Expectations for public sector procurement continue to rise as budgets shrink and the “do more with less” mantra prevails, just as it does in most private sectors.
At the federal level, there is a great need for effective procurement as a means to improve or maintain levels of education, infrastructure, public safety and much more. The challenge lies in finding sustainable, streamlined source-to-pay approaches that work in today’s evolving, uncertain environment.
Ultimately, federal procurement leaders work under the same fundamental mandates as their private sector peers.
First, they must deliver maximum value by providing the best goods and services at competitive costs. Second, they must do so while effectively managing risk.
It’s not hard to imagine how the ripple effects of a failed supplier can turn into a federal procurement officer’s worst nightmare. If, due to lack of visibility, contracts continue to be awarded to a risky company that ultimately liquidates, public services and projects, public employees, subcontracted suppliers, and taxpayers are all harmed, many irreparably so.
Federal government procurement policies and systems must strive to increase transparency and consumerize the procurement experience for buyers and suppliers. The impacts of inefficient, unclear processes flow through the supply chain and beyond. Leaders must ensure agility to do all of the above as well or better tomorrow, regardless of changing conditions. Failure to do so means progress is short-lived as they scramble to cope with fresh challenges.
Federal agency leaders face unique challenges, including strict controls and multiple layers of authorization. Rising public expectations are matched by steady budget declines, particularly with pension, healthcare and other such costs eating away at discretionary spending levels.
Political influence binds procurement's’ hands, especially when trade agreements are suddenly reopened for negotiation and protectionist trade policies threaten to upend the status quo. The U.S.-China Commission’s recent report related to federal IT acquisition is a prime example of the complex global forces that affect the procurement process. Constant changes to policies, regulations and directives create extra uncertainty.
For leaders seeking a way to excel despite this turmoil, the key is to adopt best practices already being leveraged in the private sector while avoiding approaches that cannot address unique public sector requirements. Innovative private sector procurement leaders are well on their way to transformation, keeping focus on building organizations that can operate smartly, collaborate broadly and deeply, and maintain agility.
Smart operations involve much more than improving the procurement team’s analytical capabilities. It’s equally important to free team capacity to focus on more strategic initiatives. Digitization of the source-to-pay process is critical to achieving this, yet the public sector generally lags far behind.
Federal procurement leaders should aim to eliminate manual and paper-based processes, minimize exceptions and streamline the process for all users and suppliers.
Technology plays a key role here and must be evaluated to ensure not just proven, innovative capabilities, but a consistent user experience and true integration of workflows — all driven by centralized, harmonized data. Eliminating paper is good for the environment and data governance, of course, but procurement officers will likely be more excited at the prospect of completing supplier registration cycles in days or weeks instead of months.
Developing procurement intelligence through digitized processes means bringing actionable insights to one’s fingertips. Integrated platforms that connect to third-party sources and leverage innovations in areas such as AI must be considered. An effective system can provide true 360-degree visibility into suppliers. High-risk suppliers will not award contracts if decision makers can readily access a complete scorecard of financials and payment history during evaluations.
Federal procurement leaders must bring people and systems together to foster a culture of collaboration. Technology can then play a supporting role, empowering teams to collaborate at scale with improved transparency and accountability.
When digitizing source-to-pay, look for integrated project management capabilities and supplier-friendly networks that make it easy for suppliers to connect. It’s also important to avoid relationship-damaging (and negative press generating) features such as fees and complex vendor agreements. That means going beyond PO and invoice digitization to sharing documents and supporting collaboration on new products and services.
Last but not least, agility is essential to remaining flexible enough to sustain optimized, efficient operations in adverse conditions. Leading software solutions have embedded many best practices but these systems also need to accommodate specific, not-yet-defined challenges.
For example, procurement systems should allow you to expeditiously survey suppliers for new data points and modify workflows to fit new processes or projects, while maintaining established structures and auditability.
In many ways, the success and quality of life of future generations depends on the ability of federal finance leaders to transform procurement. Private sector innovations provide a guiding light, but government agencies need strategies and solutions that scale and adapt to the unique and evolving requirements of the citizens they serve, and the ever-changing dynamics of politics, legislation, trade and the global economy.
Alex Saric is chief marketing officer of spend management solutions provider Ivalua.