20 June 2011 | Lindsay Clark
The UK government could cut the cost of running procurement
by 30 per cent by adopting seven steps introducing shared services centres,
according to Accenture.
The business consultancy said Whitehall could slash the
billion administration of purchasing with a move away from a “large
numbers of small and widely scattered operations”.
Instead, by “consolidating operations into a ‘middle office’
in lower-cost areas could reduce facilities costs dramatically, while lowering
headcount, eliminating redundant activities, encouraging more on-contract
buying, improving productivity through process standardisation, and simplifying
the task of enacting and measuring continuous improvements,” said the report, Seven Procurement Initiatives that CanStretch Public Sector Budgets.
The report says these “middle offices” could be located
offshore, “if politically feasible”.
The six remaining ways of improving government procurement
put forward in the report include:
• Using web-based applications – or cloud
computing – to give access to more up-to-date procurement software and
standardise categorisation to improve the quality and timeliness of spending
• More collaborative sourcing would allow the
public sector to lower costs. Common, indirect categories should be
centralised, while direct spend should be aggregated at the highest level that
makes sense. The government should slash its number of suppliers and each
procurement professional could manage, on average, ten times the spend they
cost of delivering goods to the public sector could be cut using an
Amazon.com-style logistics system. “That Amazon-like entity consolidates
demand for items across government departments and then interacts with the
supply base – making sure that price and logistical economies are fully
captured,” the report says.
government could better manage its strategic suppliers, building in continuous
improvement into contracts that stretch up to 10 years.
• The public
sector could offer procurement staff better training by creating a “virtual
academy” based on e-learning. “Governments tend to rely primarily on
skills-updates that are infrequent, classroom-based (instructor led), and
rarely customised to meet individual needs.”
• Using “zero-based” budgeting to reduce
demand. In the case of business travel, this would mean a “new cost profile that is based on a full analysis of
travel modes, patterns, volumes and routing”.