Collaborative Procurement
A Category Management approach
Over £2billion each year is spent by councils in the North East alone on third party goods and services. Do we get good value from the expenditure and how does it contribute to the regional economy?
The Collaborative Procurement and Commissioning Programme supports delivery of the very highest standard of public services. We are working with the region's local authorities and Fire and Rescue Services to build a better understanding of how public money is spent and how to achieve better value for money by introducing the concept of category management.
Leading public and private sector organisations are using category management approaches to realise benefits for their organisation. Category management is different from the current procurement approaches as it considers the what (is needed), why (it's needed), and how (it's purchased), as opposed to focussing solely on 'where' it's purchased from.
So what is different?
| Traditional Procurement: Current situation | Category Management: Future situation |
|---|---|
| Reactive to organisational demands | Predict future demand more accurately to meet organisational needs |
| Procurement driven by contracts ending | Managed spending, with procurement driven by market changes and conditions |
| Selection of suppliers based on a bid response | Sourcing / supplier selection driven by a Category Sourcing Strategy that works with the market |
| Individual management of contracts | Management of markets and supplier relationships |
| One off contracts let - often many times throughout the region, duplicating effort | Understanding of regional requirements with ability to jointly go to the market |
| Generic contracting skill sets | Specialist commercial skills required |
What are the benefits for authorities from category management?
- Proactive forward planning of procurement activity - A regional understanding of future demand not just that of individual organisations.
- Improved value for money demonstrated - Better collaboration and market management has been proven to deliver lower cost services throughout the supply chain without compromising on quality.
- Improved service quality for users - A strategic category management approach can help develop markets and actually improve service quality for end users.
- Cost reduction opportunities - There is a recognition that not everyone will do everything all of the time. However, aggregation of spend does offer significant opportunity to reduce costs.
- Suppliers perceive the buyer as "a customer of choice" - Better coordination will improve councils' marketplace profile which will provide greater opportunity to attract better quality providers of goods and services.
- Better spend management and planning - Understanding future demand for particular goods and services will allow much tighter control of budgets and ensure that savings targets are met.
- Motivated professional procurement staff - A category management approach will allow procurement staff to develop specialist skills, improve motivation and become proactive in delivering efficiency savings.
- Defined category sourcing strategies - A better understanding of individual areas of spend including market pressures, future demand and good practice.
The Regional Improvement & Efficiency Partnership's approach
The Programme has representation from all 12 local authorities and Fire and Rescue Services across the North East. Five workstreams have been set up to support the Collaborative Procurement Programme as follows:
- Category Spend
- Demand & Supply Intelligence
- Commerce Interface
- Capacity Management & Mobilisation
- Policy & Practice Harmonsation
Sustainable Procurement
Click here to find out about RIEP activity around sustainable procurement.