Agile Procurement and Governance
It’s Time to Adapt
The issue for traditional procurement, particularly in the public sector, is that by the time a procurement has been conducted, the requirement has changed or evolved. Conventional contracting approaches do not reflect the real-world context of the project, the rapid change or volatility. So how can we maximise the concept of agile procurement and enhance commercial outcomes whilst ensuring good governance?
Agility in procurement arises when businesses effectively harnesses knowledge, intelligence and the ability to capatilise on opportunities in the appropriate time for a competitive advantage. It’s a key driver of advancement in an era of innovation. There are intrinsic characteristics in these actions that separate the good from the average. To effectively harness knowledge, CPO’s need to be forward-thinking in determining risk exposure including market volatility, commodity scarcity, and upstream and downstream uncertainty. To convert intelligence into actionable insights CPO’s need to effectually obtain and interpret quantitative and qualitative data to determine risk exposure and appetite, current agility, and develop pre-emptive, detection and response strategies while flexibility increases through experiential activity. As with any business function, the elements of technology, streamlining processes, good organisational structure and being results driven will all account for improving the way in which organisations can achieve this by strengthening the link between strategy and execution. Most importantly, procurement is a function that can be an agent of change in the adaptability of business as opposed to merely a beneficiary.
So, what are some of the key practices available to CPO’s to ensure greater agility? Planning may seem a conventional concept, however when tailored and diversified as a responsive tool it can be used to better identify, develop, test and implement real time changes in the source and supply of materials and logistics. It can also be extended to incorporate changes in market trends and aggregations from acquisitions to build an innovative environment. This system must become the focal point of the business, embraced and collaborated on in a multidisciplinary manner. A CPO’s ability to manage the value proposition and challenges present in an increasingly innovative environment will also determine an organisation’s competitive differentiation. How well does a CPO manage costs, how does their strategic ability increase this proposition, and in a broader sense, how much value does the organisation place on the procurement function?
What is good governance and how does it interact with the procurement function? Good governance is the optimal process of decision-making. The goal is to promote a positive outcome for the greatest number of beneficiaries while remaining accountable, transparent, responsive, fair, efficient and effective. It provides the market with confidence and leads to ethical and effective decision making. So, the question really is, how do we align our procurement function to harness opportunities in real time more effectively while still maintaining good governance in government? It requires a governance policy that covers the requirements of your procurement framework including all procedural controls and probity. It includes the policies, procedures, roles and responsibilities and monitoring controls needed to manage the procurement project’s scope and complexity. It should empower the organisation to respond to emergent trends and opportunities, industry standards, and internal strategic shifts as needed. If the two are well synchronised, the organisation has the best chance of realising procurement strategies without governance becoming a confining factor. The design should, in contrast, seek to drive and enable.
Now that we’ve discussed some of the technical elements of agile procurement and governance, register for the seminar to hear firsthand how some larger Government organisations have adapted to the new age of agile procurement while still maintaining good governance.