Benchmarking for supplier relationships management practices in Indian public procurement

Abstract

Public procurement (PP) is a specialized function and is of immense importance for a nation s economic development. It is directly related to the extent of the government s delivery system. Efficiency and effectiveness is hence expected in its functions while it has to meticulously comply with all the basic tenets associated with expenditure of public funds. World class organizations have made great strides in their procurement processes which include supplier relationship management (SRM). Unfortunately similar developments have not yet happened in PP, even in developed countries. PP in India is still with archaic principles and practices, being executed with huge inefficiencies. There is no concept of SRM in its operations beyond basic contractual obligations, while it is developing into a professional practice, with great relevance to the effectiveness of procurement. Suppliers are looked upon as outsiders and dealings with them are like in a control regime. Emphasis is on suspicion and control than on outcomes. The potential available with suppliers for the buyer s benefit is hardly tapped. According to a World Bank statement, there is an urgent need to establish a procurement system that serves the economic and social needs of India. Research done on PP and SRM is highly limited. There is hardly any research done on these subjects on Indian situations. Closer look is required at the present levels of its performance and analyze the scope for improvement. This paper studies the SRM practices in Indian PP with Indian Railways as a case study. Relevance of social capital to PP is studied and factors which would enhance it are linked to SRM activities. Extent of modernization of SRM practices in developed countries for their PP is studied. Constraints and scope for changes in Indian PP are analyzed and appropriate feasible solutions are recommended.