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NIGP Consulting


Lessons Small Organizations Can Learn from Larger Agencies

Big cities have their share of problems, but they also have a larger financial base to work with. Smaller cities, on the other hand, also struggle to address their own issues, but they are forced to do so with limited funds. On a business level, even if an organization doesn’t have big-city funds, it can take big-city best practices and adapt them to meet their needs. Here are some things that small cities can do to “punch above their weight.”

Eradicate Waste. In an earlier blog post by BidSync, we quoted research that calculated the average cost of processing, storing and retrieving a single piece of paper and found that it costs $30.00 per page. This is the cost to process a page, not create it. Think about how many file cabinets there are in your office. Each five-drawer file cabinet holds approximately 12,000 pieces of paper. If you do the math, it means that it cost your agency $360,000 to manage the paper in that one cabinet. Paper, email, documents and spreadsheets are not an efficient way to manage the strategic activity of spending your allotted budget.

What Big Cities Do: Big cities use automated systems, like the e-procurement system that BidSync or BuysSpeed offers to manage costs and streamline processes.

Analyze Spend Data. According to a study from the Pew Charitable Trusts, data and analytics offer cities a critically important way to improve services and stretch budgets. Data analysis has moved from an annual, semi-annual or quarterly endeavor to an ongoing one. If you have streamlined your processes with an automated e-procurement system, analyzable data is easier to come by.  A previous blog post gives some great insights into which KPIs to track and analyze.

What Big Cities Do: The Pew study quoted Rick Cole, deputy mayor for budget and innovation in Los Angeles, who said, “It’s not the numbers, it’s what you do with the numbers.” Big cities use data to make adjustments to operations and improve performance. They use data to identify weaknesses and needs, so they can make strategic decisions.

Leverage Cooperative Purchasing. One of the biggest problems that smaller cities face is that they lack buying power. Smaller organizations can’t buy in quantities that give them the price breaks they need.

What Big Cities Do: If businesses don’t have the buying power, they combine forces with other agencies through cooperative purchasing or piggybacking. BidSync’s e-book on cooperative purchasing and piggybacking, Cooperative Agreements 101, gives readers the information needed to leverage the purchasing benefits of cooperative purchasing.

Being a small city or organization doesn’t mean you have to settle for less than a large organization. By making a few smart moves, you can eliminate waste, maximizing the value of every dollar spent.

Spend Under Management

In a recent article titled Spend Under Management – What does that even mean? The author questions the use of “Spend Under Management” as a metric in measuring a procurement organization’s performance due to the varying definitions of “Spend Under Management”. This is a valid question that is answered by the level of available procurement technology a procurement organization has to capture and analyze spend. Additionally, the definition is further impacted by the breadth of responsibility held by the procurement organization. As mentioned, in the article a procurement organization needs to define the definition of “Spend Under Management” for their use, communications, and relevancy. This focus is consistent with required key principles when developing all procurement performance metrics, as supported by the National Institute of Governmental Purchasing’s, Public Procurement Practices and Principles on Performance Metrics.

Spar X Conference

Today, March 12, 2015 during NIGP’s 1st SparX Conference, in Tampa, FL the innovative idea sharing was explosive- ranging from the use of Pcards on multi-million dollar construction contracts to the creation of purchasing mouse pads. The City of Fort St. Lucie, FL implemented the use of Pcards as their primary method of payment for major construction contracts several years ago. This innovate approach as allowed the City to realize hard dollar savings while also increasing the level of available competition.

A procurement “cheat sheet” mouse pad that quickly summarizes the procurement thresholds was created by Sound Transit, WA to provide internal clients a quick reference guide of the entity’s procurement requirements. It’s a rather simple, but extremely effective procurement communication tool to keep the procurement rules visible and close at hand while also combatting the notion of “out of sight – out of mind”.

Standalone eProcurement System Considerations

The topic of eProcurement within the public sector has been a discussion area for white-papers; such as NASPO, articles; such as Government Technology, and conferences; such as NIGP. This cross dialog is partially due to the level of investment, organizational dynamics, and the need for success. In many organizations, the Information Technology Division or the Finance Division takes the lead on the requirements and strategy for business applications, with the “inclusion” of procurement functionality. This focus when moving into an Enterprise Resource Planning (ERP) approach many times can cause unintended consequences for procurement operations. ERP deployments may hold a common database structure; however it is usually stratified from an accounting perspective rather than from a commodity or services perspective, which is needed for procurement spend analytics. Additionally, the issue of transparency and “open-use or access” can be more limited with ERP systems than seen with standalone eProcurement systems.

These differences may seem insignificant when moving forward. However, when procurement focuses on its key purpose to provide quality products and services at the lowest cost possible; procurement must ensure the organization acknowledges the level of functionality and data that must be available for success. Organizations that are focused on cost reduction and increased productivity must also acknowledge the key technology requirements of procurement for attainment of its objectives.

Data-Driven Decisions Mean Higher Productivity and Profits

In 2011, the MIT Center for Digital Government conducted a study on data-driven decision making. The initial findings from the research showed that companies with data-driven decision making environments had 4% higher productivity and 6% higher profits than other businesses did; supporting the relevancy and importance of data in decision making in the private sector. Shouldn’t this also be true in the public sector and in particular procurement?

In the public sector, there’s not a focus on higher profits, but there is certainly a focus on improved productivity, efficiency, and decreased costs. Governments are continually faced with budget shortfalls, reduction in staff resources, and aging infrastructures – Demanding the wise use of every dollar spent, and sound decision making. To ensure your procurement organization is making proper decisions to maximize each dollar a key element is the use of data, as evidenced by the MIT study. Data-driven decisions will position your organization closer to its goals of efficiency and cost effectiveness…and ultimately improved service delivery levels.

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