Improving the effectiveness of external resource management: strategic and operational lessons from the privatization experience in the UK

This paper is based on a study of 28 UK privatized companies undertaken between 1995 and 1998. A model of procurement is used based on concepts of functional professionalism and procurement competence and supply alignment. The objective was to ascertain whether privatization leads to more efficient external resource management, in line with government objectives to increase the efficiency of the organizations concerned. The key finding is that, whilst privatization acts as a stimulus to improve the efficiency of procurement, there are several other factors than ownership which affect the development of the purchasing and supply function within a company. The paper concludes that privatization has been associated with an improvement in purchasing and supply functional professionalism in the organizations studied, but it has not as yet had a significant impact on procurement and supply alignment competence at the strategic level. The research also finds that public sector organizations, with the right incentives and determined management, can bring about similar changes.