Public sector bodies are increasingly embracing the idea of mutually beneficial collaboration in procurement. We thought we’d take a look at the current situation and explore what the future holds.
The mechanics of public procurement have evolved significantly over the last two decades. The rise of eProcurement platforms, mandatory eCommunication and the introduction of new purchasing models have made competitive tendering a very different process for both buyers and suppliers.
For the UK public sector, procurement is very much in the spotlight as part of a wider effort to rationalise back-office systems and functions: the implementation of new or improved software and processes for eProcurement and contract management are seen as key to improving public service provision, achieving more value and minimising waste.
There is a particular focus on “joining up” public service provision across organisational boundaries and with so many similar organisations across the country, the procurement function lends itself well to a collaborative approach.
eProcurement systems – especially those that encompass contract management functionality – aren’t just being used to comply with regulations or improve day-to-day workflow. Instead, they’re being leveraged to deliver savings, secure added value and generally enhance relationships with suppliers.
Every buyer obviously needs to retain the ability to procure independently, but it simply doesn’t make sense to duplicate the procurement process for identical products or services. As such, multi-buyer and public sector-wide models are in the ascendancy.
Two or more buyers publishing a joint contract is not revolutionary, but newer purchasing models – namely Framework Agreements and Dynamic Purchasing Systems (DPS) – are especially conducive to collaboration and widely favoured for the benefits they offer:
- Decreased workload: supplier qualification is streamlined and competition simplified relative to “one off” procurement procedures
- Economies of scale: purchasing power is maximised as larger volumes of products and services generally result in lower unit costs
DPS are becoming more and more popular as, unlike frameworks, new suppliers can qualify anytime during the stated lifecycle. This can help unearth new solutions, increase competition and ultimately decrease costs.
The NHS in particular – which accounts for by far the largest portion of public expenditure along with pensions – has long embraced collaborative models and is prioritising procurement reform as part of its Long Term Plan
The primary objectives are to eliminate duplication of effort, secure additional savings and apply a more national approach with a new central purchasing body
. Any innovation that comes out of this process in the coming years will inevitably filter through to the wider public sector.
The overall direction of travel is towards a more unified marketplace. It’s not difficult to imagine a future in which almost all public procurement is enacted through a relatively small number of pan-government agreements covering all necessary product/service areas, with many administrative processes eliminated by a combination of centralisation and automation. Add to this the potential variables presented by emerging technology such as Blockchain and Artificial Intelligence.
We know that these and other developments are set to change the technical nature of eCommerce, but will technology begin to dictate the processes we use?
Digital transformation has always been seen as a process-driven approach with technology as the facilitator, but this could ultimately be turned on it’s head by radical near-future advancements that enable new thought processes.
Want to know more?
Proactis provides a range of procurement consultancy options for public sector organisations. Call 01224 650 756 to learn how we can assist you.