While spending cuts are high on the agenda, why should we pay a premium for procurement professionals? Michael Page Procurement & Supply Chain explores the value for employers in the public sector.
The focus on local government
Government-mandated spending cuts have caused a significant rise in the number of public sector departments investigating and implementing change programmes focused on how and what they buy. Looking at frontline services and efficiencies, buying more for less, should be top of the agenda for public sector departments aiming to reduce their spend.
The expertise required to establish and implement a rigorous procurement process often isn’t available within the existing talent framework so the typical scenario is for councils to bring in consultancies or interim managers to perform reviews, according to Richard Collins, Michael Page Procurement & Supply Chain’s public sector manager.
“Most suggest the implementation of category management. They also introduce supplier relationship management to monitor and improve existing partnerships and perform contract reviews,” he added.
The value of hiring for public sector procurement jobs
“One of the most immediate opportunities lies in linking and controlling the complete, end-to-end procurement process itself, from the commissioning of goods and services, through their provisioning, to the effective management of the payment cycle. Tightening the disciplines and compliance with operating procedures in this process alone will produce noticeable benefits very quickly,” according to Richard Hawtin, procurement interim executive with a proven track record of transformation the public sector.
“A second big area of opportunity to deliver significant cash savings is increasing the commercial rigour with which contracts are managed, particularly those which are large and like to run for a long period of time,” he added.
Establishing, implementing and managing an end-to-end procurement process in the public sector, with its unique challenges, can be complex. But, Hawtin concluded, “over the medium-term, a strategic approach which integrates the commissioning of goods and services with a commercially astute management of, and engagement with, the supply market will not only achieve savings but will invariably see an improvement in services – i.e more for less”.
Do the maths
“The return on investment in introducing strategic procurement is typically one in 10,” according to Richard Collins. The approximate £100k cost of hiring a procurement director may seem like a large outlay to an organisation looking to reduce spend, but the value realised by introducing robust procurement systems can significantly outweigh the initial expenditure and ongoing salary or day rate costs. If non-pay annual spend is £100m, it’s realistic to expect annualised savings of £10m, often within the first year of operation.
Who could benefit from introducing strategic procurement?
Strategic purchasing has been mandated across central government through the work of the Efficiency and Reform Group (ERG) . While many local authorities have introduced strategic procurement, even pre-spending review, there are several areas of local government, health, education and other not-for-profit organisations that can still utilise the buying power centralised procurement frameworks can offer. These include:
- NHS departments: For those that operate with a supplies team that sit in the legal or facilities department, there is the opportunity to develop more than a stock replenishment approach.
- Charities, education and housing associations: Although not mandated to reduce spend, these organisations have also been affected by the recession. If they work together, they can buy better.
- Smaller local authorities: Could join forces with larger councils to reap the benefits of aggregated spend.
How Michael Page Procurement & Supply Chain can help
At Michael Page Procurement & Supply Chain we’ve supported a considerable rise in the recruitment of interim managers to lead the rationalisation associated with change initiatives. Permanent headcount has also increased with new procurement jobs established to lead and manage revised operating procedure on a business- as-usual basis.
We’ve developed extensive networks within both the public and private sector to identify and attract the talent who will make the required impact to your public sector procurement jobs. We specialise in sourcing candidates who can both implement and manage strategic procurement processes.
To find out more, please get in touch with your local office.