Procurement: optimising the contribution to greater efficiency, effectiveness and economy

How do you know if your procurement / purchasing function is doing a better job than (say) this time last year – how do you measure success? How do you know if the service is VFM?

I ask the question because:

• most procurement processes frustrate me to bits – in recent days, I have even had a friend in the same business tell me that she is losing the will to live after having written x bids over recent weeks. (You may have already read my – hopefully humorous – rant about the excesses of procurement in my field  - click here if you haven’t)
• I have been offered a complementary place at a forthcoming conference on public sector procurement (see here) for which I am most grateful. The least I thought I could do was do some further thinking about the subject – hence this blog post
• the influence, scope and size of procurement in the public services is set to grow even further – especially of Sir Philip Green has his way (see here for the main story). Government services must practice excellent: efficient, effective & economic procurement as a consequence.
• it isn’t just suppliers who lose sleep and hair over procurement so do the clients want to source a particular service. I know of several instances of where a client wants Z but because of the procurement process enforced upon them, they get Y. And from the work I did years ago supporting a firm which developed systems for the Ministry of Defence – I know that the end user (be it frontline member of the armed forces in that case or a citizen / customer in many other cases) just does not get a look in, usually.

So what is to be done? I offer this checklist below as my ‘starter for ten’ attempt at what I would expect to see evidence of in an excellent procurement function. Please feel free to add more points or make the case to tweak or even delete some of my suggestions. I have written this without any reference to any published standards (of which their might be legion!)

For me, an ideal procurement function would: 

1. Have systems in place to understand and respond to trends in client satisfaction with its services
2. Have established a productive way of listening to feedback from suppliers / bidders (successful and unsuccessful) involved in the procurement processes they manage
3. Benchmark their processes with other procurement functions, both inside and outside their industry or sector, to look for ways to improve what they do
4. Collect the information and be transparent about all the resources spent on procurement processes: by the function themselves, the client who wishes to source a supplier and (radical idea perhaps) all the bidders. (It is a standard clause that clients do not pay for the effort that goes into writing bids. Fair enough. But that resource has to be paid for some how.) This overall data would also be a crude measure of how ‘elegant’ a procurement process is.
5. Have developed an easy to grasp method for measuring whether the cost benefit analysis of the procurement processes are improving or worsening.
6. Have practices in place to ensure that the ‘voice of the customer’ – the end user, citizen or frontline person who will be the final recipient of the new service / product being sourced – is evident at every stage of the procurement process and is heard loudly & clearly.
7. Make efforts to connect people together across the supply chain so that the procurement function does not attain disproportionate power by being the sole knowledge holder and (more crucially) that procurement is done ‘whole system aware’ (see here for further information about this).
8. Although it is harder, always look for ways to procure on outcomes or overall objectives rather than outputs or processes. (All too often, I see tender documents that specify what I know to be a less than satisfactory ‘going through the motion’ type process which will be lucky to achieve any lasting outcomes. Magic can happen if suppliers are given the scope to propose a process that may be outside the prescribed ‘usual’ way of doing things but which will still achieve the desired for outcomes.)
9. Run procurement processes in ways that inspire potential suppliers to be innovative and think of ways to achieve the desired outcomes with more efficiency and effectiveness.
10. Have accrediting procedures which do not involve the uploading of numerous policies and strategies but merely state that the winning bidder will be expected (then) to show that they have these in place.
11. Have established shrewd ways of sorting the bidders into ‘wheat and chaff’ involving (perhaps radically) asking the bidders to state what questions or measures they would pose to the other bidders to help achieve this result.
12. Led strategically, mindful of the key purpose of procurement within the overall strategy of the host organisation. 

I probably could go on! 

But what do you think? Do you agree with the points above? Would you add any more? Would you subtract some of the points above?

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UPDATE: Just spotted this interesting and related article:

9 November 2009 | Jake Kanter

"Significant weaknesses" in procurement skills are jeopardising value for money on major projects, according to the UK's National Audit Office (NAO). The spending watchdog's latest report, Commercial skills for complex government projects, said the public sector lacked commercial capability in areas including contract management, commissioning and risk management....

(see also my post below on the need for more commercial management)

Commercial leadership

I am struck that in several, perhaps many, parts of the UK public services there has been a shortage of commercial leadership. This is no surprise of course - government is not about commerce - despite some people's efforts to make it so. Government cannot pick and choose who it serves, it must be transparent, open and accountable, and it is about producing social outcomes not just financial ones. So for all these reasons, in my view, public services are not the same as commercial ones.

That said, the public services do enter into commercial arrangements where they have  to negotiate value for money contracts with suppliers. I do worry that sometimes this has not been done as well as it might. In short, I fear that our local and national government have been stuffed by some rather canny operators in the commercial world.

It seems to me that some public service leaders have treated transparent procurement as a proxy to commercial negotiations. But they are not the same. Negotiating a contract with a supplier after they have won the procurement competition is not the same as negotiating with them before...

I know - I am painting things in black and white here - and being deliberately provocative. But I came across a story this morning which left me sad and fed up. I attended a seminar hosted by Civil Service World and sponsored by Hewlett Packard on the 'Digital Dividend'. (It was a very good event - so thanks to the organisers.) In the networking time I spoke to a young chap from a large government department who explained to me he had recently developed a macro for a commonly used spreadsheet in his organisation that would save a lot of people a lot of time. But then he found out that if his department were to use this - they would have to pay the outsourced IT contractor about £15k every time they used it. You see - there was a clause in the contract... So this small innovation (and you know how much I like small creative ideas) was squashed from the outset.

So this got me thinking - how much commercial leadership is there in the public services. Given the current austerity measures - I would propose that we need a lot more of this kind of leadership.

What do you think?


What does commercial leadership mean for you - what skills (apart from negotiating skills of course) need to be well honed?

Research project: Leadership in a cul-de-sac

In the current financial landscape, political, executive and managerial leadership within the public services will have to be very different from that which has been exercised over the last 15 years or so. While there are some parallels to be drawn to leading a corporate organisation during a downturn, public service leaders are facing uncharted and very choppy waters.

The last 15 years have been mostly about steady growth. We are now in a situation of unprecedented reductions where previous non-cashable efficiencies must become cashable. The scale of the reduction would be enough to hole most commercial enterprises below the water line. This is in a time where (unlike commercial organisations), the demand for public services is likely to rise significantly.

There is a distinct and pervasive zeitgeist that the public services are now seen as a drain on the nation’s wealth rather than an investment in it. The measure of public services now seems to be only about what they are costing rather than any outcomes produced. It has of course always been strikingly difficult to track the links between public sector activity and safer, healthier and wealthier communities.

The public services are challenged with a large number of statutory duties and responsibilities, and political priorities which cannot be avoided but which introduce degrees of inflexibility not faced by corporate entities that are scaling down. The cuts that are to come will subject to fearsome and fierce debates over the coming months. Professional, political, personal and ethical loyalties will be under huge pressure. Public service leaders will be pitched against each other as each do battle over who can wave the biggest shroud. Tensions will erupt over whether decisions made are more in the public or political interests.

Meanwhile the public are unlikely to be passive observers as Facebook campaigns mount, Twitter storms erupt and flash demonstrations convene to hold local and national politicians to account. The celebrity culture may hold great sway as national treasures and pop artists choose to wield their influence. This phenomenon has unpredictable and possibly violent consequences.

And in amongst all this, ordinary local politicians, executives and managers will need to be making significant decisions that will have far reaching effects. This is not just about ‘managing change’ or ‘handling complexity’, this is about leading teams of public service workers in bleak cul-de-sacs.

1. Do you recognise this context – what would you add or take away? 
2. Will leadership have to be so different in these circumstances? 
3. As a leader, what pressures are you feeling most keenly at the moment? 
4. How do you think your and others’ leadership will have to change over the coming months – what will you need to do (a lot) more of or (a lot) less of... and carry on doing? 
5. What key skills will be so important that to be unpractised in them will mean seriously poor & inefficient leadership? 
6. What will you have to do that you have never done before? 
7. What resources will you draw on to help you get through this? 

I would be fascinated to read your answers to all or any of the above questions. Thanks

The critical leadership role of middle managers in these austere times

Public service middle managers will experience heavy loads of stress as the implications of the austerity measures are rolled out in coming months. They will be the people tasked to deliver the redundancy bad news to staff. They may well have little say in the decisions being taken. These managers will probably see the shape of the services they have helped to build, reshaped and reduced before their eyes. And they too may suffer a redundancy fate at the end of it all.

Throughout all this, these managers may well seek to juggle their deep commitment to the value of the service they manage & the people they serve, their need for ‘survival’ in this employment climate (& not put their heads too far above the parapet) and their desire to keep work & family life in some semblance of balance.

It is a gross understatement to say that this will not be easy.

But this is not an article to plead on their behalf – there are many others who will suffer too, not least the many (often vulnerable) citizens who will be getting lower of levels of critical services in the future. Instead I want to put forward some ideas about how these middle managers might play a critical leadership role as these looming cuts are rolled out.

For me the most important challenge to face in these coming months will be whether the cuts are used to simply reduce / ‘salami slice’ the existing services or whether bold & creative decisions will be taken to mitigate the cuts (as far as possible) by doing things differently. I contend that middle managers are best placed to do the latter while senior managers may well be under huge pressure (from their governance bodies) to do the former.

Middle managers know their services inside out. And whilst they may have a strong attachment to the current ways of doing business, their inside knowledge means that they have the potential to see some fresh green saplings instead of the old big trees. Whether this potential is realised or not will depend upon the leadership role that they adopt.

If the middle managers pursue a compliant style of leadership and seek only to implement the demands for resource cutting, there is little chance of innovation and new ways being found to deliver more with less. These middle managers may gamble on saving their own jobs by being good soldiers. But this will be a gamble. (I once met someone who was instructed to make his whole team of nine people redundant. He spent 10½  hours that day talking with each person, doing what he could to make the ‘brown envelope’ an opportunity and not a curse. Finally at around 7.30pm he returned to his own office to find his own brown envelope, just left squarely on his desk. He set fire to his filing cabinet.)

There is an alternative leadership role. (And from the discussions I have had with middle managers, many are and will be seeking to adopt this approach. I wish them well.) This approach seeks to create the room for manoeuvre to find the new ways of doing business. These might be radical innovations or just simple small changes that can lead to much higher performance, such that services and possibly jobs can be saved. This is not a leadership style for the faint hearted.

This leadership involves: 

• Being as strategic as the senior managers through understanding the past, present and future of the organisation, grasping the particular pressures which are being faced and having a vision of what could be. 

• Having the courage and deft footwork to challenge and question decisions from higher up the organisation, in ways that make the people who have made those decisions wriggle, but not squirm. 

• Being prepared to practise an inspirational & facilitative style of leadership which enables and encourages junior staff to think creatively and express their own bold ideas which will finesse the resources and find superlative efficiency & effectiveness 

• Deeply knowing what the public want and need, and being able to show clearly how proposals for newly redesigned services will come far closer to meeting their requirements and delivering social outcomes. 

• Maintaining honesty and transparency throughout, so that even if there is no job at the end, everyone will observe that the manager will still have their integrity. (In the end, that is all any of us have.) 

• Knowing what questions to ask of all involved that will liberate new ways of doing business. Just asking, for example, the simple question “is there anyone who provides this service far better than us?” can prompt a radical shift in existing methods. (When the first budget airline realised they could cut costs dramatically by keeping their aeroplanes in the air more and on the ground less, they searched for who was doing this extremely well. They learnt a huge amount from a Formula One team who showed them how do a pit stop in 9 seconds.) 

• Having the skills (and being able to share these) to redesign a service so that fewer resources are spent on ‘fire-fighting’ and more priority is given to prevention and systemic fixes that can head off the expensive mistakes.

Sometimes dramatic improvements are staring us in the face and when we finally see them we wonder how we could not have seen them before. One council I was working with had experienced something like this when they looked at how they repaired street lights. The original method involved taking a call from a member of the public that a street light was not working. An engineer was dispatched (at dusk?) to check that indeed the light was not working. If (as was invariably the case) it was not, a second engineer was then sent out to fix it. All this took a while and involved two journeys. They then changed their assumption from ‘we cannot believe the public’ to ‘we can believe the public’. As a consequence only one engineer is now despatched to fix a street light that has been reported as faulty.

This leads me on to declaring what I think is the most important attribute of this more progressive middle management leadership: 

• Having the capability to learn from the past (and possibly even chuckle about it) but not be attached to tradition. True, this is very hard to do in any organisation that is wracked with fear, blame and a belief that changing old ways necessarily involves a loss of face. But I believe (I have to believe) this is still possible, even in such organisations. Certainly if not now, then when? If this is not a time to let go of old & inefficient practises, when will it be?

If you are a politician or senior manager reading this, my challenge to you is what can you do to allow, enable and support your middle managers to act in these ways?

Putting the politics aside about whether now is the right time to be implementing extensive and deep reductions in public expenditure (I leave that to the politicians and economists to debate), it is always the right time for any manager to be putting in place radical improvements in efficiency and effectiveness. As Machiavelli said “a common failing of mankind [is] never to anticipate a storm when the sea is calm. A wise prince … must never take things easy in times of peace”.

Now that the storm has arrived, many people I fear are rushing to construct the world of public services as one large spreadsheet with lots of compartmentalised budget cells to slice and dice. I hope that the progressive middle managers will have the courage to practice leadership that calmly but dynamically acts in the interests of all of our futures.

But it won’t be easy!

Transparency: Some hopes and fears, new words and ideas

I write as a tax payer and a citizen who wants a world which is more ambitious, creative and fair. I also write as someone who has been working in and around public service organisations for the last 30 years as a civil servant, an adviser, a challenger, a listener and facilitator. I would like to talk about my hopes for what transparency should lead towards. I also have a couple of fears too.

It is my earnest hope that these new transparency arrangements will mean that citizens and taxpayers become more confident that their money is being spent wisely on the projects and services that make a difference. In other words that there will be a greater sense of ownership and accountability about what councils, central government departments etc. do and achieve. To coin a phrase, that we will have ‘transpocracy’ – where transparency is adding to (and not subtracting from) democracy. 

I also hope that we get ‘transporency’ too, such that the information that is published under the transparency guidelines seeds ideas, actions and initiatives by all concerned (politicians, providers, service users and media observers) that helps all to build the Big Society that our government is committed to developing. I believe we already have a big (hearted) society where everyday millions of people do something for a friend, neighbour or family member. But we can have an even bigger society if transparency helps a thousand flowers bloom.

I am concerned though that all this transparency could feed a growing number of cynical armchair voyeurs. To coin another word – I fear we may be at risk of creating ‘transpruriency’ where a legion of self proclaimed ‘auditors’ and ‘researchers’ are only interested in the costs of public services and not in their value.

In my more cynical moments, I also fear that the sheer volume of the data which is being published and the ways it is being uploaded onto the internet will bamboozle & overload far more than it will enlighten and inform. In other words (and this is my final ‘new’ word) that we will get a great deal of ‘transapparency’ where a semblance of transparency is created but which is actually nothing of the kind. There will be a lot of ‘sound and fury signifying nothing’.

So, how can we ensure that we get plenty of transpocracy and transporency, whilst ensuring that we keep transpruriency and transapparency in check? For me there is a simple one word answer to this question: strategy.

In this context, I speak as an organisation development and change facilitator who has seen lots of public services lurch into policy implementation without considering what they want to achieve other than baseline compliance. So my challenge is this – what do you want to achieve with transparency and how will you evaluate whether you are getting closer to (or further from) your goals?

Transparency could achieve so much. I hope it will help reconnect people with their public services and make those services more accountable. It can and should help boost value for money and spread wise spending practices from one public agency to another. It must not become bureaucratic, opaque or inaccessible.

In my view, how each council (or other public agency) develops their transparency strategy will help it to be successful or not. If the strategy is developed by just a few accountants and IT people sitting in a darkened room, I think it won’t work very well.

It is not that I have anything against accountants and IT people, I hasten to add. It is simply that if transparency is for the public then I think the public need to be involved in shaping the strategy and designing how transparency is rolled out for them. I know that some councils have done this – but have they all? (I note that the website guidance: http://data.gov.uk/blog/local-spending-data-guidance Local Spending Data Guidance does cover items such as ‘file formats’ and ‘data content’ well but makes no mention of involving the public...)

How are you developing your transparency strategy?