Outsourcing is a hot topic in the public sector with more and more areas like the NHS, police force and local councils all using external suppliers to improve their businesses. But with the significant cuts in central and local government funding, outsourcing strategies are coming under the spotlight.

The intense focus on cost cutting and becoming more agile over the last year and a half has forced procurement teams closer to most parts of the business than they ever have been. In addition, keeping positive relationships with suppliers has been a challenge for CPOs with limited access to cash flow due to economic uncertainty.

With this in mind, in order for the public sector to benefit and make outsourcing work effectively there are a few steps which need to be considered, such as planning, risk analysis and the biggest issue, overcoming funding barriers. Aligning an outsourcing strategy with the procurement team will no doubt solve these issues, but in turn, will almost certainly cause some friction as different perspectives and procedures clash. However, there are a few steps which can reduce these headaches on both sides of the table.

The Three-Step Approach

Re-thinking a procurement strategy to align better with supplier choice is always a disruptive process and many stakeholders outside the procurement function may question why this should happen and why they cannot choose their own suppliers. In this instance it is important to communicate how this new approach will provide greater control over suppliers and ultimately more negotiating power.

To make this change process easier and ultimately more successful, three key steps must be taken:

· The procurement department must always involve key stakeholders in the decision making process and discuss their objectives and expectations clearly before they begin to source suppliers. This will provide clarity around what is needed and ensure that the supply chain team is involved in the decision from day one

· Both parties must maintain good relationships with suppliers at all time, even when re-evaluating the supplier network. It’s critical to be open and honest as existing suppliers are likely to understand that refreshing deals can bring new energy to both sides of the equation

· All parties must clearly understand the selection matrix which procurement professionals use - whilst these may vary from organisation to organisation, there are usually standard measures and weightings which are used across all decision-making processes, so these should be considered at the outset

Once this is done, all stakeholders should hopefully realise that aligning procurement and outsourcing choices is for the greater good. Whilst both sides may need education on how the other works, there are many benefits to including procurement professionals in the decision making process, including improved business agility, better risk analysis and improved ‘financial bang for the buck’. By using an aligned model in this fashion, public sector organisations will be able to plan more effectively and overcome potential risks and problems associated with the ongoing funding barrier issues they face every day, as well as minimise the cultural friction.