Private Sector Organisations
In this modern day scenario there are many advantages of utilizing the services of Private Sector Organisations (PSOs) over Governmental Organizations (GMO). Specifically, private sector organisations are usually privately owned and managed by government itself, while government organisations are generally not private but rather part of state. As such, the form of ownership mentioned above as the main unique characteristic between private and public sector institutions has already been mentioned by several authors including historians as a major distinguishing feature between public and private sector organisations throughout history. However, there is another equally important feature that characterizes both the concept of ownership and the very essence of the concept of Private Sector - Private Companies and the nature of their supply chain.
Private companies are not corporatized public organisations but they have one fundamental different factor. As we noted in the above paragraph, they are businesses that are primarily run by the entrepreneurs and owners and not by boards of directors and executives, who may not be elected or accountable to shareholders (although some governments do have boards of directors responsible for ensuring that these companies operate in an ethical manner). However, unlike public sector organisation, private sector organisations enjoy profit maximisation. Profit maximisation in the context of businesses is the ability of business owners to take advantage of all opportunities to increase the value of their companies. For instance, when a private company expands its production line in order to produce a new product, it operates in the same way as any other business would do only it maximises its potential for profit.
As for the suppliers that go on sale in the Private Sector, they are generally privately owned and therefore cannot be controlled by a single person or government. Instead, they are generally controlled by the product manufacturer who is typically a private entrepreneur and there is no interference with his profits. In fact, in many cases it is possible that the only money flowing into the suppliers' outlets is the kick out of capital by the product manufacturer (who might also supply raw materials as well as labour and facilities). So, in this respect, private sector organisations operate much like public sector ones in terms of providing services to customers. Although they are run by and for the companies that own them, they are often much more efficient, have greater management efficiency, and a higher degree of productivity than their public sector equivalents.
CIOP Webinar Series
Learn the Global Best Practices in Supply Chain Management, Procurement, and Inventory Management.
