Leading global excellence in procurement and supply David Smith CB FCIPS PROCUREMENT SYSTEMS PERFORMANCE A UK GOVERNMENT CASE STUDY David Smith CB FCIPS

Leading global excellence in procurement and supply Former Commercial Director UK 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 Thinking The commercial function in Government used 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 Reduction Efficiencies Propriety How are we being measured? Absolute reduction in Spend Reduced staff numbers and overheads Speed of delivery More sustainable outcomes

Leading global excellence in procurement and supply Requisitions - Low Level Activity Introduction of Professional Purchasing Effectiveness Collaboration Efficiency Procurement –an established profession Making a business Contribution Board Level Recognition/Presence Policy through procurement E-enabled solutions Minister for Procurement Pre s

Leading global excellence in procurement and supply Key Suppliers Controls and Approvals Capability Common Commodities Growth Organisation & Shared Service Demand Management 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 What ’ 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 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 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 Systems, Processes, Technology and Knowledge - Data Influence Suppliers People

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 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 Management Is 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 Systems, Processes, Technology and Knowledge - Data Influence Suppliers People

Leading global excellence in procurement and supply Our 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

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 personally 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…