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London Procurement Strategy

Capital Ambition. London Procurement Strategy. Ken Cole Commercial and Procurement Advisor 9 th September 2009. DCLG– need to avoid a central model being imposed (e.g. McClelland in Scotland) Response to OEP / Roots and needs of new CAA

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London Procurement Strategy

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  1. Capital Ambition London Procurement Strategy Ken Cole Commercial and Procurement Advisor 9th September 2009

  2. DCLG– need to avoid a central model being imposed (e.g. McClelland in Scotland) Response to OEP / Roots and needs of new CAA Create a smarter commercial environment – ‘London acting as London’ Cashable savings 2010/11 and beyond Why a London Strategy?

  3. £9.3 billion influencable third party spend in 2007/8 Average 7,300 suppliers per authority 145,000 suppliers in total 1,583 trade with 10 or more, 4,838 with 5 or more Top 1,000 suppliers nearly 60% of total expenditure It’s sizeable expenditure…

  4. Service Outcomes Cashable Savings Use of Resources Local Economy Sustainability ..which has a direct impact on

  5. Commercial Risk / Exposure Market Scarcity of supply, limited savings, immature markets Strategy Removing barriers to entry, market stimulation Market Scarcity of supply, significant savings, in large contracts but hard to exploit Strategy Supplier Relationship Development, Contract Management, Partnership Sourcing Bottleneck £2.3 billion (25%) Specialist care, temporary agency (some), interims Strategic£4.2 billion (46%) Outsourcing, capital works, waste collection, elderly care provision Routine £0.5 billion (5%) Cleaning, materials, office supplies, furniture, IT consumables Leverage £2.3 billion (24%) Vehicles, temporary agency staff (some), consultancy, ICT hardware, advertising Market Abundant supply, low margins, high turnover of suppliers, rapidly changing conditions Strategy Automate and let go, Use an existing contract Market Few suppliers but highly competitive, and high margins Strategy E-Auctions, Category Management, Commoditization Value Understanding our Position

  6. Market Scarcity of supply, limited savings, immature markets Strategy Removing barriers to entry, market stimulation Market Scarcity of supply, significant savings, in large contracts but hard to exploit Strategy Supplier Relationship Development, Contract Management, Partnership Sourcing Market Abundant supply, low margins, high turnover of suppliers, rapidly changing conditions Strategy Automate and let go, Use an existing contract Market Few suppliers but highly competitive, and high margins Strategy E-Auctions, Category Management, Commoditization Seeking Cashable Gains Significant savings to be accrued, often 5%+ but takes time. Need to act as London e.g. through SRD Localised markets, takes time to develop. Cost avoidance is the objective Significant savings, 10%+ but not fully exploited. Often controlled by service departments Already heavily exploited. Savings are now marginal, less than 2%

  7. ICT Hardware e-Auction March 2009 (15 London authorities - £1.9M cashable) – Collaboration in action PIP (cashable savings continue to accrue) – Market Influence Postal Services (cashable savings in range of 20-25%) – Smarter Working Collaboration in Action

  8. Highways materials / services – up to £250M Construction materials – circa £200M Commercial vehicles – spend nearly £100M per annum Potential targets for regional e-Auctions

  9. Capable of standardisation of ranges / specifications High expenditure – worth investing effort Significant leverage at ‘London level’ A 10% improvement would generate nearly £50M Why these three areas?

  10. Contact DetailsKen Cole 07721 556537(M) 01784 898045 (DD) ken.cole@londoncouncils.gov.uk or ken.cole@sps-consultancy.co.uk

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