Public Sector Procurement G7 PDF

TOPICS (PUBLIC SECTOR PROCUREMENT G7) Introduction & From Efficiency and Cost-Based Thinking Toward Value-Driven and Sustainability-Oriented Procurement Processes (pgs. 138-140) INTRODUCTION Society is currently facing several challenges, like inclusive and secure societies,food security, sustain...

TOPICS (PUBLIC SECTOR PROCUREMENT G7) Introduction & From Efficiency and Cost-Based Thinking Toward Value-Driven and Sustainability-Oriented Procurement Processes (pgs. 138-140) INTRODUCTION Society is currently facing several challenges, like inclusive and secure societies,food security, sustainable energy supply, and a more circular economy. Although at its core, public procurement is about fulfilling a demand or need of a public organization for a specific work, supply, or service by buying from the market. Hence, public procurement can and should be used as a policy tool to drive innovation and contribute to the achievement of societal goals such as sustainable cities and communities, reduced inequalities, responsible consumption, and production, or increased good health and well-being of people. Trends and Developments in Public Procurement We identify the following main trends and developments in public procurement: From effciency and cost-based thinking toward value-driven and sustainability oriented procurement processes. From administrative procurement decisions toward digitalized and smart decision-making. From procurement as a front-end practical purchasing instrument to a strategic life cycle engagement process. From procuring formal dyadic supply chain relations to public procurement that facilitates relational ecosystems. From Efficiency and Cost-Based Thinking Toward Value-Driven and Sustainability-Oriented Procurement Processes The function of public procurement is evolving from an operational management function focused on fulfilling a need in a cost efficient way to a policy instrument that can be used for collaborative value creation in society. For such transitions to continue and expand, careful attention must be paid to various conditions that may drive or enable organizations to increasingly opt for a more socially and environmentally sustainable solution. Such conditions include government regulations and subsidy schemes, organization and purchasing strategy, human resource management, functional and individual processes, procedures, and incentive schemes. From Administrative Procurement Decisions Toward Digitalized and Smart Decision-Making (pgs. 141-142) Digital technology is expected to significantly alter public procurement on an individual, organizational, and societal level.  It is already occurring in the procurement process, with electronic invoicing systems, automated contract renewal, and smart data gathering. This shift allows for more time for public officers to invest in strategic activities and increase stability in buyer-supplier relations. Digitalization also affects the power balance in buyer-supplier relationships, as access to data can increase information asymmetry. The implementation of digital technologies requires consideration of data ownership, data sharing, and data-driven intellectual property and security aspects. Digital technologies are also expected to impact the measurability of performance outcomes, impacting contract management. Open public procurement data will improve transparency about public spending, increase competition, reduce collusion and corruption, and create more possibilities for research and sharing best practices. On the other hand, and especially when not organized efficiently, it will also create administrative costs and raise confidentially issues in some cases (Schotanus, 2022). However, more developed countries are more reluctant to make procurement data open due to lack of awareness and confidence in addressing commercially sensitive information. From Front-End Practical Purchasing Instrument to Strategic Life Cycle Engagement (pgs. 142-143) From Front-End Practical Purchasing Instrument to Strategic Life Cycle Engagement Traditional role of Procurement Public procurement used to be an operational function, supported by practical tooling to fulfll a specifc need of the organization. This need for a supply, service, or public work primarily initiates the procurement process. Make-or-Buy Decision Rather than simply replacing or procuring new items, consider alternatives such as: Buying as a service Sharing resources Extending product life Reuse and sustainable options Redefining Requirements Align procurement with circular, inclusive, and sustainable economies, focusing on life cycle impacts and societal contributions. Life Cycle Perspective Goes beyond delivery to ensuring public value and meeting policy goals, requiring collaboration and sometimes stricter compliance measures. From Procuring Formal Dyadic Supply Chain Relations to Facilitating Relational Ecosystems (pgs. 143-144) Current procurement systems are often focused on single dyadic relationships: a particular buyer that agrees with a specific supplier on the delivery of a certain work, supply, or service under specific conditions Ecosystems refer to the collaborative arrangements through which interconnected and interdependent public and private network actors combine their individual offerings in a coherent solution focused on value creation (Adner, 2017). Since ecosystems are network based rather than dyadic, they often avoid the need to enter into tailor-made contractual agreements with each individual partner. Collaboration in networks and systems can replace traditional procurement and tendering because performance should not only be determined by a buying organization, but also by the end users in close cooperation with the government. The role of the public buyer would also change structurally when moving toward collaboration in ecosystems. This requires knowledge of business models to understand the motives of the parties and to be able to arrive at balanced commitments. 8.3 Implications for Public Procurement Practice in a New Era The trend toward more value-driven, smart, life cycle-oriented, and relational procurement processes will have implications for the public procurement practices of the future. More flexible and adaptive ways of governing the relationship between buyer and supplier. Integration of public procurement values in all parts of the public organization. A need for public procurers with different capabilities and competences. Rebalancing the multiple perspectives on public procurement. Flexible and Adaptive Ways of Governing Relations Between Buyer and Supplier & Integration of Public Procurement Values in the Organization (pgs. 144-146) Procurement Procurement can be defined as the process of acquiring goods, and services from a third-party vendor through direct purchasing, competitive bidding, or tendering process while ensuring timely delivery of the items with the right quality and quantity. Purchasing Purchasing process means the acquisition or direct buying of goods, commodities, and services. It involves activities such as ordering, conducting purchase orders, receiving delivery, and payments. Formal Contract Management and Social Contract Management  is more effective than only managing a legal contract with formal incentives and sanctions, we expect to see an increase in relational governance mechanisms. Relational Governance is based on the idea that interorganizational exchanges are embedded in social relationships with interdependencies between J. Grandia and L. Volker partners, it is much better equipped to deal with uncertainty, innovation, conflict resolution, and complexity. Changing Capabilities and Competences of Procurement Professionals (pgs. 146-147) Digitalization, relational contracting, and sustainable procurement require changes in organizational routines and behavior. These changes demand new practices and competencies from procurement professionals. Smart procurement introduces the need for skills in information sharing, while older operational capabilities become less central. The profession remains fragmented within organizations, with many professionals failing to recognize procurement’s internal and external impact. This transformation demands either behavioral adaptation or new hires with the necessary competencies. Rebalancing the Multiple Perspectives on Public Procurement Public procurement has traditionally been driven by financial and legal perspectives, focusing on lowest price and contractual governance. The legal focus should shift from a restrictive "cannot" approach to a "can do" mentality, prioritizing public value over simply the safest legal option. Price will remain a factor, but the goal should be maximizing value for money through a life cycle view on quality. Political decision-making, driven by democratic values and election cycles, has shaped procurement policies and budgets. Less politically-driven governance is needed, focusing on long-term partnerships, human well-being, and value co-creation rather than short-term economic gains. Conclusion: Become a Change Agent (pgs. 147-148) Change Agents in Public Procurement: Anyone in an organization can take responsibility for driving change by initiating, motivating, advising, solving problems, educating, and creating public value. Small Initiatives Leading to Major Change: Small actions, like asking questions or making gradual improvements, can lead to significant changes in public procurement systems. Implications for Public Procurement: Public procurement faces challenges, such as adopting flexible governance, integrating procurement values, developing new skills, and shifting from a price focus to long-term value. The Role of Public Procurement in Societal Challenges: Procurement must address societal issues by moving from short-term decisions to long-term partnerships focused on well-being and value co-creation.