While slightly dated, this article strikingly highlights many of the critical practice improvement areas needed in public procurement (along with a comparison to the private sector) – the same practices recently highlighted by members of the Global Public Procurement Leaders Exchange. In addition, the article outlines the basic elements of a carefully planned procurement transformation.
What are the key takeaways?
The article acknowledges 3 key challenges within the context of public procurement and lays out perspectives on how they can be overcome. The 3 challenges highlighted are:
- Public institutions often lack a consolidated view of their spending because purchasing responsibility is spread across many departments.
- The government’s purchasing spending is a powerful tool for advancing various political objectives.
- The public sector is subject to complex and constraining procurement laws, which were established to ensure openness for every bidder and fair and nondiscriminatory practices in general.
While the article seeks to provide guidance in meeting these challenges, it first emphasizes the need to shore up key performance dimensions and practices, where the public sector in particular is lagging (based on procurement managers’ evaluation of their own organizations). The article cites:
- “A McKinsey survey of purchasing practices in more than 300 organizations in a wide range of industries revealed that public-sector institutions lag behind private-sector companies on several performance dimensions, including the efficiency of purchasing tools and processes, capabilities, and performance management.”
The article goes on to highlight key actions for addressing the challenges, presents a portfolio of tools and techniques that can be utilized in support, delineates critical practices that make it all happen, and finally concludes with practical advice on appropriately phasing a transformation for improvement.
Of particular interest in the improvement guidance is the point made about how most organizations tend to implement transformative improvements backward – as the article points out:
- “When embarking on a program of this kind, sequencing is crucial. Many institutions start big and broad by defining an entirely new organization structure, along with new reporting lines and procedures. In our experience, it is best to take the opposite tack by beginning with changes in a few discrete spending categories and using the success of these changes as a foundation for making similar improvements in other areas”
Full Article: McKinsey
Image Courtesy of Geralt