Public Sector Procurement OpportunitiesA Practical Guide to Supplying Food & Drink to the Public Sector in Scotland

George Noble – Supply Chain Development Manager - SAOS

CheapLow Quality

Bureaucratic

Only for Big Companies

A Changing LandscapeNational Food & Drink Policy has sustainable public procurement of food & drink as a distinct workstream.

Six Simple Steps - Guidance for public sector buyers to ensure fair access to contracts for SMEs

Establishment of Public Contracts Scotland web portal – list contract opportunities

More contracts being awarded on a MEAT basis, where price is only one factor

Introduction

George Noble - SAOS

•Guide launched by Cabinet Secretary Richard Lochhead in April 2010

•Available to download at scotlandfoodanddrink.org and ctwo.org.uk

•Practical guide for SMEs looking to supply the public sector in Scotland

The Market

•National Health Service

•Local Authorities

•Universities and Colleges

•Prisons

£130m market in Scotland with the main public sector buyers being:

Predictable income streamFavourable payment termsDemand unaffected by downturns

£130m MarketFinancially secure customer

Potential for improved produce utilisation

•Developing the capabilities required service public sector contracts often requires added investment and effort

•Distribution can be costly and complex

•Responding to tenders can be daunting for many SMEs

•Food safety and quality standards are high and must be met. SALSA & BRC are common requirements

Is This For Me?

Strategic Fit•Does supplying the public sector fit with the strategic goals for your business?

•Does it help or detract from growth/profit aspirations

•Will it enhance my competencies that will lead to other opportunities?

•Does it fit with my ideal customer profile?

Capacity & Resources•Can I supply the required range of products?

•Can I fulfil anticipated product volumes in full, on time at the right price?

•Am I aware of the risks in failing to meet contractual obligations?

•Do I have the capacity & skills for extra production?

•Do I have sufficient storage and distribution capacity?

•Can I meet food safety and quality assurance criteria?

Suitable Products•Are the type of products I sell in demand from the public sector?

•Best opportunities for SMEs lie in perishable products such as milk, bread & bakery, fruit & veg, fresh meat, poultry and fish.

•Am I able to sell seasonal products on a year-round basis?

Distribution•Can be a substantial challenge for SMEs

•Potentially wide geographic spread

•Many small drops are costly

•Ensure delivery costs are fully and accurately costedwhether using 3rd party or in-house logistics

•Develop new ‘en-route’ business to spread cost.

•Small delivery windows

Routes to Market

Supplying DirectlyProducer Public Body

Producer contracts directly with the public sector organisationPros

•Maintain control

•Maximise margin potential

•MEAT evaluation criteria, Sustainable Procurement and splitting of contracts into lots mean more opportunities for individual SMEs

Cons

•Contractual liability

•Logistics can be an issue

•Costs of compliance and due diligence

•Burden of tender completion

Supplying Indirectly

Producer supplies into first tier supplier to the public body

ProducerWholesaler/

Foodservice/Caterer Public Body

Cons

•Lower margin

•Greater sales effort required

•Easier for buyer to de-list your product

Pros

•No need to complete a tender•Distribution likely to be less costly•No contractual liability with final buyer•Access to other markets•Support for product from intermediary

Collaborate to Supply

Producers

•Supply directly or indirectly

•Loose affiliation to co-op

•Efficiencies in processing, grading and marketing of products

•Establish a delivery hub where products are consolidated – reduce delivery costs and miles travelled

•Offer a competitive mix of products and volumes

•Provide a single administrative organisation for buyers to deal with

Collaborate to Supply

AHLPG ForteithFoodservice

Argyll & Bute Council

Argyll Hill Lamb Producers & ForteithFoodservice . Collaborative producer pilot to supply Argyll schools with local lamb.

Collaborate to Supply•Lamb producer group formed to look at increasing profitability of Argyll hill lamb.

•Market finished lambs as premium branded product through ForteithFoodservice in Oban

•Successfully sold to existing Forteith customers and secured pilot supply of diced shoulder to Argyll schools

•Pilot proved successful and profitable and helped achieve carcass balance for lambs – higher value cuts to hotels and restaurants etc

Collaborate to Supply

•250 lambs 08/09 pilot, now looking to scale up to 1000 lambs.

•Return achieved of £13 per lamb as opposed to £5 per lamb received pre-pilot.

•Also selling Argyll Lamb burger into Cal Mac

Key Advice for SMEsDon’t rule out supplying the public sector – many of the misconceptions aren’t true

Register on Public Contracts Scotland portal

Give yourself plenty time to respond to tenders – do not leave it to the 11th hour!!

Be conscious of price, but more importantly take time and effort to ensure you clearly articulate your strengths in non-price factors

Take care to get your pricing correct

Support

Scotland Food & Drink Information Service –helpline@scotlandfoodanddrink.org or 0845 601 3752

Collaboration Support – www.ctwo.org.uk

George Noble – Supply Chain Development Manager – SAOS – george.noble@saos.co.uk