Managing KM in the Public Sector: The Case of the Public Procurement Process

Abstract

Public procurement is a significant part of economics and one of the most extensive measures for distributing state budget funds in the public sector. At the European Union level, the goal is to increase the effectiveness and efficiency of the public procurement process. It can be done by shortening public procurement procedures and ensuring the best opportunities for supplier competition for public contracts. Since service pro-viders, service users, technological and methodological approaches influence each other; therefore, a systematic and detailed analysis of the public procurement process is necessary to improve the key performance indicators. The implementation of public procurement can be seen as a knowledge management model for achieving the ultimate goal: to ensure quality services. Compared to private capital entities, increasing the efficiency of the public sector faces additional challenges caused by bureaucracy and detailed legal regulations that are often also imperative. The use of necessary efficiency measures, such as standardisation and centralisation of pro-curement activities, can increase the efficiency of the public procurement process. However, it is worth noting that such measures ensure only fixed effects in the long run. To reduce process costs and eliminate no-value added process steps, other process improvement methodologies, such as e. g. Lean or Six Sigma come in to play. The study examines the process improvement through a systematic review of the applied methods to increase the public procurement process's efficiency from a non-financial criteria perspective. The analysis shows that a consistent and timely process review of operational problems and search for improvement opportunities enable organisations to operate more effectively and efficiently. The main contribution of this paper is revealing the positive impact of Lean and Lean Six Sigma for low-value and typical procurement processes: employee work time on average per-process reduced by 25.81%, and the whole process's duration reduced by 16%.