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Procurement Perspectives: Strategic procurement a valuable tool

Stephen Bauld
Procurement Perspectives: Strategic procurement a valuable tool

The value of the purchasing department as a strategic tool must be fully appreciated.

It is not merely a support department, assisting in administrative and operational activity. Rather, it occupies a pivotal position between the planning and execution of strategy, because of its intimate relations with the operational departments that it serves, and its close relationship with the financial control aspects of municipal operations on the other hand.

Half of every municipal tax dollar is spent on procurement of goods and services under either the capital or operating budget. Purchasing is also a critical interface between municipal operations departments responsible for service and program delivery and their outside suppliers.

As the municipality’s window on emerging technology which will support the provision of municipal services, the purchasing department may monitor and advise senior management of the probable impact of market trends and conditions on municipal service delivery, and the cost of providing municipal services. This information can then be fed into the strategic management process.

In order to play this vital role successfully, it is not satisfactory for the municipal purchasing team to process requisition after requisition, like robots. Like all purchasing professionals across both the public and private sector, they play a key — indeed, indispensable — role in the prudent management of the funds entrusted to their care. Accordingly, they should actively pursue cost saving initiatives. These must be sought out aggressively, as well as exploited as they present themselves.

However, in contrast to their private sector counterparts, for municipal buyers and the purchasing managers, the objective is not simply to drive the best deal (i.e., to get the best value materials and services for the amount expected), but it also is essential to carry out this mission in a manner consistent with the public trust that is placed in the municipal administration.

They must advise elected officials as to the range of choices that are open; they must guide the information of policy, so that clear direction is given to all staff as to how those choices are to be made; and they must ensure that the policy direction prescribed by council is given effect.

In terms of day-to-day administration of the purchasing function, considerable attention must be placed on the apparent and actual integrity of the procurement process.

The professional must be a thinking, proactive member of the municipal administration, not simply a form of pusher or gatekeeper. He or she must be aware of new developments in supply, and of new types of product that are more suited to municipal need.

The buyer of the future must work cooperatively, with other members of the municipal administration team, drawing on their knowledge and experience to supplement his or her own. Such a professional will also be able to carry out his or her responsibilities in a way that best promotes the efficiency of municipal operations. Proper employment of the usual range of techniques open to a purchasing department (i.e., proper recording and documentation of municipal contracts, standardization of specification and the terms of contract, anticipation of need, etc.) serve both the end of efficiency and integrity.

Over the years, I have said that municipal procurement needs to be viewed as far more than the setting of rules and procedures to govern the manner in which goods and services are procured for the delivery of municipal public services and programs. It needs to be seen as an integral part of the process of service and program delivery.

Both the purchasing decisions made and the rules and regulations governing the manner in which these decisions are carried into effect have a substantial impact upon the level of service a municipality can afford to provide and the tax burden that it imposes upon its ratepayers.

Stephen Bauld is a government procurement expert and can be reached at swbauld@purchasingci.com.

Some of his columns may contain excerpts from The Municipal Procurement Handbook published by Butterworths.

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