Application of Strategic Sourcing Practice in Public and Private Sectors: Literature Review

Abstract

Notwithstanding the urging initiatives to improve acquisition processes and methods, the public sector continually fails to implement acquisition reform measures that would produce the desired change. Moreover, the strategic sourcing best practices for commercial goods and services of the private sector have not been adopted in the standardized acquisition practices of the public sector. The purpose of this paper is to analyze the implementation of strategic sourcing of the public sector. We provide thorough review and analysis of strategic sourcing from both the private and public sector viewpoints, focusing on the similarities and differences regarding the approach of each sector to strategic sourcing, we highlights which strategic sourcing practices, traits, and components have proven to work and which may or may not be transferable from the private to the public sector; focusing on bureaucracies, organizational theories, and some of the key differences among the public and private sectors as they pertain to these constructs. The similarities offer encouragement that strategic sourcing can be used by the public sector although the differences suggest that a simple mandate within the public sector to use the commercial model without any adjustments is likely not possible. These three overarching themes play a significant role in determining whether public sector agencies and departments are successful, or whether they possess the potential to be successful, in adopting private sector practices.

Keywords: Outsourcing, acquisition, public sector, bureaucracy, private sector