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How to get more money for those it’s really all about?
Seminar jointly arranged by the Ministry of Finance of Turkey and OECD/Sigma
The New Public Pocurement Procedures and Instruments
The Danish system on framework agreements, centralised and coordinated purchasing
Presentation by Mr. Søren Jakobsen, CEO, SKI A/S
Ankara, Turkey, 5-6 February 2008
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UThe Danish system on framework agreements, centralised and coordinated purchasingAgenda
A few facts about the company SKIThe company’s new strategy The future strategy of SKI
• SKI – the interactive company …
• Our vision for a “Centre for Public Procurement”
• Thoughts on competence development
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UA few facts about the company SKI
The company is situated at the harbour front in Copenhagen
Limited company established in 1994
Business modelA percentage (typically 1%) of turnover on contracts from vendors
Field of activityContributing to greater efficiency in the area of public purchasing by establishing and maintaining attractive framework agreements
Number of employees: app. 60
Number of framework agreements: app. 50
Owners• Ministry of Finance (55%)• KL, the National Association of Local Authorities (45%)
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UA few facts about the company SKI Present activities
Framework contracts (on large ’standardized’ procurement areas) Advise on public procurement (tools for estimating procurement
volume, data collection and handling, choice of supplier and solutions, procurement policy and strategy, green procurement, etc.)
Building of qualifications (user and networking groups, courses, seminars and conferences, training programs for vendors sales staff)
Publications and communication (guides, best practices, articles, PR, advice and aid regarding internal communication)
Tools (electronic tendering system, mini-tenders, e-auctions) E-commerce initiatives (customer-related price lists, advice on
implementation of e-commerce) Assistance from external consultants (advise on what and how to
buy, spend analysis, etc.)
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A few facts about the company. SKI’s turnover broken down by customer segments.
+18%
+26%
+17%
+19%-9%
Central government Municipalities Semi-public
companies Regions
(mill. DKK.)
MA
50%
28%
11%11%
+20%9.400 m.DKK(=1.250 m.Euro)
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IT
Energy
Tele & data communication
Travel
Food
Furniture
Office stationary and books
Vehicles
Equip. for research & science
Misc. electronics & hand tools
Kitchen equipment
Misc.
A few facts about the company. SKI’s turnover broken down by main product categories
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UA few facts about the company SKI’s focus on products and services
Potential turnover
Le
vel o
f S
tan
da
rdiz
ati
on
Large
Hig
h
Small
Lo
w
SKI’s focus in 2003
SKI’s focus in 2003
SKI’s focus in 2006
SKI’s focus in 2006
IT-standard hardwareIT-standard software
Tele and data communication
Vehicles
FoodTravel services
Office stationary
ElectricityGas
IT- and management consultancy services
Open Source
Printed matters
IT for education
Building and construction
Roadwork
Cleaning
Craftsman services
Hospital articles
Medicine
Eldercare
Special software
Special hardware
Ambulance-service & patient transport
Business process services
Clothing
Window-cleaning
Lawyer- and accountant-service
Handicap aid
Cleaning articles
White goods
Financial services
Newspapers/magazines
Advertising
Office machines
8 billion DKK
4 billion DKK
132 billion DKK
Furniture
Fuel
Hospital equipment
IT-outsourcing
Scanning of construction drawings
Mail and parcels
IT-outsourcing:-Mainframe & Midrange-Distributed environment & application handling
Engineering services
Courses & conferences
Hearing aid
Catering services
Guard services
SKI’s focus in 2009
SKI’s focus in 2009
Temporary workers
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USKI’s new strategy Background
The goals of the current strategy from 2002 are accomplished.
The Danish State has established their own procurement programme.
A major restructuring of the Danish public sector – fewer but larger local governments – took effect on January 1, 2007
Local procurement networks have been established.
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SKI’s new strategyOverview What is new in SKI’s strategy?1. Creating a foundation for further gains from procurement by pooling and
co-ordinating procurement volume and a closer involvement in the customer's procurement.
2. Strengthened focus on local government.
3. Improved documentation of savings both by product group and by customer.
4. More dynamic financing of SKI’s activities
5. Partnerships with the leading and interested customers
6. Easier use of SKI’s framework contracts through further development of the contracts’ content, connection and accessibility.
7. Strengthened activation of suppliers. Local as well as international.
8. ”Packaging” of framework contracts, services and communication so that SKI is able to offer coherent solutions and meet the customers’ political agenda, and thereby secure managerial impact and support.
9. Securing a more qualified procurement debate through documentation and presentation of facts.
10. Investment in renewal.
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USKI’s new strategyMission
SKI creates documented increased returns of scale in public procurement by pooling volume, qualifications and system development for the benefit of SKI’s customers.
Through close cooperation with customers and suppliers SKI secures attractive framework contracts.
SKI’s framework contracts make it easy for the public sector to purchase the needed solutions, products and services in the cheapest possible way while showing environmental, energy and social responsibility.
SKI’s earnings must make investments in new procurement initiatives possible. Initiatives that must be prioritised in a commercial way.
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SKI’s new strategy Vision
SKI strives to be a central player, that makes public procurement more effective and develops it.
SKI strives to inspire and support public organizations and their purchasing agents in achieving gains through efficient procurement and help promote an effective public administration.
Based on openness, equality and qualifications SKI strives to be the natural and inspiring focus point for all players involved in public procurement.
SKI must therefore be an innovative, effective and challenging workplace, that is able to attract and develop the best employees.
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USKI’s new strategyGoalsGrowth
• SKI’s turnover must increase to 13 billion DKK by 2012• The turnover from the municipalities must increase to 50% by 2012.• Growth and new initiatives must be self financed. The average return
before tax in the years 2008 to 2012 must be 1 million DKK per year.
Trust • For each tender the coordinated turnover must be at least 25%.• For each tender a documentation of savings that is accepted by
customers must be made.• During 2008 a minimum of 5 partnerships between customers and SKI
must be established, and the number must grow by 2 each of the following years.
Qualifications • There must exist a plan for competence development for each
employee.• Change of staff (employee initiated) must not exceed 10% per year.
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1. Attractive framework agreements
1. Attractive framework agreements
2. A new order of prioritybetween customers
2. A new order of prioritybetween customers
3. Cooperation3. Cooperation
4. A new order of prioritybetween contract areas
4. A new order of prioritybetween contract areas
5. An attractive andprofessional workplace
5. An attractive andprofessional workplace
6. A synergy with thesuppliers
6. A synergy with thesuppliers
7. Electronic purchasing7. Electronic purchasing
8. Main issues8. Main issues
• Product and market insight• Coordinated volume• Intensification of competition
between suppliers, including foreign
• Improved documentation of prices and savings • Prioritized and organised sales force
• A concept for partnerships with key customers and local procurement networks
• Development of SKI’s financial model• Customer groups• Experience groups • Centre for public procurement• Owners and political support
• Prioritising contracts• Focus on most saleable contracts• Focus on use of existing contracts
instead of establishing new contracts• The health area• Further development of models for
tendering • Standardisation like The Danish Ministry
of Finance• Regional sub-contracts• Helping with customers’ individual and
sector specific tenders
• Attracting and developing the employees
• Internal knowledge sharing and exchange of qualifications
• Tight project planning• Strengthened financial control
• Involvement of the suppliers’ sales organizations
• Supplier follow-up
• Coherent IT strategy• E-catalogues• E-auctions, mini tenders and
dynamic purchasing systems• Easy access to relevant information• CRM-service
• Environment• Energy• Social clauses• SMEs
Why? How?
Priority
SKI’s new strategy.Relationship between vision, sub-strategies and specific actionplans
- SKI strives to be a central player, that makes public procurement more effective and develops it.- SKI strives to inspire and support public organizations and their purchasing agents in achieving gains through efficient procurement and help promote an effective public administration.- Based on openness, equality and qualifications SKI strives to be the natural and inspiring focus point for all players involved in public procurement.- SKI must therefore be an innovative, effective and challenging workplace, that is able to attract and develop the best employees.
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SKI’s new strategyThe 8 dimensions of priority
Coherent solutions
Dialogue
Easy does it
One to many
Knowledge and documentation
We
Business
Increased use of existing initiatives
All initiatives must be evaluated on the following scales:
Isolated solutions
Monologue
Do it yourself
One to one
Feelings and beliefs
I
”Window-dressing”
Launching of new initiatives
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III. Coordinated volume The customers commit themselves
to buy a specific amount from a specific supplier on the framework contract. The supplier gives an extra discount.
Sub-strategies and specific actionplansAttractive framework contractsCommitted and coordinated volume
To
day
In t
he
futu
re
Tim
eTendering Buying
Before the tender The customer chooses one of the suppliers on the framework contract
The customer offers full supplier independence amongst the suppliers on the framework contract
I. Commitment to using the contract
Customers, typically from the customer group, commit themselves to use one of the suppliers on the framework contract when it is established. This is noted in the material presented in the tender process.
II. Coordinated volume The customers commit themselves
to buy a specific amount from a specific supplier on the framework contract. The supplier gives an extra discount.
III. Lowest daily price A customer obtains the price for the
day from a specific supplier on the framework contract for a specific product.
SKI obtains support from other customers.
IV. E-auction / Mini-tender The customers obtain a price for a
specific product/service with a specific volume and period of time.
(Until now only used in connection to the Danish state’s procurement programme and SKI’s contract in regard to canteen service)
I. Commitment to using the contract Customers, typically from the
customer group, commit themselves to use one of the suppliers on the framework contract for all procure-ment within the contract’s coverage.
II. Commitment to using a standard assortment from one supplier
Customers commit themselves to use a pre-defined assortment of products/services from only one specific supplier. The supplier is chosen by the customer group,
V. E-auction / Mini-tender The customers obtain a price for a
specific product/service with a specific volume and period of time.
SKI coordinates and obtains support from other customers.
If the mini-tenders are complex external consultant services can be involved.
IV. Lowest daily price A customer obtains the price for
the day from a specific supplier on the framework contract for a specific product.
SKI obtains support from other customers.
Yearly bonus to the customers Yearly bonus to the customers when the agreed volume has when the agreed volume has been reachedbeen reached
+0,05%+0,05%0,10%0,10%
+0,15%+0,15%
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UThe future strategy of SKI Primary focus points
1st wave 2nd wave 3rd wave
•Marketorientation
•Revitalisation of the organisation
•Processes and systems
•Buildingup of competences
•A deepening and broadening of partnerships
•Knowledge sharing & value-based leadership
2005 2007
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UThe future strategy of SKISKI – the interactive company.
SKI the interactive
companyExternallyInternally
Value-addingProductivity
Talented colleagues
Supportingtechnologies
Unique organisation
Good management
• CRM• ETHICS• ERP• Electronic
archives
• Partnerships• Structural frame• Building• Culture• Values• Knowledge-
sharing
• Growth• Simplification• Prioritising• Management
training
• Attractive work-place
• Competence-building
• Recruiting• Job
appraisal interviews
• Curiosity• Social
competence
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The future strategy of SKI SKI’s vision: ”Centre for Public Procurement”
Aims: • Openness• Cooperation –internally and externally• Flexibility• Proximity to customers, suppliers and
cooperating partners
Vision: SKI wants to be the natural and inspiring focus point for all persons and organisations involved in public procurement – in an attractive building.
The elements of the concept• Other organisations are invited to become
tenants• Project facilities• Seminar and conference facilities• Showroom facilities• Service for visitors
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Sub-strategies and specific action-plansAn attractive and professional workplaceWhy is competence development so important to SKI?
Customers’ expectations Customers' professionalization Customers ”deposit” their success at SKI Own ambitions regarding market orientation, dialogue
with top management and sale of solutions (instead of products/services)
Rising demands on competencies as a result of diminishing savings from procurement
The right customer-solutions can only be found through close collaboration between organisations
Demands oncompetencies
Competence development
Start of previous strategy in 2002
Today
Time
SKI has been through a fantastic turn-around… The competencies of management and
employees are fully utilized More and more new projects and activities
reveals the need for competence development
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