Commissioning, procurement & purchasing

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Towards a common understanding of the difference between purchasing, procurement and commissioning. International Public Procurement Conference, Amsterdam, August 2008

Paper subsequently published in Journal of Purchasing and Supply Management, 2009

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Commissioning, procurement & purchasing

  1. 1. Towards a common understanding of the differences between purchasing, procurement & commissioning Dr J. Gordon Murray
  2. 2. Introduction <ul><li>UK public policy shift towards commissioning </li></ul><ul><li>Confusion in difference between purchasing, procurement and commissioning processes </li></ul><ul><li>Is commissioning just part of the purchasing evolutionary journey? </li></ul><ul><li>What does a document analysis suggest? </li></ul><ul><li>A question which should be answered once so that it need not be asked again? </li></ul>
  3. 3. Do UK procurement practitioners agree procurement and commissioning are the same?
  4. 4. Commissioning <ul><li>“ Commissioning is the cycle of assessing the needs of the people in an area, designing and then securing the appropriate service” </li></ul><ul><li>(Cabinet Office, 2006, p. 4) </li></ul>
  5. 5. The commissioning cycle Strategic needs assessment Decide priorities and outcomes Plan and design services Optional appraisal Sourcing Delivery Monitor and review The commissioning cycle
  6. 6. The purchasing cycle Determine the need Supplier selection Contracting Ordering Expediting Follow-up/ evaluation The purchasing cycle (derived from van Weele, 2005)
  7. 7. Commissioning and purchasing <ul><li>“ Commissioning… starts with the needs of users. It says, what are the user’s needs , …, what are the problems that we need to address?... Then asks what are the kind of services that might address those needs and do we have the people … ourselves [or] others to provide those needs and to meet those services [the strategic make or buy decision ]. </li></ul><ul><li>It then moves to a process of contracting where people are invited to bid. Then there’s the process of choosing and selecting [a purchasing cycle] .” </li></ul><ul><li>(Minister for the Third Sector, evidence to Public Administration Select Committee, 20 th November 2007 ) </li></ul>
  8. 8. The commissioning and purchasing cycles Strategic needs assessment Decide priorities and outcomes Plan and design services Optional appraisal Sourcing Delivery Monitor and review The commissioning cycle Determine the need Supplier selection Contracting Ordering Expediting Follow-up/ evaluation The purchasing cycle
  9. 9. Procurement <ul><li>“ ... procurement involves options appraisal and the critical ‘make or buy’ decision which may result in the provision of services in-house in a appropriate circumstances.” </li></ul><ul><li>(National Procurement Strategy, 2003, p. 17) </li></ul>
  10. 10. The commissioning and purchasing cycles, and procurement Strategic needs assessment Decide priorities and outcomes Plan and design services Optional appraisal Sourcing Delivery Monitor and review The commissioning cycle Determine the need Supplier selection Contracting Ordering Expediting Follow-up/ evaluation The purchasing cycle procurement
  11. 11. Procurement includes purchasing <ul><li>Procurement includes the strategic ‘make or buy’ options appraisal – purchasing follows a decision to ‘buy’ </li></ul><ul><li>The ‘make or buy’ decision is pre-purchasing </li></ul><ul><li>Purchasing professionals should contribute to that decision </li></ul>
  12. 12. Commissioning includes procurement <ul><li>Strategic needs assessment, deciding priorities and designing securing services are pre-procurement and pre-purchasing </li></ul><ul><li>Needs assessment is different from defining/determining the need so that a specification can be articulated </li></ul><ul><li>Monitoring and review in commissioning is beyond the confines of a contract relationship dialogue – it is a dialogue with the community about whether the commissioning cycle was effective in meeting needs, etc. – it is beyond procurement </li></ul>
  13. 13. How have we become so confused? <ul><li>Our phraseology: “ … a local authority commissioned a new leisure centre” or “ a consultant was commissioned” suggests commissioning and purchasing are synonymous </li></ul><ul><li>Would strategic and operational commissioning be more appropriate? </li></ul><ul><li>In an increasingly complex profession, we need to provide clarity. </li></ul>
  14. 14. Eight principles of good commissioning differentiate but provide opportunities for procurement <ul><li>Understand the needs of users etc., by engaging with TSOs as advocates to access their specialist knowledge </li></ul><ul><li>Consult provider organisations when setting priorities </li></ul><ul><li>Put outcomes for users are the heart of the process </li></ul><ul><li>Map the fullest practical range of providers </li></ul><ul><li>Consider investing in the provider base </li></ul><ul><li>Ensure contract processes are transparent and fair </li></ul><ul><li>Ensure long-term contracts and risk-sharing </li></ul><ul><li>Seek feedback to review effectiveness of the commissioning process </li></ul>
  15. 15. Implications for practice <ul><li>Help in mapping commissioning cycles </li></ul><ul><li>Assist in interpreting legislation </li></ul><ul><li>Assist in mapping the market </li></ul><ul><li>Contribute to options appraisal </li></ul><ul><li>Assist in translating outcomes into specifications </li></ul><ul><li>Develop procurement strategies to support commissioning priorities </li></ul><ul><li>Contribute to collecting lessons learned. </li></ul>
  16. 16. Implications for research <ul><li>How robust are our definitions of purchasing, procurement and commissioning processes? </li></ul><ul><li>Does the rise in prominence of commissioning help or hinder procurement? </li></ul><ul><li>How do commissioning and procurement optimise their interfaces? </li></ul><ul><li>What skills should Procurement practitioners develop? </li></ul><ul><li>How are outcomes translated into specifications? </li></ul><ul><li>Are different bid evaluations approaches required with the shift to outcomes? </li></ul>
  17. 17. Towards a common understanding of the differences between purchasing, procurement & commissioning Dr J. Gordon Murray

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