1. London Heads of Procurement Network 30 March 2010 Analysis of the WLA Controllable Expenditure Proposed Category Management Reviews

2. Background Detailed analysis of spend data across the WLA has been completed using the Capital Ambitions Online Expenditure Analysis (OEA) tool Analysis offers a range of opportunities for securing efficiency savings through improved collaboration Strategic use of category management reviews will provide the greatest opportunity for securing efficiency savings WLA procurement spend in excess of £1.4 billion More than 26,000 suppliers generate 500,000 invoices Number of suppliers used by each Council ranges from 2,501 to 10,936 Amount spent by each Council with top 50 suppliers ranges from 47-71% of total controllable expenditure Between 93-97% of expenditure is paid to the top 20% of suppliers Small amount of expenditure (3–7%) spent with a disproportionately large number of suppliers (80%)

3. Analysis DescriptionBrentEalingHarrowHillngdnLBHFRBKCTotals% £m Total Expenditure330.4228.5208.5186.9267.7173.11,395.1100 Top 50 No Suppliers163.3121.4148.289.0161.487.777155 Top 20% Suppliers321.4211.9197.8175.3256.5163.21,326.195 Bottom 80% Suppliers8.916.610.711.611.29.9695 Table 1: Supplier / Expenditure ratios

4. Analysis cont… Table 2: Supplier / Invoice ratio *includes duplicated suppliers DescriptionBrentEalingHarrowHillngdnLBHFRBKCTotals% No Total Paid Suppliers10,9333,9562,5024,2695,1155,539*32,314100 Total Invoices122,18461,28153,01557,799106,34294,309494,930100 Invoice Av - £s£2,704£3,728£3,933£3,233£2,518£1,835£2,819100 Supp/Inv Ratio11:116:121:114:121:117:115:1

5. Analysis cont… Table 3: Spend categories – Category management opportunities DescriptionSpend £m Repairs and maintenance – Buildings171 HR Temporary Agency Staff67 Financial Services57 Facilities Management54 Professional Services – Consultancy34 Healthcare22 HR – Other22 Street and Traffic management20 Vehicle Management18 Travel, training and conference expenses11 Education (Miscellaneous)9 Horticultural Services4 Environmental Services – testing & inspection1

6. Potential Opportunities WLA Forward Plan of Procurement Shared Suppliers Category Management The Tail

7. Category Management Review Approach will drive the collective WLA procurement agenda More likely to deliver cashable savings than a reactive approach to opportunities Category management likely to drive, or be driven from, service reviews and include some level of business process re-engineering Buy-in from services therefore crucial to success Must be adequately resourced

8. Recommendations Short Term (April 2010) Include a 3-year forward plan of procurement in annual business plan for each borough Consolidate into a sub-regional forward plan - inform decisions on collaboration and packaging of contracts Begin process of planning and analysis for category management reviews Identify and start supplier review process Short/Medium Term (April 2011 +) reviews the top 100+ organisations being paid >£1,000,000 per annum across the WLA; to negotiate additional savings under their respective contracts with emphasis being placed on aggregation of WLA volume Medium/Longer Term (April 2011+) Implement the category management review programme on an ongoing basis