Overcoming the differences between private and public sector procurement

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Over the past few years many of my colleagues and I have been on a mission bolster the notion that mindset is the key issue that separates the laggards from the top performers in the purchasing field. And this is particularly evident when it comes to understanding why public procurement so often lags behind its private counterparts.

In a recent McKinsey Quarterly article; McKinsey on Government; the gaps in performance is significantly larger in the softer dimensions – mindset, talent management and aspirations – than in the areas most often promoted by purchasing solution vendors – tools, processes and strategy. While many research organizations often stop when they’ve realized their findings, McKinsey in this instance offers a rather pragmatic explanation of why public and private procurement professionals differ in these key areas:

Two important reasons [for these differences] are that, first, the members of the [public sector] purchasing staff are typically not on a career track as attractive as that of civil servants, which makes it difficult to attract and retain the best people. Second, a culture that rewards zero errors—for instance, one dedicated to “protecting the minister”—tends to favor preserving existing processes and mandates and offers limited incentives to aim for anything more ambitious.

Unfortunately, McKinsey leaves the subject of mindset and aspirations and returns to the more familiar hunting grounds of tools implementation and purchasing process streamlining; a track that is already being centrally driven in the EU through the PEPPOL initiative. And although better processes and widespread tools adoption surely will close some of the gaps between public and private sector procurement, these gaps will always remain if the softer dimensions mentioned above are not properly dealt with.

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One Response to “Overcoming the differences between private and public sector procurement”

  1. Alan Bender Says:

    I agree with these comments.
    If you look at adverts for public sector contract procurement posts the emphasis is invariably on experience of EU procurement legislation instead of on the much more important issues of commercial nous, negotiating skills, contract drafting and experience of commercial risk and risk mitigation.
    Anyone with reasonable education and intelligence can read EU procurement directives and UK regulations and follow the recipe. What is missing in many public sector organisations is hard-earned experience in tough business environments and the soft skills to deal with buyer/supplier relationships and life cycle negotiation.

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