Key Challenges for Public Sector Procurement
Public sector procurement is different to private procurement because of the many policies that need to be met before making a final purchasing decision. As a buyer or commissioner of products and services for the public sector you need to comply with specific regulations. Curious about what the public sector procurement policies are? Click here to find out more.
When procuring for the public sector, money has to be spent wisely, therefore procurement managers are pressured into making smarter buying decisions daily, be open to new ways of savings costs and make their time more efficient. Effective supply chain assurance and compliance are key to developing healthy relationships with manufacturers, suppliers and procurement departments. By working closely with the public and private sectors, we have identified a few key challenges that procurement officers meet in their everyday activities.
1. Embedding new purchasing approaches
As mentioned in PSE (Public Sector Executive), during a meeting at Innovation Birmingham, small companies share the same view about supplying to local authorities: "Public procurement is designed to buy old stuff in an old fashioned way."
The adoption of new purchasing techniques and tools can be quite scary as people often need to get out of their comfort zone and familiarise with new suppliers and ways of doing business. But change is not bad, especially when things get optimised and become more efficient.
2. Overcoming supplier related issues
Finding and qualifying suppliers is one of the most common procurement challenges. With so much governance and compliance to adhere to, it can be difficult to maintain smooth supply chain performance.
According to an article published on Deltabid, a Product Lifecycle Manager reveals: "My biggest procurement challenge is getting suppliers to do what they say they will do." Making promises is not enough to ensure a smooth supply chain and ensure a long-lasting relationship with your buyers, you need to be able to deliver according to your customer's expectations.
3. Being realistic
It goes without saying that procurement managers have big expectations. They want high quality products at very low costs, with free next day delivery. But in reality, this is often not attainable, and in many cases, it's hard to find one supplier to satisfy multiple needs.
If the supplier can't deliver the order on time or in the amount requested, additional time, money and resources are spent on market research and gaining quotes. Technologies such as Progora allow complex orders to be dealt with faster and more efficiently.
Suppliers are not charities, they need to make a profit to stay in business. Creating easier and more efficient ways of working lowers their cost of engagement that can lead to savings on the products or services they offer.
4. Making informed buying decisions
The main advantages of having a centralised purchasing platform are making more informed decisions, reducing time and optimising systems to automate processes and create streamlined purchasing experiences.
A few of the challenges procurement professional face when performing market research are:
- lack of product information
- missing product pictures
- inability to track orders
- supplier’s inflexibility
Matching capabilities and requirements with low cost pricing is almost a myth when it comes to public sector procurement. But Progora has proved time and time again that it is possible to deliver a genuine service that benefits both buyers and the sellers.
5. Accurate data
It has been proven that customers’ buying decisions are based on rational and emotional reasoning. With the rise of automated operations and online shopping, every customer now expects a smooth buying experience, whether they procure for businesses or for themselves. Everyone is familiar with platforms like Amazon, ebay and ASOS. Consumers around the world love these marketplaces because they are built with their needs in mind. This is great for the normal shopper, but what happens when you procure for government? How many public-sector marketplaces out there are built to satisfy the needs of procurement professionals?
From our research and experience, people working in procurement now expect the same journey as the normal consumer that buys a pair of shoes or clothes, and sometimes even more. In B2B environments managing return on investment is critical to a healthy business while the main job procurement managers have is to ensure is that their budget is well spent, and they get the highest quality products and services, on time, every time, ensuring a positive and effective procurement strategy.