profit from procurement

The Procurement Act – transforming Public Sector Procurement

The Procurement Bill comes into force in October this year. It will transform the way public sector organisations buy goods and services, providing massive opportunities for both buyers and sellers alike to benefit from the new commercial flexibility it affords.

The Government’s objectives for introducing the bill are to speed up and simplify public procurement processes, put value for money for the taxpayer to the forefront and create greater opportunities for small businesses and enterprises to innovate public sector service delivery.

Consequently, one of the most significant impacts on the procurement of goods and services will be a major shift from focussing on the process of procurement, which the old regulations tended to ‘encourage’, to focussing on the ‘how’ the new procurement rules are applied i.e. the new legislation requires a major shift from a ‘process mindset’ to a ‘commercial mindset’ when implementing public procurement.

This is liberating for both buyers and suppliers alike. Pre-market engagement will allow buyers far more flexibility to develop a procurement process which best suits their organisation’s needs to deliver best value and social benefits for their community while allowing suppliers to demonstrate better how they can meet those requirements and introduce innovation. The emphasis will move from considering the lowest cost-to-quality ratio under the old Most Economically Advantageous Tender (MEAT) system to a broader consideration of cost-to-quality, service, innovation, social/economic value under the new, Most Advantageous Tender (MAT) system.

Further implications of the Procurement Act will mean contracting authorities will have to evaluate the total cost of the procurement, including making provision for ensuring that the value of the contract is being delivered. Clear KPIs will need to be established along with an annual publication of an assessment on the performance against such KPIs, hence Contract and Supplier Relationship Management will become a critical part of the buyer’s activities.  Suppliers will benefit from the continuing obligation on contracting authorities to be transparent throughout the procurement process. Suppliers should have a clear understanding of what the buyer requires and the decisions they take to secure that requirement. The Procurement Act will also put additional weight on buyers to consider small and medium sized enterprises (SMEs} in the procurement process, along with providing increased visibility and easier access to tender opportunities through the provision of a Central Digital Platform.

It is early days yet, but now is the ideal time for contracting authorities and suppliers alike to put measures in place to meet not only the challenges, but also, the significant benefits the Procurement Act will bring to both parties.

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Call Supply Side Focus today and let us help you deliver the benefits of strategic procurement. By adopting and implementing a strategic approach to your supply side, our experience has shown that you will achieve benefits which will contribute significantly towards the overall success of your company. These include:

Increased Profit and Reduced Costsby improving benchmarking, supplier intelligence and management and reducing the overall cost of ownership.

Reduced and Managed Riskby identifying, understanding and defining the risk associated with each purchase and mitigating against it

Improved Supplier Performanceby identifying the appropriate relationship with each supplier and implementing proper governance accordingly

Improved People Skills and Knowledgeby investing in their training and development through top-level support for, and recognition of, strategic procurement and its essential link to the delivery of corporate strategy at the highest level

Improved Customer Satisfactionby shortening lead times through supply chain optimisation and improving the quality and service of the goods and services supplied.

Increased Competitive EdgeResulting from the above and the adoption of strategic sourcing.

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