Demonstrating the value of procurement: A call to action
Today’s public sector agencies are facing fiscal constraints unlike anything experienced in decades. As a result, agencies are taking a hard look at how taxpayer-generated funds are allocated across the organization and examining the value derived from every organizational unit. The current economic reality is both an opportunity and a call to action to demonstrate the value of procurement.
Agencies at all levels, from large federal agencies to small local governments, are bracing for tough times. Some are projecting that it could be many months or even years before current economic conditions turnaround; most agree that some degree of fiscal belt tightening will be necessary.
As in past economic downturns, agencies are exploring expenditure freezes, budget cuts and personnel reductions to address shortfalls. Some are utilizing zero-based or program budgeting that closely scrutinize how funds are allocated throughout the organization. Regardless of the means, there appears to be a common theme –agencies are asking hard questions about the return on investment organizational units provide for funds allocated.
The projected shortfalls and no-stone-left-unturned budgeting practices being explored at some agencies may result in employees who fear their jobs will be affected. Some procurement employees share these concerns, others do not. What separates those procurement employees that are concerned from those that are not?
However, there is a factor that seems to separate those who are concerned for their jobs from those that are not. During the last economic downturn, a poll found that procurement employees that were not concerned about economic conditions affecting their jobs believed in the value that procurement delivered to their organizations. In fact, some of those polled welcomed the opportunity to demonstrate the value of procurement.
Showing the Value of Procurement
The value of procurement is subjective and varies from organization to organization. One exception may be the universal notion that procurement adds value through its contribution to the bottom line, which helps assure the responsible use of taxpayer-generated resources. However, while important, procurement’s value proposition goes far beyond bottom line considerations.
Procurement adds value through awarding private sector contracts, creating jobs and fueling the economy. Procurement also adds value by addressing constituent demands to consider the impact of spend decisions on other considerations, such as small and minority contractors, to help strengthen communities, or on the environment, to safeguard natural resources.
Through ethics and transparency, procurement adds value by promoting trust for the agency, which some believe is the currency of the public sector. Rather than yielding financial returns, the public sector is measured in degrees of trust, primarily as perceived by constituents, and procurement’s role as a trust builder is immeasurable.
However, there has been no time in recent history that has demonstrated the value of procurement more than current COVID-19 pandemic national emergency. In response to the pandemic, procurement teams across the country have stepped up to to navigate “the wild, wild west” of personal protective equipment (PPE), as described by California Governor Newsom, and to secure the supplies so desperately needed to protect health care, public safety and government employees, as well as the general public. Procurement teams have stepped up in other ways too.
In Maine, state procurement, amid significant supply and pricing challenges, has brought private and public sectors together to secure more than 1 million N95 masks for front line employees. At the University of Colorado – Boulder, the procurement team leveraged technology to create a simple online way for the university community to get the personal protective equipment it needed. In Miami Beach, the procurement team has been busy working with departments and suppliers, leveraging relationships and negotiation skills, to rebid or renegotiate standing agreements, reporting nearly $700,000 in savings to date. These accounts are just a few of the many ways in which procurement has been adding value during this time of national emergency.
A Call to Action
The current economic reality is challenging every organizational unit to yield the highest degree of value possible for the taxpayer-generated resources with which it has been entrusted. As with prior emergencies and economic downturns, procurement professionals have stepped up and declared, “Challenge accepted!”
It is now incumbent upon every leader in the field to define the value of procurement for his or her agency. Now, more than ever, is the time to heed the call to action to demonstrate that procurement’s value proposition is indeed impactful. In doing so, procurement leaders and the teams they lead can be confident that they are delivering maximum value and exceeding the return on investment demanded by their agencies and the tax-paying public.
Alex Denis is director of the procurement department at the City of Miami Beach, Fla.