Procurement Planning: Private vs Public Sector Procurement

Key Differences and Lessons Learned for Procurement Planning

Procurement is a critical function in every organisation, but how it’s approached can vary dramatically between the private and public sectors. In our research for Procurement as the Guiding Light, we analysed responses from 81 Australian organisations to uncover how sector influences procurement maturity, strategy, and outcomes. The results reveal important differences – and opportunities for both sectors to learn from each other.

Strategic Alignment vs Compliance

One of the most striking contrasts is in the way procurement aligns with organisational objectives. Private sector organisations tend to integrate procurement more closely with their strategic goals, making it a driver of business outcomes. In contrast, public sector teams excel in compliance, ensuring procurement meets legislative and policy requirements.

Private Sector: Procurement is seen as a strategic enabler, supporting innovation and business growth.
Public Sector: The focus is on compliance, risk management, and meeting regulatory standards.

Market Engagement: Proactive vs Reactive

Market engagement is another area where the sectors diverge. Private sector teams are far more likely to proactively gather market intelligence, build supplier relationships, and use insights to inform decisions.

Private Sector: 40% regularly engage with suppliers and scan the market for opportunities.
Public Sector: 97% only engage the market when there’s an immediate procurement need, with little ongoing market intelligence gathering.

This difference means private sector organisations are better positioned to anticipate changes, negotiate favourable terms, and foster innovation through supplier partnerships.

Innovation: Embedded vs Limited

Innovation is a hallmark of mature procurement functions, but it’s far more prevalent in the private sector.

Private Sector: 30% actively pursue innovation, and 12% have embedded it in their culture and supplier relationships.
Public Sector: 87% report limited scope for innovation, or see it as outside procurement’s remit.

Private sector organisations encourage experimentation and see procurement as a source of competitive advantage. Public sector teams, constrained by compliance requirements, often struggle to make innovation a priority.

What Can Each Sector Learn?

Both sectors have strengths to build on:

Public sector teams can shift from a compliance mindset to strategic enablement, leveraging procurement to drive better outcomes and innovation.
Private sector organisations can strengthen their governance and compliance frameworks, ensuring robust risk management as they pursue growth and innovation.

Benchmark Your Procurement Function

Understanding these differences is the first step towards improvement. Whether you’re in the public or private sector, Procurement as the Guiding Light offers practical insights and a maturity assessment framework to help you benchmark your function, identify gaps, and chart a course for better results.

Download the ebook today to see how your procurement team compares, and discover actionable recommendations to help you shine a light on your strengths and opportunities.

Need a guiding light? Book a meeting with Stefan Gassner, author of Procurement as the Guiding Light and TargetedBrains MD