Why innovation in public procurement should be top of decision makers’ to-do lists

Posted On: 11th April 2017

innovation in public procurement

Whether you’re a buyer, supplier or decision maker, the goal of public procurement is the same – to deliver high quality public services at good value for money.

In order to meet this goal as efficiently as possible, there must be a willingness to embrace innovation in public procurement wherever it is needed; whether it’s the hospital that needs a sustainable redesign, the school that could do with new tables and chairs or an NHS trust which needs a complete overhaul of its antiquated digital processes.

A study of procurement professionals’ attitudes to innovation by Wax Digital found that 80% of those who work in procurement identified innovation as being very important or of utmost importance to their roles going forward. However, there are too few examples of public organisations solving their procurement problems in a genuinely innovative way at a time when making public procurement more innovative should be at the top of decision makers’ to-do lists.

Innovation was one of the central themes at last week’s DPRTE event with Nick Elliott, Director General Commercial at Defence Equipment and Support, delivering the event’s keynote speech which emphasised the importance of finding innovative solutions in defence procurement. Mr Elliott encouraged both buyers and suppliers to “embrace disruption; build innovation into your organisation’s DNA” and we think these principles can just as easily apply to public procurement.

In 2015, the Organisation for Economic Co-operation and Development (OECD) published a major piece of research entitled Public Procurement For Innovation: Good Practices and Strategies. The study found that governments around the world are realising the importance of innovation in procurement, and are implementing policies to bring the two closer together.

Almost 80% of the countries which responded to the survey have taken measures to support innovation in procurement, and 50% already have a dedicated, government-led action plan to assist in their efforts. In the UK, this is Innovate UK.

These initiatives  which have been launched by governments around the world have led to innovation in public procurement, including:

  • The use of LED light bulbs in public lighting, resulting in more energy savings
  • Innovative solutions for traffic management, such as mobile traffic management systems for roadworks and major incidents to reduce congestion
  • Bringing technology to senior citizens with the Smart house platform for senior housing residence

However, although these good practice cases and research shows that implementing innovative procurement practices improves effectiveness, efficiency and user satisfaction in organisations, there is still the perception that it is risky; bodies in charge of procurement are generally averse to risk, and buyers would rather stick with what they know than deviate from the norm.

Indeed, research shows that innovation in procurement is associated with higher risk simply because organisations lack the resources and skills to mitigate risk successfully rather than because innovative procurement is actually riskier, and it’s often the case that organisational cultures have a bias towards traditional methods.

However, we think you should heed the advice of Mr Elliott by embracing disruption and building it into your organisation’s DNA.

Regardless of where you fall in the procurement supply chain, innovation should be top of your to-do list.

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