How can technology help solve the labor shortage in public procurement?
We are living in the time of smart cities, autonomous vehicles, algorithmic public policy, and government deployment of blockchain. Government procurement is bound to have an impact on everything we do or aspire to do. These past few years have only fortified the significance of robust and flexible supply chains.
That said, attracting the right talent and keeping them motivated is posed as one of the biggest challenges for all businesses in North America, from a small business owner to a multinational conglomerate. The pandemic drove a lot of Americans to retire early— over 3 million in the first 18 months of the pandemic, according to the Economic Research by Federal Bank of St. Louis. According to a Brookings Institution report in December 2022 referring to Bureau of Labor Statistics projections, “silver tsunami” is going to hit the infrastructure sector with 1.7 million workers expected to retire or leave their jobs every year between 2021 and 2031. Moreover, state and local governments are also facing talent crunch, with federal employment rising ever so slightly.
Government agencies’ ongoing struggle to recruit new employees:
Public sector has long struggled to compete with the private sector for top talent and to retain workers—a trend that has only intensified in the past few years. A new hire comes with additional expenditure and time investment. It can take up to six months or more for a government agency to break even on its investment in a new hire. There are various potentially high costs involved in recruiting, ranging from advertising the opening to the time cost of an internal recruiter and recruiter’s assistant in reviewing resumes, conducting the interviews, background checks, and other recruitment-related tasks. It takes almost 4 months (119 days) to hire in the public sector, according to research by NEOGOV.
Moreover, these job vacancies are often opened up externally to provide an opportunity for everyone to compete for the job along with existing employees looking for growth in their role. So, it may end up being filled by existing employees in the organization through a lateral move or promotion. There is no way to know for sure, which can be frustrating for job seekers.
Source-to-pay solutions can support these labor gaps and can be the key to government success:
Technologies available today are able to automate most of the processes in any industry, both public and private. According to McKinsey, most organizations waste almost 4 percent of their total external spend on high transaction costs, inefficiency, and non-compliance. Organizations can manage their spends effectively by implementing a digital source-to-pay (S2P) application by up to 50%, driving an additional 31% in total savings.
This can also stand true for the public procurement industry. Source-to-pay solutions can help increase the efficiency of the entire procurement workflow, allowing government agencies to do more with less people. These solutions allow a seamless process from finding, negotiating with, and contracting the supplier of goods, to the final payment for those goods. They also help derive actionable insights from large data sets of historic spending and trends. For bidding, RFX documents can be prepared, reviewed, and distributed digitally to potential suppliers including the request for information (RFI), request for quote (RFQ), or request for proposal (RFP). Post contract negotiation and management, purchase order, invoices, and finance reports can all be generated electronically as well.
Going digital will not only improve efficiency and save time, but also attract younger talent that has a more forward-looking approach to public procurement. With baby boomers retiring in large numbers, there is more room now than ever before for a younger workforce in government agencies. Moreover, tech is the first language for most from this generation, making these digital tools and solutions a key driver for their participation in public procurement. Additionally, organizations can also divert the savings into upskilling the workforce to bridge the unfilled labor gaps. LinkedIn Learning found that if companies actively invested in employees’ careers, up to 94% of workers would be willing to stay with them longer.
By addressing certain gaps across the procurement process for value loss, cost savings can have a real impact on streamlining workflows. Operations enhancements through source-to-pay initiatives can lead to efficiency gains as well as strengthen supplier relationships. The generation entering the workforce has a desire to contribute to fixing society’s problems at scale. They can do a lot of good from within the government, and they can also do tremendous good from outside of government by working with government partners. Public procurement has the potential to be a force multiplier for addressing almost all public sector challenges. As labor challenges in the public sector continue, having one solution that takes care of everything from sourcing to supplier and contract management, procurement, finances, and analytics across, will yield much greater business value for the government and the government partners.