November 14, 2016Doug Hadden
Public Financial Management (PFM) plays a significant role in smart government. FreeBalance is developing numerous “vision cases” to describe the intersection of PFM and “smart”.
The planning and implementation of smart cities is enabled through PFM techniques and the use of open government. Cities cannot achieve “smart” without citizen engagement and a citizen-centric perspective.
Government organizations purchase and store large quantities of consumable items. Governments have significant buying power that can be leveraged to reduce prices. A “smart government” recognizes the environmental impact of purchasing, storage and shipping as part of “cost”.
- Purchasing: much of government inventory is acquired based on framework agreements pulling from vendor catalogs, or large procurement cycles for commodities
- Goods Receipt: goods are received in warehouses
- Notification: users who require inventory are notified, as suppliers – who are also notified when the expense has been approved and payment has occurred
- Warehouse operations: sensors and cameras track warehouses, transfers and large inventory item, including financial transactions – this could lead to changing store sizes and locations to be more cost and environmentally efficient
- Environmental Analysis: integrated devices and financial systems track the impact of supplier notification, warehouse energy consumption, inventory consumption, and warehouse transfers leading to an entire environmental analysis that can be displayed to citizens on transparency portals
- Spend Management: traditional spend management of analyzing usage patterns, and vendor catalog volume discount and equivalent items is enhanced by environmental analysis
- Vendor Catalogs: public display of environmental footprint includes by vendor items that can show situations where lower priced items may have a higher total cost over time, or a higher environmental cost, acting as a “nudge” for vendors to adjust product mixes and prices
- Proactive Inventory Management: the combination of tracking inventory usage, spend and environmental analysis leads to more proactive government inventory acquisition and usage decisions
The integration of PFM, open government and digital devices provides the “smart” in Smart Government:
- Citizen-centric: reduces unnecessary communications costs for vendors and nudges vendors to provide more environmentally-conscious product mixes
- Data-driven: includes inventory and environment information
- Performance-focused: identifies the best “value-for-money” including cost, total cost and environmental costs
- Long-term: creates an environment of continuous cost and environmental improvement
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