Public sector procurement teams have to juggle a complex list of requirements and priorities when sourcing goods and services for various kinds of projects. Not only is overall cost something that needs to be carefully managed, procurement professionals must also align supply with strategy, manage risk, support sustainability and social value. Doing all of this in a way that is efficient, compliant and delivers long-term value is quite a challenge!
In this guide we look at the fundamental pillars of an effective public procurement strategy in the Procurement Act 2023 age and explore the support that is available to help you plan and implement yours successfully.
Jump to:
Why procurement strategy matters
Developing an effective procurement strategy
Why this approach works in public procurement
How we can help you create a more effective procurement strategy
Why procurement strategy matters
A procurement strategy is an organisation’s roadmap for how you will source, contract for and manage goods, services and works. Without a coherent strategy, procurement tends to be reactive, fragmented and less capable of delivering the broader outcomes your organisation needs. It can also result in higher costs, duplicated effort and more admin; none of which are optimal when you’re spending public money and trying to deliver the best possible results for the communities you serve.
With the rollout of the Procurement Act 2023, which gives buyers a set of objectives to meet, having a strategy which takes all of these into account is essential.
By taking a defined strategic approach, you can:
Set clear objectives that go further than the purely transactional elements. This can include cost control, risk mitigation, sustainability, supplier relationships and innovation.
Drive consistency across categories and contracts, reducing duplication, inconsistency and scope or cost creep during projects.
Improve supplier performance and relationships. Suppliers become partners rather than simply those providing a product or service.
Manage risk more proactively, including supply chain disruption, regulatory change, social value obligations and market volatility.
Ensure compliance with evolving public procurement legislation and tools, so you’re not repeatedly reinventing processes unnecessarily.
Free up internal resources by using efficient routes-to-market and supporting structures so that your team can focus on value, rather than process.
A good procurement strategy positions your procurement team as a strategic enabler of your organisation and wider goals, not just the guardians of the purse strings.
Developing an effective procurement strategy
We’ve compiled some practical steps you can take to build a stronger procurement strategy that delivers in all of the areas needed.
Step 1: Analyse your current procurement structure and processes
It’s important to take a fresh look at what you’re currently doing. Some questions you may want to ask yourself and your team include:
What is your current procurement organisational structure, supplier landscape, contract profile, spend categories, internal processes and systems?
Where are the gaps?
Which areas take up most of your time currently?
Which contracts are high-value, high-risk or high-complexity?
How are you tracking and reporting on supplier performance?
What are the team’s main pain points?
By conducting a clear review of the internal procurement picture you gain clarity on where your strengths and weaknesses lie and provides the start of a new foundation to build on.
Step 2: Review your external market, your supply chain and regulatory requirements
Once you’ve looked at your internal situation, turn your focus to the elements that sit outside your direct control. Asking yourself these questions can be a good place to start.
What are the market dynamics in your key categories?
What risks exist (e.g., supply chain disruption, geopolitical issues, price inflation, regulation)?
What procurement tools and solutions are available in your segment e.g., frameworks, DPSs, dynamic markets?
Understanding these tools and the market means you can design your strategy to take advantage of best-route-to-market options and mitigate external risks.
Step 3: Define your goals and KPIs
Using the information gained from the external and internal analysis, you now need to base your strategy foundation on what you want procurement to achieve. This will link in with your individual organisation’s wider strategic objectives and can vary widely. It’s important to consult with stakeholders to ensure that your procurement KPIs are based on what makes a tangible difference to your organisation, your business priorities and the outcomes you want to achieve.
Step 4: Look at your budgets and resource allocation
Effective procurement strategy requires resource: people, systems, process design and budget. You’ll need a realistic view of what your procurement team can manage and what investment is required to get you to where you need to be. Calculate your current spend baseline, contract and supplier management costs, headcount, training needs and technology investment.
Prioritising your resources on the areas that deliver most value can be a challenge, but building in flexibility can be important too, because things do change and your strategy may need to adapt.
Step 5: Get buy-in from stakeholders
Procurement does not operate in a vacuum, even if it might sometimes feel like it. You need buy-in from senior leadership, operational managers, finance, legal and suppliers in order to get the best results across all areas. At this stage you should map your procurement objectives to corporate objectives: e.g., cost reduction, innovation, sustainability, social value, localism and risk reduction.
If you find things that don’t quite align (e.g., procurement goals contradict operational priorities), finding and resolving this now is infinitely better than not discovering it until much later, when it can cause much bigger problems. Setting the right governance structure and stakeholder engagement plan now is critical to success.
Step 6: Embed sustainability and social value
Public procurement needs to ensure that elements such as sustainability, the impact on the environment and social value are considered during the development of your strategy. Some areas to look at could include:
Supplier carbon-footprint metrics
Ethical supply chain audits
SMEs/Local supplier development
Social value weighting in supplier evaluation
Step 7: Choose the right procurement support, routes, tools and solutions
Your strategy isn’t all top-level. It will need to include how you will procure practically. For many public bodies, this could include utilising relevant framework agreements, existing DPSs, or newer dynamic markets. These procurement solutions can provide access to pre-approved and compliant suppliers, bring flexibility to encourage innovation and often vastly reduce the admin burden on procurement teams.
Spending some time assessing your options at this stage can result in a much more efficient procurement across the board.
Step 8: Implement and regularly review your procurement strategy
Once the strategy has been drafted and agreed internally, it’s time to implement and monitor it. This doesn’t mean that it’s completely “job done”.
A great way to start is to set a timeline and roadmap for the various changes that need to happen, such as migrating to new procurement solutions. Ensure you build in change-management and communications so everyone who needs to can understand and follow the new strategy.
It’s important to make review cycles frequent, such as quarterly, and allow for refinements as business context changes, markets evolve or new tools and solutions emerge.
Why this approach works in public procurement
The public sector faces specific challenges when it comes to procurement. Budget constraints, regulatory changes, social value obligations, transparency requirements and increasing demands for value all play a role. A well-crafted strategy that incorporates the right procurement tools and embeds efficient routes to market can deliver:
Faster procurement cycles (reducing time to contract).
Compliance the Procurement Act 2023.
Better value through strategic supplier relationships and smarter contract design.
More consistent delivery of social value, local supplier engagement and sustainability outcomes (which are increasingly mandated in public sector procurement).
Reduced burden on in-house teams through appropriate use of established tools and solutions, freeing up time to focus on strategy.
How we can help you create a more effective procurement strategy
As specialists in public procurement, we can help your organisation in various ways to develop a more robust and efficient procurement strategy that ladders up to your bigger objectives and delivers true long-term value.
Our CIPS qualified procurement strategy consultancy team can offer tailored strategic analysis and guidance, and our wide-ranging set of procurement solutions offer quick and efficient routes to market which can feed into several areas of your new strategy.