Original article published on Linkedin by Dustin Lanier, CPPO
“A purchasing agent is the focal point for the nexus between finance, business and legal and our relationships with our vendors. I don’t know how you can deliver on some of the expectations of councils to be able to manage that function, protect cost, execute a vendor supplier program and be good at managing our contracts without that focal point.”
I’m posting an interesting audio clip from the 2022 GFOA conference, where I was speaking about eProcurement.
In the Q and A period, I got a pair of unexpected questions from a large room of CFOs to the effect of “We eliminated purchasing, would this still work with no purchasing?” and "If we don’t have a procurement function, how would we build the case that we should?”
What was so interesting to me in getting these unexpected questions is that in procurement, we naturally spend a lot of time with other procurement professionals, so the question of “why have procurement” sometimes can be a bit of a startling one - as you will hear me from me in my off the cuff responses to these the two questions in the podcast.
What were my main points?
Procurement must be treated as a professional function
Excerpt from my answer: “Even if you don’t have a central procurement function, procurement has to be professionalized. That is how your money is spent and expressed, and if you have huge inconsistencies in people on their skill level on executing the work, then all it takes is one or two failures to bomb your procurement function back into the Stone Age.”
Procurement is its own Function
“Procurement may be under finance, but it’s not the same job. It is a function that is absolutely, positively a professional function"
Contract Management is not a Legal Function
“Contract management is not a legal function – it is a business function. We enter into contracts not to sue or win in court, we enter into contract to deliver an outcome. A contract manager is encouraging people along the way to fulfill their responsibilities. When contract management fails it becomes a legal function.”
Procurement is the Focal Point between Finance, Business, Legal and the Supplier Community
“If you don’t have [a procurement] function, then those pieces are falling into little pockets, but there is no central focal point for that activity.”
You Cannot Fulfill these Responsibilities at Quality without this Focal Point
“Even if you only have one [purchasing agent], you say “take all the small stuff, and get it under contract. Set up a p-card program, get us on some master contracts and get us protected and contracted for the small stuff. Then you help advise departments on the big stuff, about how to think about requirements, and how can they set up something that will create an environment where vendors will want to bid, and that we will be able to manage.”
“That’s where procurement fits in – it delivers system design against the money, to make sure departments are able to deliver their mission, and do it in a way that the vendor’s interests are aligned with the departments interests to execute the work of the City or County.”