Three councils in the North of Scotland hope by combining their procurement operations they can incentivise key suppliers to invest in local supply chains.
Aberdeen City Council, Aberdeenshire Council and Highland Council will be encouraging primary suppliers to increase their local footprint and help deliver social value.
Craig Innes, head of commercial and procurement shared services across the councils, told SM that by increasing purchasing volumes he hopes the councils’ primary contractors, who are traditionally based outside the area, will increase their business with local firms.
“What we’re trying to do is to grow and develop that local supply chain, so that they [local firms] can be more competitive in engaging with the prime suppliers that come in,” he said.
He added that where prime suppliers may once have thought the volumes were not worth the investment of setting up a local base, now “they’re looking at things differently and thinking, ‘Well, we could be tripling our volumes here’.”
A business case setting out the plan, which aims to save £24m over the next five years on a collective annual spend of around £1bn, was approved by each individual council’s resources and management committee.
The cooperation works through a “lead authority model”, where all procurement staff are employed by Aberdeen City Council.
“What we found was that a lead authority model is more advantageous, to get staff on the same terms and conditions, and in turn it makes it a lot easier to manage,” said Innes.
“I call it a one-stop shop. Our vision is to develop a centre of excellent for procurement in the North East. Where you would have a traditional procurement team, we’re far more strategic than that,” he said.
Procurement is spit into hubs, allowing staff to spend more time focusing on their particular area. The hubs include category management, strategic procurement for capital projects, recurring lower value procurement, and a team of commercial solicitors.
The also have a hub focusing on research, policy and strategy. Part of its role is developing ways to measure the outcomes of the councils’ social value goals.
“The problem we had before was that we had the same people trying to do too many things, so we were over-promising and under-delivering. Now we’ve segmented things out and it gives staff a clearer focus in relation to what their output should be. That’s been very much welcomed by staff as well,” said Innes.
Despite describing it as a “one-stop shop”, the main hub is based in Aberdeenshire Council’s main offices and the tactical hub and part of the category management hub will be based at the Highland Council’s main offices in Inverness.
“Inverness is circa three hours from Aberdeen. These are big councils, Highland covers a land mass the size of Belgium to put it into a bit more perspective,” said Innes. “[We cover] two rural councils and one urban so there is a lot of exciting challenges in the mix.”
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