Procurement leads within the Housing and wider public sector continue to face increasing pressure from their senior leaders and the external environment. Procurement is and must change over the next twelve months and must adopt a more commercial approach to meet both the short-term challenges and deliver on the long-term vision for procurement going forward.
1. Contract & Supplier Management
With the research by the International Association for Contract & Commercial Management organisation (IACCM) showing that poorly managed contracts can cost organisations 9% of annual turnover, effective contract and supplier management has never been more crucial for the public sector. Procurement plays a central role in creating a comprehensive, centralised view of the supply chain to identify opportunities for improvement, innovation and value for money. Effective contract management ensures proper forward planning and budget management and supports negotiations, while a clear understanding of performance unlocks greater value from the supply chain.
2. Recruitment and the labour market
For over a year, our Members have been telling us they are struggling to recruit many roles, particularly in procurement. The challenge stems from talent shortages and rising wages, creating a candidate-driven market and a choice for employers. To tackle this, organisations need to be clear on how they value procurement, the commercial and procurement skills required and if they are willing to pay for the genuinely good procurement professionals available.
3. The supply market
We’re in a world where costs seem to only go up and businesses, and procurement, are being asked to often do more within the same or reducing budgets. The ongoing economic volatility means procurement teams have to manage costs without affecting the quality of delivery or the reliability of the supply chain.
It isn’t just the clients who face these economic challenges, with many suppliers considering how they deliver efficiently going forward, prompting mergers and acquisitions as well as some resizing, rationalisation or termination of contracts or worse, ceasing trading.
Procurement being able to deploy those softer, more commercial skills to engage and understand the market and their key suppliers to mitigate risks in the procurement process and then through the life of the contract will be key. Doing so will reveal where supply can be optimised, prices can be challenged correctly but more so, focusing on wider value creation than the typical narrow view of simple cost-cutting.
4. Customer expectations
Whether it be the cost-of-living crisis, the new transparency on costs and contracts provided within the Procurement Act or the consumer standards, customer expectations of the value they get for their rent have never been higher.
Procurement will play a key part in integrating the customer voice and experience into every aspect of the procurement process to ensure expectations are understood, managed and solutions agreed. Customers may not always like it, but they should be able to clearly see the decision-making process, feel part of it and at least know what to expect from the contracts that affect them.
5. Responsible procurement
At PfH Live recently Jo Meehan, Professor of Responsible Procurement at the University of Liverpool, said something that stuck with me, “Anyone can procure, but not everyone can procure responsibly”.
The Procurement Act creates the opportunity for the public sector to further its local priorities and in turn, deliver more social value. However, to do this procurement will need to take social value, sustainability and modern slavery beyond simplistic tick boxes in tender responses and change practical delivery to create real, long-lasting change.
Facing new regulations and market challenges, procurement in the public sector must evolve. Our consultancy services offer expert guidance to enhance your procurement strategies, ensuring efficiency, compliance, and value.
So why not transform your procurement approach with us by your side? We provide the insights and strategies you need to navigate the complexities of the public sector. Simply call us today on 0800 031 5405 or drop us an email at info@pfhscotland.co.uk and a member of our team will be in touch.
