Presentation to CIPS Surrey The central role of Procurement in helping the Government reduce the deficit John Collington ERG Executive Director, Procurement 17 th February 2011 UNCLASSIFIED
Points to Cover • Dispelling the Public Sector myth • The key changes to Government Procurement • Debate and Discussion UNCLASSIFIED
Background: John Collington 30 years experience: 15 years in Procurement/Supply Chain, 8 years in Operations and 7 years in Sales Worked for 6 Organisations: Thomson, Thomas Cook, American Express, Accenture, ICG Commerce and HMG – Home Office / Cabinet Office Delivered, bought and sold Procurement services Member of CIPS since 1999; Fellow from 2009 UNCLASSIFIED
Dispelling the Public Sector Myth........ “Working in the “Delivered more Public Sector change and results in the will be like walking through past 4 years than treacle” the previous 11” UNCLASSIFIED
And the past 9 months have seen the biggest changes... June Feb New Government in place > Commitment to Procurement at highest levels > Greater focus on cost reductions > OGC CEO moves on > ERG created > Crown negotiations with top suppliers > Centralised Procurement Programme > New Procurement Governance > The Green Review > BS CEO moves on > Strategic Review of BS announced > New Category Strategies developed > Governments first CPO position advertised UNCLASSIFIED
So Why Change? Government deficit - £156bn CSR 10 savings of £83bn required Total public sector expenditure Pay 25% is £669Bn Other 5% Procurement 35% • Pay makes up £164bn Grants 35% • Grants make up £242bn • Procurement is £236bn • Central Government is £66bn Good Procurement is needed now more than ever! Source: Public Expenditure Statistical UNCLASSIFIED Analysis(PESA) 2010
Government’s Approach • Stated priority to tackle and reduce the deficit • A Minister who sees Procurement as fundamental to driving cost reductions • Creation of the Efficiency & Reform Group and the appointment of the Chief Operating Officer • The willingness to listen to and learn from others, both Public & Private sectors • Committed to LEAN Government Procurement and opening the market to SMEs UNCLASSIFIED
Learning & Leveraging from OGD’s = X+ ‘X+’ is > than the sum of the parts We must be better at identifying good procurement practice in Departments and the Centre and better leverage this across Government! UNCLASSIFIED
Learning from the Best in the Private Sector • We must leverage our spend, Sir Philip Green credit rating and buying power Review • We must mandate centralised procurement for common categories • We must improve, produce and use accurate spend and consumption data • We must manage down demand and specifications UNCLASSIFIED
So What’s Changing in Government Procurement 1. Departments will continue to manage existing operational and strategic spend 2. The Centre - with support from key Departments, will manage our top suppliers as – the Crown 3. The Centre will implement and mandate a new Operating Model for the procurement of common goods & services 4. We must and will improve the quality and use of Procurement and Supplier data UNCLASSIFIED
Target Operating Model for Centralised Procurement Improved Governance & Overarching Strategy Customers of Government Procurement Procurement Delivery Purchase to Payment Centralised Centres Technologies Sourcing and Enabling * Category Management Payment Processing Volume Bound Agreements and/or ** Dynamic Purchasing Business Intelligence Data Warehouse UNCLASSIFIED UNCLASSIFIED UNCLASSIFIED
Planned Timeframe for Centralised Procurement OCT-DEC JAN-MAR APR-JUN JUL-SEP CATEGORY TRANSFORMATION Category Deep Dives Output: Phase 1 Phase 2 Phase 3 Baselines As Is Supply Position To Be Supply Strategy In Scope Categories: Energy Office Solutions/Supplies Professional Services Travel Fleet Learning & Development ICT Commodities Print Management Advertising & Media UNCLASSIFIED
Thank You Questions and Answers UNCLASSIFIED
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