Aligning Procurement with business strategy – part 2: why central procurement may struggle in Whitehall

We talked yesterday about strategic alignment between procurement and the wider organisation.  These principles are applicable to any organisation; but let's look at two major initiatives in current UK Government procurement as case studies.

Firstly, the idea that has been proposed to 'merge' three London councils (Westminster, Kensington and Hammersmith) in operational terms.  Now, if that is going to apply across all management and delivery aspects of the councils, then the new single procurement team will presumably be working within a single management structure; with one set of stakeholders in each of the key spend areas; social care, roads, IT and so on.

While it may be painful for some current staff, as the new procurement function will have fewer people than the three individual functions, procurement should be fully aligned with the overall organisation.  Indeed, it will have a critical role to play in driving out the savings that will be expected from the greater spend volumes; whilst also needing to be sensitive to 'local needs' across the whole expanded area.  (I suspect it will be the politics and public reaction to this concept that will be the challenge, rather than internal management issues).

But the proposal to centralise procurement for UK central government departments appears at the moment quite different.  I have heard nothing about HR across Whitehall being centralised; or a single management structure with far fewer Permanent Secretaries (now there's an idea).  So if procurement is the only function trying to do this, it risks running counter to the whole traditional Whitehall model - hundreds of years in the making - and will be the pioneering function in terms of a new way of working.  So when a Perm Sec or Cheif Executive can't get the IT they want or need, because central procurement haven't approved it...what will happen?

I'm not saying this is impossible, and I see a lot of merit in what ERG, John Collington and co are trying to do.  But I am concerned that if procurement is the only area to push up against the underlying 'business strategy', a mis-alignment  is almost inevitable.  We could see a lot of time and money spent in new structures and processes, only for the system to spit it all out after a couple of years - just like my friend I mentioned yesterday in his large corporate CPO role!

So to be positive, what can ERG do to try and minimise the chances of this happening?  We'll come back to that at a later date...

Voices (2)

  1. Peter Smith:

    Philip
    I hope you’re right – I would just worry if procurement is the ONLY area going through the process of “integrating and consolidating” as you accurately put it. If we see similar things happening in other areas; IT, back office etc – then that will actually I think make it easier for procurement to succeed.

  2. Philip Orumwense:

    Where Procurement leads others tends to follow, not so long ago OGDs worked with the then OGC to develop the reward strategy, redefined roles and responsibilities of all procurement operatives across the public sector, collaborative procurement groups were set up, collectively and along with OGC with the Cabinet Office in tow the Government Procurement Strategy development was developed to provide the basis for a level of consolidation and aggregation.

    Now all of these initiatives have borne some fruit directly or indirectly. What’s yet to be understood is the shape, scope and accountability structure within the proposed centralisation of central government procurement. Departmental delivery responsibilities have to be reconciled back to the ownership of the delivery of supply chain solutions and commercial management. With the current consensual and collegiate way of working amongst those charged with both responsibilities (i.e. Senior Government Officials – elected and civil servants and procurement practitioners).

    The task of integrating and consolidating procurement in whitehall doesn’t seem so daunting after all. As they say when there is a will there is always a way.

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