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Procurement – what is it, and what do I need to do? - LGSS

Procurement – what is it, and what do I need to do?

Whether you choose to outsource your procurement, delegate to a shared service or use your own in-house team, this article will help you gather some coherent thoughts before you go to market.

LGSS specialise in analysing current spend and contracts, to identify opportunities for efficiency. We manage high-level procurements and can advise on any part of the procurement process.

What is procurement?

Procurement is often misunderstood or over-simplified as the act of buying. But the truth is – it’s much more complicated than that.

Procurement is really about managing complex processes to support your business objectives. Additionally, public sector procurement is legally bound by the Public Contract Regulations of 2015.

A procurement team will establish your needs and support you to develop a brief to go to market. There, suppliers will compete for your business and the strongest supplier who can offer the best value will win the contract.

What do you want?

This is the most obvious question but also the most important. Knowing exactly what you want can be half the battle, as once you get into the legality of the procurement process, there is little that can be done to change your order.

How to get it right first time?

Think about the purpose and functionality of the contract. What is in place now, and how does this need to be different?

It’s also worth thinking about the future. Will your needs change further down the line? Do you need something flexible? How might this be accounted for?

Crucially, do you have the budget for procurement?

Does your procurement strategy fit with corporate aims?

When you’ve thought about your basic requirements, you’ll write a strategy outlining what you need and why. Remember to be specific and make sure what you write fits in with long term business goals. People interpret things very differently, so there needs to be as little wiggle-room as possible for you to get what you actually want.

When writing your strategy, you must make sure it is in the interests of your company.

Involve communities and stakeholders. Send out questionnaires or hold meetings and steering groups to invite discussion. Does your proposal really help your audience and sponsors? Can they help you refine your requirements?  We have a range of techniques to help with organisational support. Feel free to give us a call and we’ll talk you through them for free.

If you think other teams might benefit from, or be affected by your plans, invite them to a brainstorm to discuss their ideas. If you are thinking of outsourcing any existing teams or services, think how core services might be affected and how you can aid a smooth transition.

And when you think about teams, don’t forget to think of individual staff. New technology could reduce jobs. A new building in a new location could disrupt working conditions. Work closely with HR and prepare communication and support for your employees where necessary.

 Is there an alternative to procurement?

Once you’ve figured out exactly what you are looking for, procurement is a lengthy and expensive process so it’s best to cover all bases before you make a commitment.

If you are a public body, there is legislation which allows you to delegate your services to another public body without going to tender. For example, a council or health trust could partner with LGSS and hand over the management of IT, finance or HR, saving millions in running costs.

You could also consider in-house capabilities, a joint venture with another organisation or delegation via the lead provider framework (for health) or an arm’s length organisation (for housing).

Market research

If procurement is definitely for you, find out who your competitors are with some market research. Is your market expanding or contracting? How can you offer something different… or do something better?

To gather the most useful information, you’ll need to book some market research. If you need help with this, just drop us a line and tell us what you need.

Do you have enough money?

Sometimes your procurement will be a statutory requirement, but if it’s something more unique, you need to work out your budget as early as possible, and make sure you can justify it.

To earn corporate support, you will need to provide your senior management team with evidence that the procurement will contribute to efficiency, long term objectives or projected savings. What are the finer details? Managers need evidence so don’t go into a meeting empty-handed.

What are the ongoing costs and how will these be accounted for? There may be an option to sell your framework to other businesses to make back some money. Is this in your best interests? Are there other funds you can utilise?

Flesh out your specification

If procurement is still the best option for you, it’s time to develop your specification.

Here you can build on your initial requirements by allowing potential providers to explore possibilities you have not thought about. For example, before the car was manufactured, the initial want might have been for a faster horse. So, if your wording describes what the need is (a faster form of travel), rather than an exact description of what this might look like (a horse with a lighter carriage, for example), this gives providers the chance to be innovative.

It’s also worth stating what is most important to you in terms of delivery. Are you looking for the cheapest provider, e.g. if you need to secure a bulk order of pens, or do you need quality?

When editing your specification, make sure you are not requesting more than you need, or you may find unwanted costs added to your bill.

Seek professional advice

Request advice and guidance on any aspect of the procurement process by contacting Gus De Silva, from the LGSS team. Alternatively, you can read more about what we do on our procurement pages.