Sir Philip Green did not tell us anything we didn’t already know – the question is HOW to deliver the savings

Friday, 19 November 2010 00:00

Sir Philip Green recently made headlines when he published the findings of his efficiency review into government spending, but he stopped short of making specific recommendations.

Because of our expertise in e-procurement, J6 paid particular attention to the comments that he made on office supplies:

There hasn’t been a mandate for centralised procurement
Government does not leverage its buying power, nor does it follow best practice.
Procurement data is shocking -it’s both inconsistent and hard to get at.
There is inefficient buying by individual departments, with significant price variations across departments for common items

Example: office supplies

The total annual central Government spend is £84m. There are five principal suppliers and 83 individual contracts for office supplies.

Box of paper: Highest price: £73, lowest price: £8, differential: 89%

Printer cartridges: Highest price: £398, lowest price: £86, differential: 78%

The challenge with office supplies, stationery and computer consumables is that each tendering process always delivers a single supplier, so once the supplier wins the contract, there is no ongoing competition until the next tender. Our analysis of the market reveals the flaws in this process with three key findings:

Finding 1 Contract stationery will pitch below cost on a range of core products (eg copier paper) to win a contract
Finding 2 The buyer will be led to believe that these core items account for a high percentage of the annual spend
Finding 3 The contract stationer will only be able to make the contract profitable by supplying non-core items at excessive prices

These three findings mean that a supplier must actively try to switch away from the items in the core contract and there are a number of strategies to do this. The result is that the buyer does not get the value that was initially negotiated, yet because of the following criteria, it is almost impossible to manage

The vast number of items in the contract make it hard to categorise and track what is happening
The large number of low value orders are hard to analyse
Poor reporting by the supplier makes it hard to see what is being procured

A new vision for centralised e-procurement

J6 has Next Generation e-procurement technology that enables multiple suppliers to compete in real time for orders placed by buyers; this technology can be deployed using the following process:

The department goes through its usual tender process for suppliers
A range of stationery products is agreed
Suppliers are assessed on quality, capability to deliver and range of products stocked
Several suppliers are selected to supply the contract
The supplier connect to the J6 e-procurement site
The buyer places orders through the site and the site instantly identifies the most competitive approved supplier for that particular order
The order is placed with the best priced supplier.

The buyer is now in control

The system complies with European procurement regulations
The site contains over 20,000 office supplies items – everything in one web site
Several suppliers compete “live” for every order, keeping prices as low as possible
Local as well as national suppliers can participate on a level playing field
You will have centralised procurement control even with multiple departments using the system (multiple users can place orders, but all orders can be signed off by one person or department heads)
You can pick “standard items” for your organisation, controlling what people buy
You can run reports at any time, showing what was ordered by whom

To find out more about how our innovative e-procurement platform could deliver savings and improved control to your organisation, please contact Nigel Hudson on 0845 130 3012, or click here and complete our online enquiry form.

To see a live version of Next Generation e-procurement in action, visit Mintprice.com