Council gets the 'Asda price'

14 February 2011

15 February 2011 | Angeline Albert

Supermarket giant Asda is to give free buying lessons to staff at Leeds City Council to help the authority cut spending. It is the first time a retailer has been consulted in this way and advice will include “driving hard bargains”.

Faced with a £90 million funding shortfall, the authority’s chief procurement officer Wayne Baxter hopes Asda can help him to hit a £20 million savings target in the next financial year.

Baxter told SM: “The idea came from our chief executive. This is the first time I’ve heard of a council asking a retailer for procurement advice. My initial reaction was ‘it’s quite innovative’.”

He hopes Asda buyers can help improve demand management and reduce the number of staff able to place orders. “I’m keen to hear their approach to category management and negotiating contracts. I want to know what they build into contracts to drive down costs and the targets they set.”  

Council chief executive Tom Riordan said: “Rather than spend money on consultants, we approached Asda. Given they are the best in the city at driving hard bargains… we want to learn from them.”

Baxter, who is meeting Asda’s procurement team next month, expects to learn most about the goods and services both organisations buy.

“It’s a surprising development,” said Peter Howarth, CEO of the Society of Procurement Officers in Local Government (SOPO) who also runs buying consultancy SBV. “I believe it’s a first – I’ve not heard of any council adopting retailers’ procurement techniques. It’s a different approach and councils need different approaches. I don’t know whether the adoption of retail procurement techniques will work in the public sector but they should be applauded for exploring this.”    

The council spends about £850 million a year on goods and services and has a 49-strong purchasing department, 25 of whom are buyers. Its needs to make savings because of a £50 million cut in government funding and £40 million in cost pressures on essential services.

Last month, a supplier won damages in the High Court after challenging Leeds council’s tendering process. The judge ruled the authority had breached its transparency obligations by failing to notify tenderers of the weightings for marking questions in pre-qualification questionnaires. Baxter said this was a minor technical point and buying practices would be amended accordingly. Howarth pointed out this is down to EU rules, which the retail trade does not have to contend with.

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