Interpreting Market Needs: Why Diversification Matters in Public Procurement

February 26, 2024

Diversifying your supply chain and supplier base can support opportunities across the public sector supply chain. We speak with Jim Hadjiyianni, Vice President of Supply Management and Business Development with OECM, to learn more about best strategies for diversification and why it matters in public procurement.

What does diversification in the realm of public sector procurement entail? How does the current market state influence an organization’s approach to diversification?

Jim Hadjiyianni profile image for OPBA

According to Business Development Canada (BDC), diversification is a strategy used by companies to ensure they are not dependent on a single source of income, product, customer, or supply. In business, this means serving more than one market or customer segment with more than a single product or service. A predominant driver in diversification is minimizing risk.

In the context of public sector procurement, diversification is a byproduct of your organization’s business model. If you are a healthcare organization procuring specialized healthcare products for a single hospital, diversification may have a narrower definition than for a Collaborative Purchasing Organization, like OECM, serving multiple sectors. Diversification offers a strategic advantage to attract and retain customers and suppliers.

A direct correlation exists between market influences and the effect on an organization’s approach to diversification. For instance, at OECM we are constantly looking at economic indicators, the global supply chain, and government direction (to name a few), to refine and shape our strategies. When governments invest funding in specific areas such as facilities to ensure safe schools and air quality, we assess if we need to further diversify our product and service offerings to better support these mandates. During the pandemic, OECM pivoted extensively, in real-time, to adjust to market conditions. We worked with facilities experts and the Ministry of Education to best understand the education sector’s needs and were able to then offer products and services that were tailored and designed to ensure school boards had what they needed, when they needed it.

It is important to recognize that funding is only one component of the process during challenging times, therefore it is incumbent on service providers to “look around the corner,” and anticipate the needs of their customers, to ensure access to products and services is seamless.

What can diversification do for the public sector supply chain? What is the value that can be gained and what are some expected outcomes?

Group of people meeting with technology and paperwork. Close up of digital tablet and laptop computer with market analysis data on the screen. The documents have financial or marketing figures, graphs and charts on them. Multi ethnic group including Caucasian, latin and African American

Diversification in the public sector can have a very positive effect. Historically, the public sector procurement landscape has been segmented, with clear sectors represented through education, healthcare, municipalities, and government. The value is such that it allows us to broaden both the customer and supplier base, creating fewer silos across these sectors. Products and services can be developed to encompass multiple sectors, and when combined, scale and purchasing power increase, creating a more competitive and attractive marketplace.

Another tangible benefit achieved through this kind of collaboration is the promotion of knowledge transfer and sharing. By sharing information, templates, processes, and data, we create tremendous efficiencies by not repeatedly duplicating processes.

Lastly, diversification is a catalyst for driving innovation and helping organizations access and attract top talent. Across the province, there’s a high likelihood that organizations within a catchment area either have never spoken to one another or don’t know what the other is doing. This offers a tremendous opportunity to share information, not just regionally but across the entire province. There’s a myriad of benefits for the public sector supply chain around diversifying, and it is fundamentally rooted in collaboration.

What is OECM’s approach to supply chain diversification? What benefits or successes has OECM identified?

Finance, profit and business people meeting with teamwork, collaboration and analysis of chart, statistics and digital graph analytics. Diversity team, planning strategy and review data report above

Our approach has many facets: First and foremost, we look at diversifying the sectors we support. Originally, OECM was established to support Ontario’s education sector, and while the education sector is core to our business and the foundation on which we were built, we have also started to grow our business to support other segments.

This includes a targeted focus on municipalities; strategic partnerships in healthcare; coordinated support with government, line ministries, and government agencies; delving into new sectors such as developmental services, and supporting key communities such as our Indigenous partners, both on the customer and supplier side.

To achieve this, we’ve introduced innovation across the supply chain through the use of technology, new models and flexible formats, including intuitive and user-friendly website updates. We’ve continued to expand OECM’s thought leadership position using case studies, articles and public speaking opportunities to highlight our value proposition and weigh in on global supply chain challenges and solutions.

We’ve also expanded and maximized our Sector Success Sharing (SSS) initiative, a $10 million reserve fund earmarked for reinvestment into Ontario’s education and municipal sectors, which is particularly exciting! As a not-for-profit, we can invest funds to support our customers on specific projects focused on supply chain collaboration, strategic partnerships, innovation and transformation—anything that improves the Broader Public Service (BPS) supply chain and unites the eco-system.

Another example of how we support and promote diversification through collaboration across sectors is through OECM-led events, such as our Leadership and Collaboration Symposium, which is designed to facilitate networking and collaboration amongst senior leaders from across the education, municipal, healthcare, and other broader public sectors. These types of events are key in bringing together the diverse range of customers and supplier partners that OECM supports while helping to facilitate new growth opportunities.

Lastly, by building formal frameworks to strengthen Government Relations, we have become a true facilitator and liaison between government and OECM stakeholders. We recently signed a collaboration agreement with Supply Ontario, a new provincial agency with a mandate to transform and modernize the province’s public sector supply chain management system.

Diversification is a critical component of OECM’s strategy and growth.

Based on your experience, what are some of the top considerations for the public sector when building a diverse supply chain?

Teamwork, documents and circle of hands on desk in business meeting for strategy, planning and analytics. Collaboration, diversity and business people with paperwork, infographics and graphs on table

Think about diversification broadly and don’t define it too narrowly within your plan—think beyond the context of products and services. Diversification can and should include your customer base as well as your supplier base. It can impact decisions around technology, strategy, growth, and key elements of your business, so take time to consider your approach and the overall impact it will have.

Be brave in how you identify your policy priorities and objectives. Invest resources that will enable your practices to support sustainable and social procurement as well as Diversity, Equity and Inclusion (DEI). These are just a few examples that help your organization diversify. A procurement or supply chain organization can operate as a leading practice organization, but it takes courage.

You also need to be authentic in understanding your customers and suppliers—engage and consult with them—and don’t shy away from models that consider more tailored approaches that support them or the sectors they represent. When you do that, diversification starts to happen organically, and it’s a wonderful thing to see within your organization.

It’s easy to continue doing what you do every day—and there’s nothing wrong with that—but if you want to be a change agent and a leader, you need to be courageous.

This article was published in the February 2024 issue of the Ontario Public Buyers Association (OPBA) Caveat Emptor E-News.

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