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14 June

Procurement challenges in a changing market

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During challenging economic times procurement and supply become key performance measures for any business sector. Procurement strategies can be the major source of working capital and business improvement. Every Chief Procurement Officer (CPO) is faced with several challenges not least balancing staffing levels and technology to give the best capability within the organisation to control procurement processes.

Challenge 1;Technology

Embracing technology both in work-flowing procurement processes and well as in the management of suppliers together with the ability to make rapid decisions to take advantage of spot-pricing can promote improved budget performance. In larger organisations improved e-procurement services could save between £3 million to £5 million per hospital to contribute to improved operational productivity..

Technology builds more effective communication tools to ensure their are no gaps in strategic messaging and in work flow management. The correct use of technology and communication tools can enhance relationship with colleagues and suppliers by always keeping their stakeholder landscape involved. This is essential in building and managing transparency across your procurement teams as well as enabling CPO's to promote the effectiveness of procurement strategies visibly across key stakeholders.

Challenge 2: Building a team with vision

A CPO has to drive visionary strategic intention when it comes to setting out supply and procurement management but even the most forward thinking CPO has usually inherited the team they work with to deploy their strategy into operational plans. This is particularly true when it come to controlling contracts or supplier. Traditionally, these were managed reactively when an issue arose or a new procurement event was triggered by a particular source no longer being available. However, in a globalised world being proactive and having teams that can plan scenarios in advance and actively manage contracts to a successful conclusion is a critical performance measure. CPO's have to manage their teams to be proactive and build strong communication tools to provide early "heads-up" for potential problems. CPO's with good communicating teams will always be in a stronger performance status.

Challenge 3: Sustainability

Of key concern to CPO's is the current and future impact suppliers have on the societies in which they operate. CPO's can no longer make decisions in isolation of local impact and social responsibility for the procurement parameters they set. Further, making future supply chains sustainable will also provide CPO's with greater security of supply in a world of diminishing resources. insightful strategic intent can add significant value to their company, significant brand security and cash flow benefits from improved production methods not simply based on low cost labour.

Challenge 4: When things go wrong

Procurement within the EU framework is a highly regulated process which is time consuming whether you are setting out the framework or responding to one. Most recent legislative updates make the process of challenging a decision more open and the automatic suspension of the decision until the challenges is put aside (Public Contracts (Amendment) Regulations 2009 SI 2009 No. 2992). Getting it through compliance can just be the beginning of having to make some significant decisions should process go wrong. So at some point a CPO will be faced with the question: "Do I challenge a procurement decision?" or "How can I prevent my procurement decision form being challenged?". The number of challenges to procurement processes has been rising incrementally since 2008. These challenges have significant consequences or opportunities depending on which side of the fence your are sitting as they block the implementation of the procurement process until a resolution can be obtained. Also challenges significantly impact on resources as they are invariably involve unallocated resources. Again understanding the consequences of getting it wrong and have the appropriate systems in place can dramatically cut the costs of challenges.

So if you are the CPO of a contracting authority you can protect yourself through improving transparency of the decision making process:1) notification (VEAT) that the procurement legislation does not apply; 2)a Contract Award notification. As a CPO of a challenging you may fall back on claims of lack of sufficient information about the process and evaluation process or simply that the awarding authority go its bid assessment wrong. For more information on procurement and supply issues contact This email address is being protected from spambots. You need JavaScript enabled to view it. or for technology solution contact M4siz Limited

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