Re-Thinking The Benefits Of Public Procurement Laws
Procurement is at the heart of every business and when done efficiently can have direct affect on transparency, cost savings and success of an organization. While the purpose for rigorous procurement laws have traditionally centered around addressing past problems with spending public funds, process fairness and cost savings, it can be argued that these processes and laws, when properly implemented, can significantly enhance the purchasing performance of an organization.
Every organization is a procurement organization. Schools and municipalities in particular procure materials, labor and services used to deliver first-class education to students. The mechanisms employed to implement uniformity of procurement processes can also be used to implement uniformity in the general operational workflows of an organization.
Sadly, due to lack of efficient means of implementing these workflows, organizations (especially those in the public sector) have regarded these laws as hindrances to efficiency rather than a catalyst to sound business operations. After all, who wants to manually deal with a cabinet full of paperwork, scores of process steps and signoffs, when all we want to do is to buy what we need at a reasonable cost and timeframe. As a result, most of the operational benefits of transparency and business insights that can result from procurement workflow data are lost.
It may be time for us to embrace the benefits of becoming process-oriented organizations which these laws help promote. Workflow technologies now exist to fully automate the requirements imposed by these state-purchasing laws and allow each organization to more efficiently manage these processes internally.
Buying collaboratives, statewide contracts, and outsourcing help contain purchasing costs but often do nothing to help with internal workflow steps specified by these procurement laws, as well as other required state and local regulations.
Taming The Public Procurement "Beast"
In most states and municipalities, procurement laws prescribe a series of thorough rigorous steps to ensure open, transparent, competitive and cost effective purchasing. Unfortunately, these laws that promote fair and cost effective purchasing also impose document intensive and time-consuming workloads on purchasing officials. Financial and purchasing officers must simultaneously coordinate and track multiple procurements, involving multiple buyers and departments, hundreds of suppliers, multiple documents, and multiple time-sensitive tasks across their organization. As a result, Files pile up, deadlines are missed, savings opportunities are lost, delays compound due to vendor protests, and excess administrative costs are incurred. Managing this "beast" manually has proved to be unsustainable, unduly burdensome and costly.
Purchasing officials do their best to manage these legally regulated processes manually with the limited computer tools and resources they have available, while at the same time juggling many other responsibilities. However, given the potential benefits of these procurement laws in streamlining internal operations and purchasing activities, a better approach and strategy is required to address the workflow complexities imposed by these laws.
We can start by following time-tested “best practices” generally employed successfully by private-sector industries to address similar internal challenges.
The following are recommendations to tame our procurement laws and release us from the workload burdens required to comply.
Make Your Workflows Visible
Begin by creating a visual map of the processes. Creating a map of each purchasing workflow reveals a thorough buying process, currently managed manually, that facilitates open, competitive, and cost effective purchases. It provides you and your staff a checklist of required mandatory and optional tasks required at each step of the process. It allows for repeatability, uniformity, manageability and control over the process.
Research Your Options
Work to identify and purchase an e-procurement system that can automate your visual maps and checklists. Systems and technologies exist today that can fully automate these workflows, allowing your organization to regain control of its’ time and resources. These cloud-based systems make it possible to use the rigor defined in state law, to yield workflow efficiencies, reduce purchasing costs, streamline internal administration tasks, and integrate internal workflows. Some of these systems also include features that allow for automated vendor price and quality comparisons, as well as ordering and order tracking capabilities.
A few systems allow purchasing leaders to use the same e-procurement workflow system to manage procurement of services, disposition of surplus inventories, and provide detailed real-time and historical report that reveal insight into business and financial operations. Moreover, these systems (if robust enough) can be reused for other business workflows, thereby allowing the organization to enjoy a more rapid Return-On-Investments (ROI).
Web-based procurement systems, especially those that integrate document management, have been used for decades by Fortune 500 companies. What’s new is the maturation of cloud-based (web-based) technologies that has made these systems affordable and easily accessible by public-sector organizations.
Enable Buyer-Supplier Collaboration
Encourage your employees and vendors to collaborate via these systems so you can accumulate the data and analytics that will enable you to identify and capitalize on savings opportunities or improve process efficiencies.
Every organization is a purchasing organization. The difference between organizations that enjoy significant business successes and those that do not, are represented in the difference between those organizations that procure efficiently and those that do not.