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Why public sector procurement is overdue for the ‘Amazon treatment’

Monday July 7th, 2014

Public sector procurement has been mired in a 1990s way of thinking for too long as the Government follows the traditional ‘Procurement 101’ rules of aggregating your spend, leveraging the market and consolidating your supply base.

This may work when buying products or for larger public service procurement but it simply doesn’t make sense when buying more personal services such as social care. We believe it is essential to buy individual services for the individual as everyone’s needs differ and a ‘one size fits all’ approach is simply untenable.

Would you want a massive impersonal company looking after your aged mother or father, or a carer from a local company who knows the area and people? Businesses of this kind have the time to stop for a quick chat rather than clocking in and out the door in 15 minutes flat – and, with more ties to the community, they are likely to be far more invested in the community they serve and are incentivised to do things cost-effectively and the right way.

Amazon’s technology has created an open market where Amazon competes with other suppliers it enrolls to its procurement platform. A buyer can see the prices for CDs, films, books and toys available through Amazon and through competing sellers. Though the challenges in public sector procurement may, on the surface, seem very different, creating new software geared towards ‘micro-procurement’ that will make care services more personalised and help governments avoid making drastic public sector cuts works in a very similar manner.

The marketplace approach means that smaller companies can get involved in public sector procurement. These SMEs are often nimbler, quicker and able to deliver specific services that meet precise needs in a way that bigger, national companies often can’t. This is turn means that pressed local authorities who need to make savings do so by buying better and more efficiently rather than by cutting essential services.

This sort of common sense procurement is best facilitated by the use of modern digital technology, up-to-date practices and the use of the web to engage a longer and more incentivised supply chain.

Technology is needed to open up the market because the reality is that it is impossible to liaise with over a hundred suppliers on every procurement transaction without some pretty heavyweight tech and those in the public sector who are commissioning social care will be better served by a system that allows them to focus on care rather than paperwork.

Julian Young, CEO, Matrix SCM

 

PASS (Procurement Advice & Support Service) runs relevant procurement training courses for the public and private sector: such as ‘Introduction to Public Procurement’ and ‘Understanding the new EU Procurement Directive’

To view the brand new Autumn Schedule of events, click HERE.

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