Its Time for Procurement Chris Newman Director Arc

It’s Time for Procurement Chris Newman Director Arc. Blue Consulting Chris. newman@arcblue. com. au 0412 318 384 Arc. Blue Consulting www. arcblue. com. au @PMMSgroup

Our public sector experience Queensland Local Government • Local Buy Training • Spend Analysis Pilot • Gold Coast Contract Management Training and Capability Development QLD State Government • Contract Management Assessment and training program • Social Procurement Development WA Local Government • Procurement and Contract Management training • Procurement Handbook Development • Spend Analysis Procurement Capability Assessment / Development NSW Local Government • Procurement Development Program across 30+ councils • Procurement Leadership Program • Regional Development Programs • Social Procurement Guidelines SA Local Government • Roadmap Program • Regional Opportunity Analysis Programs SA State Government • Savings Programs • New Royal Adelaide Hospital Procurment Federal Government State Government Local Government The Global Procurement Network NSW State Government • Accreditation process with 7 Departments • Procurement Project delivery • Capability Model Development VIC State Government • Training Programs • Review and Certification Programs Federal Government • Contract Management Training NZ Government • Agency assessment • Spend Analysis VIC Local Government • LEAP Spend Analysis and Procurement Development • Contract Management Guidelines and Development • Training • Social Procurement Programs © Arc. Blue Consulting 2

Contents } Implications of rate-capping } Why procurement - what is the data telling us? } How can strategic procurement be part of the solution? The Global Procurement Network © Arc. Blue Consulting 3

Implications of rate-capping } A burning platform for the next stage of professionalisation or } A handbrake on sector capacity and development } Opportunities for innovation } What does it mean for regional and sector collaboration The Global Procurement Network © Arc. Blue Consulting 4

Operating in a commercial world } Delivering and Demonstrating savings, value and productivity improvements } Data-based decision-making } Taking a structured approach } Building the right skills and capacity } Balancing commercial and community The Global Procurement Network © Arc. Blue Consulting 5

MAV LEAP Program Procurement Trends and Insights The Global Procurement Network © Arc. Blue Consulting 6

LEAP Background } A continuous improvement program designed to assist councils, regions and the sector to: – Achieve sustainable savings and value for money – Support local and regional economic development Identify and pursue shared services opportunities – Improve probity management and compliance – Improve organisational and sector capability § 23 councils currently participating in LEAP § Data insights are based on first 15 councils The Global Procurement Network © Arc. Blue Consulting 7

LEAP Program Statistics $1, 300 million spent across 15 metropolitan councils in FY 15 45 – 65% of total council spend >24, 600 Active suppliers in single year ~467, 000 Individual transactions (invoices) processed The Global Procurement Network © Arc. Blue Consulting 8

Spend 17% - 37% of spend in the local (Council) area. 40% - 60% of Councils spend is with top 20 suppliers ~$52, 000 average spend per supplier, predominantly below tender threshold quarter 4 opex and capex spend spikes in key categories suggesting rushed end of budget cycle spend. The Global Procurement Network © Arc. Blue Consulting 9

Efficiency 350, 000 75% of transactions <$1, 000 value Up to $73 Per transaction cost of traditional PO process 28% $2, 875 $25 million of all suppliers were used only once during the financial year, ~7, 000 single use suppliers average value per transaction spent processing transactions with value of <$1, 000 The Global Procurement Network © Arc. Blue Consulting 10

Low-value Procurement White Paper The Global Procurement Network © Arc. Blue Consulting 11

Low-value Procurement White Paper The Global Procurement Network © Arc. Blue Consulting 12

Capability and Maturity The Global Procurement Network © Arc. Blue Consulting 13

Procurement in Local Government State Regional Local The Global Procurement Network © Arc. Blue Consulting 14

Case Study: Barossa Regional Procurement Development Program Objectives & Process Program Objectives: } Make sustainable savings & create efficiencies } Stimulate economic development } Improve probity and reduce risk } Build staff and organisational capability in procurement } Strengthen regional collaboration Joint Council Kick-off Data Collection The Global Procurement Network Individual Council Workshops Detailed Joint Spend Analysis Opportunity Analysis Workshop © Arc. Blue Consulting Regional Roadmap Development and Validation Final Roadmap Workshop Progress Reviews and Support 15

Barossa Regional Procurement Program } } Regional Collaborative Procurement Program – Start May 2014 Regional Governance MOU in place – October 2014 Regional Resource engaged – February 2015 Collaborative Projects • Standardisation of process and documents • Development of regional procurement website } Agreed priority regional contracts delivered since February: • Regional Building Maintenance/ Trade Services Panel • Audit Services • Road Re-Seal Program • Stationery • Line Marking } Savings to date $800, 000 – Target $2. 5 m/ year (5%) } Increased regional spend and internal efficiencies The Global Procurement Network © Arc. Blue Consulting 16 16

The Global Procurement Network © Arc. Blue Consulting 17

Barossa Region – Next Steps Ø Expanding model to shared services investigations Ø Correlating spend data against service, output and demographic data Ø Using opportunity analysis to structure and prioritise opportunities The Global Procurement Network © Arc. Blue Consulting 18 18

Strategic Procurement } Procurement represents our most tangible area to deliver and demonstrate savings: • External and internal efficiencies • Continuing to move from administrative to strategic } Structured programs • • Targets and measurement Commercial focus Building capability – council, region, sector Demonstrating ‘value’ while maintaining our commitment to community The Global Procurement Network © Arc. Blue Consulting 19