Our new podcast – Fun with Procurement – is out now
2buy2 is extremely excited to say that the first episode of our brand new podcast – Fun with Procurement - is live!
Fun with Procurement is going to be the number one destination for anything and everything procurement related. In the coming weeks, we’ll be covering topics from contract management, with tips that will save you money, right the way through to the best ways you can spice up your specifications, and that’s just the start.
Check out today’s episode as our CEO Rob Kissick, Head of Category Nathan Swinney and our host, Head of IT & Digital Experience – Darren Kilford answer the age old question…”Isn’t Procurement just buying stuff?”.
If you would like to watch/listen to this episode, click here to start watching and be sure to sign up so you never miss an episode!
In this first episode, our trio cover topics that they have been frequently asked throughout their work life, such as:
- Isn’t procurement just buying stuff?
- What parts of the procurement lifecycle are often overlooked?
- What steps should a small/medium business or charity make during the planning stages of procurement?
- What are the long-term benefits in both public and private sector by performing a strong, mature procurement process?
So, isn’t procurement just buying stuff?
Procurement is a service that can often get mixed up with purchasing, there’s a misconception that procurement is “I want to buy a car…I need to buy a car. Where am I going to buy a car from?” As Rob mentions, this is closer to purchasing, where a transaction is both the focus and the problem.
Procurement itself is a step-by-step plan, one that focuses on a journey, as Rob states:
“…procurement really looks at right from the start. What is the need? And what is the thing that you actually need? How does that fit within your organisation in terms of your wider organisational strategy?"
Determining that initial need can be difficult, one of the best ways to figure out needs is by constantly evaluating the current spending points in your organisation. Money is often the most impactful reason, are we spending too much on our energy contracts? Are we spending too much on office supplies?
If these questions are difficult to answer, we recommend setting up a Contracts Register.
A contracts register allows you to track all of your contracts in one place. Giving you access to benchmarking - which we explain in detail here - however, it allows you to compare spend and answer the difficult question, what is my need?
That’s not all though, after your need has been identified, how do you go about fulfilling it?
"…right the way through the process from identifying that need, through to identifying the suppliers that you might require to be working with to provide that need. And then right through to the buying, the purchasing, the ordering, and then through to the delivery of that service or that product.” – Rob Kissick
As Rob states, finding your need is just the beginning. There’s a lot that goes into the typical procurement journey an organisation will need to go through. Nathan agrees, mentioning that procurement is more “intricate compared to purchasing. And it requires a lot of organisation, a lot of planning.”
Planning, research and adapting to each need being the key differences when compared to purchasing:
“We've got to research what it is that we're buying. We've got to understand the specification as we call it. So that's the description of what we're buying. We've got to research who are the suppliers and who could fulfil that requirement to your specification.
And then it's about going through that process of seeking quotations or tenders or getting prices. And that could just be a single price through a catalogue, or it could be right through to a complex tender process with lots of evaluation.”- Nathan Swinney
The process of procurement is a multi-step solution that can save your organisations massive amounts of money if done effectively. The biggest issue is that some vital steps get overlooked.
What parts of the procurement lifecycle are overlooked?
A problem with the procurement role is the fact that it’s a task that requires almost constant care and attention yet is so often overlooked. Schools that deal with procurement to supply their office essentials or make use of catering deals for example will often find their School Business Manager (SBM) dealing with the entire process on their own in some cases.
The lifecycle of a procurement contract - as Rob and Nathan have mentioned – is an area that requires constant evaluation and the pressure placed on an SBM’s shoulders can be immense.
By clearing up common procurement misconceptions everyone can perform better within their own organisations, as Nathan mentions:
“People think it's just about saving money, isn't it? Well, no, it isn't, there's so much more to that. It's about improving the quality. It's getting better commercial terms. It's about better relationships with suppliers and ultimately that's what it is. It's about relationships..."
Ensuring you are able to be as efficient as possible is sometimes about bringing in outside help. That brings us to the final difference between purchasing and procurement, as Nathan draws the question to a close with:
“It's about seeing what's coming down the road. It's about understanding what the need is before you get to the point where you desperately have that need. And it's about getting that advice. That's where we can help.” - Nathan Swinney
If you need help about any aspect of your procurement, don’t hesitate to get in touch with us and one of our experts will be at hand to make your life easier.
What are the long-term benefits within the public/private sector of performing a strong, mature procurement process?
In the UK, the procurement process is in a sort of transitional phase. With the implementation of the Public Procurement Act in 2015 and the exiting of the EU, the public and private sector have been shaken up in how best to perform their procurement as of late.
To add to this, recently, Northern Irelands Finance Minister, Conor Murphy announced a new policy on how social value will be implemented in all public procurement contracts.
Overall, the landscape of procurement is changing. How do you make sure you’re not missing anything?
Rob advises to focus on good procurement:
“Good Procurement should still be looking at how you achieve best value for your organisation. And that effectively brings in a number of different areas.”
These different areas can affect the procurement process in numerous ways. Cost is always one of the most important areas however, Rob brings up emerging areas:
“…we're seeing an increasing requirement in both the private sector, alongside the public sector, for things like social value and environmental impact and the key drivers of decision-making when it comes to procurement and what goods we procure."
These new interests - particularly social value – are becoming a vital aspect of new contracts, with the government recently announcing in a new National Procurement Policy Statement. In which, organisations are told to have “…the right organisational capability and capacity with regard to the procurement skills and resources required.”
The Government wants your organisation to focus on well-planned and properly structured procurement. By ensuring this, your organisations won’t miss any important factors of procurement.
Nathan, then touches on the differences between public and private sectors:
“…it's getting the balance right. The risks are slightly different between public and private. So you mentioned public sector is heavily legislated and rightly so, because they're spending taxpayers' money. I think in terms of public sector, there's greater risk of legal non-compliance...”
These risks aren’t just towards the public sector though as Nathan talks from recent experience:
“…we're seeing an increase in organisations receiving procurement challenges and not knowing how to handle those in the private sector. You know, the risk is more commercial, so it doesn't have that legal requirement as such, but there are greater risks around loss of opportunity, loss for potential savings and loss of commercial benefits from procurement.”
While a legal challenge within the public sector can burden an organisation, a legal challenge in private sector procurement can damage an organisation's reputation beyond repair.
In order to avoid overlooking vital areas in the future, contracting authorities will need to have processes and governance in place to determine and manage their most important contracts. If your organisation, whether it be public or private, does not have these process in place, long-term procurement will become a minefield of legal challenges and lost savings.
The word Capability that is used by the government in their National procurement Policy Statement is key in highlighting benefits of long-term procurement. Procurement capability refers to an individual or group that has a skill set, talent or experience to both perform and manage procurement tasks and activities.
Does your organisation have enough procurement capability to ensure your most important contracts are efficient?
Rob notes that often times the private sector doesn’t have the capability:
"…what we find when we engage with private sector organisations, they tend to be much larger before they start to think about professional procurement because there isn't that driver, that legal driver that's forcing them to do that.
And quite often that means there's sizable opportunities in the SME market in particular, to be able to really add value by putting professional procurement support into those organisations." – Rob Kissick
To ensure that your organisation has the correct capability and is catering to new key areas, the government recommends that you find outside help through professional consultancy, or a variety of other solutions that can benefit you in the long-term.
The benefits of these services include:
- Develop your own procurement team’s capability.
- An increase in efficiency and savings in your procurement process.
- Access to a Contracts Register where you can begin benchmarking and analysing spends.
- Ensure all your contracts are compliant.
But what can a small to medium sized organisation do to ensure they’re performing the best procurement they can?
What steps can a small/medium sized business make during the planning Stages of procurement?
Procurement for smaller to medium sized organisations has disadvantages when compared to much larger organisations with sizeable procurement teams. If you’re a small to medium sized organisation, what can you do to ensure you get the most out of your procurement?
Nathan has some advice:
“So in terms of that process, I think really it's about gathering as much information as possible. It's about data. So where are you spending, who are your contracts with simple things like just having a, we call it a contract register a list of all your contracts.
When do those contracts stop? When do they end? What's their value? Who are the suppliers? You know, what are the terms? What's the termination periods?” – Nathan Swinney
A Contracts Register is the best way to start off your information procurement journey as it gives you a solid base to build upon.
“It's about understanding who are your top spends, where are your top spends and which suppliers are they with and are they under contract? And that's a great place to start is just mapping that out.
And then from that, you've got enough information and data to start planning a forward procurement plan, which means this contract is coming up for renewal next year. How long do we need to spend to reproduce it?”
Timing for a small organisation is vital, forward planning is your greatest asset during the procurement stage, as Rob goes on to mention:
“…the biggest enemy of that process is time and a lack of time, most small businesses, small organisations, small charities that we talk to, they are busy trying to deliver the thing that's ignited their passion for doing what they're doing.”
We understand that the drive to complete your organisation’s goal is high on the priority list but try utilising the 80-20 rule – or otherwise known as the Pareto Analysis.
You should be able to extract 80% of the value from looking at 20% of your top spend items. These indicate that the top 20% spend items are your priorities, where other businesses may use the 80/20 rule to calculate how much profit those items can make them, your organisations can flip the script, looking at areas where you can save instead.
“I think if you just take that first step for smaller businesses, focus on those big spends there, okay, what can I do with those? Are there some real quick wins? Like, actually I've got contracts which have run out of contract and actually if had renewed those or, found somewhere else, I could save some money there.” – Rob Kissick
As with any important business decision, there needs to be someone taking responsibility. The issue with smaller to medium sized organisations is the fact that they may like a procurement professional, nobody is expecting you to have one however, having some person on your team assigned to oversee that area of procurement can be vital.
Who should oversee the procurement process? Nathan provides some answers:
“…that often can be someone in finance or it can be, an office manager or an administration person, just someone who takes responsibility for that is really key because procurement's a classic one where everybody thinks everybody else is doing it. And no one ever that seems to take responsibility. And what then happens is you have a lot of duplication.”
By assigning a dedicated member of your team to the procurement process, you can avoid any duplication of procurement strategy or plans. Nobody wants to have two people independently arrive at a meeting to pitch separate office supplies suppliers.
But what is the benefit to doing good procurement for a small organisation?
“…well as an organisation, as a business, as a charity, why should doing good procurement matter? And ultimately good procurement is an enabler of your mission… if you're taking money out of your bottom line effectively out of your costs, good procurement will enable you to grow quicker.
And the same on the charity side, if you're talking to a charity about their mission, if you're trying to raise funds, that can be really difficult, really challenging for a charity. But actually if you manage your procurement well, you can reduce significantly the amount of funds you need to raise. – Rob Kissick
While good procurement is a sure-fire way to save money, where are some key spending areas that you could look to as potential savings opportunities?
Some of the best categories to look at are:
- Office Supplies
Business services like HR & Payroll are also a great category to look at depending on the size of your organisation. If you work within a school, furniture can be a surprising area to save on as well.
If you’re a small organisation that feels like you are overstretched in your procurement journey, please don’t hesitate to contact us and we will be there to help you, every step of the way.
Where can you watch/listen to Fun with Procurement?
If you’re yet to watch or listen to this episode of Fun with Procurement, you’ll have missed a lot!
Rob, Nathan and Darren have a great knowledge of the procurement landscape, breaking down typically difficult to understand topics into easily understood stories. Whether that’s Rob comparing procurement to layers of an onion, or Nathan mentioning the difficulty of starting a procurement process is like his diet...just start!
Fun with Procurement is here to inform and dissect all things Procurement.
If you’d like to catch up on what you may have missed or want to stay informed of when a new episode is out, click here and sign up now.
We also have our YouTube channel where you can watch the video’s accompanying the podcast, which you can watch here.