Purchasing and supply: Procurement reforms, a distinction of process or outcome based unit

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This is a development from the previous article that highlighted the issue of the envisaged organisation of the reformed procurement unit.

By Nyasha Chizu

It highlighted that procurement could be ‘process’ or ‘outcome’ oriented or a balance of the two. This article shall then explore the distinction between a process-based and outcome-based procurement function.

A process-based approach is a clerical function. The procurement cadre is limited to processing user requisitions into procurement orders. The performance of the cadre is judged by merely assessing the turnaround time, the internal lead time of the organisation.

The other measure would be the evaluation of the process with respect to compliance with relevant laws. This will be achieved by providing a central oversight of the procurement unit.

The approach is rigid; it disregards specific needs of end users and leads to questionable results of the award process.

To the contrary, outcome-based approach is strategic. There is consideration of the business case in procurement activities in view of pertinent issues of economy and efficiency.

Value for money procurement is paramount and is achieved by building a professional procurement unit.

Professional procurement unit provides leverage to the procuring entity since it will be capable to delegate procurement responsibilities to professionals.

The subsequent procurement will be tailored to the needs of the end user ensuring that all acquisitions are the right product or service rather than acquisition of the wrong things the right way.

Process-based procurement leads to creation of central oversight body responsible for controlling the process.

There is less emphasis on procurement capacity building and the legal framework is in most cases regarded a disabler of procurement rather than an enabler.

The most prominent issues that delays are inevitable due to increased bureaucracy emanating from additional bodies and lines of responsibility and communication.

It is characterised by blurred responsibility where the procuring entity is limited to recommending procurement decisions versus the award of the contract.

This reduces efficiency due to issues emanating from timing, availability of overseers and the control mechanism.

The disconnection between the procuring entity and the oversight body is imminent and in the case of who is accountable for the procurement decision, the buck does not stop.

The major challenge is also on poor technical results on public projects. Poor quality, schedule and cost overruns are imminent due to the fact that the overseer lacks technical expertise in the various public procurement projects.

Further, there is lack of appreciation of procuring entity’s strategy that affect the procurement decision making process.

This brings another new element of inconstancies in the implementation of public projects because there is no mutual relationship between the procurement agent and the oversight body.

On the contrary, outcome-based procurement focuses on requirements of the procuring entity that will be empowered to achieve results.

This inexorably leads to reduced bureaucracy since responsibility and accountability of procurement decisions is with the procuring entity that will have been capacitated through a professional procurement unit.

Furthermore, improved efficiency is achieved since internal controls of the whole process will have coordinated planning and timing of procurement activities.

This results in optimum technical results since procurement will be aligned to user needs. End users are better placed to achieve it since they know what they need. Lastly, effective implementation is achieved when procurement is aligned with needs and focused on achievement of results.

Process-based procurement reform would suit a centralised procurement unit that does not promote professionalism when outcome-based procurement reform suits a decentralised procurement unit that promotes professionalism and capable of taking over accountability and responsibility of procurement decision making among other benefits.

•Nyasha Chizu is a Fellow of the Chartered Institute of Purchasing and Supply writing in his personal capacity. Feedback: nyashachizu@harleyreed.com; Skype: nyasha.chizu