Procurement update

Presentation to the Best Value Committee

Wednesday 22nd September 2004

Stuart Rowe – Assistant Head of Finance - Strategic Procurement

The agenda ……….

Background

Update on the national perspective

The past six months

Progress

Background

The Graham Davies report - 2002

National procurement strategy (Sir Ian Byatt)

Sets targets to be achieved for 2004/2005/2006

Key strategy themes:

Procurement matters Cultural shift Providing leadership and building capacity Partnering and collaboration Doing business electronically Stimulating markets and achieving community benefits

General comments ….

Robson Rhodes review

SAP review

Areas of key work:

Information

Organisational financial control framework

SAP systems

Organisational alignment

Draft Audit Commission report

An update on the national strategy….

Regional Centres of Excellence :

Kent lead for the South East in partnership with

Surrey, Hampshire and the Berkshire Unitaries

Management Board set up

Director appointed

Business case in draft to the ODPM

6 work streams

David McKibben leads the Transport work

stream

Gershon – an extended role

Get agreement to a corporate procurement strategy:

Reviewing the current arrangements for procurement

Challenging the status quo

Creating a strategy to achieve best value and best use of

revenue resources

Set performance targets (Benchmarking)

Develop e-procurement within the Council

Deliver the planned Council procurement savings targets

Develop partnership and collaborative working opportunities

Meet the National Procurement Strategy targets

My key objectives …

What are we doing corporately

• There is a national strategy for

procurement

• The Audit Commission are

gong to major on VFM

• We are establishing a Strategic

Procurement Board

• We are developing our own

strategy

• It’s in draft – we need to consult

• It has to involve a lot of people

• It has to balance a number of

priorities

Oxfordshire County Council Procurement Strategy 2004 – 2007 Page 1 of 1

Draft

Setting clear priorities – our work plan Setting clear priorities – our work plan

2004 / 2005 Corporate Procurement work plan - Summary view

No

Priority area

Objectives

Strategic link

1 Deliver cost savings and improve

information

Contribute to the Councils 2004/2005 efficiency savings plans, target £100k

Plan the 2005/06 and 2006/07 procurement savings targets

Improve procurement information via SAP

ROP2

MTFP

2 Improve procurement capability

and performance management

Build corporate procurement capacity, leadership and management of the

corporate procurement team

Develop a procurement performance management set of KPI’s

ROP2

NPS

3 Develop the Corporate

Procurement Strategy

Develop and publish a 3 year corporate procurement strategy

Develop and get agreement to a detailed 3 year implementation plan for the

strategy and ensure the national procurement strategy targets are met

NPS

4 Improve procurement marketing

and communications

Improve OCC awareness of corporate procurement work plan and initiatives

Improve access and awareness of procurement information to OCC staff

ROP2

5 Improve procurement corporate

governance and financial control

Contribute to the OCC governance and financial control improvement

agenda

ROP2

MTFP

6 Develop E-procurement

Develop a business case for e-procurement across the council NPS

IEG4 targets

7 Increase partnering Establish partnering arrangements with the Districts and the Regional

Procurement Centre of Excellence (Kent)

ROP2

8 Provide professional leadership Professional leadership of procurement in the Council

Professional development and leadership of the corporate procurement team

NPS

We spend our money, broadly, in two ways …

Direct spend:

direct spend is important to service delivery and can have a high degree of service and financial risk, it can be of high financial value and more importantly in most organisations, it is customer facing. This type of procurement is normally undertaken with significant technical Directorate level input with central support from procurement / commercial / legal specialists.

In-direct spend:

In-direct spend however is not normally directly customer facing and represents an overhead to the organisation, this type of spend is usually consolidated and aggregated and managed in a category management framework at a central point within the organisation. The purpose of this being to consolidate and aggregate volume to be able to get the best deal and to manage product standardisation and increase variety reduction and manage the supply chain efficiently.

This description of expenditure is important, as modern strategic procurement models / thinking and tools and techniques seek to

manage this spend in different ways, this has implications for the level at which the spend is managed and the way in which the spend

is managed.

Wave 1 work plan ….

OCC WAVE 1 2004/2005 procurement cost savings

Current Target Save Forecast Actual Award e

No Spend area spend (est) Saving FYE % PYE saving PYE FYE in auction Comments

1 Recruitment advertising 1,410,000 36,000 3% 60,500 76,375 76,375 76,375 Done COMPLETED

2 Catering 1,900,000 285,000 15% 95,000 Dec Y OJEU advert out

3 Cleaning and waste NO ACTION YET

4 Employees / Agency staff 1,210,000 60,500 5% 20,166 Dec Y Project group being established

5 ICT hardware 1,300,000 130,000 10% 75,833 Sept IT hardware mini competition

6 Office NO ACTION YET

7 Postage and carriage NO ACTION YET

8 Stationery 800,000 320,000 40% 106,666 Dec Y OJEU advert out

9 Telecoms actual 1,029,000 205,800 20% 137,625 241,462 177,125 241,462 Dec COMPLETED

10 Telecoms additional 2,280,000 375,000 133,000 ? Additional savings potential

11 Paper 300,000 90,000 30% 30,000 Dec Y OJEU advert out

12 ICT consumables 100,000 30,000 30% 10,000 Dec Y OJEU advert out

13 Training venues 287,756 8,632 3% 5,035 Sept

14 Print 500,000 25,000 5% Mar Project group being established

15 Hotel accomodation 263,000 7,890 3%

11,379,756 1,573,822 673,825 317,837 253,500 317,837

What procurement cost savings have been made so far ?

Dept Area Annual Spend

Potential saving

Actual saving incl

1 HR Recruitment advertising £1,410,000 £50,000 £76,375

2 ICT Fixed to mobile £148,050 £20,000 £29,375

3 ICT Fixed line calls – supplier b £204,500 £10,000 £11,162

4 ICT Fixed line calls – supplier c £352,500 £100,000 £155,100

5 ICT Line rental £504,075 £25,000 £45,825

TOTAL £317,837

Other procurement VFM review areas in the pipeline:

• Stationery• Paper• ICT consumables• Printing and marketing spend• Telephony

• Social and Healthcare • Agency staff• Training venues• Hotel and accommodation

Capacity - what are we doing

Current central purchasing unit

Assistant

Head of Finance

1 wte

Head of Purchasing

Bill Stewart

1 wte

Buyer

Frank Collier

1 wte

Office manager

Pat Jones

1 wte

Admin officer

Verity Roberts

1 wte

Personal

Assistant

.50 wte

Suffolk County Council …

PRO CUREM ENT AND CO M M ISSIO NING DIV IS IO N - STRUCTURE O CTO BER 2002

P ersona l A ss is tantK a tr ine O 'R ourke

A dm in is tra t iveA ss is tant

C a tr iona G il lesp ie

A dm in is tra t iveA ss is tant

A m y R ow n tree

A dm in is tra t iveA ss is tant

N icky Lynn

S upport S e rv ices O ff icerK a tr ine O 'R ourke

A ss t B uyerS teven F isk

A ss t B uyerA ndrea W eed

F ood & C a te r ingS en io r B uyer

D om in ic W arren

Lead B uyerV acan t

T ra inee B uyerM art in Jenn ings

IC TS en io r B uyer

G il lian G lanv i l le

B uye r &Lease S chem esC hr is Jackam an

B uye rD oug Lew is

T ra inee B uyerM ichel le T ucker

E nergy &V eh ic les

S en io r B uyerV acan t

S enio r U t i li t iesO fficer

P au l B one l lo

E nergy & Env ironm entO fficer

C a the r ine R eeve

E nergy O ff icerJohn M cQ u inn

S en io r A dm inA ss is tant

Jean H aynes

C h ie f Ene rgy &E nv ironm ent

O fficerD av id R icha rdson

P urchas ing M anagerD av id G aze ley

M ajo r Accoun ts,E ne rgy & Env ironm ent

C us tom er D evptM arke t ing O ff icer

Joy A l len

S en io r B uyerR a lph M u rray

S en io r B uyerP au l B u tter f ie ld

Lead B uyerS ue A nd rew s

B uye rJody A dam s

B uye rA sh ley S a le

B uye rT ony P a ine

C us tom erL ias ion A sstA nna A bbo tt

C us tom erL ias ion A sst

L inda She l ley

T ra inee C ustom erA ss t

E ve H ardw icke

Lead D r iverJohn C reasey

D r iverK ev in B u rrow s

D riverM ervyn N unn

D is tr ibut ion O ff icerJohn K n igh ts

C us tom erL ias ion O ff icerD ebb ie G reen

C h ie f B uyerC l ive H am m ondC ore C us tom ers

S en io r B uyerB en D ona ld

Lead B uyerV acan t

P artne rsh ipP ro ject

Lead B uyerM ar ia C aborn

E com m erceP urchas ing D evpt

O fficerIan F itch

P ro jec tsS en io r B uyer

Jon Ing le

P ro jec ts & S e rv ices M anagerR icha rd H a ll

S erv ices , R esea rchP ro jects & C om pe ti t ion

P rocu rem en t M anagerK a tr ina Brow n ing

C are Se rv ices

H ead of P u rchas ing & C ontrac t ingA ndy S eve ry

A ss istan t D irec tor(P rocurem ent & C om m ission ing)

N icol T horn ton

Capacity - what resources do we now have

Corporate Procurement Team Organisational Structure July 2004

Ian Clarke(Vacancy)Strategic

Procurement Manager

Joanne AlleyStrategic

Procurement Manager

VacancyPrincipal Procurement

ManagerIn-direct spend

VacancyPerformance and

Information analyst

Jo RicherTeam administrator

and PA

Frank CollierSenior Asst Procurement

Manager

Stuart RoweAssistant Head of

Finance - Strategic Procurement

Pat J onesAsst Procurement

Manager

Verity RobertsProjects assistant

David WoodStrategic

Procurement manager

John Jackson – Director of Resources

Chris Gray – Head of Finance

Jeremy Acland(Vacancy)

Principal Procurement Manager

Direct spend

VacancyProcurement Strategy and

policy manager

Bill StewartHead of Purchasing

ServicesLegal and projects

Priorities

Priority area

1 Build central capacity “to do”

2 Engage the Directorates in the procurement strategy development process

3 Recruit “interim managers” to start key procurement work

4 Develop initiatives with the Districts and with the Thames Valley Strategic Health Authority

5 Ensure cost savings targets and National Strategy targets are met

6 Develop the Corporate Procurement Strategy and take to CCMT and other appropriate forums

Priorities – an update on progress

Priority area Update

1 Building central capacity “to do” • Adverts out, two strategic procurement managers appointed• Due to go out to advert for additional posts this month

2 Engaging the Directorates in the procurement strategy development process

• Corporate Procurement Strategy Development Group established (has met three times)

3 Recruiting “interim managers” to start key procurement work

• Done

4 Developing initiatives with the Districts and with the Thames Valley Strategic Health Authority

• Spend analysis commissioned with the Districts• SPPO agreed by joint Chief Executives• Joint work with TVHA being developed

5 Ensuring cost savings targets and National Strategy targets are met

• National targets to be built into year 1 work program• Savings targets will be met FYE• Good start made, good project management crucial

6 Developing the Corporate Procurement Strategy and taking it to CCMT and other appropriate forums

• Draft corporate procurement strategy taken to CCMT on 28 th April and business case going back on the 9th June:

– Corporate strategy agreed in principle– Development of a strategic procurement board agreed