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

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

TOWARDS TESCO:TAKING THE COST OUT OF PUBLIC SECTOR

PROCUREMENT

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

FEATURES OF LOCAL GOVERNMENT SPEND

Asset ManagementCorporate ServicesSocial CareWaste

96%

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

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 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

[email protected]

www.marc1ltd.com © C M Cram

mailto:[email protected]

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


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


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

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

Documents

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