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Radical Supply Cost Reduction
Andrew Smith OBE
Chief Executive, Hampshire County Council
Lead for Procurement, Capital and Shared Assets Workstream
3 February 2011
Starting Point
• Be confident of (some or many) councils’
proven ability to deliver efficiencies
• Recognise, exploit and adopt
• Manage “Efficiency vs Democracy”
• Learn from the private sector group model
• Become a more ‘intelligent’ client
The productivity challenge…
Cultural not technical – who can afford sovereignty?
The productivity challenge…
Designing for tomorrow today
The productivity challenge…
Driving adoption
The productivity challenge…
Embracing localism
Guiding principles for the future
• Creating organic leadership – National /
Clusters / Councils
• Compelling not prescribing
• Closer to the private sector group model
• Raising collective leverage
• Improving and sharing skills
• Maximising the opportunity to raise our game
Procurement, Capital and Shared Assets
Productivity Workstream
Workstream
Board
Chair: Cllr Paul Bettison
Champion: Andrew Smith
PM: Michael Lee
RIEP Support: Andrew Larner
Property
Highways
Waste
Social Care
Corporate
Services
Leadership
• Central procurement team
– Local government hosted
– Private sector to raise commercial acumen
– Leadership role
– Interface with central government, private
sector and health
Leadership
• Clusters
– Ex IEPs / Lead councils to host
– Geography may change – Consolidation
– Matrix – Each Cluster to lead a category
nationally?
– Risk share approach
– Adaption and adoption role
– Skills capacity local ownership
– Account management style with key spenders
Leadership
• Councils
– Local decisions and control
– Tactical local procurement
– Strategic cluster / national procurement
– Client feedback on continuous improvement
Workstream plan
• Short term – Quick Wins Strategy
• Medium term – Big Wins Strategy and
new service models
• Longer term – Remove barriers to
adoption = Optimum Leverage
Big Wins Strategy… Follow the money
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50% of spend is through third party suppliers
External spend for public sector in England is £221bn…
Of which £50bn is local government
96% of our external spend is in 4 areas
Construction
Asset Management
Corporate
services
Social care
Waste
Construction and Asset Management
•
Build using a managed framework approach
Helping localism through increased leverage
Offering a core framework design for local adaption
•
Offering a Collaborative Education Partnership service model
A local government led best practice alternative approach
Easy access, low cost and flexible; based on developing programmes
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Sharing assets
Shape and improve service outcomes through sharing assets
Learn from CLG Capital and Asset Pathfinders
•
Highways
National efficiency programme
Joint DfT and local government leadership
Corporate services
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Facilitating successful outsourcing
Designing and providing “make vs buy” guidance and practical help
Developing new contracts with flexibility and incentives to reduce costs
Delivering a framework for shared services with industry
Looking at open source software and shared processes
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Standardising and reducing the cost of commodity procurement
A national online best deals service to compare prices – including central government
deals
Joining up business portals to standardise processes and help SMEs.
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Reducing the cost of energy
Developing proposals on optimum energy procurement
Reviewing local energy production and local government’s role in this
Social Care
•
Shared approaches to procurement
Geographic frameworks to shape the markets for key types of care
Regional or sub-regional community equipment services
Opening ‘best deals’ to supply chain, reducing costs of service
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Reduce unit costs
Across the WM, EM, London and SE the Care Funding Calculator continues to
offer a method for delivering savings on residential care and supported living –
Savings since 2008 to date of £13m
Developing this online and extending to children‘s services
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Reduce purchasing costs
Developing a proof of concept to help authorities to expand their Shared Lives
schemes to deliver wider support - reducing spend by up to 60%
Waste
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Transformation Support Service
A service for all councils pursuing early stage and advanced waste partnerships,
access to a national waste partnership forum
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National and regional procurement delivering frameworks representing significant
procurement savings; reducing the costs of existing contracts, and; providing access
to reduction and recycling incentive schemes
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Knowledge Transfer Waste Information portal with over 95% of LA’s registered
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Self Assessment an online service, allowing local authorities to self-assess their
service against a blueprint of best practice. 70 authorities already using this.
Driving adoption … an example
The Future
• Collaboration → Leverage
(local choice)
(aggregation benefits)
• Product shift – but less risk
• More adoption of what works – challenge for LGA
• Supply chain management
• Scale
• Standardisation?
• Compliance
•Acumen and local authority management
The Future
• Sharing capacity / skills / people (is sovereignty dead?)
• Redesign → aggregate → procure → deliver
• Elected member leadership
• Is the private sector prepared?
• Procurement models based on:
• Joint ventures
• Asset backed borrowing vehicles
• Geography or place based
• Market development
• Leverage → Business requirements → Business relationships
Thank you