Savings targets, but where is the demand management?

24 April 2009
Among all the budget hype (and pride) over how much the government intends to save over the next few years I feel one critical aspect has not been addressed. Whenever the government talks about the annual procurement value it always quotes a mysterious £175 billion figure. This is an increase from £160 billion which was the standard figure quoted before a few months ago. Where this £15 billion increase has come from is unclear – but coincidentally it accounts for the £15 billion efficiency savings outlined by the Chancellor. Considering the woeful state of spend analysis among departments revealed by the OGC’s own procurement capability reviews I find it hard to believe that even the £175 billion figure is accurate. Demand management is so often considered secondary to making cost savings – perhaps because it is seen as a more sophisticated aspect of purchasing. But when you have a congregation of buying organisations as large as the public sector, I would argue managing demand – in the first case working out how what you are going to buy – should be a priority. Making efficiency savings on unnecessary and poorly set-up contracts is, quite frankly, an attempt to close the stable door after the horse is galloping down the road.
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