Our client the United Synagogue operates 50 sites, the majority of which are within inside the M25. They have been a client of The Procurement Group since 2006 and we value the long-term relationship that we have with them.
The Procurement Group have been saving UK businesses money for over 20 years using our procurement management techniques to drive down their business costs.
In this instance, the United Synagogue had no formal strategy for acquiring photocopiers and The Procurement Group identified this, which led to this project starting.
The main issue was that every site had its own contract, meaning that there were over 30 different suppliers. Each supplier had a different contract end date, different pence per copy charges, different termination requirements, and provided different manufacturers equipment. This made the estate very hard to manage for the United Synagogue’s in-house IT department.
The Procurement Group (TPG) try to simplify clients’ lives wherever possible. In this instance, we saw the opportunity to deliver a single contract, from a provider who would exit the United Synagogue from all of their existing contracts and still deliver a saving. The benefits to the United Synagogue would be that they would have brand new standardised equipment across their estate and also that they would have one transaction a quarter going through their bank and accounting system rather than over a hundred as was the current situation.
For this project to work, TPG had to have a thorough understanding of what was being paid at each of the 50 sites currently. This was actually the hardest part of the exercise because we had to contact each site and some of them don’t work five days a week so it was a difficult task to fulfill. To achieve this each site was visited and it was established what equipment they had, how old it was, how many copies they’d done, whether it was owned or leased and how copies were paid for – pence per copy or by buying consumables. That way we’d established a benchmark.
TPG then engaged operationally with the United Synagogue to understand their requirements going forward at each site, drawing up a list of the equipment specifications required, tendering the business, arranging beauty parades for the client to meet with suppliers to understand who was the best fit, and then to negotiate the contract with the suppliers.
Working closely with the United Synagogue’s head office team, we were able to achieve this and ended up delivering a 15% saving across the estate guaranteed for three years. It was important to both the United Synagogue and TPG that title to the goods passed to the client at the end of the initial three-year term because usage is very low at each individual site and therefore, the equipment would be in good condition rather than need replacing which is the norm in the copier industry.
TPG like to take a long-term view of situations and rather than delivering the maximum savings at day one, in this case, agreed a two-step approach with the United Synagogue. The first step was to get the estate consolidated with one supplier. As an outcome of this, we were also able to install software which recorded the exact usage at each site, thereby, overcoming one of the biggest hurdles we all had at the outset which was actually understanding what the usage was. The second stage will then be to retain the existing equipment and enter into simple maintenance agreements for all of the equipment going forward, meaning that the lease payments for ownership of the equipment disappear and deliver significant savings to our client.
This is an example of how TPG bring their considerable experience to bear for the benefit of clients and deliver long-term solutions, thinking outside the box and always taking the best route for their clients, whether or not that impacts on TPG’s revenue in the short term.
If you’d like to find out more about how we use cost reduction and spend optimization workflows and processes to analyse business data in order to ensure that we deliver best value for all of our clients in whatever sector they operate, then contact me, Simon Unger, on 07768 421901 or [email protected]
The UK has the 43rd fastest broadband in the world and is 6th out of the 7 G7 countries with only Italy being slower.
That said, Europe is still by far and away the fastest. All 29 countries measured in Western Europe were in the top half of the table, countries in the region taking eight of the top ten spots in the world for internet speed. The regional average speed of 90.56Mbps makes it the fastest of the 13 global regions overall.
The data was derived from over 1.1 billion speed tests taken in the 12 months up to 30 June 2021 and spanning 224 countries.
It’s clear that the signs were there for all to see if a recent article from px Group is to be believed.
They should know as they operate a number of assets that feed in to the National Grid and claim that there were no fewer than 6 margin calls from National Grid – times when forecasted half hourly supply will not meet forecasted demand – in the winter of 20/21 vs 2 total in the whole period from 2011-2019!
Sure, we’ve been caught in a perfect storm now as i) the weather has meant a lack of wind supply at the same time as ii) Asia has increased it’s requirement for gas while emerging from the pandemic and iii) UK gas storage is at an all time low.
That said these issues haven’t suddenly occurred. They’ve been creeping us on for months if not years so were the warning signs there and was it possible for producers & providers to have taken action sooner?
5 Things To Know About Effective Contract Management
The first thing to understand about contract management is that it doesn’t just entail awarding and managing contracts.
Contracts form part of every business and the more you have, the less risk you’re exposed to. That’s why you need to have good management processes in place to manage every contract in your business.
1. Where are your contracts?
You should have contracts for the following (at minimum):
·With your partners and suppliers
·If required, customer contracts
The majority of B2B suppliers will insist on contracts being agreed. To avoid your business being on the losing end of contractual obligations, the process needs managed. You must know and fully understand the terms you’re agreeing to when you enter a legally binding contract.
2. Never sign without negotiation
That’s a rule to live by in business.
There’s always some wiggle room and it’s the entire reason for part of the duties procurement officers do day in, day out. Assess, identify and negotiate.
They need to review all the terms, understand them and find the areas within the contracts that need revised to improve those terms. Moreover, better terms are most often ripe for the picking. You don’t get if you don’t ask.
3. The ball remains in the buyer’s court so play responsibly
When you’re negotiating contracts, you cannot be in the mindset of scrounging for every saving you can. Savings are all well and good but never at the expense of a positive working relationship.
One of the worst things for contract management is to have one party feel unjust due to extravagant terms. What can start out as a standard RFP (Request for Proposal) can have numerous bids, the most attractive ones will be analysed, scrutinised and all too often sabotaged.
When suppliers are keen to jump aboard and partner with you, in particular the smaller sized firms, often the owners are looking for security of finance, rather than good terms.
The result is that they don’t have the capacity to understand the entire scope of works being agreed to until it’s too late. They find themselves bending over backwards for too little remuneration in comparison to the efforts put forth. Next thing you know, the quality of service declines, and it’s affecting your customers.
That’s the price of cheap sourcing.
Don’t look for best pricing. Focus on best value.
4. Build the relationship before the contract
You won’t get a great discussion going into negotiating terms of agreements between two parties without the relationship first. When RFPs are first put out, the focus should be on building relationships with suppliers first because often is the case, that’s a representation of how your working relationship will be, possibly for years to come.
If that rapport isn’t there, the working relationship will be poor. That’s just to start with because the contracts will come up for renewal. When you get to that stage, it’s best to be on good terms with a supplier who gets your business, understands it, and works closely with you to enhance your customer’s experience.
Changing suppliers doesn’t help customer service in the short-term but sometimes, things don’t go to plan, negotiations break down and you find yourself beginning the tendering process over.
The management of contracts is never done. As long as they’re in place, they need managed and so do the people and companies involved.
5. Analysis must be thorough
For contract management purposes, there are four ways to assess risk to business finance, and the legal responsibilities or ramifications of commercial contracts.
The four main types of analysis include:
Same as STEEP with the addition of…
Most businesses will be familiar with the SWOT analysis to assess threats and use that for their internal and external risk assessments. However, when there are changes to the economy, the political landscape cannot be ignored.
Take for example the UK’s exit from the EU. That’s politics affecting businesses of all sizes. That brings legal compliance issues into the risk assessments, and by adding in the issue of ethics for CSR policies, the STEEPLE analysis is the more in-depth option for a comprehensive risk assessment.
Manage your contracts and you’ll be better placed to manage risk within your business, thus preventing complications further down the line.
Without contract management, risk management would be impossible.
Do You Need To Transform Your Procurement Process?
How your business partners and gains buy-in from suppliers will influence not just your overheads, but your CSR policy, Procurement policy and quite possibly even extend to your HR policy too.
There’s a magnitude of variables involved in procurement that to the average business owner, without a professional procurement team (or even just a manager) in place to manage suppliers, things won’t go as smooth as they could do.
What Professional Procurement Entails
- Understanding Value
This goes beyond assigning a monetary value to lock in savings commitments through procurement. Value differs by company and it’s the business owner who ultimately determines what he or she defines as value.
Your company may value supporting SMBs for goods and services supplied, while another may place more importance on the value of green sourcing.
Whatever values your company supports and works hard at upholding as part of your CSR policy, can be supported and further championed by working with suppliers with the same core values.
Values go beyond figures.
- Professionalism throughout procurement
One of the best approaches to ensure professionalism in procurement is to ensure your buyers, whether in-house or outsourced, are invested in continual professional development.
In the UK, you can simply check with The Chartered Institute of Purchasing & Supply (CIPS).
By investing in people who invest in keeping their expertise current, you can be certain that your company will meet or even exceed compliance requirements.
In addition, further areas that will not be neglected is market research, which is essential prior to issuing RFPs (Request for Proposals) to begin the tendering process. Moreover, ethical standards will be included in the analysis of potential suppliers as well as having sound organisational knowledge.
When CPD is part of your HR policy, complimenting your procurement policies, you will find it to be beneficial for improving your entire procurement process.
- The Principles of fairness
- Transparency through competitors
By using the above fundamentals, you will achieve better operational efficiencies, reduce corruption, increase effectiveness throughout your supply chain… all of which brings us right back to the starting point of value – your business will reap the benefits of value for money, and your policy will enhance customer trust, and enable your business to gain a competitive edge.
Plus, you get the data to make further improvements to your procurement process
Data analysis is critical for business development. The longer you’re operational, the more data you will collect and store both in paper format and in digital format.
The majority of the data gathered by procurement professionals must be understood in order to enhance your business processes.
Data analysis can be done whenever you feel the need to, quarterly, bi-quarterly, annually or ad-hoc.
With the magnitude of data at your fingertips,
- Benchmarking can be done
- Supplies and suppliers monitored
- Contracts evaluated
Introducing a transformation process
Chances are, there’s something above that your business hasn’t covered already with your systems and business processes. To implement any of it would involve transforming how you currently manage your suppliers, contracts, tendering process and quite possibly, your entire procurement policy.
The good news is that it’s not too late to make changes, because frankly, to experience efficiencies through procurement, it takes an ongoing approach.
There are plays you can make for the short-term, others will be long-term.
Whatever your ambitions are to better your supplier management, there are three steps you can take that will transform how your business buys-in.
- Assess your current procurement situation
- Plan changes strategically (seek advice if you lack the market research or organisational knowledge)
- Implement the changes you deem necessary
- This 3-step approach will need to be done periodically. The more your business matures, the more frequently your procurement team will need to repeat the above three steps to ensure any gaps are identified, addressed and changes implemented for faster improvements.