The Chase for Efficiency Be Careful What You Wish For *

By Rob Cook, Marketing Manager, TenderLink

Over the past few years, we’ve noticed a real trend developing in the procurement space, with an increasing number of select/private notices being published through our system. And the numbers are telling.

Although last year our system was used to publish 5908 public procurement notices, a healthy increase of 10 per cent on 2014, the real step-change occurred in the select/private space, with our e-Procurement clients publishing 5331 such notices, representing a jump of 19 per cent on 2014.

So, while the public to select/private ratio is not quite yet one-to-one, it’s getting close. In fact, there’s an outside chance that select/private notices will outnumber public by the end of this year.
So what do we make of this?

There’s no doubt that the underlying driver behind this shift is the never-ending quest for efficiency. In the current cost-focused climate, efficiencies drive everything and it’s clear that organisations that don’t constantly chase it are doing themselves and their stakeholders a disservice.

Over recent years, we’ve seen this play out in various ways: a shift towards the widespread acceptance of online procurement toolsets, rising thresholds in procurement policies, an increased use of supplier panels, the rise of aggregators, and a gradual relaxation around the use of Request For Quotes (RFQs).

However, because our business is placed squarely between buyer and supplier, providing services to each, we are privileged to see things from both sides. From experience, we know that buyers and suppliers co-exist in a symbiotic relationship, with change on one side affecting the other. In a perfect world, efficiency gains should provide a net improvement across the whole system. It seems rather self-defeating if efficiency gains on one side come at the expense of inefficiency to the other.

So, while the smart money is on the current procurement trends delivering the desired efficiency gains to the buyer side, there is a chance that the very act of realising them has the potential to introduce a wider, longer-term risk into the procurement equation.

If more procurement activities are being removed from the public realm, with those remaining fragmented into the competing silos of various online procurement systems, not only will public supply opportunities become fewer, but suppliers will end up having to dig through ever more haystacks to find the needles they seek.

It’s a rather ironic turn that, over time, the strive for efficiencies in the procurement process has the potential to create less efficiency on the supplier side and, perhaps ultimately, more expensive procurement as suppliers adjust pricing to mitigate the inefficiencies they face.

Parallel to this is a potential debate we see emerging between ‘closed’ and ‘open’ online procurement systems, particularly within the public sector, where accessibility, transparency and supplier equity remain key considerations. In this data-driven, ‘content is king’ digital environment, content control can be abused, often to the detriment of those who actually pay for the service.

Having just signed on our 500th e-Procurement client, the majority of which are public sector entities, this is a central and ongoing discussion in our business. Our belief is that when our clients choose to go public, it’s our responsibility to ensure our system is as open as possible. For example, last week alone, 932 people connected to our e-Procurement network, having viewed publicly-listed procurement notices on our site. And anyone, at any time, can search our site to register on the vast majority of our clients’ e-Procurement portals to gain free visibility over the public procurement notices they publish. That’s what we call an open system.

Some might see this as an argument for a reversal of the trends we are currently witnessing. Not at all. The role of the e-Procurement provider is to help its clients achieve the outcomes they seek, not to tell them how to conduct their procurement. So it’s incumbent on providers such as us to continue to adapt to these trends in order to seamlessly span the growing digital divides and, where the preference remains public, to maintain an open system which preserves the balance in the buyer-supplier relationship.

*copy supplied by Tenderlink