Just how much can UK plc save on procurement?
Published February 9, 2011 | The National Audit Office has suggested that the NHS in the UK could save in excess of £500m through more effective procurement.
This raises a very interesting question – if the NHS can do this, what can UK plc do as a whole?
There is so much duplication and ineffective processes across procurement that I estimate that the total figure could be many multiples of this. There is talk today of small schools synthesising – i.e. working together and sharing services. As far as I’m concerned this is a no brainer and should be considered a given rather than an option.
Let’s concentrate on the front line services, let’s concentrate on our core competence, let’s concentrate on freeing up adminstrative duties to concentrate on client/ customer delivery. If we can collectively develop this philosophy and actively look for efficiency opprtunities rather than being protective of position/ role, then this country will quickly get back on its feet.
The way to drive real savings across procurement is not to hit the suppliers on the head for a couple of percent off this and a few pounds off that, it’s about looking strategically at how best to structure the whole process.
Where things need to be centralised, centralise them. Where there is a need for local decisions, then retain the responsibility local. However, let’s not fudge it.
Take the hard decisions now and we can look forward to building a better future for all.
Tony Lockwood, Chief Executive, xynergie
4 quick wins to drive immediate savings across your procurement function
Published January 25, 2011 | Ultimately no two organisations are the same and the quick win opportunities will depend to some extent upon your maturity within your procurement processes and progress made to date. However, our experience suggests that many organisations have opportunities to drive significant savings by simply putting in place basic supplier engagement principles.
The four ideas outlined below provide most organisations with tangible benefits within a short timeframe;
1. implement a central supplier directory – this provides the informational foundation to improve virtually every procurement activity. Besides providing a single view of all suppliers, it enables you to;
- eliminate redundant suppliers and processes
- improve procurement and finance productivity
- enable better supplier categorisation and spend analysis
- deliver savings by removing duplications
2. Strengthen supplier qualification and contract review processes – a good procurement system will support streamlined processes that can quickly;
- identify existing supplier risk so steps can be taken to mitigate it
- reduce risk and associated costs going forward
- automate the supplier review process
3. Perform a supplier rationalisation process and establish corporate contracts – Once you have a central database of suppliers, the logical next steps is to strip out duplication. Spreading your spend across too many suppliers dilutes your buying power, whilst maintaining just one relationship may increase risk of failure. A supplier rationalisation process will enable you to;
- reduce the overall cost of purchased goods and services by negotiating better value
- lock in longer term savings through corporate contracts with preferred suppliers
- reduce the risk of relaiance on just one supplier
4. Deploy a supplier portal – this provides significant savings in administration costs and enables streamlined processes to;
- automate the upfront supplier evaluation
- reduce supplier onboarding effort
- reduce sourcing effort
- reduce purchase ledger activities
Overall, these are just some of the ways that you can deliver very short term benefits and realise immediate financial impact on your bottom line.
UK PLCS HAVE £60BN TIED UP IN UNPRODUCTIVE WORKING CAPITAL
Published January 21, 2011 | Analysis from Deloitte, the business advisory firm, shows that UK plcs are sitting on £60bn of unproductive working capital.The study highlighted that working capital is unnecessarily being tied up in a myriad of simple transactions.
Deloitte’s Global Review of Working Capital analysed data of more than 20,000 companies from across the globe over a five year period. Unproductive working capital was found to be tied up in basic accounting cycles, for example in the manner in which accounts receivables and payable processes are being handled. Inventory and supply chain management were also noted as a key factor underlying poor working capital management.
What does this mean to your business?
How can you release some of this capital to drive your growth?
Call us now and we’ll be happy to assist you to do just this.
Analysis from Deloitte, the business advisory firm, shows that UK plcs are sitting on £60bn of unproductive working capital.The study highlighted that working capital is unnecessarily being tied up in a myriad of simple transactions.
Deloitte’s Global Review of Working Capital analysed data of more than 20,000 companies from across the globe over a five year period. Unproductive working capital was found to be tied up in basic accounting cycles, for example in the manner in which accounts receivables and payable processes are being handled. Inventory and supply chain management were also noted as a key factor underlying poor working capital management.
What does this mean to your business?
How can you release some of this capital to drive your growth?
Call us now and we’ll be happy to assist you to do just this.
5 areas to trim the fat in 2011
Published December 21, 2010 | As 2011 is fast approaching, thoughts are probably turning to how you are going to achieve your numbers in the year ahead. There is undoubtedly uncertainty in the markets at the moment and the economists seem to be divided as to what the year ahead will look like.
However, your success in 2011 will be more determined by your actions than any external factors. If you look back over previous recessions/ downturns, there are always those organisations that come out of them stronger and more profitable. Equally, there are individuals that thrive when the going get tough and those that just give in!
So, the question is – “which are you going to be in 2011?”
To start as you mean to go on, this time of the year is always good to reflect and trim any fat that exists within your business. Take a look at the following five suggestions and see how these can apply to your organisation. Please feel free to add other ideas within the comments.
1. What activities are you undertaking that is adding no value to your end customer? Once you have identified these, review how you could undertake them differently, more efficiently, or more radically, determine whether you have to do them at all or can you outsource them to a third party who can provide greater leverage?
2. What is your core competence and what non core activities are you doing that can be outsourced? Again, by creating focus on your business function or ideally across the organisation, identify those activities that you must do to support your core competence. At the same time, this will help you identify those activities that are non core. Look creatively at how you can more effectively deliver these non-core activities.
3. Ask yourself the theoretical question – “if I had to deliver the same results with 80% of the resources that I presently have, how would I do it?” – putting this question another way, all organisations have people within the organisation that deliver little or no value. Make it your business to strip the lowest 20% from your organisation each and every year. You’ll be amazed at the impact that this simple challenge creates.
4. In any process, there will be many hand-offs between people within your organisation. Take each in turn and challenge yourself to reduce these hand-offs by 50% – by empowering individuals within your organisation to take action at the front end, you’ll radically reduce the workflow across any process and the efficiency gains will be significant
5. How is your sales and marketing function performing? Research indicates that it now takes a minimum of seven contacts before a prospect raises his/her hands to enquire about your product/ service. What does this mean to you? Well, assuming that you have your targeting correct, how many times are your marketing people or sales representatives giving up after just four or five contact points? By implementing a structured approach to lead generation taking into account the requirement for 7 contacts, you’ll quickly drive new business generation.
Take the opportunity between Christmas and New Year to reflect on how you can apply these five simple steps to ensuring that 2011 delivers your ‘best year yet!’