Public Procurement Change Agents

Abridged excerpt from OPBA "Procurement as a Strategic Asset" presentation

Dustin Lanier, CPPO

Dustin presented to the Ontario Public Buyers Association in their Ignite series about how to develop the public procurement function as a strategic asset.

SPEAKER_00:

procurement is responsible for the transactional role of purchasing, all of that activity that has to happen to make things work. And then when we're going out in a way that is not just simply about price and only price, we're trying to achieve a best value outcome for our entity, which is inherently a more complex way of making decisions because it's not only price, we're making certain weights. Maybe we've created some custom mad scientist type of sourcing event that really requires the vendor community to stretch to participate So best value solicitations, and I'll talk more about that concept here in a couple. But when we're saying we're going to go to market and we're going to do something that is strategic and helping our departments to be able to achieve that strategic outcome, we have to be able to have the skills to look at what the market can absorb. What has the market done in the past? Has anybody really tried to change or influence the market in a way that would be different than the same bid that we did last year or the year before? So what will the market support? And then how do we go to market? Are we doing things in one sourcing event and multiple sourcing events? Are we doing a geographically oriented bid where we're going to say that you can bid for some of the regions or just one of the region? Like the complexity of the sourcing strategy, the method of going to market. And that means that procurement people need to really understand kind of a design thinking characteristic. It's not just simply, this is my tool and I'm using this tool, but what am I designing? How am I engaging and creating that opportunity? How will the vendors respond? There's just sort of a game theory, right? How do I understand the nature and the likelihood of the vendor activity and response? If every time I've gone to market for a particular way of doing automotive maintenance in the past has only ever resulted in one or two vendors, is there something different that I can do that would influence the market, that would change the way that it works? How can I expose the kind of vendor that I'm seeking to get to? Supplier and contract management. Contract management doesn't necessarily have to happen in procurement, but if it doesn't happen in procurement, it needs to not be treated as a legal function because contract management is about getting to a business outcome, not a legal outcome. I would argue that contract management and the fulfillment, did we get from the vendor what they committed to do and how do we know? And if we didn't, when and how do we escalate? That is a whole aspect of procurement that I think is deeper and more strategic. And then spend analysis and performance benchmarking is saying, where does the spend go? And do I have the right contracts and the right supplier mix in place so that things are easy and smooth? and identify improvement opportunities, then benchmarking how I'm doing a good job and knowing whether I'm doing a good job. So a lot of that is really kind of in that more strategic cut on procurement. And then your board chair did an article. It was in April. So this month, right? We're still in April. Time goes so fast. It's hard to know where I am all the time, right? So there was an article. And if you haven't read it, I encourage you to. It was a good article. Lots of good pieces and information. I plucked out two or three things that I wanted to highlight in here and then connect to the speech as I go through. So the key points from your board chair was that procurement should be collaborative, not just transactional, that strategic procurement drives efficiency, resilience, and innovation, that strategic thinking and adaptability is preferred over rigid tasks and procedures, And that procurement is a strategic force that shapes efficient, resilient, innovative communities. And I agree with all that. And that actually ties really closely to some of the stuff I'll talk about in here as far as what is this flip point between the transactional characteristic of purchasing and the broader, more holistic combo of a strategic procurement shop. I mentioned before, when I talk about purchasing and procurement, that some people will treat those as the same word. And so therefore, it begs the question, is the distinction I'm making semantics or is it something more? And I would argue that it is something more because stopping at that transactional role of purchasing has three substantive risks. One is that we're seen as slow and inflexible by our customers, which encourages them to then wire around procurement, which then further locks us into that place, right? So being slow and inflexible with our customers has a dramatic impact impact on their willingness to work with us strategically. And therefore, that means that we would be seen as tactical by our leadership, that we are in a clerking function as opposed to a strategic asset for them. And importantly, being seen as an uncompelling career choice by the next generation if we don't address that question, because what do younger people want to do and how does that tie to the roles that we can make available to them to make sure that we have long-term sustainability in this function.