The procurement review has identified substantial savings that can be achieved through a structured approach to cost reduction, including demand management, strategic sourcing and on-going contract and supplier performance and compliance.
We have detailed our findings and recommendations on the current capability and capacity of procurement and recommended the short, medium and long term improvements required in order to deliver and sustain benefits.
It is important to recognise that not all benefits can be delivered in the short term and that parallel capability development will be required while delivery of sourcing and savings is in progress.
Our suggested implementation roadmap is built upon the key principles of addressing
immediate opportunities while developing the building blocks of people, process and technology to ensure sustainable progress.
The findings and recommendations within this report are based upon a rapid review of
procurement and it is important to highlight that a detail planning and design project is required in order to develop the detail implementation plans and ensure alignment and understanding of dependencies.
Our suggested implementation roadmap is phased as follows:
6.1 Phase 1
This phase should focus on establishing the key pre-requisites to enable the start of strategic savings projects. We recommend the prioritisation of the NPO organisation and governance model to drive implementation, detailed spend analysis and project planning. The key activities to be completed during this phase are detailed below:
Establish National Procurement Office
- Recruitment of CPO and Direct Reports for Policy, Sourcing and Operations - Detailed Transition Planning Development
- Recruitment of Category Managers
Implement required Procurement Governance
- Procurement Sponsorship, Council and Category Team governance - Procurement Operating Model Development
- Development of Roles and Responsibilities - Development of Processes and Procedures
Detail Spend Analysis and Planning Alignment - Detail Spend Analysis and Category Profiling
- Spend Analytics Business Requirements and Sourcing - Sourcing Wave 1 Planning and Target Definition - Procurement Council Establishment
We recommend the establishment of a project team with separate work streams for NPO organisational design, governance model and strategic sourcing planning.
The organisational design stream will see the development of the roles and responsibilities within the NPO organisation, the assessment of current and future capabilities and transition plans to support the migration from the current to future state.
The governance model stream will see the development of the procurement board, category councils, procurement council and category team structures, roles and responsibilities and operational agendas.
The strategic sourcing planning stream will see the completion of detail spend analysis across sectors and the integration planning and dependency planning for strategic sourcing projects. It will also see the validation and confirmation of specific projects and savings targets.
6.2 Phase 2
During this phase the programme will commence delivery of the strategic sourcing waves. The strategic sourcing waves will run over a number of fiscal years, dependent upon the internal capacity and business change capability.
In parallel to the sourcing waves we would anticipate the development of system based spend analytics and the development of procurement capability against identified needs in the design phase. We also recommend the development of the technology roadmap covering e-sourcing, spend analytics, e-procurement, contract and supplier databases, savings databases and support systems.
A key activity in this phase is the development and rollout of the procurement category councils where cross sector leadership and procurement establish the forums for tracking category policy, sourcing and savings implementation. The typical deliverables from this phase are:
Procurement Category Councils establishment for Wave 1 sourcing
Sourcing Wave 1 Execution
Spend Analytics System Development
Sector Procurement Capability Development
CPO Technology Roadmap Development
The initial sourcing wave will take approximately six months to complete the sourcing and contracting with implementation of the first initiatives commencing towards the end of this period.
To support the completion of this activity and to manage the implementation and subsequent sourcing waves we recommend the on-going support of the PMO function and the specific Strategic Sourcing project support team. We would anticipate this team continuing through the sourcing waves, supporting the category council establishment, policy creation, governance execution and implementation tracking across sectors. Our recommendation is that this support involves dedicated category specialists for each sourcing wave to ensure maximum value targeting and delivery. The category subject matter expertise would supplement the NPO during transition where there may be capability gaps. This level of support would be anticipated to continue during the entire programme lifecycle.
6.3 Phase 3
In parallel to the rollout of sourcing waves, the procurement capability maturity will happen through the development and implementation of procurement operations, including adhoc tactical and operational buying support, helpdesk functionality, operational reporting and compliance and geographical shared services across sectors.
Our recommendation is to focus on delivering the initial strategic sourcing for common categories and sector specific initiatives with the support of governance model and operating procedures. Following completion of this we recommend the focus moving to tactical and operational performance through the establishment of common support services.
We recommend the engagement of experienced implementation resources in the development and rollout of the model. This activity will require operational purchasing, shared services and lean process skillsets.
Appendix
1 Categories
The following Table indicates the categories that addressable spend was mapped to.
Spend Category Mapped To
Construction Architect Civil Electrical Materials Mechanical Other Quantity Surveying Defence Aircraft Aircraft Maintenance Equipment Equipment Maintenance Naval Vessels Ordinance Equipment Other Vehicle Maintenance Vehicles Vessels Maintenance
Facilities and Services Building Maintenance Catering
Cleaning Couriers
Document Management Grows
Health and Safety Laundry
Other
Papers and Periodicals Postage Rental Security Waste Water Uniforms/Clothing Sports Equipment
Farming Livestock Consumables Equipment Other Services Supplies Food Veterinary Fleet Fuel General Vehicles Maintenance Other Rental Specialised Vehicles HR EAP
Health and Safety Other
Pension Recruitment
Temporary Staff / Contractors Training ICT Hardware Other Services Software Telecoms - Data Telecoms - Equipment Telecoms - Mobile Telecoms - Voice
Managed Service Outsource
Marketing Advertising
Creative Media Other
Promotional Events Research
Medical Blood / Blood Products
Drugs and Medicines Laboratory
Medical Equipment Medical Gases
Medical Supplies Other
X Ray / Imaging
Office Equipment Copiers
Furniture Multifunctional Devices Office Equipment Other Plant Equipment Equipment Hire Maintenance Other Plant Plant Hire
Print and Stationary IT Consumables
IT Peripherals Marketing Printing Office Printing Office Supplies Other Production Printing
Professional Service Advisory
Audit
Financial / Bank Health and Safety Insurance Legal Other Subscriptions Travel Agents Air Car Hire Hotel
Meetings Incentives Conferences and Events Other Taxi/Bus Hire Train Training Unclassified Unclassified Utilities Electricity Fuels
Gas General Utilities
2 Data Sources
The following Table indicates the sources of the data used in this report
Sector Data Sources
Health Non-Pay cost 2009 -2011
"2011/2012 Outstanding PSR's"
"April 2012 PSR Report"
"PSR Received March 2012"
Procurement CTCRM BS - Key Result Areas
Procurement CTCRM BS - Logistics and Inventory Management
Procurement CTCRM BS - Portfolio Medical, Surgical and Pharma
Dashboard Analysis of National Invoices 2011 V3
Overview HSE Procurement Staff JS110612
Education Extract - Universities spend data by supplier
Extract – DEC VEC Goods and Services
Free Education Scheme – Income and Expenditure Sample for schools
The National Public procurement Service – “Cost Savings for Schools” Oct 2011
Extract – SCPN Partner Profiles Spend by IOT Partner Academic year 2010 2011
Extract – Procurement Update – IUA Council
Extract – Sample Income and Expenditure
VEC Corporate Procurement Plan Template
VEC savings sheet
Stationary Price comparison
Local Government Extract – Combined LA Procurement Data.
Interim Report to the Minister of the Environment, Community and Local Government and the LGER IG March 2012.
Dún-Laoghaire Rathdown Procurement Review of Council Expenditure in 2010
Extract – “Procurement Summary”
Dún-Laoghaire Rathdown County Council Procurement Guidelines
Sligo CC Supplier and Spend extract
Local Government Efficiency Review Group Report
Dun-Laoghaire Rathdown County Council – Procurement Guidelines
Justice Shared Services Invoice extract
Food Cost by Prison – Analysis by Supplier
Irish Prison Service – List of Contracts For The Supply Of Goods And Service With A Value Over €100,00
2012 procurement workplan
CPU Contract Database
Report - Procurement Type Subheads and Top Suppliers
2011 4002 master 4002 List SAD
Corporate Procurement Plan (2010-2012)
Savings 2012
Contract List
Purchasing organisation
Defence Defence Force Estimates 2012
Defence Forces Organisation
Purchase Orders over €20,000 for Q1 of 2012
Central Government (Other) Shared Services Invoice extract
Revised Estimate for Public Services 2012
Accenture - "DAFF Cost Reduction Review 2011 Report"
Circular No. CP1 - "Planning for Procurement of Supplier and Services - Multi-annual Divisional Plans"
SAP records and procurement expenditure
Extract - DAFM Spend by Old Material Groups AR1
Extract – “Subitems” ( Supplier and Spend actuals)
Department of Public Expenditure and Reform – “Public Service Reform 17 November 2011”
Department of Public Expenditure and Reform – “Human Resource Shared Services Centre Financial Appraisal April 2012”
Department of Public Expenditure and Reform – “Revised Estimates for Public Services 2012”
Central Procurement Chief State Solicitor's Office: "Irish Public Procurement Materials - April 2012"
“2009 Survey of Top 30 Categories of spend”
NPS - Expenditure/Purchasing Lines NPS Lot 1 Office Supplies 2011
NPS - Live Contracts and Frameworks 2012
NPS - Organisational Chart
NPS - List of Supplier and Buyer Education Events Aug 2009 to Nov 2011
Key Responsibilities of NPS Staff
"Strategy Statement National Procurement Service 2010-2012"
Draft Memorandum for the Government Public service Reform Plan - Public Procurement ( Framework Agreements) 3/5/2012
List - Stationary Contacts by Department and Associated State Agencies
List - Top 30 Supplier Contacts by Department and Associated State Agencies
PAC NPS Briefing 16.02.12
NPS Lifetime Contract Values 2012
NPS Supplier Survey 2011
NPS Buyer Survey 2011
Other Date Sources Consip Spa spearheads efforts towards high performance in government procurement, Accenture
High Performance through Procurement in Public Services, Accenture
High Performance through Procurement in Public Services, Accenture
Scotland – Public Service Procurement Report
Scotland - Procurement Reform Delivery Plan
Strategy for the implementation of eprocurement in the Irish Public Service