5 ways online purchasing channels can boost government procurement efficiency
In the first B2B ECommerce in Evolution Report from Amazon Business, 40 percent of government buyers said increasing efficiency within the procurement department is a top priority this year. This initiative could have major implications for the way government organizations have historically purchased goods and products.
Boosting government procurement efficiency will require the digital transformation of many outdated buying processes. And while the COVID-19 pandemic accelerated digitization in government organizations, a Deloitte surveyfound that 80 percent of government executives believe their digital initiatives haven’t gone far enough.
As government procurement officials look to improve procurement efficiency, they need to consider how online purchasing channels can help streamline current processes.
Regulatory processes add up in money and time
Many government organizations use a “three bids and a buy” model for procurement, meaning the buyer can only make a purchase after reviewing at least three competing offers. In addition, most federal and state government buyers are required to spend a certain percentage of procurement budget on small and/or diverse-owned businesses.
For example, the U.S. federal government has a government-wide goal of awarding 23 percent of prime contract award dollars to small businesses each fiscal year. Of the money spent on small businesses, the federal government must also allocate funds to the following small business groups:
- 5 percent to small, disadvantaged businesses
- 5 percent to women-owned small businesses
- 3 percent to service-disabled veteran-owned small businesses
- 3 percent to historically underutilized business zone (HUBZone) small businesses
These government processes help establish fairness in procurement. In addition, government buyers want to diversify their pool of sellers to ensure they’re sourcing the best product options available. However, these processes also require added time to curate and review potential suppliers, which translates to increased procurement spend. Many government buyers still rely on visiting retailers in person or visiting multiple single-seller online stores, which often have varied interfaces and complex user experiences that make it difficult to find critical credentialed seller information.
Furthermore, the current bidding processes can be challenging for small and diverse sellers. Many don’t have the required resources, experience, relationships, and expertise to source government contracts. These barriers also impede government buyers by limiting their purchase options to a small group of sellers. This could be a factor in why the federal government consistently has trouble meeting its spending allocation goals for women-owned and HUBZone small businesses, for instance.
Unlocking better procurement through online purchasing
Many government buyers have already discovered the ease and efficiency of leveraging online channels in the procurement processes. Amazon Business found that 48 percent of government buyers plan to make more than 50 percent of purchases online in 2021—the highest out of any other industry surveyed. These channels have many features that can relieve government buyers of the procurement challenges they face.
- Centralized bid submissions With a centralized digital channel, government buyers can easily compare and contrast the products and prices they receive on contract bids. These functions can eliminate the typical time-consuming manual reviews that hamper government organizations by enabling buyers to review numerous listings of a single product type at once.
- Certification filters Buyers can use certification search filters to identify small businesses and companies owned by diverse and minority groups. This feature can help government buyers meet and even exceed their allocation goals for certain business groups. Online purchasing channels also provide small and diverse-owned businesses an accessible entry point for greater visibility into government contract opportunities.
- Multi-user accounts Government organizations can leverage multi-user accounts to enable multiple buyers to review bids and find potential sellers for streamlined account management.
- Guided buying Lead administrators on the government procurement team can establish purchasing guidelines for buyers to follow. This feature can help steer buyers to the right sellers and ensure compliance with government policies.
- Reporting and analytics Analytics technology can help government organizations gain greater visibility into spending, monitor buyer activity, and automate reporting on procurement processes.
Government procurement officials have a tall task ahead of them in making their procurement processes more efficient. However, online purchasing channels offer an intuitive way for these buyers to modernize government procurement. And by using online purchasing channels, government organizations can not only improve their own procurement processes but also make government spending more accessible to small and diverse-owned businesses.
Danielle Hinz, CPPO, leads the Bridging Communities program at Amazon Business. In this role, she works to enable customers to support their social responsibility initiatives, including sustainable purchasing and buying from small, diverse and local businesses. Prior to joining Amazon Business, Hinz worked in public procurement for more than 20 years, including leadership roles in higher education and local government. Most recently, she was the chief procurement officer for King County in Seattle, where she led a $3 billion procure-to-pay organization. She is a Certified Public Procurement Official, and earned her master’s degree in public administration from the University of Colorado.