Value-based procurement in action: Service New Brunswick leads the way
Procurement has often gotten a bad rap as solely a cost-control or compliance function. However, the team at Service New Brunswick (SNB) proves that procurement can have a meaningful impact beyond the bottom line. The crown corporation, which provides direct public services for the New Brunswick government, is leading the field in implementing value-based procurement, with big benefits for government and citizens.
Value-based procurement refers to a procurement approach which prioritizes overall value over cost. It is becoming the new standard in healthcare procurement, supporting the attainment of better health outcomes—and signalling a departure from healthcare’s sometimes-stringent focus on cost reduction.
“We’re starting to have more conversations about value-based procurement, whereby the results are based on outcomes,” says Renée Laforest, vice president of SNB’s Finance and Strategic Procurement Division, speaking to Supply Chain Digital. “For example, when we purchase insulin pumps for diabetes clients, we’ll carefully look at the needs of our clients and ensure we meet their demands rather than automatically opting for the cheapest pump.”
This approach is representative of a wider shift towards best value procurement across the public sector. The Governing Institute’s 2019 State Procurement report found that all but one of 28 states surveyed rank best value above lowest price. Data from over 200 public sector organizations on the Bonfire platform echoes the finding: the 2018 State of the RFP report found that the lowest-priced proposal won in only 10% of all RFPs, down from 16% from 2016.
Collaboration = a prerequisite to value-based procurement
Implementing a value-based procurement approach is not just a matter of changing the wording on an RFP. It requires greater coordination and collaboration with stakeholders right from the start.
“We really consider our clients’ needs and requirements when procuring goods and services for them,“ notes Laforest. “It’s important that we have these in-depth conversations, particularly when it comes to services. If you’re buying a service you may have more complex needs and requirements, so this dialogue is critical.”
Gone are the days of procurement professionals working in isolation from end users. In a value-based procurement model, it’s crucial to include end-users in the decision-making to better understand usability and the desired outcomes of the product or service.
Less paperwork enables greater value-add
The traditional procurement process, with its heavy reliance on paper and Excel, would be prohibitive to the type of collaboration required by value-based procurement. That’s why many teams leverage sourcing technology to automate the administration of the RFP process, thereby freeing procurement staff to focus on facilitating close collaboration in the decision-making process.
Cloud-based eSourcing platforms also provides the advantage of one online location for stakeholders to come together to collaborate on the RFP evaluation. Service New Brunswick uses Bonfire Strategic Sourcing Platform to manage their RFP process.
“Vendors use it to submit their proposals, and we do all our evaluations within the tool. It’s all automated, and all our stakeholders have found it beneficial,” says Laforest.
Procurement ascends as a strategic partner
The SNB procurement team’s success proves that procurement teams can be a crucial partner in accomplishing their organization’s goals. Leveraging procurement technology in intelligent ways helps teams break out of the cycle of rushing requisitions out the door, giving them the capacity and visibility to work strategically.
Ultimately, this helps procurement shed the historic reputation as a penny-pincher and rule-enforcer, and instead become a partner in delivering outcomes.
As Laforest puts it, “I want to really add value for our clients so that they don’t see procurement as a roadblock but rather see it as a value-adding function.”
For more on how procurement technology helps teams grow their strategic impact, read the GovTech Guide Understanding Procurement Technology and How to Use It.