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Procurement Transformation


01-September-2015

Case Study from 2014 QuEST Annual Report 

 
Background and context

In September 2010 NES senior management implemented a review of procurement activities across NES. The findings from this review resulted in the introduction of the ‘No Purchase Order (PO) No Payment’ policy and approval from the Executive Team and Change Management Board to develop a centrally managed Procurement function.


Problem

Until recently, NES operated a devolved procurement model with advice and guidance
provided, as required, by two procurement staff. Engagement with the procurement
team was not mandatory and staff throughout NES were able to procure goods and services
without the input of the procurement team.

A review of procurement activities identified that over 300 staff had some involvement
in the procurement cycle. It also identified various risks, limitations and disadvantages:

  • multiple suppliers engaged for similar/same commodities
  • no aggregation of demand resulting in multiple small value POs raised against a
    single supplier (1,500 POs less than £50)
  • full advantage not being taking of national contracts, losing potential cost savings
  • little opportunity for strategic management of suppliers and contracts
  • valuable specialist resource throughout the organisation engaged in procurement
    rather than their core activity
  • inconsistent application of procurement legislation
  • inexperience and a lack of understanding of the procurement process results in process inefficiencies


Aim

To transform the way procurement is carried out in NES by implementing a centrally
managed procurement team.


Action taken

The Procurement Transformation Project was established to develop the procurement
operating model and organisational structure.  The project was split into three separate
workstreams which consisted of:

  • People - to focus on the organisation structure and job descriptions, identifying
    impact on individuals and Directorates, and carrying out the staff consultation
  • Process - to conduct a capacity review exercise and carry out the modelling and
    mapping of the proposed procurement journeys
  • Communication - to involve staff and ensure they were kept up to date


Results

The centrally managed procurement team was introduced in October 2013, which has
led to many benefits and improvements, including:

  • initial savings of £300,000 and on-going savings of £430,000
  • staff promotion and career development opportunities
  • 10 per cent increase in Procurement Capability Assessment and the Procurement
    Transformation Project described as best practice
  • category A contract compliance has increased to over 99 per cent
  • the majority of POs are processed within one hour


Efficiency savings and productive gains

Initial savings of £300,000 and on-going savings of £430,000 have been realised.

There has been productive gain with staff time being released as a result of no longer having
to carry out procurement activities.


Sustainability

A full review and evaluation will take place once the team has been in place for 12
months. In the interim, a short satisfaction survey has been issued to all staff so that
the team can endeavour to provide the best possible service.

Lessons learned

  • Ensure managers are engaged in the process by involving them early and as
    much as possible.
  • Involve staff in the communication strategy to ensure consistent messages are provided at all times and the positive aspects of the change are clearly communicated.

 

About this case study

Contains public sector information licensed under the Open Government Licence v3.0.http://www.nationalarchives.gov.uk/doc/open-government-licence/version/3/ 

You can read the full Annual Report 2014 - Reporting on the Quality and Efficiency Support Team here http://www.gov.scot/Publications/2015/07/4244