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Innovation in procurement: why and how

For governments to carry out their day-to-day functions, procurement — or their ability to purchase goods and services — is critical. It is both a service function and a strategic policy tool which can help achieve a broad range of social and economic welfare objectives. It cuts across all areas of public administration and builds on cooperation among multiple public and private stakeholders.

For procurement to be more effective, then, it needs to innovate. Promoting innovation in procurement means processes that are transparent and efficient, and that facilitate equal access and open competition. Innovative solutions to public service needs are instrumental to delivering better services with long-term value for money.

Governments, as the major purchasers in every market, can also drive innovation in the private sector by stimulating their response to current and future service needs, smart regulation, and demand for innovative solutions. They can influence various industries’ investments in new skills, equipment and research and development, which, in turn, support growth and competitiveness.  Many companies have already realigned their own procurement to put greater focus on aspects such as time to market and product success rather than traditional aspects like savings and contract compliance.

Based on the potential of innovation, the changes in the procurement function should be centered on providing solutions to complex problems through collaboration of independent, multiple actors who work together co-create solutions that will help ensure the most effective procurement performance for the best possible outcomes.

To accomplish innovation both in public and private sector procurement, it is necessary to understand that:

People and institutions have always been innovating. For those of us working on procurement — from international organizations, governments, private sector or civil society — we should all be agents of change, defining new ways of collaboration that allow us to unleash a true transformational way in which procurement can deliver results.