Efficiencies of centre-led procurement*

By Rob Cook, Marketing Manager, TenderLink

The recent move towards council consolidations and amalgamations is largely aimed at increasing efficiency and reducing costs. It’s the same efficiency drivers which are forcing councils to consider additional internal and administrative streamlining.

For procurement operations, one approach that can substantially improve efficiency lies in separating strategic procurement decisions from the transactional activities in the so-called “centre-led” approach.

Not to be confused with the centralised model, where all procurement activities are conducted through a single, central unit or team, the centre-led approach is a more hub-and-spoke model, which sees a core procurement team focus on setting up the policies and infrastructure for procurement, while empowering those closer to the coalface to tackle the day-to-day purchasing activities themselves, thus allowing the act of purchasing to be conducted where and how it works best.

The centre-led approach ensures that organisations gain the benefits of high-level ‘head office’ procurement expertise while allowing for individual grassroots purchase decisions among the individual business units or branch offices.

While the centre-led approach is largely a structural concern, technology is also a key enabler in delivering efficiency dividends, helping at both the strategic and tactical levels. The adoption of an e-procurement approach can help standardise processes and reduce inefficiency while also ensuring transparency and probity. It allows the central team to ‘set the rules’ and provide the standardised tools for the whole organisation. At the same time, it empowers the tactical purchasers to make their decisions without having to worry too much about broader strategic direction. In short, they can focus on what they buy, rather than how they buy it.

Combining a centre-led procurement approach with the appropriate processes and technology allows councils to use their high-level procurement expertise strategically, while empowering the business units to make the purchases they require to fulfil their roles without the need for deep procurement understanding.
*Copy supplied by TenderLink