What is the purpose of procurement? I mean generically. Such a purpose should govern how we think about and approach procurement. It should also generate a common understanding, no matter where we work; public, private or third sector.
Why is clarity of purpose important?
Without a clear purpose are you, and everyone else, more or less likely to go in the same direction? If you don’t then you will dilute your potential. You'll mangle valuable outcomes and squander realisable value. Hopefully, I’m merely pointing out the obvious. Clarity of purpose is insanely important.
What do you think the purpose of procurement is?
Is the purpose of procurement to achieve:
- Best value
- Value-for-money
These are the most common, certainty for the public sector. Broad intentions are apparent. However, the ambiguity emanating from these sound bites makes it hugely difficult to be specific. Despite the many protestations to the contary, how will you ever know when you've acheived one or the other? For example, how common is to hear “this contract is best value” at contract award and then watch it descend into operational and commercial chaos?
For me, these are hollow get-out-of-jail-free, flexible and manipulable sound bites. Despite best intentions they manifest as indistinct impossible-to-prove outcomes; yes, they are largely useless.
Someone else supports my lack of faith in ‘best value’?
I found this,
"In line with engagement feedback, we have opted not to give the new regime the name “Best Value Duty”. We heard significant concerns that this title implies that the cost of services would be the predominant consideration in healthcare investment decisions. This is clearly not our intention. We refer therefore to the “new NHS procurement regime” pending better suggestions.”
An extract from ‘The NHS’s recommendations to Government and Parliament for an NHS bill’ published in September 2019.
I thought it sensible to seek advice from a previous employer, albeit from over 20 years ago. I searched the CIPS's Web Site and found,
“Procurement and supply management involves buying the goods and services that enable an organisation to operate in a profitable and ethical manner.”
My immediate reaction; a fudged compromise. For example, ‘enable' implies wriggle room, a lack of accountability, and 'profits and ethics' are hardly the exclusive purview of procurement. If I enable a horse to drink it doesn’t mean that it will, and yet the important bit is the horse drinking, if it doesn’t it dies.
What I think the purpose of procurement is.
Why reinvent what should already exist? Hopefully, there's sufficient evidence above, that while stuff exists its not anywhere near as helpful as it could be. That's why the procurement purpose I pursue is to ...
“… buy and spend only what is necessary to satisfy beneficiaries needs.”
The bold text is key; a clear direction and useful emphasis. It focuses buyers time and attention on what matters. However, straightforward it isn't, competing priorities and constraints always intrude. Especially the relative importance of beneficiaries, needs, reputations and budgets. However, you'll fail if you don’t satisfy the needs of primary beneficiaries, regardless of how much or little you buy and spend.
In sharper focus
The main elements of "buy and spend only what is necessary to satisfy beneficiaries needs” are:
- Beneficiaries
- Beneficiaries needs
- Satisfy beneficiaries needs
- Buy only what is necessary
- Spend only what is necessary
When we unpack each one …
- Beneficiaries- Always identify primary beneficiaries, those who trigger a procurement. There are many other beneficiaries, for example, the environment, successful suppliers, local communities and your organisation’s reputation.
- Beneficiaries needs- Legislation can specify needs, as can discretionary decisions. Some needs may constrain how you go about satisfying primary beneficiaries needs. For example, you can’t spend more than you can afford and you can’t break the law.
- Satisfy beneficiaries needs- Expectations are everything, set and manage expectations to achieve a common understanding. Satisfaction is what beneficiaries actually experience relative to what they expect to experience and what you intend they experience.
- Buy only what is necessary- No less or more, quantity, quality and functionality, to satisfy beneficiaries needs. It's the 'just right' goldilocks principle. ‘What is necessary’ helps avoid ‘perfect procurement’ bias.
- Spend only what is necessary- Helps to avoid the low price trap. I’d suggest transparency, competition, contestability and cost to supply should dominate your thoughts.
To conclude
The purpose of procurement is not about you or the lowest price or the perfect procurement. It’s about satisfying beneficiaries needs. Avoid obsessing on inputs or processes, quite simply they’re whatever you need them to be, if you are to ...
“....buy and spend only what is necessary to satisfy beneficiaries needs”