TOWARDS TESCO:TAKING THE COST OUT OF PUBLIC SECTOR

PROCUREMENT

Colin CramMarc1 Ltdcolin.cram@marc1ltd.comTel: 01457 868107Mob: 075251 49611www.Marc1ltd.com

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

EDUCATION PROCUREMENT - £30+bn

Alone would put UK in top 30% of national GDPs

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, 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+• OGC 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

•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

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

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Small Local Contracts * *Discipline/Implementation/Compliance

* * © C M Cram

INDEPENDENCE

COLLABORATION

INTEGRATION

© C M Cram

PUBLIC SECTOR PROCUREMENT: THE FUTURE?

REPOSITIONING PROCUREMENTREGENERATION MARKET ENGAGEMENT

CONSTRUCTION

ROADS MAINTENANCE

SCHOOLS

MAINTENANCE TRAINING LOCAL LABOUR

PROCUREMENT

WHERE IS MARKET ENGAGEMENTMOST EFFECTIVE? © C M Cram

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Thankyou

Colin Cram

Marc1 LtdTel: 01457 868107

Mobile: 075251 49611

colin.cram@marc1ltd.com

www.marc1ltd.com © C M Cram