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What are the major procurement challenges confronting local governments?

Procurement can be a difficult task for any organisation, but there is little room for error in the public sector, where funds are limited and local constituents must be prioritised.
By Steve Rowland on 21 November 2022

Traditionally, this has been accomplished through an open procedure. Any supplier may bid on an advertised opportunity or gain access through a Framework agreement, which is created by a council or buyer and accepts a number of suppliers as competitors to deliver the services. There is also the Dynamic Purchasing System (DPS), which works similarly to a framework but allows for the continuous addition of new suppliers.

Because most public bodies are governed by regulation, tender outcomes can and frequently are challenged.

Our category experts are dedicated to public sector procurement and are familiar with the steps required to manage a fully compliant Public Contracts Regulations 2015 (PCR 2015) procurement process. We are uniquely positioned to understand the needs of local governments, and to enable provide advice on the most appropriate routes to market via open procedures, Frameworks, DPS or Neutral Vendor Frameworks faster, more flexible, and compliant procurement.

Spending Cuts

Local government procurement professionals must strike a delicate balance between scrutiny over how money is spent and public criticism of any inefficiencies.

Councils will continue to face financial challenges, making revenue generation more difficult, while demand for services will increase. This will make spending wisely and with a genuine desire to maximise value for money more important than ever.

We understand that the term “consultancy” can be difficult to sell in the public sector and in particularly to procurement teams. Contrary to the perception of those who see it as a waste of money to hire expensive outside procurement resources to do work that could be done in-house, public sector consulting provides organisations with the opportunity to deliver procurement resources in a much more efficient manner.

We review supplier contracts on a daily basis, so we know how to get the most out of your vendors. This approach frees up internal resources to focus on more organisation-critical tasks while also establishing a good working relationship, extracting added value, and benefiting from cost savings.

The Value Proposition of Procurement

Local government procurement is increasingly being asked to demonstrate how it can contribute to both the top and bottom lines. However, the change raises difficult questions for LGP managers:

  • What value does their procurement function actually deliver?
  • Is it agile enough to seize opportunities for improvement?
  • Is it capable of embracing a new era of working with methods and skills previously unknown to local government procurement, and moving away from the operational and governing functions of the past?
  • How do they implement meaningful social value in their procurements?

Procuring through public sector frameworks and Neutral Vendor Frameworks, can deliver more agile solutions. This means that local governments can achieve fully compliant, consistent, and effective procurement in line with strategic goals by utilising various levels of support, all without the challenge of budget approval.

In these difficult economic times, cost-cutting strategies are more than just a “nice to have,” they are an essential component of your organisation’s strategy. We provide a structured and focused assessment of what is possible for your organisation as part of our procurement cost optimisation solution, ensuring that fair, balanced, and transparent deals are secured, creating long-term value and sustainable benefits.

Advancement in Procurement

There is a need for innovative ideas and solutions from suppliers and local government procurement managers alike, as well as different ways to achieve policy goals with the available funds.

Making the case for investment is the challenge for procurement. It must think about how to save money throughout the contract’s life cycle, not just at the start. It necessitates far better contract management than is typical in the industry.

Similarly, local government procurement managers must seek out innovative new approaches from suppliers in order to achieve the desired results at a significantly lower cost. “Innovation procurement” will almost certainly become more important in the future.

Our four-stage approach means that we not only analyse and define your problem, but we also create a practical solution roadmap and manage the transition from routine operations to your desired future state. This means you get the most out of your investment and build strong practices and relationships that will last.

Capacity & Capability

Local government procurement is governed by legislation. Procurement is not always viewed as a strategic added value process, often more with a focus on the tendering process’s compliance and legal aspects. Rather, it is regarded as a policing and rule-enforcing function.

Procurement can be a reactive function that is frequently ignored until specifications have been established. Contrary to commodities and category management, its purpose is derived from and revolves around contracts. There is no continuous process in place to manage internal and supply market development and opportunities, with contract expirations serving as peak moments.

We frequently see organisations making hasty purchasing decisions, sometimes out of necessity. Due to a lack of staff capacity or experience in managing complex supplier relationships, supplier contract terms written by their legal teams are accepted but not fully understood or managed.

Add to that a lack of data visibility – both in terms of your own spend and wider market data for benchmarking – and it’s easy to see how internal teams can struggle to ensure they’re getting good value for money.

We may investigate whether you would benefit from a flexible resource model that pulls in the resource you require when you necessitate it and saves you money when you do not. This delivery model, which supplements a small permanent team with cost-effective resources that are only used when needed, can save you money and provide better long-term results.

Collaboration

Collaboration among councils is difficult at the contract expiry stage. Promoting procurement and the collaboration that goes with it will determine how successful and respected procurement is within the organisation.

Procurement is an important link between the organisation and its supply base; procurement understands how to collaborate with internal and external stakeholders. To maximise cost savings and efficiencies, the local government procurement manager must now focus on collaborating with other council procurement teams.

Collaboration achieves more than just tougher transactional negotiations; it also uncovers savings opportunities through closer supplier relationships participating councils. Collaboration encourages healthy and constructive competition while taking into account the needs and goals of all councils involved.

When consulting with clients on supplier management, we frequently discover that they have been unable to allocate the necessary resources to manage the relationship, that they lack tangible metrics to measure the suppliers’ performance, or that miscommunication has been a major factor in the relationship’s breakdown.

When agreements are implemented, entrusting your supplier relationship management to expert procurement consultants like us, or seeking assistance when problems arise, can result in a far more collaborative approach to working with your suppliers.

Organisational Culture & Leadership

The lack of recognition of procurement at the board level as a high prospective suitor to achieve sustainable and not just compliant outcomes is perplexing, and procurement continues to be the ‘Cinderella’ in comparison to other council core areas.

Despite its prominence and potential, procurement must constantly compete for attention. Procurement does not always consider itself in charge of the entire end-to-end process, including category and contract management. It must develop the leadership skills required to serve as the organisation’s strategic partner.

The most difficult issue is that in most cases, a behavioural shift is required. If local government procurement managers want to be corporate strategy partners, they must take ownership, be proactive, and ask questions and seek ways to improve on a regular basis.

Leadership, or the “tone at the top,” is a critical component in developing an organisational culture in which procurement is recognised as a critical component of the organisation’s innovative and process-driven strategies to reduce costs, increase efficiencies, and advance. Effective leaders must model values and communicate behavioural expectations to their employees. The entire organisation benefits when procurement is aligned with the board’s vision and empowered by technology.

When it comes to change management, the first step is often the most difficult. At eXceeding, we provide the critical support required to ensure the success of your transformational change. Bringing in external strategic consulting expertise to support and manage your change means you’ll get an objective, yet tailored, approach with tactical steps to achieve your goals.

Technology

Procurement technology has numerous advantages, including increased transparency in spending and the advancement of social goals, as well as shorter process times and the ability to conduct better research. However, the local government procurement sector has yet to embrace procurement technology that can increase transparency, collaborate more effectively with suppliers and other councils, increase competition, reduce costs and provide insightful spend data.

A technological investment is needed, and in some cases, it has been long overdue. Outdated and overly complex organisation workflows are stifling them. Measurement of performance is difficult due to legacy software systems, spreadsheets, email chains, and manual processes, and collaboration between councils, stakeholders, and suppliers is nearly impossible.

As procurement managers in local governments demand more time to manage pro-actively, agile contract management automation technology will shift them away from tactical administration and accelerate the delivery of core competency, service programmes, and hard-dollar and soft-cost savings.

Procurement software and platforms will be the difference between sinking and swimming as financially troubled public sector organisations begin to recover. As procurement consultants, we spend time researching the market to determine the best software to meet the needs of our clients. We can assist you in deploying a variety of e-Procurement solutions, giving your organisation the opportunity to stay current with technology.

Reaching Net Zero

Local governments are crucial to achieving net zero energy. Bringing together challenges and coordinating activities will accelerate change while lowering costs.

One of the most complex existential threats we face today is climate change. The scope and depth of action required to address and arrest the consequences is vast. In the United Kingdom, local authorities bear a significant portion of the burden in delivering this.

Local councils are responsible for one-third of all emissions, according to Climate Emergency UK. Their statutory roles will need to be fundamentally altered in order to transition to carbon-neutral activities:

  • Housing
  • Transport
  • Waste
  • Planning

During a period of decreasing resources and increasing demand for services, this transformation will necessitate the following:

  • Courageous decisions
  • Revolutionary technologies
  • New organisation and delivery models

They must also represent the most vulnerable members of society as place leaders, ensuring that these changes do not exacerbate existing inequalities.

We assist organisations in translating their goals for increased sustainability in procurement and their supply chain into action plans that produce tangible results.

We evaluate the risks in your supply chain using our knowledge and experience, determine achievable and measurable sustainability objectives, and define and prioritise the levers that will help meet those social and environmental goals.

Where preparatory work is required to gain supply chain visibility or spend control, our team will not only advise on what work is needed, but will also assist in putting in place the systems and processes to make it happen.

What other issues does local government face when it comes to procuring enforcement services?

Local governments are currently dealing with pandemic recovery, BREXIT challenges, and a slew of other issues, which makes prioritising enforcement services difficult. Furthermore, time frames are frequently long and tedious due to the complexity of current procurement processes, with a heavy reliance on third-party vendors and consultants.

Some local government organisations are concerned about the corporate nature of the tendering process and how, in the public sector, social value dictates that poor quality tender submissions are frequently used for core delivery rather than better-quality submissions.

Effective public sector procurement is more than just checking a box. Finding the right supplier necessitates a significant investment of expertise, time, and resources. Only then can you ensure service or product continuity and mitigate risks in your supply chain.

Find out more about how we can help.

Steve Rowland - eXceeding Managing Director

Steve Rowland

Before eXceeding, Steve spent 16 years working on the supplier-side of outsourcing. During Steve’s 24 years’ experience, he has worked on global and UK outsourcing deals, ensuring the creation of win-win partnerships.

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