Centralization of Finnish public procurement at the local level
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School of Business |
Master's thesis
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Authors
Date
2022
Department
Major/Subject
Mcode
Degree programme
Information and Service Management (ISM)
Language
en
Pages
93+19
Series
Abstract
Procurement centralization is seen as a method to achieve better efficiency in the use of public funds. Besides cost-efficiency improvements, procurement centralization contributes to the development of public procurement processes as well as the increased quality of obtained goods and services. These are also the goals that Finnish public authorities set for themselves. Accordingly, establishing more centralized public procurement practices facilitates achieving these goals. The Finnish public sector is decentralized to the local government level, which implies that municipalities develop procurement strategies and perform procurement activities independently. This poses an assumption that municipalities handle procurement in different ways. Considering this assumption, the given research explores the purchasing practices of various Finnish municipalities intending to discover the dependency between the type of the municipality and its tendency to centralize purchasing activities. This thesis is a multiple embedded case study that applies multi-method research for collecting data and analysing it with the help of quantitative and qualitative methods. Seven municipalities that are reviewed in this research are considered separate case studies, while selected procurement categories serve as units of analysis within each case study. All the data that is used in this research is gathered from open sources. The spend analysis was used to find centralized purchasing patterns in each procurement category. Quantitative research findings were validated with publicly available documents such as notices of concluded contracts and decisions. At the final step of the empirical part of the research, the conclusion was made based on the results of cross-case comparisons. The findings suggest that there is no relationship between the municipality’s size and its tendency to centralize purchasing activities. The nature of the procurement category was found to be a stronger driver for centralization. In addition, the study results reveal the means by which municipalities can implement procurement centralization. Municipalities can purchase goods and services independently from private companies or jointly through joint procurement agencies. As an alternative, they can maximize the utilization of resources of in-house entities.Description
Thesis advisor
Matinheikki, JuriKauppi, Katri
Keywords
public procurement, centralization, purchasing pattern, purchasing behavior, supplier management, supplier base optimization, spend analysis, procurement analysis