david smith cb fcips procurement systems performance
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Leading global excellence in procurement and supply
David Smith CB FCIPS
PROCUREMENT SYSTEMS PERFORMANCEA UK GOVERNMENT CASE STUDY
David Smith CB FCIPS
Leading global excellence in procurement and supply
• Former Commercial DirectorUK Department for Work and Pensions
• Former Deputy CPO UK Government• CIPS Past President
David Smith CB FCIPS
Leading global excellence in procurement and supply
Why is Procurement so important to
Public and Private Sectors?
Leading global excellence in procurement and supply
Procurement is ‘Big Business’
Leading global excellence in procurement and supply
Procurement is ‘Big Business’
• UK Central Government spends over £66 billion per year on Goods and Services (non military)
• UK Public Sector spends over £250 billion per year on Goods and Services
“from paperclips to prisons”
Leading global excellence in procurement and supply
Government Policy touches its citizen’s lives and defines them
…..and can save them
Procurement is often at the forefront of delivery of key services
JUSTICE, HEALTHCARE AND HOSPITALS, SOCIAL CARE, CULTURE, TRANSPORT, EMERGENCY
SERVICES, WELFARE REFORM
Leading global excellence in procurement and supply
Old ThinkingOld Thinking
The commercial function in Governmentused to be seen as:
• A Barrier
• A Process
• All about requisitions
• Just Negotiation!
• Limited Added Value
Leading global excellence in procurement and supply
The General Election in the United Kingdom in 2010 brought
• The first coalition government since 1945• The worst financial position in generations• An agenda to tackle the financial deficit first and
foremost• An agenda to reduce expenditure• An agenda to address waste and inefficiency• An agenda that promoted procurement as a key
enabler to deliver efficiencies and savings yet improve public services
Leading global excellence in procurement and supply
Top suppliers asked to contribute to Government’s efficiency drive
Government to re-negotiate with its
suppliers
Quick Wins Needed
Procurement at the heart of Government’s efficiency
drive
Leading global excellence in procurement and supply
Delivery of best value for money
Quality Services
Cost ReductionEfficiencies
Propriety
How are we being measured?
Absolute reduction in SpendReduced staff numbers and overheads
Speed of deliveryMore sustainable outcomes
Leading global excellence in procurement and supply
Requisitions - Low Level Activity
Introduction of Professional Purchasing
EffectivenessCollaboration
EfficiencyProcurement –an
established profession
Making a business ContributionBoard Level
Recognition/PresencePolicy through procurement
E-enabled solutionsMinister for
Procurement
Pre 1980 1980s 1998-2014
Leading global excellence in procurement and supply
• Key Suppliers
• Controls and Approvals
• Capability
• Common Commodities
• Growth
• Organisation & Shared Service
• Demand Management
2010-14
The Key Features of Procurement Reform
Leading global excellence in procurement and supply
The role of procurement in ‘Growth’•Small & Local Businesses
•Lean Process
•‘Licence to Operate’
•Early Engagement with Market
•Transparency,
•Reducing Expenditure and delivering vfm
Leading global excellence in procurement and supply
Issues!
• Implementing cultural and behavioural change quickly
• Transforming the ‘Centre’s capability ’ to give Departments the confidence to centralise
• Delivering more with less!!!!!
Leading global excellence in procurement and supply
WhatWhat’’s Gone Well?s Gone Well?
• Government/Ministerial commitment given procurement higher profile than ever.
• Crown management of key suppliers.• Level of efficiency savings.• Freezing discretionary spend, reducing demand.• Simpler, faster procurements.
Leading global excellence in procurement and supply
‘The Enablers to Change’
•Systems , Processes, Technology and Knowledge - Data
•Influence
•Suppliers
•People
Leading global excellence in procurement and supply
‘The Enablers to Change’
•Systems , Processes, Technology and Knowledge - Data
•Influence
•Suppliers
•People
Leading global excellence in procurement and supply
Basic Data
• How much do we spend?• Who do we spend it with (and why)?• What do get for our money?
• Then make informed choices!
Leading global excellence in procurement and supply
‘The Enablers to Change’
•Systems , Processes, Technology and Knowledge - Data
•Influence
•Suppliers
•People
Leading global excellence in procurement and supply
Leading global excellence in procurement and supply
Measurement!
•Delivering!!•Cost of Function (absolute and %)•Third Party Expenditure against total Headcount•Reduce cost of function and improve Rate on Investment
Leading global excellence in procurement and supply
‘The Enablers to Change’
•Systems , Processes, Technology and Knowledge - Data
•Influence
•Suppliers
•People
Leading global excellence in procurement and supply
Working with our Suppliers
• Out of every £100 we have we spend £50 with our suppliers (65% of this is with our top ten) Our suppliers play a crucial role in delivering both front line as well as support services
• Our challenge is to ensure that our suppliers can stay long enough to contribute to delivering VFM and improving our efficiency
Leading global excellence in procurement and supply
Suppliers
• Government being seen a single customer
• Getting Better Value
• Competition and the role of Local & Small Businesses
• Supply Chain Management •Who is being managed?
Leading global excellence in procurement and supply
Supply Risk ManagementIs this the most important thing that we do?
• Understanding dynamics of key suppliers • Understanding their Supply Chain• Contingency planning• Understanding the Risks • Risk Mitigation• Supplier Relationship Management
Leading global excellence in procurement and supply
Who are your key Suppliers?
•By Value?•By Criticality?•By Vulnerability?
Who are their key Suppliers?What are their risks?Who is a more important customer than you?
Leading global excellence in procurement and supply
‘The Enablers to Change’
•Systems , Processes, Technology and Knowledge - Data
•Influence
•Suppliers
•People
Leading global excellence in procurement and supply
Our PeopleOur People!!
Leading global excellence in procurement and supply
What do we expect from the next generation of public sector procurers?
•Act with Propriety• Know what they want to buy and why•Market Aware• Commercially and financially aware •Act on behalf of the public sector
Leading global excellence in procurement and supply
What do we expect from the next generation of public sector procurers?
• Improve and drive value from existing contracts• Manage corporate demand,• Understand the future supply chain• Is not averse to risk in procurements but knows
decisions must be managed, commercially advantageous and legally sound
Leading global excellence in procurement and supply
Leading global excellence in procurement and supply
Ambition?
• ‘World Class’ Commercial Function
• Staff 100% ‘Commercially Aware’
• 100% decisions ‘Sustainable’
• An organisation that understands and wholly manages supply risk and delivering value
Leading global excellence in procurement and supply
Current Issues keeping Procurement at the ‘Top Table’
• MONEY!!!!!!• The Economy
Supplier Vulnerability Understanding dynamics of key suppliers Contingency planning Global Market
• Data Management• Delivery!
Leading global excellence in procurement and supply
Issues being addressed Issues being addressed personally by CPOspersonally by CPOs
• ETHICS & FRAUD
• SUPPLY CHAIN RISK
Leading global excellence in procurement and supply
Is it our time and our
opportunity to make a
difference!
Leading global excellence in procurement and supply
Thank you for listening
and enjoy…
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