Top Ten Good Practices for Procurement in Government and Business

Why Procurement Needs to Evolve

Procurement has long been seen as a back-office function, focused mainly on cost control and compliance. But today, both governments and businesses are rethinking procurement as a strategic driver of value, innovation, and resilience.

The OECD’s Digital Transformation of Public Procurement Good Practice Report shows how governments can shift to smarter, more transparent systems. At the same time, leading private sector organisations are using data, automation, and new supplier strategies to gain an edge.

This article highlights the top ten procurement best practices that every organisation should adopt. Whether you are in government or business, these practices will help you modernise procurement, manage risks, and create long-term value.

1. Emphasise Sustainable Procurement

Modern procurement is no longer just about price. It must also consider environmental and social impact.

• Sustainability as strategy: Choosing suppliers that follow ethical, low-carbon, or circular economy practices helps organisations meet environmental targets and comply with growing regulations.

• Cost and reputation benefits: Organisations that prioritise sustainable sourcing often save money through waste reduction while building stronger reputations with citizens and customers.

• OECD guidance: Governments are urged to embed sustainability in procurement strategies to lead by example and build trust.

Making sustainability a procurement priority turns spending decisions into a lever for long-term impact and responsibility.

2. Foster Strong Supplier Relationships

Procurement has shifted from transactional vendor management to strategic supplier partnerships.

• Collaboration over cost: Regular engagement and open dialogue build trust, improve reliability, and lead to better pricing and quality.

• Shared innovation: Suppliers can help organisations innovate by bringing new ideas, materials, or processes.

• Resilience building: Stronger supplier ties reduce risks during crises, making supply chains more adaptable.

The OECD emphasises supplier engagement as a way for governments to open procurement markets and encourage competition.

3. Leverage Data for Smarter Decisions

Data is the foundation of modern procurement.

• Spend analytics: Tracking where money goes allows organisations to identify savings opportunities and eliminate inefficiencies.

• Performance monitoring: Data reveals which suppliers deliver reliably and which pose risks.

• Predictive insights: Advanced analytics and AI can forecast future demand, flag risks, and guide sourcing strategies.

Governments using open data platforms, such as Chile and Estonia, show how transparency and standardisation improve both competition and efficiency.

4. Align Procurement with Business and Policy Goals

Procurement cannot operate in isolation. It must directly support the strategic goals of the wider organisation.

• Business alignment: For companies, this means supporting growth, innovation, and quality.

• Policy alignment: For governments, it means driving sustainability, inclusivity, and digital transformation.

• Regular reviews: Strategies should be revisited often to ensure procurement stays aligned with evolving objectives.

When procurement is tied to broader goals, it becomes a tool for strategic success, not just operational support.

5. Position Procurement as a Strategic Partner

Procurement should be seen as a strategic partner across the organisation, not simply an approval function.

• Early involvement: Involve procurement in planning stages, not just when contracts are needed.

• Decision-making power: Equip procurement teams with data, tools, and authority to influence strategy.

• Driving innovation: Modern procurement leads cost efficiency, risk management, and business transformation.

The OECD calls for procurement agencies to act as enablers of innovation and public value, highlighting the shift from gatekeeping to strategy.

6. Involve Procurement Early in Product and Service Development

Early procurement involvement reduces risks, saves money, and improves outcomes.

• Cost savings: Negotiating materials and suppliers before design is final prevents last-minute changes.

• Supply chain fit: Procurement ensures chosen suppliers can deliver what is needed at scale.

• Risk reduction: Potential disruptions or shortages can be flagged early.

This practice applies in both government projects (infrastructure, IT) and private sector product development.

7. Implement Supplier Diversity Programmes

Supplier diversity brings resilience, innovation, and social impact.

• Wider supplier pool: Working with minority-owned or underrepresented suppliers creates more competitive markets.

• Innovation and reputation: Diverse suppliers introduce new perspectives and strengthen organisational reputation.

• Measurable goals: The most effective programmes set targets, track progress, and invest in partnerships.

Governments in the OECD stress inclusivity as part of procurement reform, while private firms see supplier diversity as part of their ESG commitments.

8. Use Predictive Analytics to Forecast Demand and Risks

Predictive analytics transforms procurement from reactive to proactive.

• Demand forecasting: Analysing historical trends helps plan orders more accurately.

• Risk management: Predictive tools flag financial instability or geopolitical risks among suppliers.

• Scenario planning: Organisations can test “what if” models to prepare for disruptions.

The OECD encourages governments to use advanced analytics to detect fraud, track market conditions, and anticipate risks.

9. Automate Routine Procurement Tasks

Automation frees procurement teams to focus on strategic work.

• Examples: Purchase orders, approvals, invoice processing, and supplier onboarding.

• Benefits: Faster workflows, fewer errors, and improved compliance.

• Digital workflows: Automation also improves transparency, with every action recorded and traceable.

The OECD highlights robotic process automation and AI as tools that can reduce workloads and make government systems more efficient.

10. Conduct Regular Supplier Performance Audits

Strong procurement depends on holding suppliers accountable.

• Audits as feedback loops: Regular reviews of delivery, quality, and compliance prevent problems from escalating.

• Transparency and trust: Audits show suppliers that standards are taken seriously.

• Continuous improvement: Suppliers can adjust performance based on clear expectations.

Both governments and businesses benefit from regular audits that protect value and strengthen resilience.

Benefits of Implementing Procurement Best Practices

Adopting these ten practices delivers wide-ranging benefits:

• Cost savings and efficiency: Streamlined workflows cut waste and reduce manual tasks.

• Risk management: Diversified suppliers and predictive analytics reduce vulnerabilities.

• Sustainability: Responsible sourcing meets environmental and social expectations.

• Stronger supplier relationships: Collaboration and audits build long-term trust.

• Improved compliance and transparency: Digital tools enforce rules and increase accountability.

The Procurement Process: A Quick Guide

The seven basic steps of procurement remain essential:

1. Identify needs.

2. Create and approve purchase requisition.

3. Select suppliers.

4. Issue purchase order.

5. Receive goods or services.

6. Inspect and match deliveries with purchase orders.

7. Process invoice and payment.

Overlaying best practices onto these steps creates a modern, efficient, and resilient procurement system.

How Technology and AI Are Reshaping Procurement

Artificial intelligence and machine learning are transforming procurement practices.

• Predictive analytics: AI helps forecast prices, demand spikes, and risks.

• Vendor management: Automated performance assessments ensure consistency.

• Process automation: AI eliminates bottlenecks by handling repetitive tasks.

• Strategic sourcing: AI identifies supply chain vulnerabilities early, enabling better planning.

The OECD highlights that technology adoption must be paired with good governance and strong digital skills.

Conclusion: Building Procurement for the Future

The top ten procurement best practices show that procurement is no longer just a cost-control function—it is a strategic engine for innovation, resilience, and value creation.

For governments, it means more transparent, sustainable, and efficient use of public funds. For businesses, it means competitive advantage, stronger supplier ecosystems, and better risk management.

By embedding sustainability, data, automation, diversity, and strong supplier relationships into procurement, organisations can create systems that are not only efficient but also trusted, inclusive, and future-ready.

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