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12 August 2014 | Will Green
An “innovation team” is being established within the Crown Commercial Service (CCS) to look at the total cost of ownership around common goods and services.
Matt Denham, director of commercial delivery in the CCS, said he was in the process of recruiting staff for the team, which will look at the “big picture” with the aim of generating larger savings.
“The innovation team is absolutely about challenging the status quo and saying: Why do we do it that way?” he told SM in an interview.
“It’s brand new and really gives us focus on how do we deliver 20, 30, 40 per cent as opposed to 2, 3, 4 per cent. How do we really change the mindset? That is the right aspiration for us because it challenges the way we look at our total cost.
“It’s really about total cost of ownership not just the price of a good or service. How do we do a better job of understanding the total life cycle cost?”
Denham, who joined the CCS six months ago from Xchanging, said he had identified “gaps” in skills around market engagement and contract management, which were a legacy from the framework based-approach of the CCS’s predecessor, the Government Procurement Service.
“Maybe if there was a gap in our portfolio, really understanding the market, creating new market opportunities, really understanding where the innovation is from the private sector,” he said. “And at the back end of the process, managing suppliers, managing the contracts process. The journey I’m on is making sure I can connect all those dots.”
Denham said the CCS offered an “end-to-end” service for stakeholders. “We need to know what they’re thinking, what their pipeline of demand is, what specifications they need versus want. Then we can start to put together the right category strategies to deliver the savings that we can manage through the contractual process. It’s a different mindset for a lot of people that we need to be end to end and also we have a customer and we need to service that customer.”
Denham said he had appointed a head of contract management in the past two months to review the system. “He is going through that process of identifying what changes he needs to make in terms of process, investments in technology, so we can deliver a robust contract management process,” he said. “We are inheriting lots of paper-based contracts, some online contracts. It’s imperative we make sure we’ve got them all in one place and we can manage them effectively.”
Denham said the CCS was in charge of £13 billion spending on common goods and services but he did not want to rush into taking on more public sector spend at the risk of compromising service quality.
“The challenge I have is the sheer volume of what we’re trying to do here,” he said. “There are very few comparators in the UK, Europe, globally really, of what we’re trying to do. The challenge is making sure we understand the volume complexity and in truth make sure we are clear on the imperative to deliver an outstanding service as well as savings. So I don’t want to take on too much too quickly otherwise I will have service failures and I can’t afford to do that.”