Commercial Maturity: Themes 3 and 4 - Commissioning and Supplier Management
81% of organisations globally say that commercial awareness is needed to achieve main business outcomes. And, with 8/10 councils saying they would have to raise tax or cut services without their commercial activities, this is one of the most prominent and urgent topics in the public sector.
But for many organisations, it can be difficult to know where to start. Others may struggle to reconcile the idea of being commercial with the core purpose and values of public service. The Commercial Maturity Model from Human Engine sets out six key themes that we think organisations will find helpful when adopting a commercially minded approach to solving the complex problems of today’s world.
Strategy and Alignment
Most organisations describe their people as their biggest asset but, with public sector organisations spending up to 80% of their budgets with third parties, the commercially minded organisation will also recognise the value invested in its supply chain. The role of the public sector leader is changing. Organisations are delivering fewer things directly and more through their supply chain and with partners. This change creates a need for new skills and behaviours – from people management to contract management and from building relationships internally to collaborating with a wide range of organisations across a complex landscape.
Sound complicated? Well, it can be. Here are some tips from us to help simplify things:
Create a community. Clearly establish who in your organisation is involved by looking beyond job titles to the activities and processes people are undertaking. You may not find people called ‘commissioners’ in areas like HR, Transport or Waste – but you will find plenty of people who look at customer needs, develop strategies and work with suppliers to deliver services.
Be digital by design. Dusting off that specification from last time won’t work anymore. Your customers’ expectations have moved on and so has the market. There may be some services that will always require the human touch but when it comes to initial access, for pretty much anything you can think of, there’s an app for that.
If you’re worried about the digitally excluded, think about who specifically you mean – if it’s older people, then ONS data shows that the number who have never used the internet has decreased by 27 percentage points since 2011. And with Facebook turning 15 this year, there are generations of public service users coming up who’ve never known anything but online.
Define value broadly. There will no doubt be a need to make savings but don’t neglect the wider benefits that working in partnership with your supply chain can bring. Social value is more than just an Act of Parliament – creating it is the core purpose and responsibility of public bodies so treat it as intrinsic to your commissioning and procurement goals, not as an add-on.
Balance consistency with flexibility. An organisation-wide approach to managing suppliers won’t bed in if it doesn’t work for each area. This can be particularly tricky for organisations that commission a wide range of service from diverse markets. Focus on the key components of quality, costs, logistics, management and innovation as your consistent core and allow for local variation by departments.
Strike the right balance. The temptation is to leapfrog straight into building strategic relationships, bypassing a whole lot of good practice on the way. While it’s true that a healthy, productive relationship between buyer and supplier can make it a lot easier to resolve issues, don’t neglect the basics – including routinely collecting and analysing the data you need to identify those issues.
Don’t sweat the small stuff. Not all contracts are made equal – once you’ve defined value in its broadest sense, you can identify which contracts are delivering the most for you. Cultivate these relationships into partnerships and watch the benefits grow.
If you’re a public sector organisation on a journey of commercialisation and would like to learn more about how we can help you, get in touch via www.human-engine.co.uk
You might also be interested in our Commercial Academy courses aligned to this theme:
Project Management for Commissioning and Procurement https://www.human-engine.co.uk/events/project-management-for-commissioning-and-procurement
Specification Writing https://www.human-engine.co.uk/events/specification-writing
Establishing Effective Contract Management https://www.human-engine.co.uk/events/establishing-effective-contract-management
Embedding Social Value https://www.human-engine.co.uk/events/embedding-social-value