Industry news

NOA Director Kerry Hallard comments on the pros and cons of outsourcing as part of the shared services expert panel for Business Reporter. The full report can be downloaded as a PDF below:

Outsourcing_Shared_Services_Report.pdf

This issue of Business Reporter looks at the pros and cons of outsourcing; René Carayol talks outsourcing and innovation; see the fight to reshore outsourcing to regional Britain; Bonnie Gardiner talks to Paul Pindar about the merits of being a nice guy; and how culture clash can potentially harm your offshore production.

Changing your procurement approach can lead to significant benefits and savings which might just reinvigorate your organisation. Some of these benefits can be easily measured, such as money saved. Others are less quantifiable, such as improved service delivery, supplier-led innovation or improved client/customer care. Either way it is worth taking a look at the way you buy to pin point if there are any areas where you can make improvements. Its amazing the results you can achieve when you approach procurement differently.

For example the work we did at Mid Essex Hospital NHS Trust, which I mentioned in my previous blog, to date has saved the Trust over £3.1 million on their procurement spend. In the first year alone we managed to unlock a saving of £1.1 million. A massive difference in an organisation where every penny counts.

We did this by introducing a category management approach. Category management segments the main areas of spend into discrete groups of products and services according to both their function and, crucially, how the supply markets are organised. It is a great way of ensuring that the majority of an organisation’s third-party spend on goods and services is addressed, leaving no stone unturned. This enabled the team at Mid-Essex to drive further savings from traditional areas of spend as well as extending procurement into categories such as medical equipment maintenance and surgical instruments which had seen little or no procurement involvement.

Another key benefit has been an improvement in supplier relationships. Never underestimate the benefits developing a good relationship with suppliers offers. At Mid-Essex increased levels of supplier engagement has actually lead to supplier led product innovation, delivering even greater financial savings and patient benefits.

Whilst change can seem daunting, you need only undergo the change process once. It is much easier to make the change and maintain it than continuing to struggle on. The benefits will also carry on, often for years beyond the initial project. For Mid Essex, it became an essential mechanism for identifying annual cost improvement opportunities and is an integral part of business operations.

I hope these blogs have help you to understand the benefits of making changes to your procurement, and the impact it can have on your business performance.

About Richard McIntosh

Richard is Managing Director of INVERTO UK, an international management consultancy specialising in procurement. He has led and delivered many procurement consulting assignments, particularly strategic sourcing, organisation and process re-design and people and skills development. He has worked across many sectors, private, public and not-for-profit, leading procurement projects for clients such as Nokia, Visa, Aberdeen Asset Management, eircom, the Ministry of Defence and the NHS.

Who needs to be involved in procurement decisions?

Deciding to change your procurement processes

Ofgem, the energy in watchdog has called for new measures to be brought into place in order to reduce the stranglehold that the 6 main UK energy suppliers have over the market.

The measures which would impact major suppliers including British Gas, SSE and npower, have been welcomed by the government and consumer groups, with calls for increased action after anger surrounding the suspected manipulation of energy markets.

Senior partner for markets at Ofgem, Andrew Wright, said that the “proposals will break the stranglehold of the big six in the retail market and create a more level playing field for independent suppliers, who will get a fair deal when they want to buy and sell power up to two years ahead".

UK energy companies have recently started to look at future energy sources within the UK, with energy giant Centrica looking to enter into shale gas fracking in the country, in a move which is likely to trigger large scale investment from within the industry.

Centrica enters into talks for UK fracking stake

Centrica and Qatar Buy Canadian Gas Field equiv. to 15 Billion Barrels of Oil

Just as the royal family are celebrating an addition to the family so are UK economists celebrating with reports of a strengthening economy in the second quarter.

Office figures revealed that the economy grew by 0.6 per cent in the second quarter of the year, with services increasing by 0.6 per cent and manufacturing growing by 0.4 per cent.

Important areas of UK industry such as construction have also shown strong signs of recovery, with a wealth of new construction projects providing new work.

GDP grew consecutively over the three months leading to June with Chancellor George Osborne saying: "(Sic) GDP stats better than forecast”.

The news of second quarter growth provides much needed valediction to the Chancellors economic strategy, which avoided multiple large spending programs designed to stimulate growth been employed within the EU.

UK economy ‘improving’ according to European Central Bank as German growth shrinks

The NHS National Institute for Health Research (NIHR) Clinical Research Network has moved to employ a business intelligence system in order to improve heath trials.

The new business intelligence system is designed to improve the quality of research through the consolidation of data and the study of current existing data.

The NIHR said the new system gathers past data so that: “more educated decisions can be made about the placement and management of studies".

The new platform will include additional improvements including mobile device compatibility, allowing for improved cross sharing between departments.

The NHS National Institute for Health Research (NIHR) Clinical Research Network has moved to employ a business intelligence system in order to improve heath trials.

The new business intelligence system is designed to improve the quality of research through the consolidation of data and the study of current existing data.

The NIHR said the new system gathers past data so that: “more educated decisions can be made about the placement and management of studies".

The new platform will include additional improvements including mobile device compatibility, allowing for improved cross sharing between departments.

GE has moved to introduce a new cloud platform to host data focused on industrial tasks, the new cloud based platform is designed to facilitate the maintenance of equipment and industrial processes through cloud data management and specialist recruitment.

The transition of cloud platforms to the industrial sector represents the expanding employment of cloud services, with the platform now being employed in industrial operations, having in the past been regulated to being used predominately within the financial and consumer arenas.

To faiclaite the transition of industrial services to a cloud based platform, GE has moved to expand relationships with cloud specialists, including the development of the company’s relationship with Accenture and the creation of partnerships with Amazon Web Services and PaaS providers Pivotal.

The new cloud services are being promoted by GE as a way of increasing the quality of predicative responses and solutions to equipment failure. The new services will also allow buyer to view data in real-time.

GE has forecasted the generation of $1.3 trillion in value for the industrial industry by 2020.

Oracle opens new datacentre to support UK G-Cloud

March sets records for public sector cloud adoption

Australian based Telstra, a leading supplier of telecommunication services have revealed plans to outsource 170 jobs to a Indian provider.

Telstra have said that the plans are designed to increase competiveness and prepare the company for future rollouts in Asia and increased stability in conjuncture with the companies cloud offering.

While the decision to outsource services to India has yet to be decided, a go-ahead would see a October start for the outsourcing process, with a timeline of between six and twelve months.

David Burns, the head of the Network Applications and Services division in Telstra, said: "We need to be able to scale quickly, we need to be able to meet the demand, we need to be able to support our customers as they move into the South-East Asia region, and we need to be competitive."

Vodafone moves to acquire stake in German telecoms market

BT to create 1,000 new jobs and UK focuses on broadband roll-out

Supplement Release

The sourcingfocus.com EOA Awards Supplement featuring the European Outsourcing Awards is packed full of best practice and innovation.

The Supplement features select finalists and winners from the 2013 EOA Awards, featuring case studies and in depth interviews with finalists.

Please click below to read and share the sourcingfocus.com EOAA Supplement.

Please click here to access the EOAA supplement

The global recession has made it even more important to retain customers. To increase sales and maintain the interest of the customer in your brand, it is essential to have customer service skills intact ensuring that even if the product/service is not at its cheapest, the level of high service will ensure the customer continues to return to the service provider.

Many businesses also seem to be driven by cost reduction programmes, and this is having a major negative effect on employees which then affects the level of customer service provided. So by trying to reduce the costs in house, it is inadvertently further reducing sales, as customers are not encouraged to purchase the service or products because of the high costs and lack of customer service.

Engaging, training and developing staff is often put on hold and overlooked as many business owners tend to focus on how to increase sales, forgetting that efficient customer service is essential for increasing sales. They are at the centre of customer retention and, if neglected, can have a negative impact on sales. Without continued investment in customer driven programmes employee skills will fade and become inconsistent.

Office phones that are not answered due to a lack of staff and retailers with insufficient numbers of staff to talk to and assist shoppers, all erode customer satisfaction and completely eradicate customer retention. This can also be caused by off-hand staff, frustrated by shift changes and benefit cuts which then tend to take out their frustrations on the customers.

The internet has opened up huge choice for both businesses and customers, making it even harder to retain customers. But as customers do not have high expectations of customer service when shopping online since there is limited or in some cases no physical interaction, unless they call the hotlines. The huge deterrence there will be when, again, there is not enough staff to answer the phones to assist customers. However, businesses that have invested in optimum customer service and get it right, have survived and are flourishing.

Given all of this, the highest levels of customer service given to customers will always reflect positively in sales, even if the cost of service has been affected by the recession.