© OECD

A jo

int

initi

ativ

e of

th

e O

EC

D a

nd t

he E

urop

ean

Uni

on,

prin

cipa

lly f

inan

ced

by t

he E

U

How to get more money for those it’s really all about?

Seminar jointly arranged by the Ministry of Finance of Turkey and OECD/Sigma

The New Public Pocurement Procedures and Instruments

The Danish system on framework agreements, centralised and coordinated purchasing

Presentation by Mr. Søren Jakobsen, CEO, SKI A/S

Ankara, Turkey, 5-6 February 2008

© OECD

A jo

int

initi

ativ

e of

th

e O

EC

D a

nd t

he E

urop

ean

Uni

on,

prin

cipa

lly f

inan

ced

by t

he E

UThe Danish system on framework agreements, centralised and coordinated purchasingAgenda

A few facts about the company SKIThe company’s new strategy The future strategy of SKI

• SKI – the interactive company …

• Our vision for a “Centre for Public Procurement”

• Thoughts on competence development

© OECD

A jo

int

initi

ativ

e of

th

e O

EC

D a

nd t

he E

urop

ean

Uni

on,

prin

cipa

lly f

inan

ced

by t

he E

UA few facts about the company SKI

The company is situated at the harbour front in Copenhagen

Limited company established in 1994

Business modelA percentage (typically 1%) of turnover on contracts from vendors

Field of activityContributing to greater efficiency in the area of public purchasing by establishing and maintaining attractive framework agreements

Number of employees: app. 60

Number of framework agreements: app. 50

Owners• Ministry of Finance (55%)• KL, the National Association of Local Authorities (45%)

© OECD

A jo

int

initi

ativ

e of

th

e O

EC

D a

nd t

he E

urop

ean

Uni

on,

prin

cipa

lly f

inan

ced

by t

he E

UA few facts about the company SKI Present activities

Framework contracts (on large ’standardized’ procurement areas) Advise on public procurement (tools for estimating procurement

volume, data collection and handling, choice of supplier and solutions, procurement policy and strategy, green procurement, etc.)

Building of qualifications (user and networking groups, courses, seminars and conferences, training programs for vendors sales staff)

Publications and communication (guides, best practices, articles, PR, advice and aid regarding internal communication)

Tools (electronic tendering system, mini-tenders, e-auctions) E-commerce initiatives (customer-related price lists, advice on

implementation of e-commerce) Assistance from external consultants (advise on what and how to

buy, spend analysis, etc.)

© OECD

A jo

int

initi

ativ

e of

th

e O

EC

D a

nd t

he E

urop

ean

Uni

on,

prin

cipa

lly f

inan

ced

by t

he E

U

A few facts about the company. SKI’s turnover broken down by customer segments.

+18%

+26%

+17%

+19%-9%

Central government Municipalities Semi-public

companies Regions

(mill. DKK.)

MA

50%

28%

11%11%

+20%9.400 m.DKK(=1.250 m.Euro)

© OECD

A jo

int

initi

ativ

e of

th

e O

EC

D a

nd t

he E

urop

ean

Uni

on,

prin

cipa

lly f

inan

ced

by t

he E

U

IT

Energy

Tele & data communication

Travel

Food

Furniture

Office stationary and books

Vehicles

Equip. for research & science

Misc. electronics & hand tools

Kitchen equipment

Misc.

A few facts about the company. SKI’s turnover broken down by main product categories

© OECD

A jo

int

initi

ativ

e of

th

e O

EC

D a

nd t

he E

urop

ean

Uni

on,

prin

cipa

lly f

inan

ced

by t

he E

UA few facts about the company SKI’s focus on products and services

Potential turnover

Le

vel o

f S

tan

da

rdiz

ati

on

Large

Hig

h

Small

Lo

w

SKI’s focus in 2003

SKI’s focus in 2003

SKI’s focus in 2006

SKI’s focus in 2006

IT-standard hardwareIT-standard software

Tele and data communication

Vehicles

FoodTravel services

Office stationary

ElectricityGas

IT- and management consultancy services

Open Source

Printed matters

IT for education

Building and construction

Roadwork

Cleaning

Craftsman services

Hospital articles

Medicine

Eldercare

Special software

Special hardware

Ambulance-service & patient transport

Business process services

Clothing

Window-cleaning

Lawyer- and accountant-service

Handicap aid

Cleaning articles

White goods

Financial services

Newspapers/magazines

Advertising

Office machines

8 billion DKK

4 billion DKK

132 billion DKK

Furniture

Fuel

Hospital equipment

IT-outsourcing

Scanning of construction drawings

Mail and parcels

IT-outsourcing:-Mainframe & Midrange-Distributed environment & application handling

Engineering services

Courses & conferences

Hearing aid

Catering services

Guard services

SKI’s focus in 2009

SKI’s focus in 2009

Temporary workers

© OECD

A jo

int

initi

ativ

e of

th

e O

EC

D a

nd t

he E

urop

ean

Uni

on,

prin

cipa

lly f

inan

ced

by t

he E

USKI’s new strategy Background

The goals of the current strategy from 2002 are accomplished.

The Danish State has established their own procurement programme.

A major restructuring of the Danish public sector – fewer but larger local governments – took effect on January 1, 2007

Local procurement networks have been established.

© OECD

A jo

int

initi

ativ

e of

th

e O

EC

D a

nd t

he E

urop

ean

Uni

on,

prin

cipa

lly f

inan

ced

by t

he E

U

SKI’s new strategyOverview What is new in SKI’s strategy?1. Creating a foundation for further gains from procurement by pooling and

co-ordinating procurement volume and a closer involvement in the customer's procurement.

2. Strengthened focus on local government.

3. Improved documentation of savings both by product group and by customer.

4. More dynamic financing of SKI’s activities

5. Partnerships with the leading and interested customers

6. Easier use of SKI’s framework contracts through further development of the contracts’ content, connection and accessibility.

7. Strengthened activation of suppliers. Local as well as international.

8. ”Packaging” of framework contracts, services and communication so that SKI is able to offer coherent solutions and meet the customers’ political agenda, and thereby secure managerial impact and support.

9. Securing a more qualified procurement debate through documentation and presentation of facts.

10. Investment in renewal.

© OECD

A jo

int

initi

ativ

e of

th

e O

EC

D a

nd t

he E

urop

ean

Uni

on,

prin

cipa

lly f

inan

ced

by t

he E

USKI’s new strategyMission

SKI creates documented increased returns of scale in public procurement by pooling volume, qualifications and system development for the benefit of SKI’s customers.

Through close cooperation with customers and suppliers SKI secures attractive framework contracts.

SKI’s framework contracts make it easy for the public sector to purchase the needed solutions, products and services in the cheapest possible way while showing environmental, energy and social responsibility.

SKI’s earnings must make investments in new procurement initiatives possible. Initiatives that must be prioritised in a commercial way.

© OECD

A jo

int

initi

ativ

e of

th

e O

EC

D a

nd t

he E

urop

ean

Uni

on,

prin

cipa

lly f

inan

ced

by t

he E

U

SKI’s new strategy Vision

SKI strives to be a central player, that makes public procurement more effective and develops it.

SKI strives to inspire and support public organizations and their purchasing agents in achieving gains through efficient procurement and help promote an effective public administration.

Based on openness, equality and qualifications SKI strives to be the natural and inspiring focus point for all players involved in public procurement.

SKI must therefore be an innovative, effective and challenging workplace, that is able to attract and develop the best employees.

© OECD

A jo

int

initi

ativ

e of

th

e O

EC

D a

nd t

he E

urop

ean

Uni

on,

prin

cipa

lly f

inan

ced

by t

he E

USKI’s new strategyGoalsGrowth

• SKI’s turnover must increase to 13 billion DKK by 2012• The turnover from the municipalities must increase to 50% by 2012.• Growth and new initiatives must be self financed. The average return

before tax in the years 2008 to 2012 must be 1 million DKK per year.

Trust • For each tender the coordinated turnover must be at least 25%.• For each tender a documentation of savings that is accepted by

customers must be made.• During 2008 a minimum of 5 partnerships between customers and SKI

must be established, and the number must grow by 2 each of the following years.

Qualifications • There must exist a plan for competence development for each

employee.• Change of staff (employee initiated) must not exceed 10% per year.

© OECD

A jo

int

initi

ativ

e of

th

e O

EC

D a

nd t

he E

urop

ean

Uni

on,

prin

cipa

lly f

inan

ced

by t

he E

U

1. Attractive framework agreements

1. Attractive framework agreements

2. A new order of prioritybetween customers

2. A new order of prioritybetween customers

3. Cooperation3. Cooperation

4. A new order of prioritybetween contract areas

4. A new order of prioritybetween contract areas

5. An attractive andprofessional workplace

5. An attractive andprofessional workplace

6. A synergy with thesuppliers

6. A synergy with thesuppliers

7. Electronic purchasing7. Electronic purchasing

8. Main issues8. Main issues

• Product and market insight• Coordinated volume• Intensification of competition

between suppliers, including foreign

• Improved documentation of prices and savings • Prioritized and organised sales force

• A concept for partnerships with key customers and local procurement networks

• Development of SKI’s financial model• Customer groups• Experience groups • Centre for public procurement• Owners and political support

• Prioritising contracts• Focus on most saleable contracts• Focus on use of existing contracts

instead of establishing new contracts• The health area• Further development of models for

tendering • Standardisation like The Danish Ministry

of Finance• Regional sub-contracts• Helping with customers’ individual and

sector specific tenders

• Attracting and developing the employees

• Internal knowledge sharing and exchange of qualifications

• Tight project planning• Strengthened financial control

• Involvement of the suppliers’ sales organizations

• Supplier follow-up

• Coherent IT strategy• E-catalogues• E-auctions, mini tenders and

dynamic purchasing systems• Easy access to relevant information• CRM-service

• Environment• Energy• Social clauses• SMEs

Why? How?

Priority

SKI’s new strategy.Relationship between vision, sub-strategies and specific actionplans

- SKI strives to be a central player, that makes public procurement more effective and develops it.- SKI strives to inspire and support public organizations and their purchasing agents in achieving gains through efficient procurement and help promote an effective public administration.- Based on openness, equality and qualifications SKI strives to be the natural and inspiring focus point for all players involved in public procurement.- SKI must therefore be an innovative, effective and challenging workplace, that is able to attract and develop the best employees.

© OECD

A jo

int

initi

ativ

e of

th

e O

EC

D a

nd t

he E

urop

ean

Uni

on,

prin

cipa

lly f

inan

ced

by t

he E

U

SKI’s new strategyThe 8 dimensions of priority

Coherent solutions

Dialogue

Easy does it

One to many

Knowledge and documentation

We

Business

Increased use of existing initiatives

All initiatives must be evaluated on the following scales:

Isolated solutions

Monologue

Do it yourself

One to one

Feelings and beliefs

I

”Window-dressing”

Launching of new initiatives

© OECD

A jo

int

initi

ativ

e of

th

e O

EC

D a

nd t

he E

urop

ean

Uni

on,

prin

cipa

lly f

inan

ced

by t

he E

U

III. Coordinated volume The customers commit themselves

to buy a specific amount from a specific supplier on the framework contract. The supplier gives an extra discount.

Sub-strategies and specific actionplansAttractive framework contractsCommitted and coordinated volume

To

day

In t

he

futu

re

Tim

eTendering Buying

Before the tender The customer chooses one of the suppliers on the framework contract

The customer offers full supplier independence amongst the suppliers on the framework contract

I. Commitment to using the contract

Customers, typically from the customer group, commit themselves to use one of the suppliers on the framework contract when it is established. This is noted in the material presented in the tender process.

II. Coordinated volume The customers commit themselves

to buy a specific amount from a specific supplier on the framework contract. The supplier gives an extra discount.

III. Lowest daily price A customer obtains the price for the

day from a specific supplier on the framework contract for a specific product.

SKI obtains support from other customers.

IV. E-auction / Mini-tender The customers obtain a price for a

specific product/service with a specific volume and period of time.

(Until now only used in connection to the Danish state’s procurement programme and SKI’s contract in regard to canteen service)

I. Commitment to using the contract Customers, typically from the

customer group, commit themselves to use one of the suppliers on the framework contract for all procure-ment within the contract’s coverage.

II. Commitment to using a standard assortment from one supplier

Customers commit themselves to use a pre-defined assortment of products/services from only one specific supplier. The supplier is chosen by the customer group,

V. E-auction / Mini-tender The customers obtain a price for a

specific product/service with a specific volume and period of time.

SKI coordinates and obtains support from other customers.

If the mini-tenders are complex external consultant services can be involved.

IV. Lowest daily price A customer obtains the price for

the day from a specific supplier on the framework contract for a specific product.

SKI obtains support from other customers.

Yearly bonus to the customers Yearly bonus to the customers when the agreed volume has when the agreed volume has been reachedbeen reached

+0,05%+0,05%0,10%0,10%

+0,15%+0,15%

© OECD

A jo

int

initi

ativ

e of

th

e O

EC

D a

nd t

he E

urop

ean

Uni

on,

prin

cipa

lly f

inan

ced

by t

he E

UThe future strategy of SKI Primary focus points

1st wave 2nd wave 3rd wave

•Marketorientation

•Revitalisation of the organisation

•Processes and systems

•Buildingup of competences

•A deepening and broadening of partnerships

•Knowledge sharing & value-based leadership

2005 2007

© OECD

A jo

int

initi

ativ

e of

th

e O

EC

D a

nd t

he E

urop

ean

Uni

on,

prin

cipa

lly f

inan

ced

by t

he E

UThe future strategy of SKISKI – the interactive company.

SKI the interactive

companyExternallyInternally

Value-addingProductivity

Talented colleagues

Supportingtechnologies

Unique organisation

Good management

• CRM• ETHICS• ERP• Electronic

archives

• Partnerships• Structural frame• Building• Culture• Values• Knowledge-

sharing

• Growth• Simplification• Prioritising• Management

training

• Attractive work-place

• Competence-building

• Recruiting• Job

appraisal interviews

• Curiosity• Social

competence

© OECD

A jo

int

initi

ativ

e of

th

e O

EC

D a

nd t

he E

urop

ean

Uni

on,

prin

cipa

lly f

inan

ced

by t

he E

U

The future strategy of SKI SKI’s vision: ”Centre for Public Procurement”

Aims: • Openness• Cooperation –internally and externally• Flexibility• Proximity to customers, suppliers and

cooperating partners

Vision: SKI wants to be the natural and inspiring focus point for all persons and organisations involved in public procurement – in an attractive building.

The elements of the concept• Other organisations are invited to become

tenants• Project facilities• Seminar and conference facilities• Showroom facilities• Service for visitors

© OECD

A jo

int

initi

ativ

e of

th

e O

EC

D a

nd t

he E

urop

ean

Uni

on,

prin

cipa

lly f

inan

ced

by t

he E

U

Sub-strategies and specific action-plansAn attractive and professional workplaceWhy is competence development so important to SKI?

Customers’ expectations Customers' professionalization Customers ”deposit” their success at SKI Own ambitions regarding market orientation, dialogue

with top management and sale of solutions (instead of products/services)

Rising demands on competencies as a result of diminishing savings from procurement

The right customer-solutions can only be found through close collaboration between organisations

Demands oncompetencies

Competence development

Start of previous strategy in 2002

Today

Time

SKI has been through a fantastic turn-around… The competencies of management and

employees are fully utilized More and more new projects and activities

reveals the need for competence development

© OECD

A jo

int

initi

ativ

e of

th

e O

EC

D a

nd t

he E

urop

ean

Uni

on,

prin

cipa

lly f

inan

ced

by t

he E

U

Thank you for your attention! Comments and questions …