Strengthening procurement governance

Procurement needs to move beyond being seen as a transactional function, but one that plays a critical role in helping organisations to achieve their strategic goals and control risks, while creating long-term value. This means engaging with procurement professionals early and regularly, enabling them to provide strategic advice and input across broader organisational decisions.

This includes ensuring appropriate governance and oversight, with:

• Clear decision-making structures;
• Independent oversight from senior stakeholders to maintain accountability and strategic input;
• Linking of procurement decisions and outcomes to the overall strategy of the organisation to meet ESG requirements, diversity targets, or digital transformation goals. Focussing on value, not just cost;
• Continuous evaluation to enhance operational capacity while decreasing operational risks.

When organisations treat procurement as a strategic function and apply strong governance, they position themselves to make smarter decisions, reduce risk, and deliver lasting value across the business.

Early market engagement, including Market Sounding activities or Requests for Information (RFIs), provide opportunities for organisations to: 

• Validate project requirements to ensure they align with actual market offerings;
• Assess supplier and the markets capabilities and capacity to deliver on organisational needs;
• Explore new methodologies, approaches or solutions and consider emerging technologies; and
• Develop better informed and realistic procurement strategies, minimising the risk of misalignment between organisational needs and market capabilities.

These activities can be particularly beneficial for large or complex construction projects and IT/ICT procurements, where technology advances quickly and solutions options may differ widely. 

To ensure these processes are defensible and equitable, organisations should:

• Carefully manage engagement activities to avoid:
  • Creating unintended commitments;
  • Providing unfair competitive advantages to specific suppliers; and/or
  • Developing requirements that are overly tailored to suit one supplier.
• Implement safeguards, including:
  • Clear communication protocols to ensure consist messaging;
  • Documented processes to ensure transparency, accountability and stakeholder awareness;
  • Disclaimers that protect the integrity of the process on matters such as:
    • Non-commitment (no obligation to proceed);
    • Non-reliance (information is preliminary and subject to change);
    • Confidentiality (both of information shared and received);
    • Use information (discretion to use some or all, and how);
• Independent oversight to ensure fairness and equal treatment;
• Adequate record keeping of:
  • How suppliers/participants were selected;
  • Information shared and received throughout the process;
  • How feedback and insights gathered helped to inform the strategy, scope, and requirements; and
  • Any changes made as a result of market feedback.

Whether operating in the public or private sector, engaging broadly with the market can support organisations to achieve better procurement outcomes. 

In government, this is often mandated through open tendering or the use of established panels or registers. Private organisations can also benefit from adopting similar practices. By engaging more broadly with the market, organisations can achieve improved procurement outcomes, including:

• Access to a wider pool of suppliers, increasing competition and choice;
• Bringing diversity into the supply chain, tapping into fresh ideas and different perspectives;
• Unlocking innovation, especially when exposed to suppliers doing things differently;
• Building resilience across the supply chain, by not relying too heavily on a few suppliers;
• Aligning procurement with broader organisational goals, such as sustainability and social impact; and
• Achieving better value for money outcomes, by encouraging competitive pricing.

Strong procurement governance doesn’t stop once a contract is signed, it continues throughout the life of the contract. To do this well, organisations need skilled people, clear processes, and the right tools.. 

At its core, effective procurement governance relies on professionals who:

• Understand the complexities of risk management, market engagement, and contract oversight;
• Are familiar with regulatory requirements and know how to meet them; and
• Can confidently manage the full contract lifecycle, from negotiation and establishment to supplier performance monitoring and management.

Organisations can build procurement capability and confidence by:

• Investing in upskilling and training to build confidence and expertise;
• Establishing clear frameworks and policies that guide consistent decision-making;
• Developing templates, tools, and systems that make complex procurement tasks easier; and
• Providing dedicated procurement resources with support from subject matters experts and external advisors where required, to give confidence in decisions being made.