Increased investment in procurement staff needed

Procurement Perspectives | Stephen Bauld
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I came across a recent press release from the Canadian Supply Chain Sector Council’s HR (human resources) Study which identified the major current HR issues for employers, in their sector, as recruitment, lack of leadership skills, succession planning and the retirement of experienced employees.

The full interim report is available on the Council’s website, at www.supplychaincanada.org. The final report is due out in late March 2012. The report’s results are based on 3,244 surveys of employers, employees and education providers, 11 focus groups and 16 key-informant interviews.

Despite the problems that arise from time to time, the purchasing staff at most municipalities go about their work on a day-to-day basis, in an honest and conscientious manner.

Most municipal council’s sincerely attempt to create a governance formula which provides assurance that they will do so. Sadly, the extent of the problems that arise in municipal procurement indicate some considerable disparity between the promise and the delivery.

Stephen Bauld, government procurement, president and CEO of Purchasing Consultants International Inc and co-author of the Municipal Procurement Handbook, published by LexisNexis Canada

Procurement Perspectives

Stephen Bauld

Municipalities need to invest heavily in developing their purchasing staff, to ensure they are equipped with the requisite commercial skills appropriate to their responsibilities.

Looking at it from another viewpoint, it is interesting to compare the trend in private sector procurement to the corresponding development (or lack of it) in the public sector.

According to a March 2007 Report by CAPS Research, corporations across industries ranging from aerospace and defence to utilities, report that they are hiring more purchasing employees, paying those employees higher salaries, and spending more on training, according to a previously released benchmarking study.

There has also been an upward trend in the number of purchasing dedicated employees as a per cent of company employees.

That reported benchmark increased from 1.22 per cent in 2004 to 1.45 per cent in 2005 and 2.72 per cent in 2006, showing the upward trend for the need for qualified procurement departments.

Tight budgeting and the consequent comparative underinvestment in training in the public sector, relative to private, coupled with the growth in municipal responsibilities, has created a skills gap in the municipal sector. Small purchasing departments result in staff being spread across different areas of responsibility, further undermine the procurement effort.

To carry out the procurement function properly, it is not sufficient to provide a clear chain of accountability. Most municipalities have by-laws, policies and procedures that dwarf anything in the private sector.

It is equally necessary, in order to give effect to those by-laws, policies and procedures, to have an appropriately resourced procurement system which has the capacity to carry out the core responsibilities assigned to it, and to develop, improve, deliver and manage performance at all levels.

A lack of resources has led to a situation in which purchasing controls and accountability procedures look strong on paper but break down in practice because there are insufficient people around to do the task.

The consequence: a superficial commitment to a rules-based system of procurement. Municipalities have opted for a managerial structure, which effectively means that those defending adherence to the rules are not even present when critical decisions are made to override them.

Both private and public procurement professionals need more authority over the process.

Stephen Bauld is a member of the Daily Commercial News editorial advisory board. He can be reached at stephenbauld@bell.blackberry.net.