Innovation on the shopping list

New procurement processes in municipalities and regions can provide better public service and at the same time aid smaller companies. MindLab helped the Danish Government initiative, the Business Innovation Fund, to understand the decision making processes of municipalities and regions in connection with purchasing.

“The system we are all part of has become extremely cumbersome and we find it very difficult to manage. We know that it kills creativity, but we don’t know how to escape from it or change it.”

Regional purchasing manager on the procurement situation today

Procurement officers in municipalities and regions throughout Denmark work every day to secure the necessary equipment for other public employees to do their jobs. They buy everything from paper, pencils, computers and diapers to advanced hospital equipment and various assistive technologies for the elderly and disabled care sectors. Thus, private companies’ sales to the public sector amount to approximately 36 billion EUR per year.

Today, many private companies that attempt to create a business based on delivering welfare technology and service to the public sector find that discounts are more in demand than innovation. Therefore, the Business Innovation Fund launched a pilot project providing support to municipalities and regions so that they can try out more innovative public procurement in the welfare sector.

Of course, price always plays a central role in public sector procurement. But a unilateral focus on purchase cost can stand in the way of new and innovative solutions in some product areas. New solutions may be expensive at the point of purchase, but they may be worth the investment in the long term because they can save resources, increase job satisfaction, lower sickness absences and result in more satisfied citizens. For example, electronic bed sheet turning systems that enable caregivers to turn a bedridden citizen alone, whereas this task typically requires two caregivers. These systems also give citizens better contact with caregivers and more dignified care.

MindLab interviewed

• 8 employees who perform procurement functions in municipalities and regions

The most important results

MindLab and the Business Innovation Fund identified 3 key elements in the pilot project:

• Economy across budgets is difficult and requires competence development. There is a need to broaden public procurement officers’ tools with the competencies needed to examine multiple budgets when considering whether investment in a given solution is worthwhile. A solution that saves resources or contributes to increased job satisfaction may affect sickness absence and thus the budget for temporary staff, and also save society the expense of worker burnout. Even though it only takes five minutes for two employees to turn a bedridden citizen, this translates into many work hours at a large nursing home with many residents. The pilot project helps municipalities and regions to consider such process savings when assessing potential purchases.

• From buying “gizmos” to formulating problems that need to be solved. In somewhat simplified terms, you could say that procurement officers today are given a shopping list: “Buy lifts for all of the municipality’s nursing homes”, “Buy three scanners with these specifications”, etc. To give companies the opportunity to propose unconventional solutions, the pilot project supports a procurement process (functional procurement), where the procurement officer does not pre-define how a given task is to be solved ¬– for example, that there is a need to buy lifts for moving residents. Instead, objectives are defined for the problem that is to be solved ¬– for example, solutions that enable staff to move residents in a sound and dignified manner while requiring fewer resources. This enables solution proposals that the procurement officer is not necessarily aware of in advance.

• The good purchase starts early. Defining the relevant criteria in a more open and innovation-oriented procurement process requires professional units and procurement divisions that engage in dialogue before a specific need arises – for example, for an assistive technology or working tool. Unlike today, where the procurement process does not begin until after the decision of what to buy has been made, the pilot project supports an initial phase where professional staff and procurement officers collaborate to identify potential focus areas for innovation through procurement of new solutions.

What MindLab did

MindLab conducted interviews at the procurement officers’ workplaces to learn about their daily work and the challenges they face. The interviews examined a specific purchase made by the interviewee. For example, one interviewee had purchased new beds for a hospital, another has purchased ceiling lifts for assisted living homes, and yet another had purchased new mattresses for municipal institutions. The interviews were recorded on tape. Key insights about the procurement officers’ situation were supported by audio clips from the interviews. The insights were presented to the project group at the Business Innovation Fund, together with MindLab’s assessment of what the planned initiative should support in order to achieve the desired change.

“MindLab’s work played a key role in the decisions regarding the design of the pilot project.”

Responsible head of unit at the Business Innovation Fund