View
226
Download
0
Category
Tags:
Preview:
Citation preview
Colin Cram - Background
Director, North West Centre of Excellence- 47 local authorities
Director, Research Councils’ Procurement OrganisationDirector, North West Universities’ Purchasing ConsortiumDirector, Benefits Agency Contracts OrganisationCentral Unit on PurchasingCabinet Office, Treasury, Central Government generally
Senior Adviser to Office of Government CommerceMember of Society of Local Authority Chief Executives -SOLACEFellow of Chartered Institute of Purchasing and SupplyHonorary Fellow, Manchester Business SchoolInstitute of Directors: ‘Towards Tesco’
TOPICS
1. Context for Procurement
2. How the Public Sector Creates Cost
3. Taking Out Cost/Savings
4. Procurement Models
Delivering Significant Procurement Savings is Not Easy District Councils are Too Small to Obtain Good Overall VFM Supply Chains are Increasingly Global No Perfect Procurement Model
MIRROR TO PUBLIC SECTOR PROCUREMENTWhat Does It Look Like? How Well is it being Managed?How Can We do Better?
DOES PUBLIC SECTOR PROCUREMENT MATTER?
• £220 Billion pa• £3,500 per Adult and Child pa• One Third of Total UK Public Spending• One Sixth of UK Gross Domestic Product (GDP)• 0.75% of Global GDP• Size makes it Critical to Delivery of Public Services• Effective Management is Essential to Reduce Public Spending Deficit and Deliver Government Procurement Policies
LOCAL GOVERNMENT PROCUREMENT - £42+bn
Alone would put UK in top 25% of national GDPs
FEATURES OF PUBLIC SECTOR PROCUREMENT• 65% Non-Central Government• 50% Common Categories, Goods, Services
• Professional Services £35bn• Construction £21bn• ICT £10bn• Facilities Management £10bn• Energy £4bn• Reprographics £3bn• Travel £3bn• Fleet £3bn• Food £2bn
IF IT WAS YOUR MONEY, WOULD YOU MANAGE IT LIKE THIS?
• Some Major Central Government Department Organisations• Some Large Specialist Organisations• NHS Outsourcing• Buying Agencies: 40+• Office of Government Commerce and Category Teams• Several Thousand Small to Medium Procurement Units• 40,000+ Procurement Points
BUT• Increasing Collaboration/Joint Procurement
HOW TO MAKE SAVINGS PUBLIC SECTOR ORGANISATIONS CREATE
UNNECESSARY COSTS FOR SUPPLIERS
•Indiscipline
•Different Procedures/Contract Ts and Cs
•Complexity – e.g. Tender Procedures
•Multiplicity of Tenders
•Multiplicity of ‘Duplicate’ Contracts and Contract Managers
•Inconsistency of Expertise/Capability/Processes/Procedures
•Inconsistency of Specifications
PUBLIC SECTOR ORGANISATIONS CREATE COSTS FOR THEMSELVES
Varied Specifications/Reinventing the Wheel
Indiscipline/Disaggregation
Duplication
Inconsistency of Expertise, Processes and Procedures
AND cannot use industry best practice supply management
SO WHAT IS THE COST OF POOR PRACTICE/MISSED OPPORTUNITY?
Furniture 30%
FM/Outsourcing/Major Contracts Up to 35%
Laboratory Consumables Up to 90%
IT 5 – 80%
Construction 5 – 25%
Excellent Construction Management 5 – 15%
Social Care 10%
Legal Services 10%
Good Contracts Management 5 – 35%
© C M Cram
BIG IMPROVEMENTS NEED BIG CHANGES
•Right Procurement Structures/Joint Procurement
•Common and Complete Databases
•Common Information/IT Systems
•Common Procedures
•Common Specifications
•Commodity, Markets, Procurement Expertise
•Specialist Management
•Best Practice Procurement Techniques
PRACTICAL WAYS TO TAKE OUT COST
Understand Procurement Spend – Great Start!How much does Essex need to save?
Look at the big spendsOpportunistic SpendsBankable Cash SavingsNegotiate – e.g. IT or IT software
PROCUREMENT MODELSOBJECTIVE / COLLABORATIVE MODEL Indep-
endenceBench-mark
Limited Collab
Geogr-aphical
Hub
1. Identify and Deliver Savings
2. Negotiation
3. Reduce Costs for Suppliers
4. Consistent Contracting Expertise
5. Consistency of Specifications (to reduce cost)
6. Best Practice Techniques
7. High Levels of Service
TOTAL© C M Cram
WORKSHOP AGENDA
• How to Save
• Evaluation of Procurement ModelsAgree ObjectivesAgree Possible ModelsEvaluate Models
• Rules of Thumb for Successful Collaboration
Thankyou
Colin Cram
Marc1 LtdTel: 01457 868107
Mobile: 075251 49611
colin.cram@marc1ltd.com
www.marc1ltd.com © C M Cram
WORKSHOP AGENDA
• How to Save
• Evaluation of Procurement ModelsAgree ObjectivesAgree Possible ModelsEvaluate Models
• Rules of Thumb for Successful Collaboration
PRACTICAL WAYS TO TAKE OUT COST - continued
Do things differentlyRe-visit specificationsQuestion/challenge specificationsChallenge need for procurementsCut out what is not essential – consultancy?Internal DisciplineCompetitionUse Best Practice ProcurementManage Internal DemandApply Project Disciplines to Larger ProcurementsRight Expertise, Resources, Authority, Motivation
PRACTICAL WAYS TO TAKE OUT COST:COLLABORATE
Price benchmark with other local councils/SEIEPUse Office of Government Commerce recommended
arrangementsExpenditure benchmark – with other local councilsIdentify spend with common suppliers with other councilsCollaborate on Specifications, Procedures, ProcessesJoint Negotiations – aggregate suppliers/commodities – then
negotiateCollaborate on individual procurements/framework agreements Use consortia, purchasing agreements, Buying SolutionsEngage with RIEPJoint Procurement Organisation with other councils?
REPOSITION PROCUREMENTREGENERATION MARKET ENGAGEMENT
CONSTRUCTION
ROADS MAINTENANCE
SCHOOLS
MAINTENANCE TRAINING LOCAL LABOUR
PROCUREMENT
WHERE IS MARKET ENGAGEMENTMOST EFFECTIVE? © C M Cram
X
PROCUREMENT MODELSOBJECTIVE / COLLABORATIVE MODEL Indep-
endenceBench-mark
Limited Collab
Geogr-aphical
Hub
1. Identify and Deliver Savings
2. Negotiation
3. Reduce Costs for Suppliers
4. Consistent Contracting Expertise
5. Consistency of Specifications (to reduce cost)
6. Best Practice Techniques
7. High Levels of Service
TOTAL© C M Cram
RULES OF THUMB FOR COLLABORATIVE PROCUREMENT
Clear and Realistic Objectives
Clear Business Plan
Strong Project Team
Business Case
Select Right Model
Consider Constitution: Set of Club Rules
Right Governance
Strong Support from the Top
RULES OF THUMB FOR COLLABORATIVE PROCUREMENT
Good Quality Analysis
Clear Understanding of Costs
Performance Measurement
Suitable Contract/SLA
Flexibility - Government Policies
- CSR07/10
Compatible Standing Orders
Don’t Start unless Determined to See it Through
Do Not Avoid Issues
Use Proven Documents
RULES OF THUMB FOR COLLABORATIVE PROCUREMENT
Only Collaborate with those Fit to Collaborate
Only Collaborate with Those Who Wish to Collaborate
Clarity Over who Does the Work
Maintain Internal Support
PUBLIC SECTOR PROCUREMENT IN 5 YEARS TIME?Central/ Major Departments/Buying Solutions
Industry Specific
Regional P Hubs/Medium Depts
Local/Med/Small Departments
Major National Contracts/Suppliers
* *
Common Categories * *Relationship Management * *Market Management * *Industry Specific * *PPIs/Major Project Support * * *
Regional/Large Local Contracts/Suppliers
*
Small Local Contracts * *Discipline/Implementation/Compliance
* * © C M Cram
Recommended