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Strategic Procurement and Outsourcing

Contents

Introduction.

Capabilities in Procurement

Future of capability in procurement

Procurement Cycle.

Stage 1. Planning and need identification.

Stage 2. Selection of procurement methods.

Stage 3. Framing the procurement strategy.

Stage 4. Implementation of the strategy.

Stage 5. Monitor and improve.

Types of future capabilities needed.

Strategic capabilities.

Human Resources capabilities.

Processes capabilities.

Technological capabilities.

Governance capabilities.

Organizational capabilities.

Conclusion.

References.

Introduction to Procurement and Supply Chain Management

Lysons & Farrington (2016) has established the procurement as the fundamental business process refers to the act of obtaining goods or services, typically for business or governmental purposes. Procurement in the simplest sense is a combination of a series of activities and processes that have an essential role in the organizational practice to acquire the quality of products and services from the optimum level of suppliers in optimum time frame and price.

In the recent trend of globalized businesses and workforce practice, utilization of strategic procurement capabilities has arrived as an important terminology in the facet of capacitated development of procurement processes that could nourish the organizations with the most optimum choice of procurement styles. Business procurement cycles usually acquire the sense of preparation, solicitation, processing, and whatnot in the different facets and distinct areas of work in the organization, henceforth making the strategic and capacitated utilization of procurement activities a vital task.

Procurement capabilities also serve as a major tool in the arena of strategic procurement. The involution of government capacitance to derive the capability in the procurement cycle have a great deal of importance and vitality. Therefore, the government bodies seek to demonstrate the use of different types of capabilities for future procurement progress (NSW Public Service Commission 2015).

The study proposed surrounds the concept of procurement and its enhanced capabilities in the frame of governmental or organizational conduct. In addition to this, the study also seeks to derive the concept of capabilities in the procurement areas and its future development. Not limited to this, but the study also determines the theoretical aspects of the capabilities and its types required or essential by the government for the future progress of the procurement cycle in the view of obstinance of a robust style of procurement benefited by the global business diversification and cross-functional practices.

Capabilities in Procurement

According to Bag et al. (2020), procurement capability denotes a skill set, ability, or the degree of consensus in the proper accomplishment of procurement tasks and activities. Procurement occurs as an elemental and unavoidable part of work or exercise in any organizational conduct whether private or public or the government itself, and hence the utilization of capabilities in the terms and approach of procurement for the sake of multilateral procurement service optimization in each corner of the practice becomes a necessary tool.

In the concern of government as the focused organization for procurement, utilizes and demands the multiple procurement teams in different zones of work that operate under a unilateral system as a core component of the government’s corporate strategy under the utilization of capabilities of procurement (Uyarra et al. 2020).

Procurement capability and operations in the facet of globalization of business practices and acceleration of cross-functional practices can lay beneficial offerings, few of which have been formulated below.

  • The capability procurement development benefits the government as these entities cannot solely create each resource for the nation and hence drives the need for effective capability in the procurement in order to allocate the required resources.
  • In order to cater to the national level public with the essential demands and needs of the distinct products and services and increase the expertise of the procurement force for consistency of public development (Uyarra et al. 2020).
  • Also, in the view of serving holistically, the areas of human resource, economy, efficiency, sustainability, and all other relevant trends of procurement by the government, the capability of procurement seem must.

Future of Capability in Procurement

According to Strohmer et al. (2020), in the age of rapid movement and expansion of the familiarity of the concepts like globalization, technological abruption, industrial revolutions, and cross-functional ease have catered as a big scope and perspective view to the future of procurement activities by the creation of a future-focused procurement model to meet and nurture the needs of the people and users. Capability in the procurement activity, aided and assisted by the technological elevations has inexplicably raised the ‘digital procurement’ service where a great upsurge of the use of digital services catalyzed by the enhanced and uplifted globally dimensional demands of the people have hyped the capability of procurement in the recent era and so for further.

Government and legislative entities that have, in order to cater to the efficient procurement details, seek to develop the continuously alarming procurement strategies in different phases and styles to develop their nations as the most lucrative in terms of fulfilled demands. The Chartered Institute of Purchasing & Supply of Australasia or CIPS (n.d.) has derived in its research, the six building blocks that occur as the types of capabilities that are vital to be imposed by the government in the future state of the procurement cycle, viz. strategy, governance, organizational interface, people, processes, and technology.

Procurement Cycle

As stated by Lysons & Farrington (2016) the cycle of procurement is a cyclical and iterative process that accounts for the key steps involved in the procurement of products and services. In order to serve and cater to the national public with the fulfilled demands of each essentiality, the procurement cycle for governments becomes significantly viable for satisfying the demands.

As demonstrated by Mena (2018), the five staged procurement cycle initiates with the planning which is the paramount act in the process followed by the other stages in view to carry out an effective procurement strategy for optimum allocation and acquisition of required resources.

Stage 1. Planning and Need Identification

The initial stage of planning of the procurement conduct by the governments where the intake of economy, efficiency, and all other relevant procurement ideas and factors must be identified (Khna 2018). Integrated by the attributes of types of procurement capabilities, the planning stage usually invokes to cater to the most feasible yet leveraging procurement conduct.

Stage 2. Selection of Procurement Methods

To understand the internal and external context and consistency of availability of products and services for effective procurement, a market situation analysis by the authorized entity, the governments, is expected to be taken into processes, on the follow up of which the most feasible method for procurement is to be selected. Public procurement usually arises as to the most complex style of procurement as it involves a list of entities and their cross-national procurement demands, the assessment of which requires the intake of efficient types of procurement strategies.

Stage 3. Framing the Procurement Strategy

Keeping in view the vision, mission, and goals of the government or concerned entities, along with the procurement model taken into consideration, the strategic identification of the holistic goals of the government is assessed for the effective knowledge of strategies to be utilized and framed in the manner (Mena 2018).

Stage 4. Implementation of The Strategy

Followed by the strategic procurement identification and also tracking of the efficient outsourcing methods necessitated, the implementation of the framed procurement cycle in the catalysis of procurement strategies and types is carried out in a timely, economic, and feasible way.

Stage 5. Monitor and Improve

Evaluation and monitoring of the procurement process have an elemental role because of obstinance of the fulfillment of the procured demands by the governments to derive the public need fulfillment and satisfaction (Mena 2018). In such a stage, a comprehensive check of the results is vital for acknowledgment of complete demand fulfillment and also for recognition of the areas of improvement in the process in regard to strategies, people, process, technology, and so on.

Types of Future Capabilities Needed

Strohmer et al. (2020) explained that in the current and the ongoing age of procurement, several factors have acted as fuel in the radical change in procurement markets. Procurement in each age and generation holds an enormous tendency of innovation than that of compared to the sales function. Also, governments seek to establish as a prominent entity in the procurement process for the satisfactory fulfillment of the public needs and demands regarding services and products.

In the process of public procurement aided by the use of an effective and iterative procurement cycle, the following types of future capabilities seem to be needful in the governmental or public context in the progress.

 Strategic Capabilities

Whilst turning into the need for procurement, the very initial plan for procurement cycle followed by the other processes, the institution of strategic capabilities of procurement as the future need for government procurement is elementary.

Uyarra et al. (2020) has revealed that the increased competitiveness in the global human sphere and increased cross-boundary procurement needs lays the strategic procurement capability as the future key for effectiveness. In the arena of public procurement, where the government seeks future trends of procurement capability, strategic type of procurement capability tunes into active player for the sake of following.

  • For optimum procurement of resources to derive an economic yet competitive position among the global facets.
  • Feasible risk assessment methodology aided by the use of strategic profiles of the future capability of procurement.
  • Increment of internal public future satisfaction levels in the arena of globalized competitiveness.

Human Resources Capabilities

Human resources have been identified as one of the prominent holders of the stake in any people-focused approach or system. The extent to which the government seeks the future capability of its procurement success is predominantly dependent on the procurement capability of efficient human resources.

Henceforth, as propounded by Treadwell (2017), for the sake of future capability of effective procurement in the comprehensive procurement cycle, the human resource focused type of capability of procurement by the government is paramount for the strategic and optimum maintenance of procurement standards. To thus innovate the human resource capability of the government for the future progression of the human resource capability of procurement, need the inheritance of the following.

  • Skillful development of human resources and people for a competitive edge.
  • Strategic management and innovative ideologies for future human resource development for effective procurement.
  • Involution of future readiness by application of innovative tools such as IT assisted HRM practices for robust development.

Processes Capabilities

In the zone of effective procurement capability, the processes incorporated in the field are the pillars to the degree of effectiveness assessed in the capability of procurement. In a contrasting manner, among the wide range of procurement processes available or present in the global range of procurement, utilization of the most effective and competitively constructive process is vital for the future need of capability in the procurement process.

According to Strohmer et al. (2020), for incorporating the futuristic capability of procurement, the process capability type of procurement is evident for the governments as it can assess the attainment of future goals in the sphere of globally competitive and compelling procurement capability development. Henceforth, the framing of the futuristic procurement process that can be the optimum and most feasible one, as needed by the governments for effective procurement, must be done promptly. Thus the public procurement strategy to serve the future need for procurement asks for the following intakes.

  • Composition of an effective and reasonable system or process of procurement that acts as the standard procurement format for the government in order to leverage the future need for optimum procurement process most economically and conveniently possible.
  • Derivation of operational tendency, as supported by Uyarra et al. (2020), in regards to the process capability development by intake of a standard process structure, keeping in view the precision level and correlativity level of procurement needs of the future.

Technological Capabilities

As stated by Rejeb et al. (2018), the procurement function has seen revolutionary changes with the amendment and advancement of technological functions and capabilities in the phase of procurement. The advent of the Fourth Industrial Revolution and integrated ICT systems at different stages of procurement have dynamically created robustness.

For the future progression of the procurement cycle for the government’s efficient procurement need fulfillment and hence effluent public procurement, the need for advanced and dynamically elevated type of technological procurement type by use of different practices as mentioned below can serve the governments and public to be technologically enabled in the field of the future trend of procurement progression.

  • Continuous improvement and dynamic adaptations of technological systems and applications such as aided by ICT (Information and Computer Technology) systems for the future procurement age.
  • Automation has also been one of the most gigantic technological functions that have aided many areas of functionality (Rejeb et al. 2018). Use of automation as a future advanced tool as the procurement capability can serve the public procurement need fulfillment phase most effectively as the automation seeks to derive as the most extended technological outburst.
  • Also, expanded by Rejeb et al. (2018), the internet as the other technological facilitation can also be considered as the fast-growing segment of technological upgradations along with the enhanced IoT application i.e. Internet of Things. The increased dependency on internet-based technology has been observed to lead future state-of-the-art internet renovations, such as RFID, GPS, and other applications that can create and cater to the future need of the procurement capability.

Governance Capabilities

Governance as one of the factors in the facet of procurement and follow up of procurement cycles acts as an essential tool or type of capability that has the tendency to ensure the public procurement with the strategic achievement of procurement functions. Governance capabilities have been, via the intake of formal procedures like governance structure, policies, procedures, etc., catering as the fundamentally associated type of procurement capability.

In the view of Dolla et al. (2020), the effective procurement capability and its future management, require the government entities to identify the scope of governance capability as it can assist the future adoption of procurement needs of capability by raising the bar for governance structure through the institution and admittance of unique and peculiar policies, few of which as derived below.

  • In the administration of future procurement cycle under the governance capability procurement type, for the future capability of the government to progress through the procurement cycle, the edition of governance capability and uniqueness by way of effective policies and structures such as intake of ongoing and improving corporate social responsibility in an advanced and extended way that can leverage the future perspectives is essential (Dolla et al. 2020).
  • In the likewise manner, the governance type of capability in the procurement cycle that also seeks the ethical and sustainable facets in the public or government procurement activity in the future needs for effective procurement is elemental.

Organizational Capabilities

In the general practice of the current modernized and technologically benefited public procurement has been seen to be utilizing the strategic organizational capabilities such as organizational USPs, key indicators of growth, and many such unique tools that embarked at the global level, the government’s or organization’s competitive positioning in the capability of procurement (Bag et al. 2018).

In the purpose to aid the future need for procurement by use of organizational type or level of capability in the future perspectives, requires an efficient grade of enforcement of agreements that can cater the uniqueness and propensity development for the government.

  • To enforce the organizational capability needed by the government in the future procurement phase, utilization of financial operational and organizational attributes such as placing of the service level agreements in addition to the future goals of the organization in alignment with the procurement cycle can cater as the government’s most feasible and optimum way of future procurement succession in parallel to the progressive procurement cycle at iterative level (Bag et al. 2018).
  • Under the portfolio of the organizational capability of procurement efficiency, innovation and innovative capability development by the government organization to create a future-ready sense in its cycle of procurement can act as the potential area of procurement capability that could advantage the entity with the global brand value and edge.
  • Stakeholders also demonstrate as the most solitary part of the organizational or government capability. The need for creating future-readiness towards an organizational type of capability in future procurement needs fulfillment by catalysis of the procurement cycle.

Overall, in the complete analysis and thorough investigation on the subject of capabilities in the procurement, the certain outlined capabilities and their subparts, in parallel to the efficient running of the iterative procurement cycle and need for public procurement, raises the bar for the future development of procurement capability most feasibly and strategically, thus making the government future-ready (Uyarra et al. 2020).

Conclusion on Procurement and Supply Chain Management

In the overall subject of study, procurement has been identified as the major concept and practice in the current global context of procurement management and capability for futuristic progression. Procurement defined as the fundamental combination of a series of activities and processes that caters a vital role in the organizational practice to acquire the quality of products and services demanded or essential in the need for consumption from the optimum level of suppliers in optimum service. Therefore, this makes the area of procurement a vital and ever going area of service as the need for fulfillment of demands at the global and cross-boundary level, especially in the current scenario of the global rise of technological and business facilitation that has eased the practice of obstinance of supplies essential.

The overall conduct of procurement as stated or highlighted in the study reflects the need for capability in procurement, and thus also the future need for capability in procurement areas by the governments in the operational frame. In the zeal of deriving the future capability in the areas of procurement to be utilized by the government for the fulfillment of needs and essentialities, the pillars of the capability of procurement, to name a few, people capability, process capability, technological capability, strategic capability, etc. in a futuristic way acts vital factors in the flow of progressive procurement cycle that determines the government’s need for involution of types capabilities of procurement that can significantly leverage the future keys of effective procurement capability in relation to effective use of the iterative cycle of procurement.

Thus, to conclude, the study finally reveals that capability acts as an important concept in the procurement vernacular these days and also has a great correlation in the future aspects of robust procurement management and capability.

References for Procurement and Supply Chain Management

Bag, S., Gupta, S., and Telukdarie, A. 2018. Exploring the relationship between unethical practices, buyer-supplier relationships, and green design for sustainability. International Journal of Sustainable Engineering11(2), pp.97-109. https://doi.org/10.1080/19397038.2017.1376723.

Bag, S., Wood, L.C., Mangla, S.K., and Luthra, S. 2020. Procurement 4.0 and its implications on business process performance in a circular economy. Resources, Conservation and Recycling152, pp.104502. https://doi.org/10.1016/j.resconrec.2019.104502.

CIPS. n.d. Six building blocks to bolster procurement capability. Chartered Institute of Purchasing & Supply. [Online] Available at: https://www.cips.org/Documents/Resources/White%20papers/Six%20Building%20Blocks%20to%20Bolster%20Procurement%20Capability.pdf. [Accessed on 27th October 2020].

Dolla, T., Devkar, G., and Laishram, B. 2020. Procurement governance and information asymmetry in waste management of India. Built Environment Project and Asset Management. https://doi.org/10.1108/BEPAM-12-2019-0143.

Khan, N. 2018. How it is done: Procurement cycle and procedures. Public Procurement Fundamentals, pp.29-61. https://doi.org/10.1108/978-1-78754-605-920181003.

Lysons, K., and Farrington, B. 2016. Procurement and supply chain management. Pearson.

Mena, C. 2018. 03 the procurement strategic cycle. Leading Procurement Strategy: Driving Value Through Supply Chain, 39-60. The USA.

NSW Public Service Commission. 2015. Procurement professional capability set. Capability Framework. [Online]. Available at: https://www.psc.nsw.gov.au/workforce-management/capability-framework/capability-framework-resources-index. [Accessed on 27th October 2020].

Rejeb, A., Sule, E., and Koegh, J. G. 2018. Exploring new technologies in procurement: Transport & Logistics: The International Journal, 18(45), pp.76-86.

Strohmer, M.F., Easton, S., Eisenhut, M., Epstein, E., Kromoser, R., Peterson, E.R., and Rizzon, E. 2020. The Future of Procurement. In Disruptive Procurement, pp. 19-48. Springer, Cham. https://doi.org/10.1007/978-3-030-38950-5_2.

Treadwell, R., 2017. Bringing health share NSW procurement into the 21st century. Management in Healthcare1(4), pp.312-323.

Uyarra, E., Zabala-Iturriagagoitia, J.M., Flanagan, K., and Magro, E. 2020. Public procurement, innovation, and industrial policy: Rationales, roles, capabilities, and implementation. Research Policy49(1), pp.103844. https://doi.org/10.1016/j.respol.2019.103844.

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