Join a procurement hub
- Procurement hubs offer quick access to effective contracts and maximise council's buying power. They also benefit suppliers by making contracts accessible to a wider market.
- The West Midlands Procurement Hub, run by Improvement and Efficiency West Midlands (IEWM), offers a wide range of ‘best deals' from a growing list of over 330 contracts which all local authorities can access including energy contracts, vehicles and fleet services, ICT, office supplies, agency staffing and consultancy and waste management to name but a few.
- The hub has saved approximately £6.5 million during 2008/09 and in total has saved £10.7 million since it started in May 2007.
Why do it?
- The key business driver for the West Midlands Hub was the need to increase public sector efficiency by reducing the costs of procurement administration
- There was also a need for consistency and promotion of what is being done across the region in order to prevent maverick spend. Use of the hub by subscribers is closely monitored to determine how effective it is at enabling cashable savings.
The figures gathered are used to compile a monthly report on the level of cashable savings made in the region that the hub has helped to achieve. Savings are validated by benchmarking with what the local authority was previously paying. The benefits: information, coupled with feedback channels, are used to constantly develop the hub and to ensure that its potential benefits are maximised.
What are the challenges?
- Getting everyone to work together – in the West Midlands they are working together on procurement in the following groupings:
- Solihull / Coventry / Warwickshire County (plus potential districts joining)
- City Region (City Region is the six 'Mets' coming together on a range of areas, one of which is procurement funded by IEWM (Birmingham / Dudley / Sandwell / Wolverhampton / Walsall / Solihull)
- Shared Service (Dudley/ Sandwell / Wolverhampton /Walsall)
- Staffordshire County and six district authorities
- Worcestershire / Warwickshire Districts
- Having a clear vision of what you want to achieve as collaborative groupings – they support local councils in the region to achieve the required efficiencies by helping them to:
- develop collaborative approaches to procurement
- share contracts and contract information
- maximise purchasing power through joint procurement exercises and frameworks.
- Achieving agreement on the hub content and development – the development of the hub content was based on significant consultation and engagement with the local authority procurement community combined with the IEWM procurement team's knowledge of what was needed in the region. A steering group (the procurement advisory group) originally drove the project forward. The operating model which was developed was not solely based on getting the ‘best deal' but also involved offering the necessary support, expertise and consultancy to source the best arrangements.
- Keeping up the momentum for change and the buy-in of users: the hub is continually being developed on an ongoing basis in order to reflect the needs of users. The hub support officer undertakes two-monthly reviews with top-tier authorities and six-monthly reviews with districts in order to elicit feedback on how to improve the website and to make decisions about which areas should be developed or down-sized. Many of the development ideas are identified at ‘demonstration' workshops with local authorities or through speaking directly to the users.
- The costs associated with setting up and running a procurement hub - the project initially had a budget of £300,000. However, development costs were low, made up of web development costs of approximately £5,000 per year and a further £3,000-£5,000 maintenance cost per year. In addition, the cost includes the time of one officer who supports and administers the hub.
For the first year of the hub's existence this was a more or less full-time role. However, over time the input required has declined and that person now spends 25-30 per cent of their time working on it. Most of this time is spent on updating content and relationship management, including contacting the relevant local authorities to obtain current information.
The ‘demonstration' workshops and training events act as the main marketing tools for the hub. IEWM did consider external hosting of the hub. This is a more expensive option for the sector, (approximately 100,000 per year). Irrespective of the costs, IEWM took the view that the hosting option would not provide the‘hands on' support and consultancy expertise,including the effective relationship building with the authorities which its own in-house resource currently provides. As a result it was decided that hosting was not a viable solution.
Looking towards the future IEWM are seeking a long-term sustainable funding model for the Hub to support the sector over the coming years.
What are the results?
The IEWM smarter procurement programme is currently securing savings of approximately £1 million per month with around £3 million per year coming directly from the hub; The IEWM Hub also supports regional joint working around procurement projects and challenges.
IEWM Hub highlights include:
- promoting the use of Office of Government Commerce frameworks among the region's councils which achieved savings of £1.6 million during CSR07
- enabling savings of £1.7 million in agency staff costs and £1.1 million savings against stationery supplies
- a saving of £85,000 for one local council on its annual bill for water coolers
- Across the country there are a number of existing procurement hubs which provide a ‘one stop shop' for all of your procurement needs. Facilities include access to framework contracts and ‘best deals', draft contract templates, sometimes advice and training.
Some even keep a contracts register for businesses keen to do business with local authorities. (see also North West IEP's ‘Chest' their regional procurement portal – their savings from better procurement are reported at £68 million from 2004/05 to 2008/09).
The South East portal has extremely good representation, with 69 out of 74 councils using it with very active support from the Federation of Small Businesses.
Supplying the South West is a ‘one-stop shop' or the area's procurement needs and forecasts savings of £6.6 million over three years.
Jonathan Jones, Programme Manager – Smarter Procuremnt
29 June 2012