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Transparent Procurement…the Pros

Benefits of Transparent Procurement

Transparent is something you may use to describe an object or material that can be seen through. In business, transparency is something that has a generally positive connotation if you are the one providing it and negative if you refuse to do so implying that you have something to hide. Here’s what Wikipedia says about transparency in business:

Transparency, as used in science, engineering, business, the humanities and in a social context more generally, implies openness, communication, and accountability. Transparency is operating in such a way that it is easy for others to see what actions are performed. It has been defined simply as “the perceived quality of intentionally shared information from a sender”.[1] For example, a cashier making change after a point of sale transaction by offering a record of the items purchased (e.g., a receipt) as well as counting out the customer’s change on the counter demonstrates transparency.

So when it comes to transparent procurement for business or for government, this is an area that will vary depending on the entity in question and the “department” or branch within the government. One example would be the military branch – as procurement of certain items would be considered part of national security and therefore transparency would not be ideal. What we are looking at is a organization that is accountable to itemployees/customers/citizens and the benefits of transparency.

No duplication: With a transparent procurement policy in place it will often reduce or eliminate the duplication of the purchased items. Expensive items with a limited purpose will be visible to different departments and may have the possibility of being shared instead of purchased again. With the awareness of visibility and accountability looming, duplicate requests will be more closely watched and prevented.

Record management: Records are often better organized and managed because multiple people can access at different times due to the transparency. It will need to be a well defined system so everyone can understand and access the information they need. Overall, this helps increase efficiency for everyone involved.

Bulk purchasing: In a transparent procurement system the purchasing officers are now able to buy in bulk quantities. Requests and PO’s from different departments can be combined into a single order. In this way they will reduce transportation and unit costs. Upon arrival the quantities would be distributed to their designated locations.

Regular improvement: The people who are behind the procurement process must not be satisfied with what they have. Transparency has a way of increasing accountability and improving performance. You’ve heard the saying about when the boss is away the mouse play? Transparency means someone is always watching. It may not mean someone is literally there hovering over the shoulders of the procurement team, but knowing that people can see or check at any given time or even go back and review the process, orders, and spending changes the environment. People rise to the occasion and perform better and strive for improvements that all can see.

This list is not exhaustive, but it should help give you some ideas about the benefits of transparent procurement. This doesn’t necessarily mean you need to revamp and make everything transparent on every level. In our next post we will look at some of the disadvantages and then you can have a complete picture to decide what is best for your organization.

BELLWETHER PURCHASING SOFTWARE can help prevent these pitfalls. Contact us today for a LIVE DEMO, or sign up for a FREE 30 DAY TRIAL and see what our software can do for your company.

May 6, 2014
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BY Bellwether
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