How to Develop an Olympic Standard Procurement Process

Schools kit scam ‘could cost schools millions’.

This is, sadly, an all too familiar headline. It is estimated by industry experts that schools in England and Wales have been ‘scammed’ for millions of pounds in contracts for supposedly ‘free’ laptops, photocopiers and printers.

So, if it really is just a case of ‘common sense’ here why did so many people fall into the trap? The belief is that the two main reasons are a lack of procurement experience and, almost as importantly, a lack of time.

List the roles a bursar or School Business Manager is now required to undertake and it’s as long as your arm. Procurement, whilst not new to the job requirements, is becoming increasing important as the ability for an academy to take advantage of their new found freedom from local authority control allows them to consider whether the private sector offers them better value for money and/or improved service provision on a vast array of products and services.

That alone is a difficult decision as some local authorities are more commercial than others and even individual service provisions within the local authority vary in terms of cost and quality. Payroll services seem, in the main, to be run well and at a reasonable price, HR and employment law services can be expensive and offering patchy advice dependent on which individual you deal with. Local authorities have also been known to have a habit of platinum plating everything too. This sometimes means advisory documents can run to dozens of pages when the same information from a private firm is much more lean and efficient whilst still providing exactly what is required to meet regulatory and legislative requirements. All too often there is also a ‘one size fits all’ approach to tenders meaning that the individual requirements of schools are overlooked in favour of uniformity in the tender process.

That said, some local authorities are really taking to this new environment like a duck to water with, as an example, Wigan having a collaborative approach helping to broker its schools into mini-consortia each of which has its own leadership and is charged with bringing improvements to the schools on behalf of the authority.

15 ‘Golden Rules’ For Successful Procurement

So, once you have emerged from the regulatory mire of conversion what should you be doing to ensure that your purchasing is up to Olympic standards? Here are our 15 ‘Golden Rules’ for successful procurement:

1. Before you even invite suppliers in to discuss requirements ensure you have drawn up a robust brief or specification document for what you need. Involve those people who have day to day sight of the requirements as they will often add to, or remove from, your initial document.
2. Consider your negotiation strategy. Preparation is the key to a successful outcome. What are the points on which you will not compromise and those where there is some degree of flexibility? Know your BATNA (Best Alternative to a Negotiated Agreement) make sure you have a plan to protect yourself against making an agreement you should really reject and, secondly, to help you make the most of what you do have in your favour to ensure the outcome is as positive for you as possible.
3. Remember that you are looking for a win/win for both the school and supplier. If you negotiate too hard and the supplier is left with minimal, or even no, profit in the deal it’s unlikely they will have the ability or inclination to deliver a quality product or service you require.
4. Sustainable cost reduction; remember that a short term gain doesn’t always equate to a long term one. Ensure that the contract you have negotiated will deliver benefits throughout the duration.
5. Be sure that any reduction in cost you achieve isn’t at the expense of service improvements; the cheapest price doesn’t necessarily offer the best value for money.
6. Read the small print. It may sound obvious but the vast majority of procurement ‘errors’ come from missing out this vital part of the process.
7. Remember, if a deal looks too good to be true it probably is!
8. Ensure there is active engagement of staff at all levels including the administrative staff, maintenance staff and academic personnel – if the people who are making the purchases on a day-to-day basis aren’t involved in the decision making process in some way it’s highly unlikely they’ll stick with a new supplier that they feel has been imposed upon them. Winning ‘hearts and minds’ is the best way to maximise the savings and ensure that they are sustainable.
9. Knowledge transfer, process documentation and training should be an integral part of your procurement practices. This means being mindful of the fact that anyone involved in the purchasing of goods and services should be in a position to confidently manage the procurement process.
10. Get the most recent set of annual accounts for the suppliers you’re considering – these can tell you alot about the business not just their financial health. Are they profitable? Is their balance sheet backed with tangible assets like property and cash? Are they growing or shrinking? It’s also highly recommended you visit the supplier premises as this can also reveal any stresses the business may be under.
11. Take references – ask for the details of at least three reference sites, preferably other schools, in order to get some feedback on product quality and service.
12. Don’t be frightened to get the supplier contract documentation amended to suit the school requirements and make sure that any bespoke terms agreed are fully detailed so the supplier is committed to sticking to them.
13. Implementation is key; you need to embed a culture change within the school with respect to procurement. Encourage personnel to treat school funds as if they were their own money.
14. Be ruthless! If staff spend on expenses outside of a ‘Preferred Supplier List’ don’t reimburse them! This is a tough one to do but you only need to do it once and the message will be heard loud and clear!
15. Create, or add to, a contracts database. Make sure you don’t miss a contract renewal date as this is often where schools are caught out meaning they end up paying penal rates for services.

 Outsourcing Your Procurement

Of course if all of this looks a little too much to be dealing with, alongside all the other strategic and day-to-day tasks you are faced with, there is the option of outsourcing your procurement processes to a third party.

One of the benefits of doing this is that you are able to retain the decision making capability whilst getting all the leg work done by someone else.

One of the more difficult aspects of the procurement process is ensuring that you are comparing like for like with the offers on the table. If you don’t know what you’re looking at many suppliers have an enormous number of tools in their kit bag to ensure it’s an almost impossible task to easily compare offers.

Outsourcing is also a means of getting the input of spend category experts. Being knowledgeable in areas as diverse stationery, building contracts, utilities and catering, keeping up with the latest industry pricing and knowing who the current market leaders are, is simply not feasible when coupled with the myriad of other tasks you have to perform.

An often overlooked benefit of outsourcing is the ability to leverage spend through collaborative buying. Most School Business Managers see the potential benefits of this but simply don’t have time to explore it, nor do they want to be the one lumbered with all the work to coordinate it. Getting a third party in to oversee this for your consortium or multi-academy trust ensures all parties maximise benefits whilst minimising time commitment.

When all is said and done procurement really isn’t rocket science. It mostly requires a good dose of common sense and attention to detail to ensure you get it right and, when you do, the benefits are not just financial.

Lorraine Ashover is Managing Director of Minerva Procurement Consultancy Services offering cost reduction and procurement advice exclusively for schools. More details can be found at www.minervapcs.com Minerva has been shortlisted as a finalist in the School Procurement Service category at the Education Investor Awards 2012.