With the excitement of the World Cup building, I wanted to give the England football boys some advice to help them along their way in Russia.
So what can England learn from procurement?
Within procurement it’s essential to plan ahead, and in order to do so you must identify your own business’, your incumbents’ and other potential suppliers’ positions within the market to make predictions on any changes based on research data. This better enables you to develop a negotiation strategy for obtaining the best possible value on necessary goods within any category.
Equally, when it comes to football, the England squad must identify their own position and draw comparisons against their opponents to highlight each of their strengths and weaknesses. This will help them to develop a strategic game plan to better their chances of success.
Find out how Market Dojo can help your team plan ahead and analyse spend with Category Dojo.
Effective supplier relationships are critical to business success. There is far more to sourcing goods/materials than simply signing a contract and watching the rest fall into place. Without strong relationships, supply chains can easily breakdown. There is a much more human element to ensuring processes work. Arguably the most important aspects of building a strong supplier relationship are;
These components of supplier relationship management are also transferable to the England setup. The players must trust, respect and openly communicate with each other, as well as with the management in order to work together as a team. Not only will this improve their teamwork but should they use these communication skills as well as the feelings of trust and respect towards their opponents and officials alike, it will also help the players to establish themselves as key role models for young fans.
Find out how Market Dojo can help your team build supplier relationships with SIM Dojo.
Procurement departments realise that each link within the supply chain is of equal importance to the next. Similarly on a smaller scale, within a business it is not just those ‘goal scorers’ i.e. the salesperson making the highest margin, or the buyer obtaining the best value on a particular item, that are important. It is the rest of the team, the other departments that enable the ‘goal scorer’ to do their job to the best ability. Likewise with football; the strikers add value by scoring goals, the midfield create opportunities and the defenders manage the risk for the goalkeeper. No one player can win the World Cup single-handedly, its about working together as a team, utilising the individual players’ strengths and exploiting your opponents’ weaknesses.
Find out how Market Dojo can help your team work collaboratively with your suppliers using Innovation Dojo.
Come on England!
In the UK especially, it seems that the prices of food and household goods are always on the increase. No matter how often you see those price slashes and discount signs, every year you seem to be getting less for your money.
The news always likes to point to a suspect, with Brexit seemingly being the flavour of the month (for almost the last few years it now seems), but is it really all that simple?
At Market Dojo and working within the Procurement sector, we’re in the fortunate position to better understand market influencers. This gives us the first-hand ability to see how competition and additional resources given to procurement teams can help to drive savings and pass bottomline efficiencies straight to the consumer.
Half of Britain’s food is imported and 30% comes directly from the EU, with an additional 11% reportedly coming from non-EU countries under trade deals negotiated by the EU. If a trade agreement cannot be negotiated, then the purchasing and importing of these goods will likely see additional barriers or processes put in place.
Currently the EU trade agreements are in place to help manage trade relations between countries within the EU and those outside of the EU, these help to create better trading opportunities and overcome related barriers to importing goods.
Without trade deals in place, imports from the EU would be subject to the same treatment as non-EU imports. Which will threaten the border systems in place. In addition to increasing the costs and reducing the competition of goods being imported.
To counteract this, the government could cut tariffs on all food imports from both EU and non-EU countries. Although doing so would likely threaten British food producers who cannot directly compete on price.
However this isn’t even mentioning the impact that Brexit has had on the value of the Pound Sterling. The “weaker” the pound is in contrast to other countries’ currencies, the “more expensive” it is to import goods to the UK and the “more competitive” British goods appear abroad.
The simple answer is no. Different markets have different pressures. Whether it’s increasing taxes and new tariffs or the cost of raw materials going up.
Traditionally, food prices are at the mercy of global pressures that we all struggle to control. It was only in 2012 that we were all encouraged to get behind the nation’s dairy farmers in their fight for a fair deal. But when the cost of producing overseas can be a fraction of doing the same in the UK, consumers are forced into a choice. Consumers traditionally are unwilling to move from the habit of demanding low prices, forcing British businesses out of the market and making supermarkets source their products and raw materials from overseas.
On a broad (and simpler) perspective, it becomes inevitable that the UK either import in greater volumes or as a consumer we suffer through these pressures and accept the price hikes.
It’s often these “pressures” which are attributed to the cost hikes. But in reality, there are a variety of smaller factors which come into play. On the scale of a single supplier, over time inefficiencies are creating in their process or non-value adding steps. Which force companies to either increase their margins or increase their prices to continue to grow.
Often supermarkets will try to “hide” their price increases with offers signalling that yes you can get it for the same price (or even cheaper) but this is a now a ‘limited’ time offer and no, you shouldn’t be surprised when the price goes up.
In recent years you may have heard the phrase “Shrinkflation”. It means the process of items shrinking in size or quantity while their prices remain the same (or even increase). Meaning that you’re getting less quantity and less value at the same time.
A few goods examples of “Shrinkflation” are:
Toblerone having previously been 200g, the chocolate bar was reduced to 170g in 2010 and then again to 150g in 2016. This means that Toblerone has actually reduced in size by 25% in less than 10 years.
PG Tips Tea Bags. Although the number of the tea bags in each box remained the same (80), the business reduced the quantity of tea within each unit. You can now purchase 232g per box rather than the original 250g for the identical price of £1.99.
In 2014, Coca-Cola reduced the size of their 2 litre bottles to 1.75 litres and more recently they have again reduced the size to 1.5 litres, however the price to purchase each bottle remains the same.
What can we do about it?
As a single consumer it’s very difficult to do anything about it. But in my opinion, it’s important to understand that although Brexit is creating volatility in the market and may have a lasting impact on exchange rates, we can’t blame this all on the feet of Brexit.
Regardless of our position in the EU, consumers shouldn’t be getting less in terms of quality and quantity.
If you’re interested in finding out how your organisation can make savings. Click here to arrange a call and discover how Market Dojo’s eSourcing platform can help you.
When I was thinking of a subject to write about for my latest blog article, I thought it would be a great opportunity to write about something on topic and which encompassed two of my favourite subjects; procurement and Love Island.
Some of you may read the title of this blog and think that a blog about Love Island is “not for you.” I would urge you to persist…I thought the same about Love Island itself when I was first subjected to an episode by my wife last year. However, over time I became hooked, I sort of fell into the Love Island world (sound familiar with how you ended up in Procurement?) The icing on the cake was when I heard that one of this year’s contestants, Jack, was responsible for selling office supplies (and was bragging about how good he was), my mind immediately screamed “eAuction!” So what exactly do procurement and Love Island have in common?
Effective contract management
The top earners from last year’s Love Island have made a reported £1 million each since leaving the show through various endorsements, sponsorships and more. Rumours are that this year the show’s owners have clauses written into the contestant contracts that they receive 10% of all future earnings they receive off the back of the show. How the show continues to monitor and maximise benefit from this new clause will require some very prudent contract management. Perhaps if they’re very shrewd, there is even a clause that states that the % increases as their earnings increase, similar to how some of you may have rebates based on volume within your contracts with suppliers.
Negotiate when you have the leverage
Continuing with the contract management theme above, the opportune time to arrange these contracts is before the show begins and the power lies with the show owners. In Kraljik Matrix terms, the contestants are ‘leverage items’ before the show starts. There are thousands of others who will happily accept a place on the show if a contract cannot be accepted.
It’s going to be much harder to negotiate a contract with the show’s winner once they leave the show, as the power balance will lie with them. Apply the same to your tenders, if you can get the supplier to agree to an NDA and Terms & Conditions as part of your Pre-Qualification Process.It is much easier to get the terms that you want, and will lead to a much more efficient implementation phase upon award. The supplier can be extremely demanding with their terms if they have been told, or believe, that they are going to win the business.
Speak with your stakeholders…even the difficult ones
Only an experienced Love Island viewer will have picked up on this, but the contestants are very good at approaching and having the difficult conversations with their fellow contestants. There is much to be learned by procurement on this, get out into the business as much as possible and engage with your stakeholders, take the initiative to arrange a meeting. The more that you are seen to be engaging with, and having those conversations with business partners, the better placed you’ll be to be able to offer strategic value.
Still sceptical about eAuctions…try it first with an office supplies event
20 years later and there are still reservations around reverse auctions, and misconceptions that they are difficult and complex. They really do not need to be. They are also not just applicable to non-strategic, commodity based items. However, if you are still unsure about eAuctions, office supplies is always a great category to get started with as it’s easily defined and there is high liquidity (viable suppliers). Market Dojo even offers the opportunity to run an office supplies auction for free: https://www.marketdojo.com/office-supplies/
If you are still not a fan of Love Island, I’m sure that you would take great pleasure in seeing Jack sweat under the pressure of an eAuction.
Are there any other similarities that you can see between Love Island and Procurement? Please feel free to comment below.
My name is Henry and I’m the business development Executive here at Market Dojo. Part of my role is to help the company exhibit at eWorld, which is a conference based on supply chain and procurement software.
This time around, we decided that we would get up early and drive down to eWorld in the morning from Gloucestershire. 4 o’clock in the morning is the worst type of 4 o’clock there is. I was, however lucky enough to have time for a proper coffee before setting off to meet the rest of the team and drive into London.
When we did get to London, myself and Peter Glass set up our fantastic stand that had been organised by Craig Knowles, our marketing guru, while Alun and Lewis parked the car. This year we had a secret weapon. A fresh coffee machine. After some complaints about the quality of coffee available at the last eWorld, we wanted to offer something that everyone needs in a long exhibition day. Fresh coffee. Simple, aromatic and uncomplicated. A bit like Market Dojo when it comes to eSourcing.
That, coupled with the Bacon Sandwiches available for exhibitors, which made me momentarily forget my almost-kosher diet, helped satiate a growing hunger that had been awoken as I got into the car at 5 am.
We met many fantastic delegates from companies all over the world and fellow exhibitors including the lovely team at Baker Wanless. Many were familiar faces, returning, again and again, to tell us how amazing Market Dojo is and how we’re at the forefront of the industry (true words and a direct quote from one of our lovely customers). Many were fairly new to eSourcing and we got to show them how an event would look like in the tool, which was great.
It’s one of the pleasures of the job, teaching people a better way to do things. Some people weren’t really aware of auctions or what they can do to help hit savings targets within procurement teams. Other people have used them but they were too complicated and thus have avoided them going into future projects.
Just before we started taking stuff down at the end of the day, we have a draw every eWorld for the winner of a month’s free license. This year the winner was Debbie Wright. Watch the video of the live draw below.
The Market Dojo afterparty was held in a lovely Lebanese restaurant somewhere in Knightsbridge. An ever adventure loving company, the entire table had Kafte kebabs, which were delicious. We then packed in the car for a chat about where Market Dojo was headed next. We all agreed it was for even bigger and better things.
Market Dojo helps procurement professionals negotiate better with our on-demand eSourcing tools. If you’d like to find out more, get in touch or register for free and play around with our software for yourself!Market Dojo Interview with Founding Owners of the Trending Procurement App, Scott and Leslie McBride
Our latest blog post introduces the founders of an exciting new venture for procurement news – A Trending in Procurement app. Co-Founder Leslie McBridereached out to us here at Market Dojo to introduce their application designed for procurement professionals to keep up to date with current trends, papers and news within the field and most importantly encourage collaboration between people within the industry. Read our interview with both Leslie and her co-founder/husband Scott McBride to find out more.
Market Dojo: What made you start Trending Procurement?
Leslie McBride: Scott approached me with the concept of a procurement app a few years ago. The procurement industry has great resources; blogs, webinars, white papers and podcasts, but at the time there were no resources available where one could access all of this information in one place. This is the essence of Trending Procurement, all of the procurement news of the day, upcoming events, etc. in one place, one app.
Scott McBride: I have been in the procurement space for approximately 12 years. One day, it hit me that this is likely to be the industry that I call home for the rest of my career and I want to have a way to be part of this community other than just an employee. I enjoy reading procurement news, blogs, and analyst papers but it’s a serious chore to visit 15 websites every day to accomplish this. Creating a free app to bring this content together is a way to solve this problem and provide a needed service to other procurement professionals.
Market Dojo: What is the aim of Trending Procurement?
Leslie McBride: The app is free to download and the content is free to users. The goal of the app is to provide access to all things procurement in one place. We aim to provide our users with diverse content and include a comprehensive industry events list where the users are even able to register to attend conferences and industry events from within our app.
Scott McBride: Every morning, when a procurement practitioner sits down at their desk and wonders, “what’s going on in procurement today?”, or, “how does [a specific news event] affect my procurement strategy?” I want Trending Procurement to be the resource they use to answer this question.
Right now, if you conduct a simple Google news search for “procurement” or “supply chain” it will return hundreds of articles written in the last few hours. Many of these articles will focus on topics that we don’t traditionally consider to be part of procurement. However, I tend to believe that the Google search is right—that everyday procurement practitioners need a fundamental understanding of many topics to continue their professional growth and relate to their colleagues adjacent to procurement. To be clear, I don’t think we will be using voice-enabled p-card robots to purchase bitcoins on a blockchain platform anytime soon. On the other hand, some of these concepts will stick around and it will draw the procurement practice closer to other departments and business processes. Trending Procurement aims to be a primary way that we continue to learn about these topics.
Market Dojo: How do you find working with your spouse?
Leslie McBride: Scott has been in the procurement world for years, so it is nice to be able to learn more about the industry from his point of view and experience. My background is in the pharmaceutical industry and I am fascinated by all the ways that procurement truly impacts all professions. The app is our creative outlet and something we enjoy working on together. Scott and I have different strengths and this becomes an advantage when brainstorming and planning for the growth of Trending Procurement.
Scott McBride: IT IS THE BEST THING IN THE WORLD!!! (you’re crazy if you think I’m going to answer this in any other way…)
Market Dojo: Where do you see Trending Procurement in 5 years?
Leslie McBride: We would like to see Trending Procurement continue to grow and provide additional content to our users. On the horizon, we would like to incorporate new ways to provide industry news to our users and continue to make access to all things procurement easy. I can’t give away all our ideas just yet…
Scott McBride: In five years, I believe we will have a very large community of users and almost certainly an expanded sense of coverage. I believe that we will continue to see the rise of automation, alternative currency growth, and fundamental technology strategies like blockchain shape our definition of procurement and I want Trending Procurement to be a tremendous resource for understanding these topics.
Market Dojo: Do you feel there is a difference between UK procurement and US procurement?
Scott McBride: The fundamental DNA of procurement professionals seems similar, but the UK does seem to have a very close procurement community. It’s also true that UK professionals have had good reason to embrace their community recently. Brexit seems to have presented massive challenges to many buying groups and my hope is that US procurement groups have taken some time to understand this issue and UK procurement’s communal response to it in case we face similar changes to US policies like NAFTA. We could have a lot to learn from each other.
Market Dojo: Would you ever consider moving to the UK?
Leslie McBride: Both Scott and I are from the Midwest in the US, so this is home and I can’t imagine relocating would be in our future.
Market Dojo: On a more topical note, what are your views on Disney buying out 21st Century Fox?
Scott McBride: It certainly has been a busy year for global news—Trump, Brexit, multiple natural disasters, the blockchain, bitcoin, etc. The Disney/Fox deal is complicated but seems to follow the trend of media consolidation. This seems like a great thing if you are concerned about studio funding for the next superhero movie, but potentially a harmful thing if you value differing editorial positions on global news topics. The truth is, with platforms like Twitter, Medium, and even LinkedIn, there’s no shortage of opinions. The problem is that these opinions are very scattered and difficult to find. This is exactly what Trending Procurement aims to remedy.
Market Dojo: And just in time for 2018, what are your new year’s resolutions?
Leslie McBride: I feel like I should state the quintessential resolution response to eat healthier and exercise more, honestly though, I doubt I will follow through with either of those resolutions.
Scott McBride: I’m very bad at these. More exercise should be my resolution but I think we all know that this will end up being just slightly longer dog walks by March.
Download the app for free on Android here or for iPhone here.
Market Dojo helps procurement professionals negotiate better with our on-demand eSourcing tools. If you’d like to find out more, get in touch or register for free and play around with our software for yourself!
We recently encountered an article on Linkedin by Rémy de Lavergne, a highly experienced procurement professional with a specialism in Logistics. Rémy had clearly put some thought into what made a ‘good’ buyer and went a step further by categorising them by key attributes.
We couldn’t resist having a call with Rémy to understand this further, which led to this introductory article on our blog. We’ll follow up with more of Rémy’s insight in due course, but here is an introduction to his Procurement Matrix.
“Procurement is the process of finding, agreeing terms and acquiring goods, services or works from an external source, often via a tendering or competitive bidding process. The process is used to ensure the buyer receives goods, services or works at the best possible price, when aspects such as quality, quantity, time, and location are compared.” – Wikipedia
This definition is clear but it is not enough for me and probably neither for you?
I have been Purchasing for 20 years now (in different countries and industries) and I have often read and heard very interesting things about Procurement issues, but not enough to give me a global picture about what are the objectives and the best practices.
So I have started to brainstorm and have tried to create a one page Powerpoint puzzle about Procurement with 2 questions in mind:
– What does buying mean?
– What is a good buyer?
After selecting and analyzing more than 35 keywords (SRB, Networker, Communicator, Excel…), I found a clear and simple definition :
A Buyer is both a Value Marker for Clients and a Cost Reducer, at the same time.
And by analysing what buyers contributions are to these 2 objectives it became clear to me that we have been seeing 4 generations of buyers:
1. The Bureaucrat who manages supply but creates no value for clients nor cost -reduction for the organisation.
2. The Cost Killer who reduce costs but without taking care of value creation for the clients.
3. The Innovator who values innovation but without trying to reduce costs.
4. The Business Developer who values innovation and reduces cost at the same time.
To describe the 4.0 Buyer – the Business Developer – I have also written an article about it (in French).
“The 2017 Buyer : (An) International Business Developer: a professional, piloting projects in the field looking for innovation and savings”.
If you want to know more about the Lavergne Procurement Matrix and/or to use it in your school or company, do not hesitate to contact me.
The Lavergne Procurement Matrix is protected by a copyright.
Rémy de LAVERGNE
Email : email@example.com
Tel : + 33 (0) 6 64 90 47 56
Market Dojo helps procurement professionals negotiate better with our on-demand eSourcing tools. If you’d like to find out more, get in touch or register for free and play around with our software for yourself!5 Top Tips to no longer fear Reverse Auctions
This article is to help you overcome what seems to be a very scary concept to organisations – the reverse auction. Too many procurement people, or perhaps your stakeholders, the mere mention of the word ‘reverse auction’ can install huge pangs of anxiety, or even terror. There is a misconceived notion that reverse auctions are complex beasts, that only the most experienced, battle-hardened procurement professional is capable of running.
There is a common saying that “People fear what they don’t understand” so we’re here to help you and your stakeholders overcome your fear of reverse auctions. These 5 top tips are designed to tackle any feelings of fear you have towards reverse auctions, and hopefully, teach you that they are something to embrace.
Our study into reverse auctions showed that 90% of respondents thought stakeholder buy-in was the major barrier to running reverse auctions, (Read our barriers to reverse auctions blog here). If possible, try and choose some non-sensitive categories to run reverse auctions on, to begin with. Office Supplies is a great choice for this (apologies to those of you who are very precious over the type of pen you have). Invite stakeholders to view the auction, showcase the value you can offer and hopefully it will be a springboard for success to attack some other categories.
When it comes to choosing which category to run a reverse auction on, look for those which are easy to define, has savings potential, and high liquidity (high number of capable and interested suppliers).
This tip applies to both your stakeholders and suppliers. For suppliers, in what other scenario do they have an opportunity to receive some live feedback on their competition and where they sit in the market. Typically, the only feedback suppliers will receive is what the procurement lead offers them, and this can be hard to come by.
For stakeholders, the obvious benefits to reverse auctions would be price, but there are much more. It can offer insights into bench marking as well as true Market Price. We’ve seen some reverse auctions where 5 suppliers have been within £100 of each other for a £million contract – that is true market compression. It is also a much more efficient negotiation method where you can involve multiple participants over short timescales, and with no geographical constraints.
Top tip 3 – Seek guidance from your solutions provider
Your solutions provider should have seen a wealth of eAuctions completed across their client base, across a huge selection of categories too, and are in an ideal position to help you with construction and strategy for your eAuction. Don’t be afraid to pick their brains, they’ve probably seen your category put through a reverse auction, or something very similar. At Market Dojo, we’ve seen over 10,000 eAuctions across more than 150 categories run through our tool. We want to see our clients succeed, so we offer lite strategic advice included within our licence cost, to maximise the likelihood of success.
Top tip 4 – Communication is key – get your suppliers bought into the process
I cannot reiterate the importance of communication throughout the reverse auction process. Communication needs to be clear and consistent from start to finish and will help with any objections you have from suppliers. Explain to your suppliers why you’re looking to do a reverse auction, hold a session with all the suppliers to give them the opportunity to raise any concerns they have and take the time to give them feedback to alleviate those concerns. Inform them about the award criteria you’re going to use (see Tip 5), and ensure that your award method is consistent.
Some suppliers will have a negative perception of reverse auctions, but the way that you communicate will go along way to changing their opinion. Please do not change the award criteria at the last minute, as it will completely undermine the entire process.
“We’re not an organisation which buys purely on the lowest price” – Good because you don’t have to! There is absolutely no obligation to go with the cheapest quote within the auction. More often than not, reverse auctions are run under what’s called a ‘buyer’s choice’ meaning you have free reign to award the business to whatever supplier you see fit.
Furthermore, you can actually run weighted reverse auctions, therefore combining the quality aspect to your tender with pricing in the reverse auction. This works in exactly the same way as if you were to run a weighted RFQ, but with live rankings based on a combination of price and quality scores. There is no reason to not run a reverse auction based on the objection of a price.
Don’t forget the importance of communication to your suppliers – make sure you follow through on your actions.
For more information on barriers to reverse auctions click here.
Market Dojo helps procurement professionals negotiate better with our on-demand eSourcing tools. If you’d like to find out more, get in touch or register for free and play around with our software for yourself!CPO’s first 100 days by Erik Van Kampen
Market Dojo continues its search into transforming procurement teams in the CPO’s first 100 days. This time our guest contributor is Erik Van Kampen.
Erik is an experienced and successful procurement professional with proven success and continuous progression gained within major blue chip companies, including heading up Procurement at Old Mutual Wealth. Erik shares his view on the first 100 days as a CPO.
Procurement is common sense, right? We all buy things every day, whether it’s shopping, holidays, cars or computers. We become perceived experts in what we buy. It’s hardly surprising that when you join a new organisation, there may be differing opinions and expectations of colleagues and stakeholders about your approach and strategy.
What did you promise you could deliver during the multitude of interviews and what do you expect to achieve? How do you assess opportunities and when do you do it? A previous boss and mentor once said to me that the first 100 days was “your only opportunity to ask stupid questions” which made me laugh at the time, but I guess has its merits.
There is only a limited time for you to take stock before someone will ask ‘now what’. The ‘now what’ is what will shape your success, and from my experience, this is five ways to get there.
Set the tone. Be clear about what you will and can achieve and what is needed from stakeholders to succeed. Procurement is not rocket science so don’t make it difficult for people to understand. Something that always helps me is to be clear, use plain English, and be accessible to your team, stakeholders, and key suppliers. Establishing an understanding of key contracts, areas of spending, policies and process as well as the systems that are in place would be one of the first stops.
My natural style is to focus on relationships. People need people and while technical skills are important, unless you can relate to other people and influence them then the outcomes will not be optimal. Lastly, be honest and straight up with people. The key deliverable may be a strategy paper or roadmap focusing on aspects such as Sourcing Execution, People, Systems & Tools, as well as Policy, Process and Governance and when things can be achieved.
#2 Leadership Team
The most successful teams I’ve worked in have a complimentary mix of personalities, skills, and experience. You shouldn’t hire in your own likeness, nor should you be intimidated by people with more experience or a different outlook. Provided everyone is working towards the same overall objectives and support one another then you’re halfway there.
Competition is healthy and can be good fun if you don’t take yourself too seriously. Get to know people, their strengths, weaknesses and aspirations (personal and professional). Use the knowledge that is already in place and don’t rush into making wholesale changes just because you’re new, unless there are clear issues that need to be addressed, There are bound to be disagreements, but establish trust and respect early and avoid ‘public’ arguments when opinions differ.
Look at what is in place. Are policies easy to understand and are they concise, or a source of frustration and to be avoided at all costs? Think about how you can make it easy for people to do business: with suppliers and procurement. Different industries require/welcome different levels of compliance and control; use a flexible and risk-based approach.
Procurement is evolving and technology platforms are becoming more commonplace so don’t be afraid to try things out and don’t believe that a single solution provider is the best route. Decide which aspects would benefit from integration (if any) which could mean not sourcing the best but something that does the job.
Personally, I don’t believe that full-scale automation is going to be the answer to everyone’s Procurement woes, but I do believe technology has its place. However, the business process and data behind it must be effective and mature.
Crap in = crap out! Data relies on the input source so unless the people putting the information incorrectly, you are off to a bad start and fixing will take a lot of effort. Make sure you have skills in place to drive adoption and manage ongoing data quality.
Data quality is key to any Procurement function. Whether the subject matter is spend data, contracts, etc. if you get it wrong you risk undermining the credibility of the function and individuals in it. Work hard to get it right and ensure resources are available to maintain it. It is critical that sourcing and procurement teams know why it’s important and understands that they are pivotal to it.
Erik is currently working as an interim Market Data Procurement Consultant at Chain IQ Group, where he is engaging with key financial index providers to ensure compliance with the European Benchmark Regulation. If you would like to reach Erik directly, you can find him on Linkedin.
I recently found procurement data for England and Wales police force online and thought it would be fun to see what it contained. Market Dojo have been thinking about reporting recently, and have found that a lot of our customers are using or planning to use Microsoft Power BI. To learn more, I decided to use Power BI in my analysis.
The purpose of publishing the data was to help identify where forces could save money by working together. The benefits this can bring were demonstrated by a recent e-auction. Twenty forces, including Police Scotland and British Transport Police, collaborated to buy almost 3,000 police vehicles, and the deal delivered £3.7m of savings for the taxpayer*.
The data is provided in csv files, with 2 files (services and equipment) for each of the 43 police forces. By combining all the separate files, we were able to analyse it more easily.
Total spend by force
The data covers 38 specific categories of spend. By multiplying the price by the quantity for each of the items included in the report, we can see how much each force spent.
Services Vs Equipment
Viewing by force, and showing the breakdown of services v equipment data, we immediately see that spending by the Met is much larger than other forces. Not really surprising as it has more than 33,000 officers, compared to around 8,000 for the second largest force (Greater Manchester) **.
A very large proportion of the Met’s £19,161,138.30 spend goes on office cleaning, in fact, it is 70.59% of the total spend reported!
It is difficult to compare this with similar forces. Greater Manchester, West Midlands and Merseyside all use an in-house cleaning service and as a result, do not publish a figure for this service. The comments section is frequently used for this category with South Wales is a good example:
“The force does not pay for standard office cleaning per m2 as the cost is dependent on many factors such as frequency of clean, type of use (canteen, office, store etc) and what if any equipment is needed. A monthly bill for cleaning the force premises is monitored through a schedule of rates per building. The force’s Estates department has calculated the average cost per m2 per annum taking all these considerations into account.”
However, it is interesting to note the big differences in how this category of spending is treated, and perhaps this is an opportunity to share best practice. Cleaning services and energy supply are both areas where eAuctions have been used with great success.
Most expensive items by average cost
The most expensive items included were the vehicles, and as this is something that is purchased less frequently, the variance between forces is quite large.
Average cost and units purchased: Compact High-performance estate vehicle – fully converted.
The most expensive item is the ‘Compact High-performance estate vehicle – fully converted’. Costs range from £34,724.21 to £17,252.27. Different makes are purchased including BMW, Volvo and Vauxhall and it appears that they are customized for specific uses. We can see from the graph that there is a relationship between the number of items purchased and the cost. The big difference in cost probably relates to the different requirements for each force, and even between individual vehicles, however as vehicle purchasing was the area highlighted as an opportunity for collaboration and saving*, it may be possible to improve in this area.
Cheapest five items by average unit cost.
Of the five cheapest items purchased, the one with the lowest cost was telephone call charges. I imagine there is significant variance here, but noticed this is one category where none of the submissions included any clarifying comments.
Total published spend on per minute telephone call charges.
Many forces did not submit a number of minutes used, so total values are only available for some forces. The force that spent the most on call charges was Devon and Cornwall, at £10,290. Norfolk and Suffolk both reported a quantity of 11 minutes, but Lincolnshire used 2151 minutes for a total cost of £18.28
I found investigating these public data sets to be fascinating, and am sure that by sharing their data, procurement teams will be able to find new ways to collaborate and purchase more efficiently.
In reading the comments and clarifications that are included with the data, I was also reminded of some of the challenges and scrutiny which are part and parcel of public sector procurement.
Background information from
Force size from Wikipedia
There’s often a misconception within procurement and eAuctioning that success with using eSourcing solutions relies heavily on the type of categories. Typically, categories such as stationery and IT equipment are thought to be more suitable for eAuctions than other complex categories. However, the auctions ran through our tool suggest differently.
Here I have listed just a few categories which have been run through our software recently.
Food can often be thought of as complex category as the specifications and health and safety regulations require careful onboarding and strict requirements from suppliers. However as shown, cupboard essentials can be run through eAuctions! So don’t rule them off too quickly, they could reap you some huge savings depending on your specification.
This is an easier category that is often ran through the tool. Specifications are relatively easily defined, depending on how you limit the specification. E.g. size and shape are much easier to modify, with the ability for suppliers to make this a highly competitive lot, ensuring you get the market price.
Items in this category surprisingly have been successfully sourced through eAuctions. However, tight specifications and strict onboarding protocols are essential to make this a success.
An especially easy category to define with a highly competitive market. However, your requirements need to be relatively sizeable to attract participants and gain substantial savings. Numerous Market Dojo clients run these categories frequently through our tool.
A highly competitive market depending on specification. Potential to generate high savings if suppliers have been correctly onboarded and potentially allow suppliers to offer next best alternative. However, a company may want to stick with a particular brand, limiting your negotiation opportunities.
These types of categories have successfully been run through the Market Dojo tool, producing high savings for many Market Dojo customers. The potential for a loose specification gives it the ability to source from numerous suppliers for increased competition and additional savings.
The benefit of allowing users to customise their requests through questionnaires allows just about anything to be auctioned through our software. As you can see from the list, there is a variety of categories sourced through our tool. Even for more tricky categories, we offer a service to govern the onboarding processes called SIM Dojo to ensure that proper practice is met. So don’t be put off running complex categories through an eAuction tool!
If you are interested in any of the services that we provide such as Market Dojo and SIM Dojo mentioned to help run your eAuctions and govern supplier onbaording click here for more information.