What is digital procurement?
Digital procurement in the public sector involves the use of technology and digital tools to streamline and enhance the procurement processes within government organisations. Through using digital technologies such as electronic procurement platforms, e-procurement systems, online portals and automated workflows, digital procurement helps to improve the efficiency and transparency of the procurement cycle so demand can be met easier without delays or overspending.
Digital procurement in the public sector ensures compliance and quality standards are met consistently to provide the best support services possible to residents in your local community.
Through digitising traditional procurement methods, digital procurement allows staff to save significant amounts of time by allowing individuals to find all the information they need in one place instead of searching through mountains of paperwork and spreadsheets. Here the time saved allows your local authority to have more time to adapt services quickly as needs change.
Why is digital procurement important for the public sector?
Digital Procurement in health and social care is important for a variety of reasons. With demand for health and social care continuously rising and staff retention at an all-time low too, digital procurement is predominantly important to help local authorities meet all the care needs of the community so no one is left without the care and support they need.
Digital procurement is important in the public sector because it primarily addresses the challenges and limitations of traditional procurement methods. Currently many local authorities are faced with various challenges when it comes to commissioning and procuring the services their community needs. The dependency residents have on local authorities is continuing to rise rapidly so it is crucial local authorities can manage and meet the demand.
When these challenges are not overcome and the demand is not met, local authorities are at risk of commissioning services that do not meet the individual needs and risk lower quality services being delivered. Digital procurement in the public sector is important therefore as it helps offer the flexibility local authorities need to overcome the challenges of traditional procurement methods as well as be able to adapt services when needed so demands can be met without delays.
There are a variety of benefits of e-procurement in the public sector including:
- Time and Administrative Burden
- Supplier Management
- Transparency and Accountability
- Contract Management
- Compliance
- Time and Administrative Burden
Digital procurement is important because it helps to streamline the purchasing process by reducing the paperwork and reliance on manual processes. Instead e-procurement automates tasks helping local authorities have better use of their time,, resources, and budget to reduce the administrative burden. This then frees up time so more time can be spent on more critical and essential tasks.
1. Supplier Management
Digital procurement also helps local authorities with the challenge of managing suppliers by centralising all the information in one place so managing suppliers couldn’t be any easier.
Using digital procurement platforms allows local authorities to maintain a comprehensive database of their suppliers to track performance, monitor their compliance, and evaluate their supplier relationships. This ensures they are consistently delivering the servicesneeded.
This therefore helps establish a more successful co-production approach to procuring services by allowing local authorities to make better data-led decisions to ensure all support services delivered are right for each individual.
2. Transparency and Accountability
Digital procurement is also important as it improves the transparency and accountability local authorities can have over the procurement process.
Digital procurement platforms provide real-time visibility into procurement activities to enable stakeholders to be able to monitor the progress of procurement and track spending more efficiently.
This increased transparency throughout the procurement cycle therefore helps to prevent fraud, corruption, and favouritsm.
3. Contract Management
Digital procurement helps improve contract management by automating the creation, tracking and storage of contracts. This helps to facilitate better contract negotiation, reduce contract cycle times, as well as improve compliance.
Through using digital procurement therefore local authorities can ensure that all organisations have the right contracts in place to reduce legal and financial risks, but more importantly deliver better quality support services.
4. Compliance
Like already discussed digital procurement in the public sector is important as it helps improve compliance, but how?
Digital procurement systems help to ensure that the strict regulations and standards within different local government organsiations are followed and always delivered by providing in-built controls and automating processes which incorporate the regulations within the procurement workflow. This helps to improve compliance because it generates end-to-end audit trails for accountability and regulatory reporting so suppliers that are no longer compliant are quickly removed from your approved list, so no individual is put at risk.
It is clear the benefits of e procurement and digital procurement systems in the public sector are crucial to enable local authorities to organise better quality services at the best price, whilst maintaining all regulatory standards, being flexible to individual needs, and save time and resources when budgets are stretched.
Here digital procurement is important therefore, because it helps to overcome the challenges facing the market to ensure all individuals receive the high quality support they need when they need it.
How does digital procurement work?
For digital procurement to work successfully in the public sector there are usually 7 key steps in the procurement cycle which tend to be followed.
1. Identifying requirements
This first stage arguably could be one of the most important in the procurement process. Here the services and goods needed are identified.
2. Requisition and Approval
The next stage is creating an electronic requisition. This then specifies all the required items needed according to the needs of the community. Within the electronic requisitions information including the quantity of supplies and other relevant details are also included and then submitted for approval which will be dependent on the local authority’s workflows and capacity.
3. Supplier Selection
The third stage involves initiating the supplier selection process. This involves establishing a supplier database to allow all potential suppliers to upload their bids following the published proposal.
4. Evaluation and Supplier Management
Once bids have been submitted the next stage of digital procurement is evaluating the bids on numerous criteria. Often some digital procurement platforms will automatically assess and arrange the bids in order of most to least appropriate according to your criteria. This helps make the process even easier.
Examples of criteria could include:
- Price quality
- Quality of service
- Delivery timelines
- Compliance and regulations
Here digital procurement systems also help manage supplier relationships to track performance and maintain supplier information.
1. Purchasing and Contract Management
Once a supplier is selected a purchase order is created within the digital procurement system. Within the purchase order all the regulations, requirements, and terms and conditions are included and then it is automatically sent to the supplier.
Often some e-procurement systems at this point are able to track the status of the purchase order and stakeholders can be notified when a change or a next step happens.
2. Invoice Management
Once contracts are agreed the digital procurement platform will then verify receipts and completion of orders whether its mobility equipment or support in the home, arranging temporary accommodation, or even community transport. .
Here the system can generate the electronic receipts automatically to keep a record and proof of delivery which match invoices to purchase orders automatically so no supplier is left over or under paid.
3. Reporting
The final stage of digital procurement is the reporting. Digital procurement systems provide robust reporting and analytic capabilities where reports on procurement activities, spending patterns and supplier performance can be created.
These reports then help local authorities make data-driven decisions to improve and continue optimising their procurement strategies in the future to continuously improve outcomes.
What is e-tendering?
E-tendering is arguably a key part of digital procurement. Sometimes known as electronic tendering or online tendering, e-tendering refers to the process of conducting procurement activities via an online platform.
Within the public sector e-tendering is used to facilitate the bidding and the selection of suppliers for the provision of goods, services, or works needed across the local authority.
The e-tendering process takes place therefore once a request for proposal (RFP) has been published. At this point bidders can then submit the required information in response to the request by a specific deadline, ready to be analysed.
What is the difference between e procurement and ecommerce?
Both e procurement and e commerce have a lot of similarities when it comes to organsing, buying, and selling goods and supplies to address the needs in a local community. However, they do differ.
E procurement specifically involves the electronic management and automation of tasks to streamline and optimise procurement activities to help improve efficiency, save time, resources, and costs. Primarily e procurement in the public sector involves local authority stakeholders and suppliers. Here local authority stakeholders make streamlining their purchasing processes their primary aim to get the best outcomes.
E commerce in the public sector however, is a lot broader as it involves the buying and selling of businesses (B2B) consumers (B2C) and amongst consumers themselves (C2C). The aim of e commerce in the public sector therefore is to facilitate commercial transactions between buyers and sellers.
Often it involves a wider variety of participants including local authority stakeholders, providers, suppliers, manufacturers, distributors and end consumers.
Digital Procurement explained – What are the barriers when transitioning to digital procurement processes in the public sector?
Despite us discussing why e procurement is important for local authorities there can be some disadvantages to digital procurement you should be aware of if your local authority isn’t fully prepared for the switchover.
By being aware of the challenges your local authority can face you can be better prepared to either avoid them completely or know how to address them when they do arise. Some of these challenges include:
1. Limited digital infrastructure
One of the key challenges or things to be aware of when transitioning to digital procurement processes in the public sector is that you need a platform that can easily keep up-to-date with the increasing and ever changing demand.
Some local authorities may have a limited digital infrastructure and therefore will struggle with the demand. This puts individuals at risk of receiving unwanted or poorer quality support.
In order for a smooth digital transition all local authorities need address any IT infrastructure gaps so when investing in a new system the changeover can be seamless with minimal disruption.
2. Limited digital literacy
Another challenge your local authority may face is the different levels of digital skills and literacy all indnviduals involved in the procurement process may have.
This can massively limit how much quicker digital procurement processes can be compared to more traditional methods. This is because it may take significant amounts of time to find the information needed, onboard suppliers’ bids, and track the performance of suppliers.
It is important to be aware that training using a digital procurement system will take time for all involved, however once that training is given and all users are fully confident, the procuring and contract management of suppliers can be quicker and much more efficient with minimal mistakes, and less risk of data breaches.
3. Data Security
Due to digital procurement systems storing all the information of all bids, proposals, suppliers, and end-users all in one place, sophisticated data security is needed to prevent your data being at risk of breaches, and your local authority being at risk of hefty fines and reputational damage.
It is crucial therefore individuals using the system only have access to the data and information they need to minimise the risk of confidential data and information being shared with the wrong people.
Time also needs to be spent informing all parties involved the importance of data security and what can be done to protect all data and information from fraudsters and cyber-attacks.
4. High upfront cost
As we are all aware the budgets to procure goods and services in local authorities across the UK are very static despite the demand increasing more and more.
Local authorities need to be diligent with their budgets and fully evaluate the benefits of investing in new technology to identify if the return on investment is worth it.
In order to transition from more traditional methods to digital ones there may be high upfront investment cost as well as the potential to have to spend more to integrate the new system within existing processes.
It is crucial therefore before investing in any digital procurement solution your local authority can identify its return on investments and how it will help your local authority reach your goals within your local community as well as national goals too.
How to overcome the challenges facing digital procurement in the public sector?
Digitalising procurement processes can help local authorities improve the services they deliver in their local community by improving the quality of these services. This in turn, helps to improve your community’s wellbeing
It’s important to know and understand how to overcome the barriers your local authority can face when digitally transforming your procurement processes. Some of key areas to prioritise are:
- Data and Information Security
- Competition and managing suppliers and bidders
- Addressing specific requirements
- Improving relationships and sociability
1. Data and Information Security
Like discussed above one of the biggest challenges local authorities can face when digitally switching over to e procurement processes is ensuring all data and information is stored correctly and safely to prevent any risk of data breaches.
Digital cloud-based technology is accessible anywhere, at any time. Using e-procurement processes ensures parameters are put in place to ensure the correct people have the right level of access to make sure the system is completely secure.
E-procurement platforms can more easily connect, display, and report on the information needed. This allows different teams within a local authority to view or access the specific data they need when they need it more easily.
This can also ensure staff members get the most tailored training for them to ensure they know how to use the digital procurement system with full confidence to prevent the risk of any data or information being shared incorrectly.
2. Competition and managing suppliers and bidders
Another challenge local authorities can face when digitally transforming their procurement processes is knowing how best to manage the increase of suppliers and bids they receive and knowing which bidders are best for which individual need.
Investing in e-procurement platforms allows for easier reporting through a series of automated tools. This helps provide better visibility of the provider marketplace and individuals’ experiences. Departments can then easily spot trends in the data, allowing them to act quickly and plan for the future based on clear evidence.
Our commissioning solutions also helps your local authority understand which providers are performing best, where the majority of your expenses are being spent, and if an area or demographic needs more services.
For example, Milton Keynes City Council needed to optimise their home-to-school-transport service. Through using our Access Adam Transport solution, they were quickly able to identify that they had multiple routes covering the same location and journeys every day. They needed a route planning tool to make better usage out of their resources.
Our transport platform helped save staff time on manually planning their routes and enabled them to easily assign new routes to their fully compliant providers.
Through digitsing this process they also found they had increased competition and on average they now have 14.4 bids per route compared to 4.5 previously. They also saw their provider base increase from 17 to 32. These changes therefore led to a more consistent high-quality level service as our platform could automatically filter the bidders from best to worse to offer a greater access to education in their local community.
3. Addressing specific requirements
As well as local authorities having targets to improve community health and wellbeing they also have targets to reduce their carbon footprint. These requirements as well as individual care needs will always be mentioned one way or another in the RFP.
Local authorities are acutely aware of their environmental impact and the need to reduce their carbon footprint in line with the government’s net zero goals.
Investing in more sustainable technology, including e-procurement processes, and aligning their technology across different departments and areas can automatically reduce their carbon footprint. This is because the need to use multiple products to perform the same task will no longer be needed.
Leeds CCG for example found after implementing our end-to end solution across multiple departments and services their servers and electricity usage reduced.
By giving councils and Integrated Care Systems (ICSs) increased visibility of the marketplace, they can see which providers align with their goals and values for their local community more clearly.
For example a landlord that has properties with solar panels and other sustainable features can reduce the overall carbon footprint and offer a better environment for tenants. By commissioning a bidder who is more sustainable your local authority can encourage other landlords to do the same. This could lead to multiple landlords improving the quality and sustainability of their housing.
The data can also reveal differences within the local area and the specific communities that need further investment to enable future improvements to be made.
Investing in sustainable commissioning to make local councils greener therefore can be crucial to reach all your local community’s specific goals whilst improving your community’s health and wellbeing.
4. Improving relationships and sociability
Ultimately in order to get the best outcomes your local authority needs to have strong relationships with your suppliers. Without strong relationships like discussed previously you are at risk of poor communication, a lack of quality in services addressing both clinical and non-clinical needs, and essentially the risk of a waste of time, resources, and money by delivering or purchasing goods and services which your community does not need.
Through using a co-production approach services can be connected together more effectively to provide a stronger voice and opportunity for local authorities to work with multiple suppliers to meet their criteria and improve their local areas even further.
As providers are at the heart of the community and often converse with people on a daily basis, they have a wealth of knowledge and experience to share, with a unique insight into the thoughts, feelings, and needs of the local people. Our procurement technology therefore can offer a central point to communicate with providers, share information, gather feedback, and work together to improve outcomes further.
By strengthening these relationships providers can share their ideas and help to implement local initiatives to maximise positive outcomes, as well as offer further opportunities of integrations and innovation with 3rd parties to improve the continuity of services even more.
This then can prevent all individuals involved being confused at what is happening next in the procurement process as all expertise, knowledge, and training can be shared so no individual using the system is left unsure of what to do.
Summarising the benefits of e- procurement in the public sector
In this article I have reviewed what digital procurement is, and why it is important for local authorities as well as how it works and the key differences between e-procurement, e-tendering, and e-commerce.
The article has also reviewed the challenges local authorities can face if procurement processes are not switched over correctly and what can happen to the quality of their support services if that happens.
What is crucial to remember is that investing in digital procurement platforms and transitioning all your procurement process digitally can take time, and in order for your local community to get the best outcomes time does need to be spent teaching all parties involved how to use the system. That way the risks of data breaches, miscommunications, and confusion in how to use the platform, due to limited digital literacy, can be prevented to improve outcomes further.
Through explaining how to overcome the challenges local authorities can face when transitioning to digital procurement processes, I have showed how some of our customers have benefitted from using our Access Adam Care Commissioning solution and how we have been able to help local authorities procure services in health and care, as well as housing and transport.
To find out more about our brokerage solution and how we can help filter your bidders to best meet your proposal and improve the quality of services you deliver, discover more now.
Contact us and we can demonstrate how our commissioning solution can be bespoke to your local authority’s needs to help improve individual outcomes as well as improve your community’s wellbeing as a whole.