5 Ways to Get More Efficient in Government Procurement and Contracting
Procurement teams are first responders – right along with police, fire, fleet and emergency response teams – and have been in the virtual “eye of the storm” during the recent pandemic and other challenges over the past year. As the year 2021 unfolds, government procurement and government contracting teams can further demonstrate their crucial value with strategies to help drive efficiencies and savings.
As a former purchasing agent, with an understanding of the challenges faced by procurement teams, I’ve listed 5 ideas to consider with your management team or department customers. Whether you are on the procurement side or supplier side of the table, these ideas are worthy of an upcoming discussion.
1) Automate! Telecommuting and working from home is the way of the future – even for government teams. With possible upcoming personnel reductions, or positions not being filled after people retire, the only way to keep on top of the workload is automation. It supports social distancing, and by expanding a virtual vendor registration system, it opens more opportunities to local and small businesses. Now is the time to push for the whole process to be automated – including virtual bond submittals, electronic signatures and bid openings – it is possible to do it all virtually now!
2) Explore Warehousing Options. Over the past decade, supply chain teams were encouraged to eliminate warehousing, as many suppliers can provide same or next day delivery. However, many were caught off guard when worldwide demand for products during the COVID-19 pandemic created shortages. It may be time to look ahead to inventorying on a selective basis. While I am not suggesting that agencies re-create the huge warehouses of the past, smaller warehousing is proposed, with vendor dispensing machines for those supplies that may be needed during an emergency or as-needed basis.
3) Ask Your Suppliers for Budget Savings Ideas. The typical approach during budget reductions is for a procurement office to reach out to suppliers and ask for a unilateral 5-10% cut in their pricing. However, that is not always possible nor the best approach. For larger contracts or areas of spend, set up a meeting with those suppliers and honestly share the budget situation. They may have unique ideas to propose such as longer warranties, discounted volume pricing, delivery reductions or possible substitution of certain products lines that serve the same purpose. Small allowable changes in your contracts, not just pricing, could still result in savings.
4) Research Financing or Leasing Instead of Outright Purchasing. When most governments purchase items, they spend the money upfront upon delivery. However, for more expensive items or larger purchases such as heavy equipment, ask the supplier to propose alternative financing or leasing options. Leasing or financing can provide relief in the current budget year while still getting the equipment needed.
5) Explore the Concept of Cooperative Contracting. Even the largest agencies use cooperative contracts to drive savings through leveraging the spend of many across a contract, thus driving down pricing for all. Review your organization’s expiring contracts this year and explore the option of piggybacking on a cooperative contract instead of going out to bid. Suppliers can also bring forward their own awarded state or cooperative contracts for agencies to quickly adopt as their own, driving further savings and efficiencies.
Tammy Rimes is the Executive Director of National Cooperative Procurement Partners (NCPP). The NCPP is North America’s premier association for cooperative procurement with a membership of cooperatives, suppliers with cooperative contracts and public procurement and government employees. Further resources can be found at www.NCPPAssociation.org.
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