Government and educational entities serve the public good through their organizational vision and mission. Each municipal department or school district must obtain the goods and services for its operational needs to ultimately serve customers, students, residents, and surrounding communities.
Good procurement leadership is crucial to success. The ability to create positive impacts is key to achieving these organizational goals. As procurement establishes a leadership role within any organization, it’s important to consider the following:
- Where is procurement positioned within the organizational structure, and how is it viewed?
- What are the important procurement goals, and how will they be measured?
- Where can procurement become more strategic?
Whether the category is commodities, services, or construction, most organizational spending goes through procurement. As such, procurement leadership decisions can greatly impact efficiency, savings, and ingenuity.
Transitioning Roles and Performance Metrics
Over the past decade, there has been increased attention paid to transitioning procurement from a processing department to a value-added business partner. For example, when choosing a procurement methodology, deciding to issue a solicitation or use an already existing contract (cooperative contract) can greatly impact the timeline, pricing, availability, and cost to procure.
Another example is instituting a practice of including sustainability or minority-owned subcontracting requirements to help achieve social goals. By supporting the greater mission, procurement actively participates in contributing to key initiatives.
Establishing performance metrics is a strong way to measure outcomes and strive for continuous improvement. It’s important that created metrics reflect added value.
An ineffective metric would be to simply count outputs, such as the number of purchase orders processed in a year. This metric is heavily reliant on the requesting departments and the available budget. Bundling purchasing opportunities will drive volume discounts and increase efficiency, although it reduces the number of purchase orders.
Better key metrics might include tracking turnaround times for processing department requests, measuring the quality of solicitation documents by the number of addendums or protests, or tracking and reducing the personnel costs associated with a procurement process.
According to Harvard Business Review’s recent article, How Automation Drives Business Growth and Efficiency, “leaders are under immense pressure to deliver results. Automation is an immediate way to improve efficiency and productivity across every department. Technology is no longer a 'nice-to-have;' it’s a must-have, because automation tools improve both business and employee performance. And automation can help combat burnout and improve work-life balance, which are critical retention strategies for adapting to the shifting labor market.”
In the post-pandemic workplace, more emphasis is being placed on balancing workloads in a more effective way and allowing telework schedules to become the norm. This has significantly increased the need for greater utilization of automation to ensure connectivity and continuous communication. Procurement’s long-held traditions are also changing, as pre-bid and evaluation meetings are held online and bid advertising and submissions are moving to eProcurement systems.
Artificial Intelligence and eProcurement
Artificial intelligence (AI) – and how to implement it – is a growing topic of interest among government teams. Protocols, standards, and ethical oversight are important considerations. The private sector is moving more quickly towards AI, and the impacts on procurement are starting to be realized.
According to the Deloitte Center for Government Insights article (Nov 2023), Generative AI can help transform government procurement, “even if government does not adopt generative AI, others likely will. Contractors could use gen AI to write large proposals more easily. While this could help smaller and nontraditional vendors compete for government contracts, it could also increase the number of proposals that contracting officials must review. More proposals mean more time spent on reviewing and vetting compliance. And without increasing the workforce, more time on compliance can mean less time spent on core tasks like choosing the right acquisition strategy, selecting meaningful evaluation criteria, and selecting the best value offer(s).”
Past generations of AI were only effective for a few procurement tasks. However, with the advent of generative AI, tasks such as screening incoming proposals for compliance, performing market research, or developing specifications and scopes of work for solicitations is on the horizon. With a roll-out of AI, various documents can be quickly created and considered for the most efficient path or open new buying strategies that were not initially considered. As this tool develops and procurement teams begin to share those successes, the entire profession can be transformed through new automation.
The benefits of moving towards eProcurement systems to conduct procurement processes has been a growing phenomenon with well-documented benefits:
- Vendor outreach and participation increases, as the opportunities can be shared across a larger region.
- Questions and answers can be easily tracked and quickly responded to, with all interested bidders receiving the information simultaneously.
- Calculations conducted through the system reduce human error and ensure greater accuracy.
- Transparency is increased as all documents and communications are recorded and retained with the system.
- Personnel savings are realized as many manual tasks are completed by the system and automated reminders can be pre-scheduled.
- The system can be accessed 24/7 rather than just during typical eight-hour workdays.
As challenges continue to evolve, including unexpected emergencies and unique circumstances, it’s imperative that procurement teams be flexible and continually adapt to new ways of conducting business. Becoming more strategic, utilizing automation, and adopting innovative ideas is a growing trend for procurement teams across the country.
SHARE
