As we all adapt to a new way of life in the work environment, we see new ways of working becoming the ‘new norm.’ The question is how is the ‘new norm’ looking for Procurement Professionals?
By Keith Armstrong, Chief Executive, Procurement Assist
Throughout the pandemic most if not all our clients have had to change the way and where they work, with the work environment suddenly becoming part of home life. It has been inspirational to see the fantastic work that the Procurement Teams we work with have completed throughout the year, especially in ensuring staff safety through the procurement of PPE.
After the 19 July it is expected the UK government will give UK businesses the option as to whether they allow staff to return to offices, and if they do, under what terms?
Here at Procurement Assist the feedback from our clients is that we are expecting only a partial return to office working with many giving staff the choice as to when they wish to return to the office. Whilst there are others that are expecting a full return to the office around mid-August.
Regardless of how we return to the ‘new norm’ the job still needs to be done!
The pandemic has seen the public sector focus on delivering and maintaining a high level of service despite restrictions being in place. This is resulted in many contracts being extended or entered into under the PPN 01/20 legislation which was brought in to help the Public Sector to procure goods, services and works with extreme urgency. Since PPN 01/20 ended on 31 October 2020 we have seen the sector continuing to use supply chain routes which do not always offer the best value for money.
As the country returns to a level of normality, it is expected that the economy will bounce back – with the likelihood that the demand for goods and services will out-strip supply. This, coupled with the forced closure of most of the manufacturing sector over the last 15 months will see the supply of materials fall short of the demand as we come out of lockdown, which will inevitably push prices up.
Evidence of this is already creeping into the wholesale market for raw materials – with the price of copper up 5% on the previous quarter. The same goes for plastic products too, up 11.5%, as plastic is a key component of face masks.
The signs are that procurement in the Public Sector will be tough over the next 12-18 months. PPN 01/20 helped in the short term, but there will be a backlog of contracts to procure that must now go through a compliant process, which in turn will put a strain on resources. Prices are expected to increase significantly too, resulting in further pressures on budgets.
With is in mind, a question that I expect to come up regularly once we are out of lockdown will be “Does the supply chain route we normally use offer the best value for our organisation?”
One area the Public Sector can achieve savings to offset the expected increase in costs of goods and services is by reducing the cost of procuring the contracts. It is likely that many organisations internal procurement resources will require external support in order to deliver the upcoming work. As was the case pre-Covid 19 this would be through a compliant procurement provider, such as Procurement Assist rather than carrying out direct tenders themselves due to the volume of work and time taken to carry out full tender processes.
Typically, consortia and other consultancy businesses charge a percentage of throughput as their fee, which is paid to them by the winning bidder and absorbed as an uplift into the unit prices paid by the client throughout the life of the contract. Most, if not all providers advertise themselves as a free to use service, but their fees are hidden in the prices paid – otherwise how can they afford to operate? The fees are typically 2-7% (usually lower for development contracts). The larger the contract value, the greater the fee.
As an example, if a contract is procured at a value of £2m, at the median fee of 4% this would cost an organisation £80,000 – the question is, does this represent best value?
If a flexible 100% PCR compliant procurement route at a fraction of the cost was on offer, then surely the question should not be ‘why should I not use this? Rather ‘why should I use this.’
Here at Procurement Assist we provide a fully compliant low-cost procurement service designed around each clients needs. We help our clients achieve savings not only on the price and quality of their contract, but also on the cost of procuring the contract. We have 4 levels of service with fixed pricing and no supply chain fees. Our pricing is based on the time it takes us to support the procurement project and not the contract value! Some of our Clients report an 18-fold reduction in their procurement costs by using Procurement Assist. And as you would expect we are always 100% compliant.
I challenge all Public Sector organisations to look at our services with an open mind and benchmark our cost against their current supply chain route and see the difference in the cost!
Post 19 July, the ‘new norm’ might not just extend to where you will be working, but also who you will be working with?