Last week, we read that Pittsburgh Mayor Bill Peduto issued an Executive Order to improve the budget controls and transparency of city funds by employing strategies provided by the National Institute of Governmental Purchasing (NIGP). It’s a great testimony to the caliber of the NIGP Consulting Program as well as other NIGP offerings. One key strategic product offering by NIGP is the NIGP Commodity/Services Code (Code), which consistently grows and provides real value.
In 2014, the NIGP Code grew in both new subscribers and in the creation of new master items. This trend has continued throughout 2015. In February, NIGP members and current NIGP Code License Holders embarked upon a comprehensive review and update of the NIGP Code. The project consisted of 52 public procurement professionals who analyzed all 9,138 active 5-digit codes. Their efforts realized the development of over 1100 comments for potential language/description adjustments, removal of outdated codes, movement of codes into different Classes or potential code consolidations.
And, let’s not forget that the NIGP code is updated monthly for the 3- and 5-digit versions, and daily for the 7- and 11-digit versions. Standard updates like this and comprehensive reviews like the one above are a few of the many reasons the Code continues to grow, fueling public procurement excellence.
The National Association of State Chief Administrators (NASCA) and the National Association of State Procurement Officials (NASPO) jointly released a report featuring case studies developed by Leadership for a Networked World on state government shared services and e-procurement - Pathways to Value: Shared Services and E-Procurement.
The report identifies the benefits of eProcurement including: “improving organizational efficiency through insights on contracts and costs, improving strategic sourcing and leveraging buying power, and improving transparency”. The most significant barriers identified included: “integration with other systems, preparing the organizational culture, and workforce training and preparation”.
Understanding these benefits assists in advocating the benefits of eProcurement solutions by procurement professionals and understanding the barriers assists procurement officials in assessing their organization’s potential barriers for development and deployment of sound strategies for ensured success.
A Moore Business article, dated March 27, 2009; titled Why is Market Research Useful? The Importance of Market Research “defines marketing as a process that is intended to find, satisfy and retain customers while business makes a profit. But central to all these definitions is the role of the customer and his relationship to the product (i.e. whether he considers the product or service to meet a need or want).” This business purpose and basis supports the requirement for market research as a key management tool for informed decision-making in a proactive approach.
In public procurement, the need for market research has a different driver than generation of a business profit. Although, the importance of the conduct of market research in the development of competitive procurements is just as critical. Without proper knowledge of the available competitive market or its supply chain delivery methods – How can the best sourcing approach be achieved for public procurement’s customers? Many times, customers believe that because “government” wants something the market can and should deliver – however, the cost of such an approach should be evaluated. It’s public procurement officers’ responsibility as stewards of the public funds to ensure achievement of the customer needs while balancing the available competition in the marketplace, which can only be achieved through quality market research.
Michael Thornton, Purchasing Manager from the City of Leesburg, VA, recently wrote about Innovation in Public Procurement at NIGP NSites.
Michael states that innovation is not a word usually paired with public procurement. He furthers discovers that as a procurement leader he has asked the key questions of: What do we do? Why do we do it? Is there a better way? In asking the questions, the desired outcome is to determine how as an organization we can “buy better to deliver better.”
This adage can speak volumes if answered and acted upon. Innovation directly supports purpose-based procurement and transformation.
In support of Michael’s insights, has your organization asked the question lately? If so, what was the answer and is a plan in place to address the innovation question?
The NIGP Commodity/Services Code continues to be the “go-to” answer for public procurement in the classification of suppliers, and procurement spend tracking. During the past few weeks, a broad spectrum of entities has licensed the 5-digit and 7-digit Code. A few of the licensee entities include:
· City of Augusta, GA for use with supplier management;
· Washington Suburban Sanitary Commission, MD for strategic sourcing analytics;
· Hennepin County, MN for supplier registration and to capture purchasing history;
· Bibb County School District, GA for supplier registration and purchase history; and
· Ascension Parish Government, LA.