Procurement Innovation – What Does It Really Mean?

By Peter Smith posted 05-17-2018 05:18

  

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We know that “Procurement Innovation” is something that is dear to the hearts of many Public Spend Forum readers and indeed many working on both the buy and supply sides of the public procurement world, across many countries.

But as this has become a hot topic, it has also led to some confusion. That’s because it can – and does – mean different things to different people. I wrote about this recently on the Spend Matters UK/Europe website here, and over the next couple of weeks, I intend to get into these issues in more detail, with a specifically public (government) sector slant.

So, in summary, my hypothesis is that there are at least four different aspects of “procurement innovation,” and when we are talking about the topic, we need to make sure that everyone we’re engaging with understands on which we are focusing. The first two we will propose relate to how we actually conduct procurement work.

Innovative Operational Procurement means carrying out procurement responsibilities and tasks in an innovative manner. For example, using new and innovative tools and systems as part of the end-to-end procurement process – from sourcing optimisation to crowdsourcing. The introduction of the “G-Cloud” and then digital marketplace in the UK is a good example of this and there are many more around the world.

Innovation in Procurement Strategy is perhaps less common – it means positioning procurement work or the function in a strategically different manner. One public sector example from the UK is Westminster Council, where the procurement function is part of a joint venture formed to offer procurement services externally to other public (or even private) organisations.

The other two relate to the externally facing element of procurement activity.

Buying innovative goods and services is perhaps the most usual definition when “procurement innovation” is discussed. We might call it ‘procurement of innovation’ – how to buy innovative, new and early stage goods (or sometimes services) in areas such as information technology, drones, medical products, or military equipment. That brings challenges as well as opportunities.  

However, we might argue that an even more important issue is encouraging innovation from every and any supplier (and contract). This is the principle that, in every procurement exercise and contract across the government sector, we should seek out and encourage innovative ideas and plans around the supply of goods or services. That can apply whether the purchase is a construction project, a new IT system, a legal services assignment, or a fleet of drones. Can it be delivered in an innovative manner that drives better value for the taxpayer?

So, as you can see, these are all interesting and important issues, but all quite different. And is there anything we have missed? We’ll be back with some further thoughts on this in coming days.


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