1. World class services for a world class city www.capitalambition.gov.uk London Procurement Strategy Ken Cole Commercial and Procurement Advisor 9 th September 2009 Capital Ambition

2. World class services for a world class city www.capitalambition.gov.uk Why a London Strategy? DCLG– need to avoid a central model being imposed (e.g. McClelland in Scotland) Response to OEP / Roots and needs of new CAA Create a smarter commercial environment – London acting as London Cashable savings 2010/11 and beyond

3. World class services for a world class city www.capitalambition.gov.uk Its sizeable expenditure… £9.3 billion influencable third party spend in 2007/8 Average 7,300 suppliers per authority 145,000 suppliers in total 1,583 trade with 10 or more, 4,838 with 5 or more Top 1,000 suppliers nearly 60% of total expenditure

4. World class services for a world class city www.capitalambition.gov.uk..which has a direct impact on Service Outcomes Cashable Savings Use of Resources Local Economy Sustainability

5. World class services for a world class city www.capitalambition.gov.uk Understanding our Position Commercial Risk / Exposure Bottleneck £2.3 billion (25%) Specialist care, temporary agency (some), interims Strategic £4.2 billion (46%) Outsourcing, capital works, waste collection, elderly care provision Routine £0.5 billion (5%) Cleaning, materials, office supplies, furniture, IT consumables Leverage £2.3 billion (24%) Vehicles, temporary agency staff (some), consultancy, ICT hardware, advertising Value Market Scarcity of supply, limited savings, immature markets Strategy Removing barriers to entry, market stimulation Market Scarcity of supply, significant savings, in large contracts but hard to exploit Strategy Supplier Relationship Development, Contract Management, Partnership Sourcing Market Abundant supply, low margins, high turnover of suppliers, rapidly changing conditions Strategy Automate and let go, Use an existing contract Market Few suppliers but highly competitive, and high margins Strategy E-Auctions, Category Management, Commoditization

6. World class services for a world class city www.capitalambition.gov.uk Seeking Cashable Gains Market Scarcity of supply, limited savings, immature markets Strategy Removing barriers to entry, market stimulation Market Scarcity of supply, significant savings, in large contracts but hard to exploit Strategy Supplier Relationship Development, Contract Management, Partnership Sourcing Market Abundant supply, low margins, high turnover of suppliers, rapidly changing conditions Strategy Automate and let go, Use an existing contract Market Few suppliers but highly competitive, and high margins Strategy E-Auctions, Category Management, Commoditization Already heavily exploited. Savings are now marginal, less than 2% Localised markets, takes time to develop. Cost avoidance is the objective Significant savings to be accrued, often 5%+ but takes time. Need to act as London e.g. through SRD Significant savings, 10%+ but not fully exploited. Often controlled by service departments

7. World class services for a world class city www.capitalambition.gov.uk Collaboration in Action ICT Hardware e-Auction March 2009 (15 London authorities - £1.9M cashable) – Collaboration in action PIP (cashable savings continue to accrue) – Market Influence Postal Services (cashable savings in range of 20-25%) – Smarter Working

8. World class services for a world class city www.capitalambition.gov.uk Potential targets for regional e- Auctions Highways materials / services – up to £250M Construction materials – circa £200M Commercial vehicles – spend nearly £100M per annum

9. World class services for a world class city www.capitalambition.gov.uk Why these three areas? Capable of standardisation of ranges / specifications High expenditure – worth investing effort Significant leverage at London level A 10% improvement would generate nearly £50M

10. World class services for a world class city www.capitalambition.gov.uk Contact Details Ken Cole 07721 556537(M) 01784 898045 (DD) ken.cole@londoncouncils.gov.uk or ken.cole@sps-consultancy.co.uk