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