Procurement is no easy job – just ask the Government.

November 16, 2010

The last few weeks have delivered a plethora of news stories on efficient (or in most cases inefficient) procurement practices.

The main story has been around Sir Philip Green’s ‘Government Spending Review’ which generated headlines with the words “shocking”, “inefficient”, “inconsistent” and so on.  Whilst I am not suggesting that Independent Schools would generate anything like such negative feedback on their procurement practices it goes without saying that many could benefit from additional resource and expertise in respect of their purchasing.  Most bursars I speak to say that either they or one of their team know they could do better but it’s ‘finding the time to do it alongside all of the other tasks’.

So what are the issues highlighted that you can take from Sir Philip Green and apply to your own school?

1. Is there a culture of ownership of spending within the school?  Do administrative and teaching staff make purchases as efficiently as if they were spending their own money?  Schools are in the business of education and this should include educating all personnel on the financial implications of decisions they make.

2.  Is there a formal process of review for departmental budgets?  When annual budgets are submitted are they simply accepted or is there a degree of challenge?  Is now the time to cull the ‘sacred cows’ that no one has dared challenge before?  You have to have had your head buried in the sand for the past 18 months not to see what the climate is like and so it’s a good time for Bursar’s to review ALL expenditure.

3. Is purchasing being conducted by personnel with the relevant skill sets? We’re talking about spending of millions of pounds in many cases being ‘managed’ by Heads of Department or administrative support staff with no formal procurement or negotiation training.

4.  Have supplier invoices been reviewed to ensure that where items are being ordered by different departments they are all paying the same prices?  Also, on aggregating annual volumes across the school there is often an opportunity to renegotiate pricing with the supplier based on the value of all business.

5.  Have you benchmarked your purchases externally to ensure you are paying at or below market rates for the products or services?  In many cases this is quite difficult to achieve as this type of exercise requires a significant time investment to gather the benchmark data.  This is where the services of a firm such as Minerva is invaluable as we already hold this data from various previous audits. In the case of the Government printing costs showed differentials of 15% and 80% between market prices and what the Government were actually paying.

6.  Have you considered more cost and environmentally efficient ways of doing business?  Obvious examples include emailing bills instead of posting; using another school to conduct ‘offsite’ meetings with the ‘quid pro quo’ being they can use yours; is video conferencing an option for Governor/Trustee meetings thus cutting carbon footprint and travel expenses?

7. When did you last review your expenses policy?  Are you happy that this cannot be ‘abused’?  Have you considered the use of Company Credit Cards?  I know many schools are fearful of this but it’s actually an incredibly secure, cost efficient and  administratively efficient means of controlling personnel spend.  Nowadays spending limits can be placed on individual cardholders and even where the card can be used can be fixed.  In addition if you have Government Procurement Cards (which you qualify for if you meet certain criteria, which most schools do) then there is not even any cost for having them.

8.  Have you reviewed any long-term contracts in place.  Often these are overlooked on the basis that “we are locked in”.  However, investigate the penalties for early release from any contracts as it’s quite possible that cost savings generated from a contract with a new supplier will still be achieved even after any penalty payments to get out of the old one.

9.  Are you maximising the value of your property portfolio?  Many schools have extensive grounds and infrastructure which is under utilised.  Whilst external ‘lettings’ are sometimes seen as unpalatable to more traditional institutions this would enable revenue generation from something which presently costs money rather than makes money.

10.  Remember that this exercise is not a ‘one-off’.  Efficient procurement should be an ongoing activity as much through the good times as the bad.  It is more difficult to manage revenue but it is within your span of control to monitor and reduce expenditure.

Luckily for us we are not in the position to have to find £6bn of savings like the Government but all of the above points are as relevant to schools as they are to the Government.

I hope that the above is a useful list of areas to consider if only a memory jogger.

Good luck!

Posted by Lorraine | Filed Under Uncategorized | Comments Off 

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