Public Procurement Professionalization and Capacity Building

A United States Perspective

Robert E. Gleasonrobert.gleason@maryland.gov

Objective

ProfessionalizeProcurement Programs

for Better Performance

ProfessionalizationTraining and Workforce Development

“Excellence is an art won by training and habituation.We do not act rightly because we have virtue orexcellence, but we rather have those because we haveacted rightly.

We are what we repeatedly do. Excellence, then, is notan act but a habit.”

Aristotle384-322 BC

Excellence

Procurement

What is a professional?

Building the Profession

• Specialized service, necessary to society• Performance based on codified body of specialized

standards of knowledge• General education followed by continued training in

the specialty area• Examination tests qualifications to enable practice• Code of ethical conduct and compliance framework • Secure career path• License or certification required to practice

Building Blocks of a Profession

1Education

2Licensing

4Society

3Standards

Compare and ContrastEngineering Medicine Legal Procurement

Education

Licensing

Standards

Society

Mission (Define in policy, ordinance, or governing code)

Achieve organizational strategic goals by developing

effective contracts with high-value suppliers to deliver

high-quality materials, supplies and services, efficiently,

timely, at reasonable cost, using fair, open competition

with impartial processes, policies, and procedures.

Why focus on people?• Loyal customer worth up to 10x the value of first purchase

• 70% of customer experience based on how they feel treated

• If happy getting issues resolved, then they’ll tell 4-6 people

• If unhappy, they’ll tell 9-15 people (13% tell over 20)

• For every unhappy customer experience, 26 remain silent

• Customers defect 4x more over service, rather than price

• For every one unresolved negative experience, you need 12 positive ones to make up for it

Our purpose is service. We must own it.

ROLE VALUE

LeadInfluence Business Strategy

Effectively harnesses supply power, market innovations, SRM, and joint side-by-side collaboration with business leadership, finance, others to meet strategic goals

Value Management

Assists reach GOALS, increase value from managing both “supply” (spend + suppliers), AND “demand” (reduce magnitude of spend)

ExceedValue Broker

CRM, money management, and influencing demand requirements and specifications

DemandManagement

Reduces unneeded demand activity, complexity, immediacy, variability

AchieveCost

Reducer

Cost modeling; supplier and market analysis, basic SRM, supply planning, project mgt and risk mgt.

SupplyManagement

Helps reduce TCO and/or avoid supply costs

Negotiation Purchase Cost Reduction Right price and quality

LagFirefighter

“Expeditor.” Trench-level, site-specific buyer, order taker. ”Tyranny of tiny tasks”

Supply Assurance Right stuff, right place, right timeIn

crea

sing

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pply

-sid

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deve

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Tactical

Operational

Strategic

Reactive

Dr. Robert Handfield. The Procurement Value Proposition

Faithful Servant (“Administrative”)

Gatekeeper(“Old School”)

Three-way Integration

Procurement / Supply Management Maturity Model

Building CapacityStrategies are “Keys to the Game”Alignment | SRM | Category Management | Technology | Talent

Grand Strategy

The means used to achieve long-term objectives.

Alignment• Procurement must be aligned to mission• Framework agreements aligned to goals• Resources aligned to strategic categories• Strategic sourcing aligned to spend categories• Collaboration across jurisdictional boundaries• Staff, spend categories and suppliers are

aligned to mission, goals, and objectives • Procurement plans aligned to supply and

demand to incorporate market innovation and leverage commercial efficiency

Category Management & xRM• Category management is broader than strategic sourcing

• Assess spend, major business needs, key supply categories

• Orient categories to focus on business leader needs

• Seek simplicity, efficiency, ease-of-use, eCommerceenablement

• Fair and ethical supplier practices inspire trust, trust enables supplier insights, innovation, and expertise

• Suppliers must consider you their customer of choice

Technology• Seek best tools possible: maximizes benefits for effective

stakeholder value, transactional efficiency, supplier enablement, and public transparency

• Train suppliers to understand and use eProcurement; use catalogs and processes to increase responsiveness

• Maximize widest possible use of all public bodies and buyers to leverage maximum benefits to all stakeholders

• Deliver transparency, accountability and business insight so trust permeates all public procurement activities

• It’s all about the data!

Talent• Recognize – Recruit – Develop – Reward – Retain

• Seek best professionals available; effective in each role

• Develop training and certification program: ethical guardians to produce innovative, high-performance contracts

• Develop capabilities for advanced market intel in all strategic demand and supply categories

• Develop and enable culture of leaders, driven by integrity & who strive towards competence and creativity

• Encourage leaders to innovate, drive change, and create high-value relationships to meet public goals and objectives

Traits and ValuesTraits

• Competent• Cooperative• Creative• Curious• Dedicated• Enthusiastic• Humorous• Imaginative• Innovative• Intelligent

Values (UPPCC Values/Principles)

• Courage• Dependable• Ethical (UPPCC Code of Ethics)

• Fair• Honest• Integrity• Loyal• Responsible• Service• Transparent

Integrity First, Service Before Self, and Excellence in All We Do

Competency ModelsVolcker Alliance | Public Spend Forum | NIGP | ISM

CIPS Global Standard

CIPS Global Standard

Volcker Alliance

Group Competency %

1 Contracting Process 82%

1 Policies & Regulations 62%

2 Negotiations 60%

2 Contract Management & Administration 50%

3 Supplier Engagement 33%

2 Problem Solving & Critical Thinking 32%

Group Competency %

3 Internal Customer Alignment & Expertise 29%

2 Business Acumen & Financial Analyses 27%

1 Program & Project Management 26%

2 Requirements Planning & Understanding 23%

3 Market Alignment & Expertise 19%

2 Risk Analysis & Management 14%

Volcker Alliance

Source: Public Procurement Workforce Competency Model

ISM Mastery Model

UPPCC Body of Knowledge - DomainsKnowledge | Tasks | Responsibilities

• Procurement Administration• Sourcing• Negotiation Process• Contract Administration• Supply Management• Strategic Procurement Planning

https://www.uppcc.org/certified/2013-Body-Knowledge

Professional AssociationsPathways to Innovation and Best Practices

Public Procurement

Private Procurement

International

….and more to come

Cooperative ContractingLeveraging Capacity

Area of

Operations

NASPO ValuePoint ModelParticipation is Key by….• Helping decide what and when to source• Contributing in drafting or reviewing RFP• Including your requirements in the RFP• Communicating in RFP your “intent” of use• Advertising the RFP to your own suppliers• Assist review and recommend award/s• Using a “Participating Addendum” to modify

awarded contracts with your requirements

“Piggy-backing” is not a true cooperative

Guiding Principles• Measurements – Performance or Results• It’s all about “them”• Link all procurement efforts to organizational strategy• Think “SaaS” for system solutions• Soft skills – relationship building essential• Influence behavior – make “necessary” easy• 20% of transactions are 80% of total (Nu € £ ¥ $ ₹)’s• 80% takes care of itself, then focus on the 20%• Focusing on business value actually obtains savings• Communicate, communicate, communicate…you cannot

over-communicate

Objective

ProfessionalizeProcurement Programs

for Better Performance

RecapReviewed….• Elements in building our profession• A sample procurement mission statement• Need for people-based procurement focus• A procurement maturity model• A procurement grand strategy• Various procurement competency models• A cooperative contracting model

Resources / References

• Volker Alliance: Key Competencies for Effective Public Procurement

• Public Spend Forum. Raj Sharma• Procurement Value Proposition.

Gerard Chick, Robert Handfield• NASPO ValuePoint. Voight Shealy• Vested. Kate Vitasek• Spend Matters. Pierre Mitchell

• IACCM. Tim Cummins• Art of Procurement. Philip Ideson• Buyer’s Meeting Point. Kelly

Barner• Procurement Insights. Jon Hansen• SIG. Bonnie Keith, Michele Coquis• CPO Rising. Andrew Bartolini• Hackett Group. Chris Sawchuk

Questions / Discussion

Robert E. Gleasonrobert.gleason@maryland.gov

001 +1 410-260-3910