Case Study Overview: The client was a procurement organisation for local government and other entities, which supported procurement needs for Councils servicing 1.7 million people. The project engagement length was 1.5 months. Active Directions was referred by an accounting firm.
Project Trigger: From a competitive viewpoint, there were a number of other procurement aggregators who provided services supporting individual Council procurement needs. Our client decided to conduct a business and procurement functional review, with the aim of showing how a procurement organisation could continue to deliver value to Councils along a number of dimensions and act as a true strategic procurement business partner.
Key challenges to be addressed
Our diagnosis considered a number of perspectives to deliver a comprehensive review:
Procurement performance diagnostic: Firstly, we conducted a comprehensive performance diagnostic analysing organisation, process, people, technology and service. This presented a client’s eye view of the function’s actual versus envisioned performance. It enabled us to dissect the client needs from a number of perspectives (i.e. small council versus large, or metro versus suburban).
In-depth procurement analysis: Secondly, we assessed the individual Council needs for now and into the future from the perspective of each General Manager and their procurement heads. This produced a vast array of findings that were categorised and assessed; through this process common patterns were found and real needs identified.
Procurement and Local Government trends: Finally, backed by the needs analysis, we looked at how the function could best support councils into the future. We used international procurement experts to analyse these issues and recommend the best practice options. We also researched how local governments are delivering the next generation of services that support ‘smart city’ concepts.
Procurement Function Review Outcomes
The engagement set out three options:
- Develop a business partner model by connecting all their Council members, share thought leadership, and build relationships to deliver strategically important assets; or
- Implement a shared services model where an end to end procurement service is delivered; or
- Expand the shared services model into an extended procurement service targeting such items as payroll, audit, insurance and other non-strategic services.
So what was the real value?
The organisation’s General Manager had a body of evidence that clearly articulated how they could provide significant value in a procurement process for the future. It gave the organisation options to serve as the basis of an informed dialogue with the Board of Directors.
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