ArcBlue Consulting It’s Time for Procurement Chris Newman Director ArcBlue Consulting

The Global Procurement Network © ArcBlue Consulting 2 QLD State Government Contract Management Assessment and training program Social Procurement Development VIC State Government Training Programs Review and Certification Programs VIC Local Government LEAP Spend Analysis and Procurement Development Contract Management Guidelines and Development Training Social Procurement Programs NZ Government Agency assessment Spend Analysis NSW State Government Accreditation process with 7 Departments Procurement Project delivery Capability Model Development State Government Local Government SA Local Government Roadmap Program Regional Opportunity Analysis Programs Procurement Capability Assessment / Development Federal Government Contract Management Training Federal Government Queensland Local Government Local Buy Training Spend Analysis Pilot Gold Coast Contract Management Training and Capability Development WA Local Government Procurement and Contract Management training Procurement Handbook Development Spend Analysis SA State Government Savings Programs New Royal Adelaide Hospital Procurment NSW Local Government Procurement Development Program across 30+ councils Procurement Leadership Program Regional Development Programs Social Procurement Guidelines Our public sector experience

The Global Procurement Network © ArcBlue Consulting 3 Contents  Implications of rate-capping  Why procurement - what is the data telling us?  How can strategic procurement be part of the solution?

The Global Procurement Network © ArcBlue Consulting 4 Implications of rate-capping  A burning platform for the next stage of professionalisation or  A handbrake on sector capacity and development  Opportunities for innovation  What does it mean for regional and sector collaboration

The Global Procurement Network © ArcBlue Consulting 5 Operating in a commercial world  Delivering and Demonstrating savings, value and productivity improvements  Data-based decision-making  Taking a structured approach  Building the right skills and capacity  Balancing commercial and community

The Global Procurement Network © ArcBlue Consulting 6 Procurement Trends and Insights MAV LEAP Program

The Global Procurement Network © ArcBlue Consulting 7 LEAP Background  A continuous improvement program designed to assist councils, regions and the sector to: –Achieve sustainable savings and value for money –Support local and regional economic development Identify and pursue shared services opportunities –Improve probity management and compliance –Improve organisational and sector capability  23 councils currently participating in LEAP  Data insights are based on first 15 councils

The Global Procurement Network © ArcBlue Consulting 8 >24,600 Active suppliers in single year $1,300 million spent across 15 metropolitan councils in FY15 ~467,000 Individual transactions (invoices) processed LEAP Program Statistics 45 – 65% of total council spend

The Global Procurement Network © ArcBlue Consulting 9 17% - 37% of spend in the local (Council) area. 40% - 60% of Councils spend is with top 20 suppliers Spend quarter 4 opex and capex spend spikes in key categories suggesting rushed end of budget cycle spend. ~$52,000 average spend per supplier, predominantly below tender threshold

The Global Procurement Network © ArcBlue Consulting ,000 75% of transactions <$1,000 value Efficiency $2,875 average value per transaction $25 million spent processing transactions with value of <$1,000 28% of all suppliers were used only once during the financial year, ~ 7,000 single use suppliers Up to $73 Per transaction cost of traditional PO process

The Global Procurement Network © ArcBlue Consulting 11 Low-value Procurement White Paper

The Global Procurement Network © ArcBlue Consulting 12 Low-value Procurement White Paper

The Global Procurement Network © ArcBlue Consulting 13 Capability and Maturity

The Global Procurement Network © ArcBlue Consulting 14 Procurement in Local Government State Regional Local

The Global Procurement Network © ArcBlue Consulting 15 Case Study: Barossa Regional Procurement Development Program Objectives & Process Program Objectives:  Make sustainable savings & create efficiencies  Stimulate economic development  Improve probity and reduce risk  Build staff and organisational capability in procurement  Strengthen regional collaboration Joint Council Kick-off Data Collection Individual Council Workshops Detailed Joint Spend Analysis Opportunity Analysis Workshop Regional Roadmap Develop- ment and Validation Final Roadmap Workshop Progress Reviews and Support

The Global Procurement Network © ArcBlue Consulting 16 Barossa Regional Procurement Program 16  Regional Collaborative Procurement Program – Start May 2014  Regional Governance MOU in place – October 2014  Regional Resource engaged – February 2015  Collaborative Projects Standardisation of process and documents Development of regional procurement website  Agreed priority regional contracts delivered since February: Regional Building Maintenance/ Trade Services Panel Audit Services Road Re-Seal Program Stationery Line Marking  Savings to date $800,000 – Target $2.5m/ year (5%)  Increased regional spend and internal efficiencies

The Global Procurement Network © ArcBlue Consulting 17

The Global Procurement Network © ArcBlue Consulting 18 Barossa Region – Next Steps 18  Expanding model to shared services investigations  Correlating spend data against service, output and demographic data  Using opportunity analysis to structure and prioritise opportunities

The Global Procurement Network © ArcBlue Consulting 19 Strategic Procurement  Procurement represents our most tangible area to deliver and demonstrate savings: External and internal efficiencies Continuing to move from administrative to strategic  Structured programs Targets and measurement Commercial focus Building capability – council, region, sector Demonstrating ‘value’ while maintaining our commitment to community