Purchasers moving to procurement outsourcing should be positive

18 April 2011

18 April 2011 | Angeline Albert

Buyers who are transferred to procurement outsourcing providers should see their move as “an opportunity, not a threat,” Thames Water’s head of procurement, Simon Rutter, has said.

Rutter said purchasing staff should embrace such change because there are likely to be big opportunities at outsourcing providers who are likely to have customers across a variety of industries.

He made the comments after Thames Water’s five-year contract with Efficio was announced. The deal, which began on 6 April, will see direct and indirect spend (amounting to £500 million a year) outsourced and 21 buyers transferred.

The purchasers will remain based at Thames Water’s Reading headquarters to stay close to business units.

Rutter said: “Buyers have good skills that can be used in the consulting/outsourcing market. This market is strong and more fast-moving and with a positive outlook buyers can do well.”

His message to senior procurement professionals contemplating outsourcing is: “If you are upfront and involve staff from the start, nothing is a surprise and they can see the logic of decisions. We haven’t had any pushback from my team at all.”

Rutter has retained nine buyers to control procurement for major construction projects linked to a capital expenditure programme worth £5 billion over five years. He is also retaining 35 people to undertake more transactional work.

In the past three years, Thames Water transformed procurement with investment in training which saw 12 workers undertake CIPS training. Some 98 per cent of every category was revisited involving retendering and awarding new contracts to deliver savings. In this three-year period, procurement saved £65 million. 

Rutter said: “We reached a point where to take this to the next level, we needed to do something radically different and we were limited by the type of people we could attract. The outsourced staff did an excellent job but we are tapping into Efficio’s high quality of expertise.” 

Efficio will train the transferred staff and is targeted to achieve £100 million of cumulative savings over the next five years.

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