Colin Cram Background Director North West Centre of

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Colin Cram - Background Director, North West Centre of Excellence - 47 local authorities

Colin Cram - Background Director, North West Centre of Excellence - 47 local authorities Director, Research Councils’ Procurement Organisation Director, North West Universities’ Purchasing Consortium Director, Benefits Agency Contracts Organisation Central Unit on Purchasing Cabinet Office, Treasury, Central Government generally Senior Adviser to Office of Government Commerce Member of Society of Local Authority Chief Executives -SOLACE Fellow of Chartered Institute of Purchasing and Supply Honorary Visiting Fellow, Manchester Business School Institute of Directors: ‘Towards Tesco’

TOPICS 1. 2. 3. 4. Procurement Context for Guildford General Procurement Principles Taking Out

TOPICS 1. 2. 3. 4. Procurement Context for Guildford General Procurement Principles Taking Out Cost/Savings 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

TOWARDS TESCO: TAKING THE COST OUT OF PUBLIC SECTOR PROCUREMENT

TOWARDS TESCO: TAKING THE COST OUT OF PUBLIC SECTOR PROCUREMENT

MIRROR TO PUBLIC SECTOR PROCUREMENT What Does It Look Like? How Well is it

MIRROR TO PUBLIC SECTOR PROCUREMENT What 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

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 EDUCATION PROCUREMENT - £ 30+bn Alone would put UK in top 30% of national GDPs

FEATURES OF PUBLIC SECTOR PROCUREMENT • 65% Non-Central Government • 50% Common Categories, Goods,

FEATURES OF PUBLIC SECTOR PROCUREMENT • 65% Non-Central Government • 50% Common Categories, Goods, Services • Professional Services £ 35 bn • Construction £ 21 bn • ICT £ 10 bn • Facilities Management £ 10 bn • Energy £ 4 bn • Reprographics £ 3 bn • Travel £ 3 bn • Fleet £ 3 bn • Food £ 2 bn

IF IT WAS YOUR MONEY, WOULD YOU MANAGE IT LIKE THIS? • Some Major

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

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

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

HOW ELSE TO TAKE OUT COST? TACKLE THE SUPPLY CHAIN

HOW ELSE TO TAKE OUT COST? TACKLE THE SUPPLY CHAIN

SO WHAT IS THE COST OF POOR PRACTICE/MISSED OPPORTUNITY? Furniture 30% FM/Outsourcing/Major Contracts Up

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

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

PRACTICAL WAYS TO TAKE OUT COST Understand Procurement Spend – Great Start! How much does Guildford need to save? - Develop Project Plan Look at the big spends Opportunistic Spends Bankable Cash Savings Negotiate – e. g. IT or IT software

PRACTICAL WAYS TO TAKE OUT COST - continued Do things differently Re-visit specifications Question/challenge

PRACTICAL WAYS TO TAKE OUT COST - continued Do things differently Re-visit specifications Question/challenge specifications Challenge need for procurements Cut out what is not essential – consultancy? Internal Discipline Competition Use Best Practice Procurement Manage Internal Demand Apply Project Disciplines to Larger Procurements Right Expertise, Resources, Authority, Motivation

PRACTICAL WAYS TO TAKE OUT COST: COLLABORATE Price benchmark with other local councils/SEIEP Use

PRACTICAL WAYS TO TAKE OUT COST: COLLABORATE Price benchmark with other local councils/SEIEP Use Office of Government Commerce recommended arrangements Expenditure benchmark – with other local councils Identify spend with common suppliers with other councils Collaborate on Specifications, Procedures, Processes Joint Negotiations – aggregate suppliers/commodities – then negotiate Collaborate on individual procurements/framework agreements Use consortia, purchasing agreements, Buying Solutions Engage with SEIEP Joint Procurement Organisation with other councils?

PROCUREMENT MODELS OBJECTIVE / COLLABORATIVE MODEL Indep- Bench- Limited Geogrendence mark Collab aphical Hub

PROCUREMENT MODELS OBJECTIVE / COLLABORATIVE MODEL Indep- Bench- Limited Geogrendence mark Collab 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

Thankyou Colin Cram Marc 1 Ltd Tel: 01457 868107 Mobile: 075251 49611 colin. cram@marc

Thankyou Colin Cram Marc 1 Ltd Tel: 01457 868107 Mobile: 075251 49611 colin. [email protected] 1 ltd. com www. marc 1 ltd. com © C M Cram

PUBLIC SECTOR PROCUREMENT IN 5 YEARS TIME? Central/ Major Departments/ Buying Solutions Industry Specific

PUBLIC SECTOR PROCUREMENT IN 5 YEARS TIME? Central/ Major Departments/ Buying Solutions Industry Specific Major National Contracts/Suppliers * * Common Categories * * Relationship Management * * Market Management * * Industry Specific PPIs/Major Project Support * Regional P Local/Med/ Hubs/ Small Medium Departments Depts * * Regional/Large Local Contracts/Suppliers * Small Local Contracts * * Discipline/Implementation/ Compliance * * © C M Cram

PUBLIC SECTOR PROCUREMENT: THE FUTURE? INTEGRATION COLLABORATION INDEPENDENCE © C M Cram

PUBLIC SECTOR PROCUREMENT: THE FUTURE? INTEGRATION COLLABORATION INDEPENDENCE © C M Cram

REPOSITIONING PROCUREMENT REGENERATION MARKET ENGAGEMENT CONSTRUCTION ROADS MAINTENANCE SCHOOLS TRAINING LOCAL X PROCUREMENT LABOUR

REPOSITIONING PROCUREMENT REGENERATION MARKET ENGAGEMENT CONSTRUCTION ROADS MAINTENANCE SCHOOLS TRAINING LOCAL X PROCUREMENT LABOUR WHERE IS MARKET ENGAGEMENT MOST EFFECTIVE? MAINTENANCE © C M Cram