Industry: Public

Procurement is a hard job — but managing the procurement process with outdated tools (or no tools at all) is making it even harder. That’s the reality for 60% of procurement teams who rely on manual hard-copy processes for their bid and RFP process.  

Every team has a tipping point, after which the status quo becomes unsustainable. Read on to see if you recognize any of these signs on your team:  

1.  Paper cuts are an occupational hazard of your job.

2. Your office is running out of storage space for filing cabinets.

3. You have procurement software—but it’s so old that it only runs on a computer from the 1990s and only one person on the team knows how to use it. 

4. Your blood pressure spikes on bid closing day. 

5. More than once, you’ve debated the time on the clock with a vendor at bid closing time.

6. You have procurement software, but you spend more time in Excel than in the system. 

7. A vendor debrief can send your department into detective mode trying to track down scores and comments. 

8. You have procurement software, but nobody has logged in for months. 

9. Getting people to serve on evaluation committees is like pulling teeth. 

10. With all the email threads from vendors and evaluators, ‘inbox zero’ is a faraway dream. 

If you’re nodding your head to any of the above, it’s time to take a look at the evolving procurement technology marketplace. Modern sourcing software has adopted the same principles of user experience as the apps you use in your day-to-day life, resulting in an intuitive interface that is easy for stakeholders and procurement teams to learn and use. By digitizing and centralizing your bid and RFP process, your team can: 

• Eliminate paper and Excel completely (resulting in less time spent on paperwork, less storage space needed, and no risk of lost or misfiled documents)                
• Reduce timestamp disputes and bid closing chaos with a simple and straightforward online submission experience for vendors
• Improve collaboration, by providing a convenient online platform for evaluators to communicate on project progress, review proposals, and complete scoring 

Wondering where to start?

 Attend the webinar with NIGP: 

Making Sense of Procurement Tech:  a practical guide to digital transformation

With Patrick Moore, Senior Fellow, Centre for Digital Government

August 13, 2:00 pm ET

Things are changing when it comes to the ways that public agencies approach their software needs. 

Previously, suite solutions reigned. Organizations purchased ERP systems and other large-scale solutions with the promise of one source for all the data and information that powers their organization. 

Fast-forward to the present. Many teams have been burned by painful multi-year implementations and infrequent updates. Others find themselves stuck with monolithic software that forces a square peg into a round hole, leading to workarounds and manual steps outside the system. This is not just inefficient—it also compromises the integrity of your data and leaves you with an incomplete picture. 

As a result, organizations are favouring a new, more agile type of software: “best-of-breed.”

What is best-of-breed software? 

Technopedia defines best-of-breed software as: 

“The best system in its referenced niche or category. Although it performs specialized functions better than an integrated system, this type of system is limited by its specialty area.” 

Here’s how it works: rather than trying to find a software solution that is ‘everything to everyone,’ many public agencies are implementing best-of-breed systems in multiple functional areas and linking them together—a ‘swiss-army knife approach’ to buying software. 

In the context of procurement technology, GovTech defines best-of-breed as “digital tools designed for one element of the procurement process, such as sourcing.” 

5 benefits of best-of-breed software 

How does best-of-breed software help your team? Here are some key advantages:

1. Solutions do exactly what you need them to. 

By nature, best-of-breed solutions are hyper-focused on doing one thing well. As the GovTech procurement guide notes, “by specializing in one area, a vendor may offer newer technology and more extensive capabilities than companies providing broader applications.” You can also expect more frequent updates and greater product innovation. 

2. ROI in months, not years. 

Because they involve fewer stakeholders and offer specialized solutions, best-of-breed systems have lighter training and implementation requirements — making them a good fit for teams that need results today and can’t wait for a lengthy implementation.  

RELATED: Calculate the ROI of sourcing software for your organization 

3. Better user experience. 

The cornerstone of good user experience is designing solutions with end users’ needs, behaviors, and values at the core. Thanks to their narrower scope, best-of-breed solutions can provide a user experience that is tailored to primary users’ needs and preferences, making it intuitive to learn and pleasant to use on a daily basis.

4. More agile, less risk. 

Nobody plans for their software implementation to fail, but in reality, 90% of them do. Best-of-breed solutions have much lower implementation and start-up costs, meaning the risk of getting locked into a system that doesn’t work is much lower. Some systems reduce risk further by offering ‘proof of concept’ or trial periods so you can try the solution before committing to a long-term contract.

5. Can be linked together efficiently. 

Employing more than one best-of-breed solution doesn’t mean your data is doomed to be siloed. Many best-of-breed solutions offer significant flexibility, allowing you to connect multiple systems through light integrations or simple processes.

A best-of-breed software case study for public sector

“Best-of-breed” was the approach that Craig Milley, Principal Consultant at Wayfinder Consulting, took when seeking technology to support procurement improvements for Cayman Islands government. 

Rather than seeking a one-size-fits-all ERP-style application, they chose to implement multiple purpose-built software systems. They selected best-of-breed solutions that met the Cayman Islands’ unique needs, supported process improvements, and could be quickly rolled out to stakeholders, many of whom are not subject matter experts in procurement. 

After selecting Bonfire to manage the bid and RFP process, they were able to quickly implement the software across forty departments and begin reaping the benefits of increased vendor competition, accelerated cycle times, and better visibility. 

“Our approach was to get the best-of-breed technology in each area and stitch them together — the right technology for the right function,” explains Milley. 

Now more than ever, procurement is gaining recognition as a strategic contributor to the organization, rather than simply an administrative or support department. After all, procurement teams play a crucial role in ensuring that internal departments get the goods and services they need to put organizational plans in action. 

Along with the shift in perception, the role of procurement teams is shifting. Technology is reducing the amount of transactional administrative tasks in a procurement manager’s day, providing more capacity for strategic sourcing. 

Data collection and analysis is necessary to inform a strategic approach to procurement. After all, in order to fuel continuous improvement, you need to understand where you are now, where you want to be, and how you are tracking against those goals over time. 

“Procurement organizations need detailed data to fully understand their purchasing volumes, their expenditures, their spending histories, and the usage patterns of government departments,” explains Dugan Petty, Senior Fellow, Centre for Digital Government and former CIO and state purchasing officer for the state of Oregon. “Without these insights, it’s difficult to build a more effective sourcing strategy.”

DOWNLOAD the GovTech Guide “Procurement Tech and How to Use It” 

Using procurement data to achieve strategic sourcing goals

Cost savings

Given that half of every municipal tax dollar is spent on procurement of goods and services, prudent management of funding is a chief concern of procurement teams. 

Data on cost savings (on an overall as well as per-project basis) makes it possible for procurement teams to identify and optimize cost savings opportunities. It can also give procurement teams a concrete measure of their impact on the organization. 

“Once you do market research and analyze what you’re paying under your contracts, you can execute procurement strategies that are based on what you’re seeing in the marketplace,” notes Petty. “If you find you’re paying three percent over market for an item, for example, you can set a goal of hitting prices two percent below market over the next year or two and track how well you’re moving to that target over time. That can result in hard dollar savings that you can use to demonstrate the value proposition that procurement achieves.”

Better outcomes for stakeholders

In the public sector, it’s not all about the bottom line. 

“Purchasing is also a critical interface between municipal operations departments responsible for service and program delivery and their outside suppliers,” says government procurement expert Stephen Bauld. As such, procurement teams also consider internal customer service and contract outcomes as chief measures of success. 

In order to be able to ensure that procurement outcomes are being delivered and priorities are aligned, procurement teams must stay engaged with their contracts and vendors even after the award is made. 

 By collecting data on supplier performance, contract term and change orders, and total contract value, procurement teams are able to close the loop on their bid and RFP decisions with clear visibility into how well suppliers are fulfilling their contract. They can also provide more proactive and insightful service to stakeholders by using supplier performance data to correct issues before they escalate, or even to inform future procurement decisions. 

Preparing for the procurement function of the future

Data is the new currency, and its impact on procurement teams will only grow in the future. 

Fortunately, eProcurement technology is evolving to make it easier for procurement teams to capture and analyze their own data—without spending hours in Excel. 

As Petty explains, “The data capture and data analysis capabilities are so much stronger than what we ever had in the past, and that is providing tremendous value.”

Digitizing your procurement function makes it possible to capture your procurement data for the benefits described above—while also preparing your procurement team to reap transformative benefits of ‘big data’ in the future. This will help teams provide even greater strategic insight to inform their organization’s spending decisions in the future. 

“The power of cloud software and ‘big data’ will transform how public agencies buy,” notes Bonfire CEO Corry Flatt. “It’s an exciting time for public procurement technology.”

For more, read the GovTech Guide Understanding Procurement Technology and How to Use It. 

Much has been made of the ‘silver tsunami,’ which describes the looming wave of Baby Boomer retirements set to disrupt the public sector workforce in the next few years. Between 30% and 40% of state workers are currently eligible for retirement, with even higher numbers in local government. Meanwhile, most public sector teams (as many as 90% in some jurisdictions!) do not have succession plans in place for replacing employees or managers.

For procurement teams, which are often operating under strapped resources at the best of times, the impact will be magnified. The reality is that when veteran employees retire, decades of experience and institutional knowledge go with them.

Retention, training, and recruiting initiatives are valuable strategies to mitigate the impact of the anticipated ‘brain drain’ from senior staff retirements. However, these are long-term plans—and with nearly half of the public sector workforce eligible to retire today, teams need to start preparing now.

Sourcing software: a port in the storm of staff turnover

Transitioning your paper or Excel-based bid and RFP process onto a centralized sourcing platform provides several benefits to help manage staff turnover and retirements without missing a beat on your procurement.

1. Centralize bid and RFP activities in one platform.

All too often, bid and RFP information is stored in filing cabinets and locally-stored spreadsheets. When a staff member leaves, their teams find themselves putting on their detective hats to find project information, connect with the right stakeholders, or piece together FOI requests or audit reports after the fact.  

At best, it’s a time sink—at worst, it’s a source of risk for your procurement function.

Sourcing software provides one central platform to manage all bid and RFP decisions, across all procurement staff, in one place. Retiring employees can grant access to their colleagues to provide immediate visibility into vendor details, proposal documents, evaluator information, scoring, and project communication for all past and current projects.

As a result, procurement teams have the up-to-date information they need to pick up where their colleagues left off.

2. Do more with less.

Forty-two percent of government purchasing staff report that they are overworked—and the problem is likely to grow more acute as staff retire. In many cases, open positions are backfilled or go unfilled. Even if they are filled, the average hiring process in public sector takes 53.4 days, so teams can be expect to be shouldering an increased workload for some time.

Sourcing software helps procurement teams manage growing workloads by automating many of the tedious administrative steps in the process — such as manning the receiving desk, distributing proposals to evaluators by hand, or manually aggregating scorecards.

As a result, teams are able to reduce RFP cycle time by half, giving them additional capacity to keep up with increasing demands on their time.

3. Operationalize best practices for quicker on-boarding and training.

Every team has a ‘go-to’ person, who is relied upon for questions, gut checks, or reminders on how the formulas work on complicated Excel files. You wish you could bottle up their knowledge—but alas, that technology hasn’t been developed yet.

The next best thing is using a sourcing platform to operationalize best practices across the procurement team. Templates and drafts ensure that standard clauses and compliance language are always included. Staff can also access all past projects in order to learn from previous examples that yielded high value contract awards.

While new team members are learning, experienced team members can maintain supervisory visibility over bid and RFP projects. This helps team members learn the ropes more quickly, with full peace of mind that all steps are being followed correctly.

See Bonfire sourcing software for yourself

Join our upcoming webinar for a firsthand demonstration of how the Bonfire sourcing platform supports teams in managing capacity gaps caused by retirements or staff turnover.

WEBINAR: 3 ways eSourcing can address the transit talent gap

June 25, 2 pm EDT  

Experts predict that most of the jobs that today’s students will hold do not even exist yet. K-12 schools have an imperative to evolve curricula and teaching methods to ensure students are equipped with the technological skills, problem-solving abilities, and creativity they need to take on whatever the future brings.

Procurement teams see the evidence of this in the purchase requests that come across their desks. As STEM education becomes more widespread, procurement teams are playing a key role in delivering the right technology to classrooms.

From SmartBoards to 3D printers, technology purchases now make up 25% of all RFPs run by K-12 procurement teams.

IT procurement decisions are more complex and involve more stakeholders than procurement projects for well-understood products and services. As a result, procurement teams have to work closely with educators and administrators to determine what classrooms need and how to get it at the best price, according to applicable rules and regulations.

It’s no small challenge! Here are three key considerations to help you work with stakeholders to facilitate successful IT procurement outcomes:

#1 Consistency

For stakeholders who don’t live and breathe procurement, the RFP process can seem daunting, cumbersome, and out-of-step with the fast pace of technology change. As one school district superintendent put it, “The traditional procurement process is time-intensive, bottlenecking the ability to stay current with the latest technologies and curricular offering.”

Standardizing the RFP policy and process provides everyone with a clear roadmap, which helps to ensure smooth and efficient stakeholder participation.

This has been a key part of Green Bay Area Public Schools’ success in changing the perception of the technology RFP process. In addition to referencing state and local policy to ensure standardization of when and what type of RFP procedure must be used, they have also built out a standard timeline and leverage a common template to build their RFPs.

“Systematizing and building guidelines and procedures into the school district’s culture can help make each procurement a little smoother and less daunting than the one before,” writes Green Bay Area PS’ Chief Technology and Information Officer Diane Doersch. 

Learn more about how Green Bay Area Public Schools ensures effective collaboration in their RFPs in the upcoming webinar “Better Collaboration for Better Classroom Outcomes” with guest Jake Alverson, Director of Procurement, Green Bay Area Public Schools.

#2 Collaboration

In order to achieve the desired educational outcomes of technology purchases, procurement teams, district administrators, and classroom educators need to get on the same page.

It’s easier said than done when busy schedules, geographic distance, and different priorities get in the way.

Procurement teams can lay the groundwork by reaching out to stakeholders at regular intervals to understand their upcoming needs and open up communication channels early in the process.

Another foundation of effective collaboration is providing an easy and convenient way for stakeholders to access project details, communicate, and complete their evaluation. Historically, participation in the RFP process has meant a lot of paperwork for evaluators, with a host of binders, spreadsheets, and emails to manage on top of their day-to-day work. However, eProcurement technology has made it much easier for teams to share information and collaborate virtually, saving time and making it possible to ensure alignment despite geographic distance and busy schedules.

#3 Compliance

Procurement teams are relied upon to guide stakeholders through a maze of federal, state, and local procurement laws, as well as school district policy. As if this weren’t enough, IT procurement often comes with additional compliance concerns surrounding cybersecurity and the privacy of student data.

Procurement teams can leverage resources such as their legal team, internal IT resources, or helpful tools like this edtech evaluation database to help navigate these policies and procedures. From there, it is valuable to operationalize compliance—for example, by creating templates that ensure all clauses are included or using an automated system to manage vendor submissions and collect Conflict of Interest forms. These steps help to ensure that transparency and fairness is built into the DNA of your procurement process.

Best value procurement, a competitive process that prioritizes best overall value rather than simply the lowest price, is on the rise in the public sector.

In fact, a study of over 6,600 RFP projects found that the lowest priced proposal won in only 10% of all projects. Conversely, the most expensive proposal won 2.9% of time. The majority of projects fell in the middle, finding a balance between price and technical or qualitative factors in order to determine the best overall value (rather than simply the lowest cost).

Healthcare decisions are particularly well-suited to the best value procurement model because they must always consider patient outcomes above the bottom line. Many RFPs include factors such as service quality, experience, or clinician preference in the evaluation.

Especially when it comes to procuring cutting-edge technology or innovative solutions, procurement teams are beginning to replace the traditional RFP (which provides a list of predetermined specifications) with a problem-focused approach, which presents the challenge to be solved and gives vendors flexibility to propose solutions. 

The challenges of evaluating best value through paper and Excel

Best value procurement and other innovative methods deliver better solutions at a better price, which is good news for healthcare organizations and the patients they serve.

However it only makes procurement’s job harder. They must involve more stakeholders and ensure well-balanced and clearly specified criteria, while controlling costs and maintaining compliance to rules and regulations — and for many teams, they are doing it all over email, Excel, and paper.

While digitization is well underway in frontline healthcare, it has lagged when it comes to the administrative functions of the organization, leaving much of the RFP process to be conducted offline. This results in high administrative demands on procurement teams, as well as a risk of errors or delays in the process. The sheer amount of time it takes to conduct manual data entry and manage evaluators by email means that many teams have limited capacity to take on strategic procurement projects.

Three ways eProcurement software helps teams conduct best value procurement

Bringing the bid and RFP evaluation process online eliminates mountains of paperwork from buyers’ desks, cutting the amount of time spent on manual projects by half.

Leading eProcurement platforms go beyond efficiency gains to provide workflows and tools that make it easier to manage best value evaluations of RFPs. Here’s how:

1. Easy stakeholder engagement.

RFP decisions often depend on the input of several individuals across the organization, including clinicians, facilities managers, administrators, and others.

eProcurement platforms provide one online location to engage evaluators and centralize communication.

For evaluators, it means that they can log into one platform to find, review, and score relevant proposal documents at their convenience.

For bid administrators, it means that their inboxes are free from lengthy email chains, and their to-do lists are free of manual tasks like scorecard creation, distribution, and tabulation. With clear visibility into evaluators’ scoring progress and automatic score tabulation, bid administrators can focus on facilitating best value decisions, rather than managing administrative tasks.

2. Evaluation tools for efficient review of vendor information.

Bid administrators’ time is best spent on the difficult task of understanding stakeholder needs and properly balancing scoring rubrics — not on manually copy-and-pasting scores or checking vendor submissions for completeness.

eProcurement software platforms allow procurement teams to set custom weighted criteria, collect structured vendor responses, and automatically collect and tabulate scores, saving administrative labour at each step.

Evaluation tools automatically format large amounts of information, attributes, and specifications side-by-side for ease of comparison and scoring, so decisions are made with all the necessary information at hand.

3. Robust support for compliance requirements.

In a 2016 survey across Council of Academic Hospitals of Ontario (CAHO) members, 76 percent of respondents reported policies, directives, and procurement regulations as “major hurdles” to adopting innovation within their companies.

eProcurement platforms can’t change the laws that procurement teams must adhere to, but they can support procurement teams’ efforts by providing customizable built-in controls throughout the process. For example, online Conflict of Interest form collection makes it easy to ensure evaluators’ impartiality before they are granted access to proposal documents. eProcurement platforms also provide centralized digital records of every step in the decision to protect the organization from legal challenge and make it easy to respond to vendor debriefs.

Procurement teams have an unprecedented opportunity to provide value to their organizations through leading practices such as best value procurement. Healthcare-focused eProcurement software makes it easier to manage the evaluation of healthcare bids and RFPs.  

Excel is used by approximately one in seven humans worldwide — including many utilities procurement teams, who rely on Excel for the evaluation of bids and RFPs.

It may be a familiar tool in the toolbox, but it was not built for the complexity and collaboration required of the bid and RFP evaluation process. In fact, trusting Excel with your utility’s high-impact, high-dollar sourcing decisions is an increasingly risky choice.  

Here are five ways that Excel puts your RFP evaluation process at risk:

1) Spreadsheets are error-prone

Studies show that 88% of audited spreadsheets contain errors, and when people are asked to review spreadsheets with known errors in them, they only catch those errors approximately 50% of the time.

Here’s what makes spreadsheets dangerously prone to errors:

• They’re deceptively simple. Many people have basic working knowledge of Excel, but when it comes to advanced formulas and pivot tables, it’s easy to become out of your depth without realizing it.
• They lack oversight. There’s no spellcheck to let you know when you’ve made a mistake, and no formal mechanisms for testing or validation.

When you’re managing huge amounts of supplier data in spreadsheets under tight timelines, it’s more a question of “when” rather than “if” a simple error occurs, with potentially serious consequences for your RFP decisions.

2) Spreadsheets are inefficient

Managing the RFP evaluation process through spreadsheets requires a significant amount of manual data entry. From inputting vendor information, to aggregating scores, these tedious tasks take up hours of staff time that could be put to more productive use.

3) Spreadsheets lack consistency and standardization

Every organization has its Excel whiz (you know who you are) — but for the rest of us, it can be difficult to make heads or tails of the unique spreadsheet configurations that have developed over time in procurement departments. With staff turnover and retirements,  it is difficult to ensure consistency and standardization in the process.

4) Spreadsheets limit collaboration and control

RFP decisions often include many stakeholders from Engineering to Finance.

However, spreadsheets weren’t built to be used by multiple people at once. As a result, it’s common to find yourself poring over multiple versions of the same spreadsheet, trying to determine which is the current one. The end result is yet more manual data entry to harmonize the various copies.

This is not just a hassle, but also a source of risk. Unlike a database, spreadsheets contain no version control or audit trails — leaving you with no record of who accessed a document and what information they changed.

5) Spreadsheets keep your data siloed

How many spreadsheets would you have to consult to determine the total spend and savings of your procurement department this year? When procurement data is siloed in spreadsheets and physical files, it takes a lot of manual effort to report on metrics. Many organizations just don’t have the bandwidth. This leaves them with incomplete visibility over their spend and missed opportunities for consolidation and cost savings.

Fortunately, procurement teams have another option: sourcing software is built to support the entire bid and RFP process online, allowing procurement teams to reduce manual work and evaluate bids and RFPs more efficiently.

Learn more about how sourcing software helps utilities’ procurement teams reduce risk and run faster bids and RFPs by signing up for a custom demo.

Sustainability is a hot topic for many public institutions, but the conversation is especially active in higher education, where students and faculty are at the front-lines of sustainable development research and practice.

In the Sustainability in Education report, one third of respondents reported that sustainability was a strategic priority for their institution, while nearly all institutions have a sustainability policy in place.

These policies and priorities can manifest in many different ways on campus: everything from curricular expansion in the field of sustainability, to community programming, to green-building initiatives.

Many administrators are also looking internally at the standard operating procedures of their departments, to examine where they could make changes to their own process to support their institution’s sustainability commitments.

What is Sustainable Procurement?

Sustainable procurement is the adoption and integration of ethical and environmental concerns into your procurement processes and decisions, while also ensuring that they meet the needs of your business.

Many higher education procurement teams are beginning to implement formal sustainable procurement initiatives. These can have a huge impact—after all, each procurement decision represents the opportunity for institutions to choose environmentally and socially preferable products or services for their campus.

Formal initiatives aside, procurement teams have an immediate opportunity to make the procurement process itself more sustainable by reducing the reams of paper that flow through procurement departments every year.

Procurement’s paper footprint

In an article for Inside Higher Ed, Eric Sickler wrote about a recent experience as a vendor submitting to an RFP for a major American university. He notes that despite the university’s stated sustainability commitment, the requirements for this RFP specified the submission of numerous identical paper copies, amounting to nearly 1,000 printed and bound pages.

The irony was not lost on Sickler, as he asked:

“Is your department — and the departments with which you routinely collaborate — really walking your sustainability talk?”

While Sickler’s experience deals with a particularly detailed RFP, the procurement process is notoriously paper-heavy. The State of the RFP, a benchmarking study of billions of dollars of public sector RFP decisions, shows that the average RFP submission is 132 pages in length. Considering that the average project receives five submissions, with copies for an average of four to five evaluators, a single RFP project requires a total of 2,970 pages of paper.

Bringing your bid and RFP process online eliminates the need for paper instantly, resulting in a more sustainable procurement process.

The environmental impact of a paper procurement process

Paper savings are not just about the number of trees being cut down! As this infographic shows, paper production also requires a significant amount of water and electricity resources. Consider also the CO2 emissions from the delivery and transportation of paper RFPs from your vendors’ office to your campus.

By implementing paperless procurement process, Bonfire clients have saved a total of 31 million sheets of paper, equal to:  

• 3,767 trees
• 1,695 MWH of energy (enough to power a desktop computer for 11,300 years)
• 13 million gallons of water
• 104.8 tons of CO2 emissions

Digitizing procurement: good for you, your campus, and the planet

Sustainability improvements are a good news story for your institution. However, the environmental benefits of digitizing the procurement process are merely icing on the cake when you consider the advantages to procurement teams:

• Significant efficiency gains, resulting 50%+ shorter RFP cycle times
• Streamlined communication with internal departments
• Clear visibility and reduced risk

Bringing your procurement process online is a win-win, allowing you to ensure alignment with your institution’s commitment to sustainability, while also improving the process for your team.

Read more about the impact of paper RFPs in The True Cost of your Paper RFP.

That’s the question explored by Bonfire CEO Corry Flatt in a recent feature on Future of Sourcing.  

It may sound farfetched to those outside of the procurement world. However, as Public Procurement Month comes to a close, there’s no better time to consider how procurement can be part of the solution to some of the biggest challenges facing the world.

Public procurement’s footprint

Still skeptical? Consider the following statistics:

• Global public procurement spend is estimated at $8.5 trillion USD annually
• 13 – 15% of gross domestic product (GDP) in OECD countries is spent through a procurement process

Contrast this with the World Economic Forum’s estimates for the expenditure required to tackle major global challenges:

• $116 billion to wipe out hunger,
• $26 billion to provide basic education to all children, and
• $8.5 billion to eradicate malaria.

Given the scale alone, it’s clear that public procurement, and its core principles of fairness, transparency, and best value, can have a major impact on the fabric of society. The ripple effect of responsible and ethical spending decisions extends beyond the direct end users, to the supplier community and wider society.
From increasing a community’s economic capacity through the involvement of minority-owned businesses, to promoting more sustainable industry by including environmental criteria in the purchasing decision, procurement teams can have a major impact on the world around them.

Challenges to overcome

However, there’s a clear gap between procurement’s potential impact and the status quo in most public organizations:

• Only 26% of public sector procurement leaders believe that their procurement function is highly effective, and that procurement is highly regarded internally and seen as a key business partner contributing significant strategic value
• Technology adoption is low, with only 39% of procurement leaders reporting that their digital strategy helps them deliver on objectives and improve enterprise value

The digital transformation that has brought exponential efficiency gains to many functions has been slow to materialize in procurement. In many cases, procurement is still seen as a back office function, with staff members’ time monopolized by administration and transactional work, leaving little time or energy for innovation and process improvement. After all, it’s hard to think about changing the world when you’re buried in paperwork.

How technology accelerates procurement’s impact

Adoption of technology is a key piece of the puzzle when it comes to procurement’s impact. As the pace of technological advancement accelerates, it is crucial for teams to begin the process of modernization in order to take advantage of game-changers such as blockchain and AI.

It begins with leaving behind paper and offline processes that are a drain on staff time and an obstacle to collaboration.

“By taking a first step toward digitizing the procurement process with something as simple as an e-sourcing platform, teams can eliminate many of those ailments while introducing collaboration, data insights, healthy competition among vendors, transparency and compliance,” notes Flatt. “The compounding effect of utilizing procurement software for smarter decision making has the ability to lead to material improvement and an overall better world for people.”  

Once digitization is underway, the data that was previously scattered in spreadsheets and filing cabinets becomes centralized and actionable. This unlocks the potential to apply artificial intelligence and blockchain to procurement for greater impact.

Olinga Taeed of Birmingham City University, a leading researcher on the applications of blockchain for social good, is enthusiastic about the role of procurement in enabling  values-driven purchasing. He writes:

 “My honest belief is that procurement will be the single largest instrument in the world to change the world – children will say they want to be a procurement officer because they will want to change the values of the world – what we buy, what we eat, what we sell, the values by which we transact. Blockchain and AI will change our processes dramatically.”

What is your organization doing to build towards this future?

Read the full article in Future of Sourcing.  

Fair and open competition is fundamental to public procurement. However, from a vendor’s perspective, public sector bids and RFPs can seem anything but open, thanks to the complex rules and cumbersome submission processes.  

The reality is that many organizations are inadvertently excluding vendors from their opportunities: not through any policy violation or compliance issues, but simply due to the difficulty and hassle of doing business with the organization.

There are many barriers for vendors in public procurement. It starts with the challenge of finding open opportunities in the first place and continues throughout the submission process: interpreting legalese-filled forms, spending hours by the photocopier collating copies, paying for costly shipping, and facing disqualification for postage delays or other wild cards. At the end of the day, many qualified suppliers decide that it’s simply not worth it.

Uncompetitive RFP projects on the rise

Unfortunately, research shows that this problem is worsening rather than improving. The State of the RFP Benchmarking Study, which looked at RFP processes in 190 organizations in North America, found that in 2017, 16% of projects received only one submission. This is a 3% increase from the previous year. Furthermore, 38% of projects received only two submissions, a 5% increase from previous years.

Other studies that included both bids and RFPs have reported even higher numbers, with one study showing that 25% of tenders received only one bid.

A lack of competition signals that your processes are not truly as open and transparent as they should be, but that’s not all — it also seriously impedes your ability to ensure best value.

The price of poor competition in your RFPs

Economists show that the number of bidders in a procurement influences the relative difference between expected price and award price, confirming what most procurement professional already know: more competition equals better prices.

In a typical fixed scope, price-only procurement, one additional bid can result in 3% cost savings. For a more open-ended type of project with defined outcomes but flexible scope, that can be much higher at 8% or more.

For public sector teams under pressure to maximize funding and reduce costs, accepting the status quo of two or three vendors per project is no longer feasible.

How eProcurement software helps improve RFP competitiveness

1. Reach more vendors.

To increase competition, you need to get your opportunities in front of more vendors. Newspaper advertisements and Excel-based vendor lists are a limited and outdated way of reaching vendors in today’s connected world. Clients using Bonfire eProcurement platform have reported a 5x increase in the size of their vendor database. Here’s why:

• Online advertisement and submission makes it easier for vendors all over the country to find and submit to opportunities, removing geographic limitations.
• Buyers can tap into a large pre-existing network of vendors who do work for hundreds of other public organizations.
• Buying teams can invite vendors by commodity code or location, notifying relevant vendors of your opportunities without any manual work.

2. Make it easy for vendors to participate.

Once vendors are aware of your opportunities, it’s up to procuring organizations to demystify the rules and regulations and remove barriers to participation, so vendors have every chance of succeeding.

Here’s how eProcurement software platforms help:

• One central location for vendors to find opportunities, register, and view all details and documents.
• In-platform Q&A and vendor communication so vendors can easily get answers to questions and stay abreast of all addenda or clarifications.
• Structured step-by-step submission to reduce error and ensure complete submissions.
• Online submission removes the cost and expense of printing and shipping, as well as risk of shipping errors, lost packages, etc.
• Instant confirmation of bid receipt, for peace of mind.

3. Visibility into your vendor community through up-to-date records.

Keeping up-to-date vendor lists is a constant struggle for procurement teams, made even more difficult when you’re doing it with paper forms or email and Excel. However, without clear visibility into your vendor community, it’s impossible to know where to invest vendor outreach or other growth initiatives.

eProcurement software provides:

• Easy online vendor registration with custom fields to collect and auto-expire vendor information.
• Visibility into vendor behaviour: how many vendors have viewed your opportunity, how many submit, what time they make their submission.   

Your ability to deliver best value to taxpayers depends on sufficient competition. See how Bonfire could help you get more vendors involved with your opportunities in a 20-minute demo webinar.