How and why you should get strategic with procurement
A procurement strategy is essential when assessing the direction of a public entity, like state and local government agencies, educational institutions, and non-profit organizations – all of which face expense pressures and tight budgets.
Implementing a comprehensive procurement strategy helps procurement staff to handle their diverse range of responsibilities and acts as a guide for the organization’s long-term goals and action plans. There are many types of procurement strategies, with organizations typically focusing on cost reduction, risk mitigation, and leveraging supplier relationships. However, a successful procurement strategy should be an organization-wide process that is tailored to meet the needs of an agency.
The Evolution of procurement’s function
Developing a procurement strategy can be a complex undertaking. There has been a profound transformation within public procurement over the last 10 years. Procurement’s traditional cost-only control function is a far cry from what it is today. These days, procurement is a pillar of management, innovation, and sustainability within an organization.
The evolution of public procurement’s function has resulted in the need for a more strategic approach. Building an effective procurement strategy can serve as a pivotal tool for procurement professionals to utilize and gives them the needed strategic edge.
4 keys to building a successful procurement strategy
The success of any procurement strategy lies within the following key elements that are necessary to provide a public entity with everything needed to meet their goals and serve their constituents:
- Analyze organizational spend
Identifying and gathering data on an organization’s spend can gain visibility that results in decreased procurement costs, improved efficiencies, and the ability to forecast spend. This data needs to be acquired from internal stakeholders, suppliers, and all other parties who are involved in the procurement process.
- Determine internal needs
In order to gain full insight, an exploration of an agency’s needs is necessary in order to formulate a strategy for the future. In doing so, the agency can translate this into direction and requirements, setting targets for what needs to be procured.
- Assess external market conditions
Once an internal analysis has been completed, it only makes sense to look externally at the global marketplace in which suppliers conduct business. Conducting a supplier market analysis to identify industry trends will help agencies better understand the industry and suppliers who may best meet the internal needs identified above. In the long term, this will help to mitigate risk and resulting in stronger sourcing events.
- Implement a sourcing process
After all the necessary research and data analysis has been conducted, a sourcing process can be established. A sourcing process will allow an organization to understand internal goals and external conditions while building a competitive supplier base with the objectives of stakeholders in mind.
Even though there are steps public entities can take to ensure smooth planning, there are always challenges to overcome. Cooperative purchasing provides opportunity to alleviate some, if not all those challenges.
Cooperative purchasing: Today’s contracting strategy, yesterday’s purchasing tool
Cooperative purchasing as we know it in today’s world has extended far beyond the simple purchasing tool it was traditionally used as. It is now a procurement best practice when it comes to strategic planning. Reducing costs and administrative burden while providing contract compliance are just a few of the benefits you can see from cooperatives.
Procurement professionals are becoming more strategic with their buying process through cooperative purchasing. The urgency to free up time-consuming tasks, such as the need to manage multiple new competitive bids, has resulted in procurement staff using an already solicited cooperative contract to procure goods and services, saving them time to work on more strategic procurement events and providing more value.
Using cooperative purchasing to develop an effective procurement strategy
Challenge 1: The procurement process can be bureaucratic
The traditional practices of public procurement can require much repetition and time, often consisting of a paper-based process, a restrictive budget, and difficulty introducing new processes to a pre-existing infrastructure. This restricts the time and resources dedicated to strategic procurement events.
Solution: A cooperative purchasing organization simplifies the process of public procurement. Utilizing a cooperative contract helps drive down costs while mitigating the problems of procurement’s traditional manual processes by saving time and resources. At OMNIA Partners, Public Sector, our cooperative contracts are competitively solicited and publicly awarded by a true lead agency, adhering to the highest standards of procurement to ensure contracts are in full compliance with industry regulations.
Challenge 2: Departments can be disconnected
With procurement professionals being entrenched in their day-to-day operations, it can be challenging to look beyond short-term, immediate initiatives. Oftentimes, this can create a disconnect when aligning all department goals into a single procurement strategy.
Solution: First and foremost, the goals of an organization must be identified. Then, procurement can start aligning their business goals to the right suppliers with the right capabilities. Through partnership with OMNIA Partners, procurement professionals are connected with best-in-class suppliers, streamlining the procurement process and ensuring alignment within departments.
Challenge 3: Procurement’s focus can be internally focused
The decision-making process for a procurement strategy can exclude factors, such as external key stakeholders (i.e. suppliers, subject matter experts) who are needed both for diagnosing issues and for delivering solutions.
Solution: OMNIA Partners cooperative contracts are awarded to market-leading suppliers who are setting the standard of excellence within their industries regarding innovation and technology. These suppliers are best positioned to work with procurement to understand the needs and challenges of their agency and provide resolutions.
Challenge 4: Limited authority and visibility
Limited authority and visibility within procurement can mean a lack of information sharing, poor communication, and less informed decision-making, all of which contribute to an ineffective procurement strategy.
Solution: Cooperative purchasing helps procurement achieve a transparent procurement process by consolidating spend across the organization and managing contract compliance. This provides better visibility into spend and promotes additional value in the form of cost savings and resource and time savings.
OMNIA Partners: A one-stop shop for cooperative procurement
OMNIA Partners, Public Sector brings you the most robust portfolio of high-quality cooperative contracts in the public procurement space. Our participants have access to the largest portfolio of competitively solicited and publicly awarded contracts with best-in-class national suppliers. All contracts are awarded by a government entity utilizing industry best practices, processes, and procedures and will ensure that all your procurement needs are met with the industry’s highest possible standards.
OMNIA Partners acts as a centralized source for providing the best prices and solutions, allowing you to consolidate spend, mitigate risk, drive more value, and save time and money.
The OMNIA Partners team is the most experienced in the cooperative industry and will work with you to maximize cooperative purchasing as part of your procurement strategy.
For more information on how OMNIA Partners can assist you with your procurement strategy, go to omniapartners.com/publicsector