Industry news

The schools watchdog, Ofsted, have decided to bring their inspections of schools in house and end its £40m a year outsourcing contracts with companies including Serco & Tribal. Wanting to re-gain control and after some criticism regarding the quality of the contracted inspectors, the transition will take place in August 2015 when the current contracts come to an end. Currently Ofsted employ 300 in house inspectors with more than 2000 through outsourcing providers.

Civica win £17 million outsourcing contract to support academy schools

Thales UK has been awarded contracts worth a combined £28.8 million to cover the deployment of traffic management technology at Network Rail’s Cardiff and Romford operating centres by 2015.

In a bid to create a more affordable, higher performance railway, Network Rail has awarded contracts for the first phase of a new nationwide traffic management system for Britain’s railways. Their operating strategy has traffic-management technology at the centre of it, creating a consolidated control of Britain’s rail network from more than 800 signal boxes into 12 state-of-the-art rail operating centres over the next 15 to 30 years.

Network Rail aims to cut the cost of Britain’s railways by £250million each year whilst improving industry efficiency, reducing delays and providing more accurate and timely information to staff and passengers.

Serco awarded sleeper service train contract from London to Scotland

The NHS have partnered with Tradeshift e-invoicing platform as part of a strategy to create a paperless NHS by 2018. The NHS Shared Business Services are encouraging over 100,000 suppliers currently working with the NHS to use the Tradeshift e-invoicing system to submit invoices electronically.

Tradeshift will work with the Department of Health and Steria who provide back office finance and procurement services to hospital trusts and Primary healthcare providers.

SME to drive collaboration in NHS shared service programme

Serco the outsourcing firm have been awarded a 15 year contract to operate the Caledonian Sleeper service from London to Scotland. It will take over the franchise from transport operator First Group. Serco have been recently accused of overcharging previous government contracts to the value of £800m.

It’s been a mixed month for Serco

The Cabinet office is seeking a replacement for its current Payroll, Human Resources and Finance Services (PHRF) in use by local UK public sector bodies. With the value of the pre-tender being at £50m - £200m, as part of the pre-tender the Crown Commercial Service (CCS) will be setting up a framework agreement for the provision of managed back office services.

Digital strategy launched by Cabinet Office

The Department for Work and Pensions (DWP), has selected ICT and security firm Auriga to manage their SAS accreditation service. The two year contract will also have Auriga also manage their Listed Adviser Scheme (CLAS) and secure business process modelling services to help achieve accreditation in line with CESG and Cabinet Office guidelines. Auriga were picked due to their agile approach to security and the value for money they offered DWP.

DWP uses digital services framework for Universal Credit transformation

What’s the official company name for Coke? It’s not Coca Cola or Coke Corporation. It’s The Coca-Cola Company. Why does this matter? Inaccurate, inconsistent and disconnected supplier information or vendor information could be wreaking havoc on your supplier spend-management and supplier risk- management goals and costing you millions.

Fasten Your Seatbelt: How Two Companies Were Losing Millions

If you are responsible for supply chain management, supplier relationship management, procurement, purchasing our sourcing, keep reading. Let’s talk about three companies that lost millions and try to prevent these procurement nightmares from happening to you.

• The procurement leader at a global Oil & Gas company realized the company was wasting $2 million per year. Why? The downstream supply chain team, which was negotiating contracts and sourcing products from The Coca-Cola Company for thousands of gas stations was operating independently from the upstream procurement team that was negotiating contracts and sourcing products from Coke Corporation for hundreds of offices around the globe.

• The merchandising leader at a global retailer, which has a laser-like focus on lowering operating costs so it can keep prices low, realized the company was losing millions. Why? The buyers for North America who were negotiating contracts and sourcing products from The Proctor & Gamble Company for hundreds of stores and e-commerce sites in the U.S. and Canada were operating independently from the EMEA buyers, who were negotiating contracts and sourcing products from P&G for hundreds of stores and e-commerce sites in Europe, the Middle East and Africa.

Why Do These Procurement Nightmares Happen?

According to a 2012 report by the Hackett Group: “While companies often turn to spend analytics solutions to reduce purchasing spend, they quickly learn that accurate spend analytics ultimately depend upon the consistency and quality of the underlying supplier and product data across all relevant systems within the enterprise. Our experience also confirms that successful analytic initiatives must be based on a strong master data management foundation.”

But I think this quotation, which will be kept anonymous, sums it up more eloquently: “Our supplier information is crap. Suppliers often don’t get paid on time. We send payments to the manufacturing plant that supplies us and not the corporate billing department. Payments get lost in the shuffle. We have paid suppliers we shouldn’t have. You can have all the processes in the world but if the data is crap, they are not going to work and you end up doing a lot of manual fixes.”

So, what are the root causes of innacurate, inconsistent and disconnected supplier information?

• Supplier information is scattered across systems: Not all business-critical supplier information or vendor information is in one system. It’s scattered across applications such as ERP, Sourcing AP, and Supplier Relationship Management. To complicate matters, companies don’t typically have just one ERP system or AP System. One company we work with has 50 separate ERP systems and almost 400 separate AP systems.

• Inconsistent supplier identities: The Coca-Cola Company could be the name of the supplier in one system, while Coke could be the supplier name in another system. Supplier names could be in different languages.

• Supplier information changes all the time: According to the U.S. Census Bureau, every hour 240 companies move and their address changes, 150 change phone numbers, 5,769 people change jobs, 20 companies close their doors, and 4 companies change names.

• No automatic updates: When someone updates supplier information in their system, it doesn’t automatically update in all the other systems.

• Mergers, acquisitions & divestitures: Your company could merge with or acquire a company or divest a subsidiary, business unit or product line. Your suppliers may be doing the same. The integration of data from ERP systems that hasn’t been mastered often complicates the problem.

How to Better Manage Supplier Information to Save Millions This Year

As mentioned, effective data management and integration is key to preventing this nightmare. Support from data integration experts such as Informatica can help better manage supplier information on an ongoing basis; implementing a combination of data integration, data quality, master data management. In effect, this can help companies to:

• manage clean, consistent and connected supplier information or vendor information including addresses,

• manage corporate hierarchies (legal from D&B, for example, and location), contacts, contract and important documents proving suppliers meet business, legal and regulatory requirements,

• track changes to supplier information, so you can see what, when and who changed supplier information over time for auditing and compliance purposes.

In a recent business value assessment, we estimated one of the largest companies in the world could save $49 million per year by better managing business-critical supplier information to:

• negotiate corporate payment terms across global operations,

• accelerate and reduce the costs of supplier onboarding and certification,

• increase the efficiency of the supplier information management organization,

• improve the ability to analyze supplier risk,

• reduce potential exposure to regulatory requirements such as IRS 1099 reporting and the provisions to the 2012 Dodd Frank Act.

Thus, if your supplier information is inaccurate, inconsistent and disconnected, I wish you good luck rolling it up into a report to understand your company’s total relationship with global suppliers or vendors. Without this visibility provided by data management tools, it’s extremely difficult to make significant improvements in supplier spend management and supplier risk management across global operations.

Jakki Glivicky Geiger is Senior Director, MDM Solutions Marketing, Informatica. A a results-oriented marketing executive, Jakki has a 15-year proven track record of partnering with sales, generating demand, and building strong brand recognition to drive growth.

A lack of catering staff, not enough dining room space and sourcing enough ingredients to triple the number of meals served per day are just some of the concerns currently facing headteachers as they look at how they’re going to make best use of increased budgets to provide free school meals for the under 8s this year .

In a bid to encourage healthier eating and enhance learning, late last year the Government announced that from September 2014 it plans to make all children in reception and years 1 and 2 in state-funded primary schools eligible for a free school meal.

Although this move is widely supported for the benefits it’ll offer pupils, it’s fair to say that the plans are causing logistical headaches for many primary schools. As a public-sector professional buying organisation we’ve received an increased volume of calls from headteachers and their governors concerned about the practicalities of delivering this significant increase in school meals.

The health and educational benefits of providing free school meals is in no doubt and this initiative fits in well to tackling childhood obesity and enhancing concentration levels in school children. Deputy Prime Minister, Nick Clegg announced that the Government would be providing more than £1 billion to ensure that children get a healthy meal in the middle of the day and that in addition to helping improve performance in the classroom, it would also mean significant savings for families.

With an estimated 1.55 million additional infants eligible for a free school meal, some schools will see an increase in the number of meals it needs to provide on a daily basis. Although the Government has pledged £150million to help schools expand their catering and dining facilities, schools are still unsure about where to turn to for new equipment, extra staff and whether their current catering suppliers will cope with this increase in demand.

The ways in which schools provides meals differs from school to school so we’re hearing from teachers looking to refurbish their kitchens, those that need extra dining room furniture to accommodate an increase in young diners and those who don’t feel their staff or kitchen can cope with the demand for extra meals.

We are currently working with many schools to help them find a solution to their needs which is both practical and cost effective, whether that’s sourcing a quality ingredients supplier or an organisation that specialises in fold away dining room tables. And for those schools without a kitchen, we can offer advice on sourcing and working with catering service providers and with the supply of food, such as fruit and veg, meat and groceries.

So our immediate advice for any schools planning for these increased numbers is to act now and seek guidance from experts who can advise you on how best to prepare.

The UK news is filled with optimistic headlines regarding the economy and jobs at the moment. However, the truth is that productivity is still falling behind and in terms of output per worker, UK productivity is still well behind the average in the G7 leading industrialised nations.

The good news is that greater innovation can help to merge this disconnect between growth and productivity. New developments in workforce management software, for example, are already helping business process outsourcers (BPOs) to evaluate their business models and provide a much clearer view of how to price the administration of a particular book of business.

By using workforce management technology to gather data from the back office, management can see precisely how long each financial product takes to administrate. This in turn, provides a bird’s-eye view of individual policy or product books.

Drilling down to this granular level of information allows these firms to make much more accurate evaluations on the cost to outsource policy administration. Enhanced workforce management tools can offer a number of significant benefits from day one, as they can help UK businesses to make better and more effective use of their time by allocating specific tasks to those with the relevant skills at the right time, regardless of their location.

This modern approach can drive greater efficiency by showing managers exactly where time is being spent and which products or customers need particular attention. Managers in the back office can therefore obtain a clear view of their staff’s workloads in order to keep track of day-to-day task progress. Workforce management systems can quickly reveal any over or under capacity issues across teams and give managers full visibility of their team members’ utilisation so that they can move less busy team members around effectively to fill in any capacity gaps elsewhere. As a result of the real time monitoring, tasks are completed more quickly and to a higher standard, employees are happier and more motivated, and workers are given the chance to focus and develop in the areas where they excel or need additional training.

Ultimately, workforce management software can help firms to improve the accuracy of costing whilst also boosting the efficiency of processing. This way, outsourcers will be able to improve productivity and stay one step ahead of the competition. Perhaps even more importantly, this modern approach will enable firms to spark and maintain the cultural change that is needed to secure a strong ROI right now, and to deliver sustainable growth over the long-term.

The future’s bright, the future’s…transparent. It appears that the government is about to open the books on its outsourcing deals, with the CBI’s Head of Public Services Jim Bligh telling Public Finance of Whitehall’s desire to ‘move very far forward’ on transparency by introducing ‘open book accounting’ on contractors’ costs, charges and profit margins. Personally, I’d like to see it go way beyond open book accounting and move to a progressive culture of ‘open book accountability.’

Many outsourcing providers have long been willing to open their books up to the public: confidentiality clauses are the government’s wont, and it’s a brave step to consign them to history. Jim Bligh speaks about allowing the National Audit Office to ‘scrutinise deals’ and hopefully, it will delve deeper than P&L statements and get its claws into how deals actually work. Most government suppliers have multiple contracts with a vast array of public sector bodies. Some will be more profitable than others. Some will effectively be loss-leaders. Will the government offer to pay extra on these? Will they take a sensible, holistic approach to relationship management or will they seek to cut profits on the most profitable deals?

Why stop at a conversation about profit margins? It’s always a good idea to engage suppliers in grown-up, ballsy chat about profits, but a truly intelligent customer you consider their own ROI and business benefits to be more important than supplier profit margins. It would be much better to get clear visibility on stakeholder satisfaction than focus on, shock horror, a PLC wanting to turn a profit.

Profit margins will grab the headlines, but measuring the value added and residual benefit is the correct way to spot a bargain. If a contractor is providing an equal or better service than the incumbent government agency, charging them less money than they could do it themselves and making a profit and paying tax on it and creating jobs, that’s an enormously positive outcome that is going largely untracked.

Like the financial forensics of Detective Lester Freamon in The Wire, open book accountability would ‘follow the money’ - how much of the profit is invested in new technology and innovation that the government will benefit from in the future? The money the treasurer saved, how many electronic whiteboards and skipping ropes does that buy the local schools? These are the sort of indices that need to be calculated and publicised for outsourcing to disarm those cynics that assess the price of everything, but the value of nothing. And that goes for the human effort that went into achieving that value too – profits don’t come from nowhere.

Open book accountability would consider such efforts in detail, offering greater public visibility into the way outsourcing deals are managed with governance schedules, 360° scorecards, SLAs and outcomes independently redacted into an easily-digested report, where interested parties can see exactly who’s delivering the goods and who isn’t. I’m not suggesting dashboards should be published in real time - there is such a thing as too much public consultation - and nor do I think it fair to compromise suppliers’ intellectual property, which in turn would affect their competitiveness - but an omniscient big data approach to public sector service delivery and value creation would be a much more transparent way to let the taxpayer know how well government deals are working than a few cynical headlines about profit margins.