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Title: PowerPoint Presentation Best Practices in Procurement Education


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WELCOME
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DANIEL LIEGHIO 4C Associates
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Delivering Savingsto the Bottom Line4C
AssociatesBrook House229-243 Shepherds Bush
RoadLondon W6 7ANwww.4cassociates.com
  • 24th May 2007

6
Agenda
  • Introduction
  • About 4C, and about savings
  • Some approaches to fast and effective savings
  • in areas youve just reviewed?
  • in all the other areas?
  • Identifying, verifying and prioritising
    opportunities
  • Locking in the savings
  • Change management
  • Delivering ongoing value

7
Introduction About 4C
  • 4C are one of the UKs leading providers of
    specialist procurement consultancy and
    outsourcing
  • We work with large organisations to improve their
    procurement abilities and results
  • We often need to help them to obtain large
    sustainable savings as quickly as possible
  • We look to maximise competitive leverage whilst
    avoiding bureaucracy and delay

8
Introduction About 4C
  • Some recent accolades
  • 3 CIPS awards in 3 years
  • Top 3 in the Sunday Times 2006 Fast Track 100

Why are we successful?
9
Introduction What are savings?
  • Savings must avoid unsustainably affecting
    quality
  • Improving value not just Reducing costs
  • Butreal savings, which can be taken out of
    budgets
  • How you define value in procurement?
  • The minimum I can pay for the service I require
  • Getting more than you need wont be good value
  • Is it sustainable? 1 year, 3 years, 10
    years?
  • Ways of saving that we wont talk about today
    (much)
  • Effective tendering
  • Shared services

10
Introduction Why do savings opportunities exist?
  • OJEU does not guarantee value
  • We may get value by accepting the best bid but
  • What if we havent asked all the right questions?
  • What if no supplier is offering value for money?
  • What if you like part of one suppliers bid and
    part of anothers?
  • What if the reality turns out to be worse than
    the proposal?
  • Tenders dont typically minimise the risks of
    these things happening a discussion for another
    day

11
Agenda
  • Introduction
  • About 4C, and about savings
  • Some approaches to fast and effective savings
  • in areas youve just reviewed?
  • in all the other areas?
  • Identifying, verifying and prioritising
    opportunities
  • Locking in the savings
  • Change management
  • Delivering on-going value

12
More savings in areas youve just reviewed?
  • Easy savings have already been done by many
  • Or have they..?
  • How close is the value to what could be achieved?
  • How would we know?
  • Are the savings locked in for the future?

Supplier management
13
Supplier management
  • Supplier management means staying on top of
  • Is the supplier doing what they should be doing?
  • Are they charging what they should be charging?
  • Are they giving you the info. you need to find
    this out?
  • Organisations often dont get the value they
    think they do

14
Supplier management
  • What are some things that suppliers do to
    increase their margins?

15
Supplier management
  • If you can find out, you can start to maximise
    value
  • Some categories are notorious for this, e.g.
    agency staff

16
Cost Component Analysis
  • Supplier management depends on Cost Component
    Analysis
  • Break the total cost of ownership into individual
    cost drivers
  • Understand competitiveness of each vs.
    alternatives
  • CCA is very difficult to carry out effectively
    without a procurement category expert

17
Cost Component Analysis Obtaining information
  • Buthow do you find out about activity and
    pricing?
  • If you have good contracts, you will already have
    what you need
  • But we often spend a lot of time working with
    suppliers too
  • Difficult if suppliers cant or wont give you
    the info you need
  • Effective strategies to beat this can include
    working with
  • The best value suppliers, or
  • Suppliers with good systems
  • Depends on the situation

18
Agenda
  • Introduction
  • About 4C, and about savings
  • Some approaches to fast and effective savings
  • in areas youve just reviewed?
  • in all the other areas?
  • Identifying, verifying and prioritising
    opportunities
  • Locking in the savings
  • Change management
  • Delivering ongoing value

19
Savings in all the other areas?
Fast and effective approaches to sustainable
savings
  • What other opportunities are there?
  • Ways to achieve savings can (always?) be found
    with sufficient innovation and expertise

Supplier management
  • Other approaches
  • Using the right supplier for the job
  • Negotiation
  • Volume migration
  • Demand management

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Using the right supplier Preferred suppliers
  • To optimise value, you need to be able to
    accurately define requirements and anticipate who
    is best able to meet them
  • Some suppliers can provide better value than
    others
  • In complex areas, e.g. professional services,
    buyers dont always know
  • What am I looking for?
  • Who is best able to provide it?
  • How much will I need to pay to get it?

A combination of price, performance and strategy
determines supplier status
Not yet approved
Approved
Preferred
Disallowed
Segment strategy
Comparable performance info
Comparable pricing info
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Using the right supplier Growing suppliers
  • To optimise value, you need to be able to
    accurately define requirements and anticipate who
    is best able to meet them
  • Some suppliers can provide better value than
    others
  • In complex areas, e.g. professional services,
    buyers dont always know
  • What am I looking for?
  • Who is best able to provide it?
  • How much will I need to pay to get it?

A combination of price, performance and strategy
determines supplier progression
Reduce
Maintain
Grow
Remove
Segment strategy
Comparable performance info
Comparable pricing info
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Using the right supplier Category procurement
tools
  • Specialist category tools can compare pricing and
    performance between approved category suppliers

23
Negotiation
Fear of negotiation exists across the
public-sector, and is driven largely by EU
regulation But well-prepared negotiations can be
fast and effective
  • Explore win-wins to reduce waste but remember
    youre not getting value
  • Why would a supplier want to reduce prices?
  • Can always do better or worse from a relationship
  • Identify how, and build your strategy upon it

High
Value to Supplier
Current position
Low
High
Low
Product / service price
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Negotiation
Fear of negotiation exists across the
public-sector, and is driven largely by EU
regulation But well-prepared negotiations can be
fast and effective
  • Explore win-wins to reduce waste but remember
    youre not getting value
  • Why would a supplier want to reduce prices?
  • Can always do better or worse from a relationship
  • Identify how, and build your strategy upon it

High
OPPORTUNITY
Value to Supplier
Current position
THREAT
Low
High
Low
Product / service price
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Negotiation
Fear of negotiation exists across the
public-sector, and is driven largely by EU
regulation But well-prepared negotiations can be
fast and effective
  • Explore win-wins to reduce waste but remember
    youre not getting value
  • Why would a supplier want to reduce prices?
  • Can always do better or worse from a relationship
  • Identify how, and build your strategy upon it

High
Current position
THREAT
Value to Supplier
Low
High
Low
Product / service price
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Negotiation
  • What if you dont like the suppliers response?
  • Understand the alternatives, plus any legal
    constraints and timelines required, e.g.
  • Volume migration?
  • Switching technologies?
  • Creativity and experience of other organisations
    and best practices will be invaluable
  • Ideally you keep your current suppliers but a
    credible threat to change is vital

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Volume migration
High
  • Move volume away from worse-value suppliers, and
    towards better-value suppliers
  • You may have other contracts for similar services
  • There are also OGC, LCSG and other existing
    OJEU-compliant alternatives
  • There may also be alternative technologies

Spend
Low
Value
High
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Demand management Is there an opportunity?
  • Ask, for each category
  • Who is managing demand in this category, and how?
  • Do they have the expertise and information they
    need to do a good job?
  • Are you confident that its being done well?
  • There are many ways of managing demand to reduce
    spend

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Demand management Information required
  • Ask, for each category
  • Who is managing demand in this category, and how?
  • Do they have the expertise and information they
    need to do a good job?
  • Are you confident that its being done well?
  • There are many ways of managing demand to reduce
    spend
  • Products / services
  • Whats in each category?
  • Who is buying them?
  • What specifications are being used, and why?
  • What prices are being paid?
  • Processes for
  • Supplier selection
  • Specification and ordering
  • Supplier and contract management
  • Who is responsible for what?

30
Demand management Some approaches
  • There are many ways of managing demand to reduce
    spend

However, its typically easier to change to
contract than to change category users behaviour
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Demand management Mobile telecoms example
No of Users
1. There are 1450 users making an average of 109
minutes of calls each per month 315 02 mobile
users make less than 10 minutes of calls per
month Can we remove 50 of these phones? 2. The
top 10 users make 15,000 minutes of calls per
month at an average of 1,560 minutes each Can we
reduce the call volumes and associated costs?
Call Minutes per Month
32
Agenda
  • Introduction
  • About 4C, and about savings
  • Some approaches to fast and effective savings
  • in areas youve just reviewed?
  • in all the other areas?
  • Identifying, verifying and prioritising
    opportunities
  • Locking in the savings
  • Change management
  • Delivering ongoing value

33
Identifying further opportunities
  • Map internal stakeholders
  • Who uses which services?
  • Who makes decisions?
  • Who set up and manages the relationship?
  • What can they tell you about supplier
    performance, pricing, value for money, contracts,
    category strategies and plans, etc.?
  • What do they want to achieve?
  • Build buy-in to change from internal stakeholders

34
Identifying further opportunities
What are the characteristics of a good savings
opportunity?
  • Substantial supplier or category spend
  • Limited category-specific procurement expertise
    available
  • Low organisational resistance to change can help
  • Perceived organisational barriers to change
  • Some categories are known for ultra-high savings
    opportunities
  • 1m ?
  • Depends on your organisation

35
Identifying further opportunities
What are the characteristics of a good savings
opportunity?
  • Substantial supplier or category spend
  • Limited category-specific procurement expertise
    available
  • Low organisational resistance to change can help
  • Perceived organisational barriers to change
  • Some categories are known for ultra-high savings
    opportunities
  • What are the components of total cost?
  • What are good benchmark levels for each?
  • Which suppliers are providing good value for
    money?
  • What can we do about it?
  • What have others done about it?

36
Identifying further opportunities
What are the characteristics of a good savings
opportunity?
  • Substantial supplier or category spend
  • Limited category-specific procurement expertise
    available
  • Low organisational resistance to change can help
  • Perceived organisational barriers to change
  • Some categories are known for ultra-high savings
    opportunities
  • Dis-satisfaction with current suppliers
  • Ongoing initiatives which have stalled
  • Constructive stakeholders
  • High-level buy-in

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Identifying further opportunities
What are the characteristics of a good savings
opportunity?
  • Substantial supplier or category spend
  • Limited category-specific procurement expertise
    available
  • Low organisational resistance to change can help
  • Perceived organisational barriers to change
  • Some categories are known for ultra-high savings
    opportunities
  • Unclear there is any alternative to the current
    situation
  • Unclear who is ultimately paying for the services
  • Etc.

38
Identifying further opportunities
What are the characteristics of a good savings
opportunity?
  • Substantial supplier or category spend
  • Limited category-specific procurement expertise
    available
  • Low organisational resistance to change can help
  • Perceived organisational barriers to change
  • Some categories are known for ultra-high savings
    opportunities
  • 40 savings, for example in
  • Office supplies
  • Document management
  • Uniforms
  • Parts of ICT
  • Etc.

39
Identifying further opportunities
Characteristics of a good savings opportunity
  • Substantial supplier or category spend
  • Limited category-specific procurement expertise
    available
  • Low organisational resistance to change can help
  • Perceived organisational barriers to change
  • Some categories are known for ultra-high savings
    opportunities

Use initial findings to set priorities for
further investigation
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Verifying further opportunities
  • Gather available information on each supplier,
    including contracts, quality, spend,
    disaggregated pricing, and TCO
  • Obtaining information from suppliers is often
    faster and is sometimes the only realistic option
  • Compare cost components with external benchmarks

41
Setting priorities
  • Construct a simple (at first) cost model, built
    on a number of category-specific variables
  • What would be the effect if we could change each
    variable?
  • Analyse a range of scenarios based on making
    realistic changes to each savings lever

42
Setting priorities
  • Assign priorities to each savings lever based on
    the organisations priorities
  • Savings targets
  • Timeframes
  • Political / buy-in from within the organisation
  • Scale of the project
  • Etc.

43
Example opportunity summary
Opportunities in the bottom left are simplest and
fastest
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Agenda
  • Introduction
  • About 4C, and about savings
  • Some approaches to fast and effective savings
  • in areas youve just reviewed?
  • in all the other areas?
  • Identifying, verifying and prioritising
    opportunities
  • Locking in the savings
  • Change management
  • Delivering ongoing value

45
Change management in a programme environment
Change management
  • Poorly-managed change leads to a high risk of
    failure
  • Following a few basic steps will maximise your
    chances of success

Programme timetable
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Delivering ongoing value Sustaining the savings
  • How are the savings going to be maintained?
  • Who is responsible for making sure that they are?
  • Sustain savings via best-practice agreements and
    internal change
  • On the supplier side
  • Ensure pricing will move in line with industry
    benchmarks
  • Give suppliers a clear incentive to continually
    improve value
  • Ensure quality MI is provided by suppliers, to
    help manage value
  • Others, e.g. supplier code of conduct

47
Delivering ongoing value Sustaining the savings
  • Internally
  • Upgrade management tools and reporting to
    effectively manage best value in each category,
    and across the board
  • Ensure key internal officers understand how to
    deliver maximum value after the project concludes
  • Make sure new responsibilities are clear and
    embedded in routine
  • Effective communication and training are key

48
Delivering ongoing value Management reporting
Cost savings reporting
Knowledge transfer
  • Category Value Delivery Plan

Category management
Impact on behaviour
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Delivering ongoing value Control Dashboard
50
Summary and something about people
  • There are very big opportunities out there, which
    can be captured quickly and effectively
  • To maximise value, organisations need to
    understand much better what they are buying
  • This will require expert staff to have
  • Significant procurement expertise,
  • Deep category expertise and
  • The gravitas to influence very senior
    stakeholders
  • There are not enough of these to go around and
    many are at specialist consulting firms like 4C
  • The Public Sector must do more to develop
    expertise in depth, and to explore outsourced and
    shared-service models

51
Thank youvery muchFor furtherinformationpleas
e contactDan LieghioDirector4C
AssociatesBrook House229-243 Shepherds Bush
RoadLondon W6 7ANdaniel.lieghio_at_4cassociates.co
m www.4cassociates.com020 8741 4441
  • 24th May 2007

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ALEX SCOTT Wyse Solutions
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LCSG ConferencePresentation byAlex Scott
Senior ConsultantWyse Solutions
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Supply Positioning
  • STRATEGIC SECURITY
  • Low value / high risk
  • STRATEGIC CRITICAL
  • High value / high risk
  • Prospectus
  • TACTICAL ACQUISITION
  • Low value / low risk
  • Bus. Cards / Forms
  • TACTICAL PROFIT
  • High value / low risk

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The Print Contracting Cycle
Identify an opportunity
Identify potential suppliers
Ongoing relationship
Obtain prices terms
Invoice payments
Make contract
Delivery of goods / services
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Print Management Tool Process
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Tender Evaluation
  • Basic Principles
  • Price Evaluation Models
  • Getting Best Value From Suppliers
  • Managing Prices
  • Terms of Contract
  • Relationships with Suppliers
  • Issues for Consideration
  • Trust Based Partnerships
  • Balanced Purchasing
  • Darwinian Rivalry

Core Business Process
Competency of the Business Process
Source Gartner Inc. 2001
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Contract Management
  • Performance Measures
  • Delivery
  • Pricing
  • Customer Service
  • Product
  • Benchmarking

60
The Preferred Supplier
CORE BUSINESS High value / high attraction
DEVELOPMENT OPPORTUNITY Low value / high
attraction
Attraction
EXPLOITATION High value / low attraction
NUISANCE Low value / low attraction
Expenditure
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KIERAN McGREGOR London Centre of Excellence,
Procurement Training Programme
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Best Practices in Procurement Education
  • Kieran McGregor
  • Associate Consultant LondonMet Enterprises

64
Structure of Session
  • What delegates like
  • Challenges
  • Suggested best practices
  • Questions / Discussion

65
What delegates like
  • Interaction
  • Cross fertilisation (opportunity to learn from
    other organisations)
  • Relevance / applicability of materials
  • Flexible learning approach

66
Challenges
  • Too many demands on precious time
  • Empowering delegates to apply learnings in the
    workplace
  • Location and physical environment of training
  • Appropriate facilitators

67
What can Providers improve?
  • Understand the client
  • How ?
  • -
  • -
  • -
  • -

68
What Providers can do better
  • Training needs assessments
  • Individual study programmes
  • Understand the company/industry
  • Understand all stakeholders

69
Other lessons
  • Dont focus on cost
  • Build relationships
  • Accept that your organisation may not be unique
  • Dont reinvent the wheel
  • Ensure selection of appropriate delegates
  • Empower delegates to apply new skills/knowledge

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Discussion
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DARREN BLACK RORY GRUMLEY London Borough of
Camden
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Agenda
Procure2PayThe Good, The Bad and The
Ugly Darren Black Rory Grumley
Presentation 30 minutes Open questions 25
minutes Wrap up 5 minute
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e-Procurement and P2P process
Goods and services requested
A receipt is made
An invoice is received
75
What are the benefits
More efficient P2P process Remove use of
maverick suppliers Management
Information Greater control of budgets
Less resource
Cash
Drives future savings
Controls spend
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London Borough of Camden Monthly Metrics
7,000 POs per month through e-Procurement
1,200 agency staff managed through on-line VMS
800 requisitioners 350 approvers
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Ely, Clint and Lee
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The Bad
Goods and services requested
A receipt is made
An invoice is received
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The Good
A PO is raised
A receipt is made
An invoice is received
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London Borough of Camden - Benefits
Efficient P2P process
900,000 pa resource savings
Availability of maverick suppliers removed
660,000 delivered in 1st full FY 1.1m planned
for current FY
Substantial increase in the use of core list
itemsest 50,000 pa in 1st FY
Pre approved items
Costs taken out of budgets18 month payback
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Making it happen
  • Removal of maverick suppliers
  • Audit trail of communications
  • Returning invoices
  • Local resistance
  • Nominal mapping rationalisation
  • Rationalisation of codes
  • Mapping all relevant codes to UNSPSC
  • Complaints
  • Centralisation of invoices
  • Removal of manual signature
  • Change of control from local to central
  • How to get suppliers to send invoices to a
    central address resource investment
  • Local resistance

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Making it happen
  • Im out of scope syndrome
  • What is it?
  • Board support and escalation
  • Supplier adoption
  • Rationalisation exercise
  • Move to electronic PO
  • Receipt
  • Why?
  • Timely ?
  • Supported by automated MI
  • 76 1st time invoice match
  • Helpdesk / training
  • Handholding policy Resource investment
  • Trained 900 requisitioners and 600 approvers
  • Difficulty of getting correct people to train

83
Questions
84
What makes Camden so different
  • P2P design built around Policies and Procedures
  • We mandate that PO Nos are quoted on all
    invoices
  • All invoices are received and matched centrally
  • We remove all paper order pads
  • We actively manage out maverick suppliers
  • The budget holder must approve all requisitions
    requiring approval
  • We remove the ability to mis-code
  • Software purchase built around P2P design
  • Board sponsorship
  • Go live with all products and services (80 of
    spend)
  • Focus upon training and hand holding

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THANK YOU FOR ATTENDING
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