective”. In fact, experience shows that these misconceptions can be overcome. With the right leadership, procurement departments can serve as the hub of innovation and change within organizations by leading business process improvement, embedding project management disciplines within the tendering cycle, and enabling strategic execution.
To add value to the organization, McCue and Johnson maintain that procurement advisors need to be “actively engaged in the resource allocation decisions and play an important role at the strategic planning table.” As the authors observe, “procurement should be involved in the decision-making process from the first step.” For example, the authors note, procurement advisors should be involved in deciding whether to maintain an existing system or migrate to a new one, or in deciding whether to build a system internally or buy one externally. However, project teams tend to cut procurement advisors out of strategic discussions, viewing the procurement role as, at best, tactical and operational. This failure to leverage the benefits of strategic procurement leads to significant lost opportunities.
As McCue and Johnson observe, “procurement’s contribution to the organization’s success has, in the past, been viewed primarily as ensuring the timely availability of required supplies and services, obtaining them at economical prices and at the right time”, but that “when procurement is included at the beginning of the design process, these contributions are greatly expanded.” As the authors note, strategic procurement advice is essential to steering project teams away from being overly prescriptive in defining project requirements so that those requirements do “not contain features that unduly limit competition among qualified suppliers.” Strategic procurement advice should focus on far more than compliance issues. In fact, it should drive the strategic business planning decisions that inform project scoping, pricing structures, and contract development strategies, as well as the procedural compliance requirements that include the development of transparent evaluation criteria and award procedures. To achieve the benefits of strategic procurement, procurement advisors need to be integrated into the design planning process rather than being cut out of strategic discussions and then called on to execute on flawed strategies.
Future Considerations: Overcoming the Lack of Awareness
McCue and Johnson warn that procurement departments often face systemic institutional obstacles to proper strategic planning and that these systemic obstacles commonly include a lack of commitment to planning, the failure to develop and execute sound strategies, a lack of clear goals, the failure to accept planning as a rational and creative process, excessive institutional reliance on past practice, the lack of clear delegation, and resistance to change. In the absence of strategic planning, the procurement-dependent objectives of a public institution are put in a state of peril. Overcoming these obstacles is no simple task. Doing so requires the execution of a rapid action plan that transforms procurement departments from marginalized clerical cogs to the role of trusted strategic advisors. However, in order to assume that strategic role, procurement departments need to rise to the challenge of creating a greater institutional awareness of the benefits of strategic procurement.
