Description of impact
Bangor Law School’s Institute for Competition & Procurement Studies (ICPS) research into procurement practice within Gwynedd Council (a Local Authority with an annual spend of £160m) has had a major impact in transforming the way their procurement activity is organised and structured, and in re-engineering their procurement processes to deliver significant savings in an era of extreme austerity (= economic impact), hence sustaining quality front-line services to the citizens of Gwynedd throughout the large, 2500 km2, catchment area of the county (= societal impact; impact in terms of public services & impact in terms of health / quality of life). Our research (undertaken by a multi-disciplinary team of procurement legal experts, procurement process experts and data analysis experts) and recommendations have been accepted and applied by the Gwynedd Council Cabinet [b2] and has led to a complete reorganisation of their procurement model in terms of strategy, structure, and practice, resulting in multi-million pound cost savings significantly in excess of the £2.3m initially envisaged over a 4 year period to 2019. Our research is not only helping to meet the Council’s Corporate objective of achieving Efficiency Savings, but is also enabling it to meet another of its core goals / values of “Keeping the Benefit Local”. The latter is being realised as a result of a more professional, planned and consistent approach to procurement. With the public sector desperately seeking to "do more with less", our work addresses a major strategic need for the entire UK, and indeed for public bodies further afield, influencing Welsh Government, UK and international policy agendas by providing compelling evidence of the need for, and approach to, restructuring Local Government procurement. Using our research findings and recommendations, procurement within Gwynedd Council is now totally re-organised according to a Category Management based model under 3 discrete categories of common spend (“Environment”; “Corporate” and “People” Categories). This represents a “paradigm-shift” in how a rural Local Authority manages public spend. The impact of this research (measurement of which will be ongoing) is already evident across a number of distinct levels as follows:(A)Economic Impact Efficiency Savings Gwynedd Council have developed a Benefits Realisation Plan to capitalise on our recommendations and have confirmed they are on target to substantially exceed the expected £2.3 million savings over a 4 year period to 2019 [b1, b3] – savings that are being realised as a result of our work. They also now have in place individual savings targets for all major contracts and recently reported saving £471,000 annually on one (food) contract alone. These savings are coming to fruition as a result of improved procurement practice, visibility of spend, spend aggregation and wider efficiency savings. Additionally, the cost of resourcing procurement activity has also reduced notably as a result of the change in approach from use of part-time (non-specialist) procurers right across the Council to utilisation of specialists devoted to procurement – for example, the cost of undertaking procurement activity within just one sub-element of the “People” category is already reported to be (annually) £12,000 less than previously [b1]. Maximising spend with local businesses The increased focus on devoting more effort to the planning stage of procurement (an underpinning element of Category Management’s strategic approach to procurement) is meeting the Council’s ambition of achieving 45% of their total procurement spend with local companies – the “Keeping the Benefit Local” [b4] agenda is a major corporate objective of Gwynedd Council (and the 45% target is clearly stated within Gwynedd Council’s Strategic Plan [b1]). With Gwynedd Council’s new approach to procurement delivering both efficiency savings and maximising spend with local businesses, it is generating much interest from other Local Authorities in the UK who have similar Corporate objectives (e.g. Denbighshire and Flintshire County Council’s). Reducing the cost of doing business with the CouncilSuppliers are noting a much more consistent approach to procurement is being adopted throughout the Council. This is significant because procurement activity is being implemented on a more centralised basis meaning there is no longer scope for different departments to buy exactly the same thing but in very different ways thereby unnecessarily increasing supplier transactional costs of doing business with the Council. (B) Societal Impact / Impact on Public Services / Impact on Health and Quality of Life The efficiency savings emerging from adopting a new procurement operating model is freeing up additional resource to devote to key front-line services thereby ameliorating the current squeeze on services such as Social Care. (C) Policy ImpactOur research is influencing Welsh Government and international policy agendas, providing compelling evidence of the need for, and approach to, restructuring Local Government procurement, in particular through adopting a Category Management based model to provide a clear catalyst for delivering efficiency savings.Description of the underpinning research
Severe cuts to Local Authority budgets since the global financial crisis have clearly highlighted the acute need for more efficient and effective Local Government working, in short, delivering more with less and preventing front-line services from suffering unduly. Good procurement practice is increasingly viewed throughout the world as a key strategic enabler in adding value, delivering savings, and providing better services to citizens, and it was within this context that Bangor Law School’s ICPS undertook evidence-based research on behalf of Gwynedd Council, an Authority based in peripheral North-West Wales who have been hit hard by budget cuts. The ultimate objective was to use the results of this research to re-engineer and re-structure the way procurement is carried out by the Council to deliver efficiency savings, and simultaneously increase the level of spend with local businesses in order to boost regional prosperity. The research was undertaken by Professor Dermot Cahill (lead), Ceri Evans, Gary Clifford and Dr Ama Eyo.The research was designed, inter alia, to establish the baseline within the Council with regard to:
- Strengths and weaknesses of their current procurement operating model, structure and practice according to leading practice principles (including identification of the challenges staff face in their day-to-day procurement working)
- The procurement skills base (and skills gaps) within the Council
- The extent of full-time equivalent (FTE) resource devoted to procurement activity across the Council’s multitude of departments and in relation to the various steps of the procurement chain
- Distribution of spend across the Council to identify common areas of influenceable spend.
The above was undertaken utilising a variety of targeted research interventions: (i) 4 x focus groups meetings with 55 staff members from across the Council (all 55 focus group attendees were also required to complete an inter-related questionnaire); (ii) interviews with E-Procurement; Legal and Human Resource specialists from within the Council; (iii) interrogation of Gwynedd Council’s procurement spend data across all spend categories; and; (iv) an on-line FTE survey was also completed by approximately 400 staff.
Further focus groups were also undertaken with staff to establish whether the re-structuring and re-engineering opportunities that emerged from Bangor’s ‘baseline’ research indicated above, could realistically be implemented and whether this new way of working would meet the twin objectives of making efficiency savings whilst “Keeping the Benefit Local”. Questionnaires were once again utilised to provide additional insight.
Key Insights / Findings and Recommendations:
- The research clearly demonstrated there was a large degree of duplication of procurement activity and spend across the various departments in the Council, with a ‘silo mentality’ ethos being the norm rather than the exception, presenting significant lost opportunities for aggregation of spend / spend leverage and eradication of duplication and inefficiencies.
o ICPS put forward a recommendation that a restructuring of procurement should take place, whereby procurement activity should not take place on a ‘silo’ basis within individual departments, but instead according to specific categories of common spend. Service departments can then communicate their needs to procurement category teams who then undertake the buying on behalf of all Council-wide departments safe in the knowledge they have spend visibility / transparency and are adopting a strategic, organisation-wide view of spend and at the same time are also eliminating procurement process duplication.
- Large numbers of non-specialist procurement staff are engaging in procurement activity in a fragmented fashion throughout the Council, with very little centralisation, which is perpetuating the inaccurate view within the Council that procurement is an operational rather than strategic discipline. Maverick spending (spending off-contract) was commonplace, with evidence of many other examples of sub-optimal procurement activity and procurement leakage delivered by part-time procurers not fully conversant and trained in modern day procurement best practice. This resource base was under-qualified according to modern day benchmarks (e.g. McClelland Report benchmark states the need for one qualified procurement staff member per £10 million of expenditure).
o ICPS recommended that procurement resource within the Council should be confined to Category Teams where staff spend their time in dedicated procurement roles in contrast to the modus operandi at the time where a number of part-time procurement roles were spread across many different service departments creating ‘generalists’ rather than specialists.
- Procurement activity was epitomised by a lack of pre-tender planning, with insufficient supply market intelligence proving particularly detrimental to effective practice.
o Our recommendation was for the Council to reverse their approach, and instead devote their efforts and energies to the planning stage of procurement by creating Category Strategies and gathering sufficient intelligence before going to tender.
The above led to our overall recommendation to the Council to re-engineer how they structure their procurement activities according to a Category Management based approach to procurement to ensure that: (i) Buying power is maximised (ii) A planned and strategic approach to procurement is adopted and; (iii) Duplication of procurement activity is minimised.
General Notes
The underpinning research will be published in academic journals once all data is cleaned and anonymised.| Impact status | Ongoing |
|---|---|
| Category of impact | Economic |