Category

Procurement

Four procurement initiatives that can help Recruitment Agencies drive value from their spend

By | Procurement

The recent economic trends and low unemployment has undoubtedly been great news for much of the recruitment sector*, however with Brexit uncertainty and falling consumer demand, it’s also a sector that is set to contract during 2019 with employers considering freezing recruitment plans until the business landscape becomes clearer.

It’s inevitable that contraction will lead to winners and losers. Those with solid balance sheets and strong ambition will move ahead of the pack perhaps through M&A activities, acquiring agencies with less capability and resilience. The acquisition winners then face the challenges of how to best embrace the differences in culture, vision, target markets, operating methods and leadership styles, to name but a few.

One area that can help agencies create significant opportunities to drive savings and fund future growth is Collaborative Procurement.

Ok so it doesn’t sound as much fun…. as creating ideas to attract the best candidates or close the next big client account but focusing on the following four core activities will genuinely help you achieve savings throughout your operations and fuel your ambitious growth plans:

1. Adopt a Centralised buying approach – in our experience working with larger recruitment agencies with multiple acquisitions, every brand or entity ends up with their own version of the “best deal” for each good or service. Rather than taking a traditional category management view, these “deals” can be bolted together and taken to the market as a multi -branded, single basket of goods enabling you to win through lower pricing and leveraging economies of scale.

2. Complete a good old-fashioned process review – It’s not just about what you’re buying, but how you are doing things. Recruitment always works to one outcome – placing a candidate whether it’s for a temporary or permanent role. Take a step back and review the processes, documents, templates and the systems being used to determine what is best for your business. Whether you’re a large multi brand or a sole agency, you will have recruiters who bring their own styles and processes. Find the best of these and create a single way of working that enables your agency to grow and for all recruiters to bill on a level playing field. For example; we had one client spending two days per month reconciling spreadsheets costing significant time and effort over the year. A top down approach at the click of a button gave them all the information they needed.

3. Challenge your property portfolio – A fancy office means extra billing which can lead to busy fools. With the rising cost of property and increasing running costs, multiple swanky offices do look good for candidates, but this adds pressure on recruiters to ensure that profits can cover overheads. Successful agencies are taking a view on the actual space they need and procuring that space rather prioritising looking good. Consolidate offices – the digital world has transformed the recruitment experience and your top billers are as likely to hold their candidate interviews in the nearest Costa, the same top billers whose revenue is being spent on maintaining lots of offices when they really aren’t needed.

4. Take advantage of the digital market – as with most sectors, the recruitment world needs to embrace the digital world to stay agile. Platforms such as LinkedIn have long gone from being a “professional social network” to a massive window of opportunity for any recruiter whether they sit in the comfort of their home office or are a top biller at a large recruitment firm. Include procurement in your digital strategy to ensure that you are investing in the right technologies not just the latest trend! You don’t have to possess the latest software or candidate trackers. Many of our clients are getting just what they need in a scalable way via LinkedIn and spreadsheets without the need for expensive apps or notifications. It’s vital to keep considering what you’re buying, where you’re working, how you’re working and what you’re working with and in this digital world you can afford to be more adventurous while streamlining your costs accordingly.

In our experience, using centralised buying technique can drive over 20% in cashable savings and by reviewing your in-house processes and looking at how your people are working using a lean value analysis study can realise up to 30% in efficiency savings.

All of which can be used to fund future growth and improve the quality of your candidate and client experience.

So in a nutshell – What we have seen that is often not considered is that with all the focus on success in billing for new candidates, the day to day running of the business is sometimes not a priority when profits are high. Yet in 2019 when pressure hits with the expected challenges to recruitment volumes and rates, along with ever-increasing operating costs, Collaborative Procurement is a very viable way to generate real savings.

*BDO LLP’s 2018 report reveals it’s a sector worth over £12bn to the economy

Vinesh Mistry is Head of Procurement Consulting at Retearn. As well as being a Liverpool FC fanatic, he’s worked with a number of recruitment agencies and has helped large and small private and public sector clients deliver their procurement and supply chain goals.

Thoughts? Questions? Need more help? We’d love to hear from you at hello@retearn.co.uk or

Call us on +44 (0) 7795 236664

Vinesh Mistry

Head of Procurement Consulting

Brexit – A “big deal” not “no deal” for Procurement Leaders

By | Procurement

Procurement Brexit checklist

A “no deal” Brexit is beginning to look increasingly likely with Mark Carney, Governor of the Bank of England recently quoted as saying the level of risk is “uncomfortably high”.

Accountable for over 44% of all UK exports, the EU remains Britain’s biggest trading partner enjoying free trade and zero customs restrictions with the 27 fellow members. When Britain leaves, this is no longer the case and the impact on supply chains cannot not be underestimated. For example, supply chains designed to deliver fresh food will be affected and it’s already been reported that large organisations such as the NHS and AstraZeneca* are preparing to stockpile drugs and blood supplies.

You don’t have to walk blindly into significant challenges

With all the sensationalist articles, plus the recent Annual Deloitte CPO survey identifying that 33% of procurement leaders see Brexit as the single most significant market risk for their businesses and 65% of procurement leaders have limited or no visibility past their Tier 1 suppliers, I wouldn’t blame stretched finance and procurement leaders not simply wanting to fake hibernation declaring ‘wake me up when it’s all over”.

However if you consider the Financial Times article ‘Big banks are increasing their budgets for dealing with Brexit’ states businesses will need to invest significant sums (big banks £100m+) and resources just to stand still, those not taking an active interest proportional to their business may be blindly walking into significant challenges and reputational issues.

After reading the Supplier Management March 2018 article titled ‘Brexit countdown: Time for procurement to get ready’ it occurred to me that with so many articles and opinions on Brexit readily available, despite much yet to be decided and understood, if I was a stretched finance or procurement leader of an SME with minimal time to look at the horizon, it may be useful to have a high level one page checklist of key topics to consider over a seven (yes that is only seven!) month period so I could decide for myself, allocate appropriate time and resources, tick them off and/or plan for how and when to mitigate any perceived risk.

The four key checklist benefits

This checklist (holistic for public and private sectors) is based on reviewing your current organisation circumstances from a procurement and operational perspective to:

a) support highlighting to the business the value of procurement

b) provide the board with greater informed understanding of risks and opportunities to support key decisions i.e. allocation of strategic effort and costs, investment in transformation, or even the drastic decision to (full or partial) relocate the organisation

c) ensure that procurement is undertaking key strategic activities (many of the below topics should ideally be embedded into a sustainable procurement function and not just for Brexit)

d) help with any tactical prioritisation. As an example a recent BBC article “Brexit: Warning of rising food bills and disruption to supplies” highlights the need to consider the possibility of rising food supply chain costs, therefore organisations with a high proportionate catering spend may wish to consider fixing pricing where possible

Supply chain audit

Consider Desired Result(s)
· Understand your business spend by area and categories

· Map who your suppliers are (by UK and non-EU)

· Map your supply chain by tiers (not just your direct suppliers but your key suppliers supply chain)

· Undertake a supply chain risk analysis (financial stability, sanctions, etc.)

· Enhancing existing, or establishing new, supplier relationships

· Identify key supply chain potential currency fluctuations

· Completed Supplier Relationship grids (by spend and location as a minimum)

· Research your market so grids are comprehensive with agile and flexible options (UK and EU)

· Complete and action the risk register

· Identify and build supplier networks

· Map and forecast fluctuation challenges and costs by key suppliers

By When: December 2018

Contracts review

Consider Desired Result(s)
· Client contracts. Examine what issues could arise (for your organisation or your clients) under existing contracts (i.e. specific references to EU territories, laws or regulations)

· Supplier contracts. Are templates fit for purpose and flexible? How might they need amending and how quickly can they be implemented?

· What contractual risks exist in live supplier contracts? How can these risks be mitigated? (attention on data protection and IPR)

· Identify and map key supply chain cost increases

· Analysis by client contracts and supplier template contracts of risks and mitigating actions

· Identify risks in current live standard contracts and mitigating actions

· Identify risks and mitigating actions in supply chain contracts (standard or supplier terms) based upon client contract flow downs

· Lock in pricing with key or volume suppliers for fixed term post March 2019

By When: November 2018

Comms

Consider Desired Result(s)
· Keep stakeholders and suppliers regularly informed

· Ensure ongoing understanding of legislative impacts to the business

· Design and implementation of communication plan relating to procurement planned activities
By When: September 2018

Make vs Buy

Consider Desired Result(s)
· Analysis of high spend or high volume suppliers to understand if full or partial services or goods can be managed in-house · Identification of areas for transition including action plan and collaboration with key suppliers
By When: December 2018

Contingency

Consider Desired Result(s)
· Design supply chain contingency plans i.e. overstocking of goods · Identify key supply chain failure points and implement contingency action plans from March 2019
By When: January 2019

Resources

Consider Desired Result(s)
· Understand any restrictions on EU/UK freedom of movement of workers and the potential need for visas or residence permits

· Ability to recruit and recruitment policies

· Complete a workforce risk analysis including forecast of increased impact on operations and costs

· Implement new recruitment strategies and processes

By When: January 2019

Forecasting

Consider Desired Result(s)
· Collaboration with other departments to understand their needs to design and implement support now and in future · Deep integration with business to ensure Procurement resources and efforts are appropriately aligned
By When: Ongoing

Supply of services or goods

Consider Desired Result(s)
· How much does your operations/legal structure/location depend on access to free trade agreements?

· What challenges would be faced in implementing a relocation?

· Impact of greater tariffs and import complexity

· Liaise with Finance and Operations to link business wide legal and geographical challenges with supply chain audit to support mitigating actions

· Forecast for additional administration and resources

By When: December 2018

Compliance

Consider Desired Result(s)
· Understand and map extent of compliance policies tailored to EU laws and regulations · Link to contract review processes

· Plan of action to maintain company status i.e. ISO

By When: November 2018

Travel and Expenses

Consider Desired Result(s)
· Travel and Expenses innovative solutions and policies to support reduction in costs without impacting business operations · Update and embedding of new internal and third party Travel and Expenses systems and policies
By When: February 2019

Project Management

Consider Desired Result(s)
· Hire (or promote internally) a Brexit Project Manager to oversee all internally appointed workstream owners

· (I have seen multiple crazy job adverts expecting one person to oversee all Brexit implications)

· An individual(s) that can report back into the board on progress, risks and outcomes
By When: Immediately

Caveat time! This checklist is of course not exhaustive. It does not cover key business financial topics that would need to be reviewed (such as tax, financial ratios, sources of funding, credit ratings, etc.), PR challenges (such as public announcements and internal communications) or even tell you how to successfully undertake and deliver each topic. Also, it would need peeling down further relating to any specific industry, and assumes other strategic initiatives, such as managing and rationalising Tail Spend, has been undertaken or would be incorporated.

A recent Supplier Management article stated Brexit provides “a great opportunity to elevate the profile of procurement” and “Procurement leaders have it in their gift to add value, and show how we are in control of this risk”
With only seven months to the March 2019 deadline and the prospect of a “no deal” this is a “big deal” for procurement leaders, there is a continued opportunity to action what we can now rather than waiting nearer the December 2020 deadline, when the agreed transition expires, and any external specialised support may be less readily available.

If this checklist raises any concerns and you need support on any of the categories listed or to discuss your Brexit Supply chain strategy further we’d be happy to help – Good Luck

*Source BBC, article: AstraZeneca to stockpile drugs for Brexit

James Ball is a consultant at Retearn and has extensive procurement, supply chain and operational experience across private and public sectors, including senior roles as the buyer of outsourced services for blue chip organisations, as well as delivering outsourced services

Thoughts? Questions? Need more help? We’d love to hear from you at hello@retearn.co.uk or

Call us on +44 (0) 7795 236664

A lesson on accountable leadership from EasyJet’s CEO

By | Procurement

Transformation needs more visible leadership  

There’s an old saying that Irish Catholics have more emotional baggage than a Ryanair flight to Kerry.

That may have some truism, however, when it comes to the art of flying, I am one Irish Catholic who has worked hard over the years, determined to get our short haul European travel down to a fine stress-free art.

No bag-drop or collection queues for our family, everyone has perfected the skill of packing their capsule wardrobe and 100mls toiletries into one small wheelie suitcase (although I think our son’s strategy of packing of one pair of boxer shorts should be avoided!)
Typically, our airline of choice has been EasyJet who despite some delays / a couple of sleepovers at airports over the years, have worked hard to be the credible airline of choice for our short haul low cost travel.

In the past twelve months though we have found ourselves suffering more and more from that 3rd world problem – CBA (Cabin Bag Anxiety) – the acute fear after managing to avoid all eye contact with airline staff they eventually manage to wrestle your cabin bag of you at check in and place it in the hold.

There is no question that demand for cabin bag storage outstrips supply causing anxiety for both customers and staff, with delayed departure times as staff struggle through gritted teeth to wrestle bags in to unfathomably small spaces.

It’s a strategic transformation issue that newly appointed CEO Johan Lundgren has publicly stated in a recent article that he is tackling head on and holding himself personally accountable for delivering against. The article refreshingly concluded with his own email address requesting customers to contact him personally with their feedback.

Question: how many leaders delivering transformation projects take personal ownership, providing their email address for feedback?

I found myself testing his customer promise this month after inadvertently paying an additional £150 for hold luggage I thought I needed due to changes on their website. Emailing Mr Lundgren direct, 24 hours before flying explaining my complaint and desire to receive a refund, I pressed SEND with very low expectations of ever receiving a response.

I was delighted to be proved wrong when three hours later I received a call from his office offering me a refund and an apology for the misleading information – ‘amazed, delighted, gobsmacked, flippin heck he does what he says he’ll do, imagine that’ were just some of my reactions.

Transformation is difficult, process change is hard. Particularly in the airline industry which continues to face very challenging market conditions, intense price competition and constantly rising fuel prices.

Transformative change doesn’t happen without clear and rapid decision making or is guided by clear and measurable outcomes. Most importantly it must be led from the top with demonstrable leadership who role model accountability.

I would urge more leaders in charge of transformation to publicly hold themselves to account and engage with their customers in a very transparent way.

Good luck Mr Lundgren you deserve to be successful!

Briege is the Marketing Director at Retearn and works with the team to make sure everyone gets the message about the amazing and transformative outcomes they are delivering for clients on both procurement and transformation projects.

Thoughts? Questions? Need more help? We’d love to hear from you at hello@retearn.co.uk or

Call us on +44 (0) 7795 236664

Briege Kearney

Marketing Director

Are you ready for an outsourced procurement solution?

By | Procurement

Take the test

 Organisations are under constant pressure to cut costs, improve revenue, remove waste, standardise processes, implement best practices, adopt best in class tools and technologies… the list goes on!
In a previous Retearn blog, ‘In praise of procurement outsourcing’, James Ball detailed some of the benefits and challenges of procurement outsourcing. In this blog we examine if Procurement Outsourcing could be right for your business to help you solve some of these pressures.

Start by answering the questions below to ascertain if it will help you achieve some core business objectives:

Do you need to reduce costs? Yes No
Do you need to streamline, document or automate processes? Yes No
Do you have statutory reasons to manage your supply base efficiently? Yes No
Do you need to set up a procurement function and achieve immediate in year results? Yes No
Do you need a catalyst to transform your existing procurement team? Yes No
Would you benefit from installing a procurement culture throughout your organisation? Yes No
Do you wish to introduce latest/innovative thinking or technology to better analyse spend data and manage your supply chain? Yes No
Would you benefit from an expert managing your supply chain (even partially such as Tail Spend) and achieving benefits, while allowing you to focus on other key activities? Yes No
Does your corporate culture lend itself to an outsourcing environment? Yes No
Would strategic activities or projects benefit from additional expert resource and focus? Yes No

If you find yourself answering Yes to more than 2 of these questions, then procurement outsourcing could be just the thing you fall in love with to help you achieve results.

There are however many who are fearful of outsourcing or are even thinking about bringing their outsourced services back in house, citing concerns such as:

1. Estimated savings not matching targets or expectations
2. Security, IT or Modern Slavery compliance concerns
3. Service levels under performance
4. Internal and external political or brand pressures

Except for number 4 these concerns can be mitigated. The process should start with a thorough business case and process to identify and appoint the right outsourcing partner, including contracts, SLAs and investing time in developing the partnership.

It’s also key to think about how long it will take to implement an outsourced model, and this will largely depend on the size of the organisation, geographic locations and complexity of the outsource (size of scope, delivery outcomes and any TUPE discussions with HR). A suggestion would be to introduce the outsource model by first testing the outsource provider under specific requirements (managing the tail spend for example) which will help reassure both parties on culture fit and the client on delivery of results. Once comfortable, it should be seamless to move to a partial or full outsource (big bang or over a sustained period)

When deciding to outsource procurement, even if perceived as an expensive outlay, it is worth appointing a procurement specialist and not a generalist, as the specialist will bring their experience, technology and a tailored solution – all of which you should expect, to increase the ROI multiple times. Look for a provider with a passion for their art, solid infrastructure, track record of the consultants and excellent industry knowledge.

As Procurement evolves to support an ever-widening remit, some of the modern core skills sought by businesses and found in experienced and modern thinking outsourced procurement consultants include; networking (internally and with suppliers), strategic thinking, spend analysis, digital solutions, marketing (of the procurement function), problem solving, integrity, flexibility, negotiating and of course achieving RESULTS

Finally, well designed and delivered outsourced procurement services can enable companies to concentrate on their core capabilities, confident that their purchasing is being effectively and profitably managed and surely that can only be good business practice?

 

 

James Ball is a consultant at Retearn and has extensive procurement, supply chain and operational experience across private and public sectors, including senior roles as the buyer of outsourced services for blue chip organisations, as well as delivering outsourced services

Thoughts? Questions? Need more help? We’d love to hear from you at hello@retearn.co.uk or

Call us on +44 (0) 7795 236664

In praise of procurement outsourcing

By | Procurement

The benefits and the challenges

With the collapse of Carillion and the recent profit warnings from Capita, it is no surprise that outsourcing as a business strategy to drive efficiencies and reduce costs is under the spotlight.

Whilst I must declare a vested interest (disclaimer: I work for a fresh and exciting transformation and procurement consultancy), I am very much in favour of clients outsourcing their procurement function as it really can mean significant differences in the return on investment and results that are achieved.

Think of outsourcing procurement as comparable to outsourcing Legal, IT or HR which is common place, allowing a business to benefit from highly-skilled procurement specialists who have access to extensive and relevant networks, and can manage (independently or supporting existing internal functions) areas such as: sourcing, spend analytics, category management, compliance, contract management, invoice matching and projects.

A recent industry procurement whitepaper states “…on average procurement outsourcing can deliver improvements in spend under management (18%), contract compliance (31%), savings from sourcing (28%) and reduction in operational costs of 15-20%, that are above and beyond the levels typically achieved by internal procurement departments.

Figures not to be sniffed at, yet why do so many organisations fail to recognise they can genuinely achieve “first mover advantage” by outsourcing procurement / purchasing, freeing them up to concentrate on the core business that they’re good at?

Some of the key benefits that can be achieved are:

Take advantage of external structures, expertise, technology or market leverage – following in the steps of many global organisations, more and more public bodies and SMEs with limited internal purchasing resources or skills are taking example of these benefits. For example, the Gordon Ramsay Group recently hired a specialised procurement team to manage its supply chain as a direct result of Brexit, economic uncertainty, mitigate inflationary impact and rising food prices.

Savings that can be reinvested in other critical business areas for example

– head count – replacing a permanent line on the P&L with a variable line
– training – reduction in professional qualifications and ‘soft’ training spend
– offices – cost and space savings
– technology – world class outsource providers should include the latest   sourcing and contract e-procurement tools and solutions in the service cost which is often a hidden benefit as many organisations struggle to obtain funding to update their existing technology

• Cost reduction and cost mitigation – annual returns totalling three to eight times the fees of the procurement service are typical. Good outsource providers will be prepared to put their fees on the line when committing to delivery of services. This risk and reward model can provide CFOs with financial assurances and focus for the outsource provider

• Superior Market leverage – improved discounts from suppliers and greater compliance as the supplier builds trusted partnerships with the procurement outsource who can support them across multiple clients

• World class knowledge and skills – for example they will have market knowledge and experience of multiple or industry specific supplier landscapes (UK and international) to ensure best fit suppliers are identified and selected. They will possess fantastic negotiation skills which will be more effective and will yield greater returns and they are also more likely to be up to date with latest trends and innovations

• Improved insights to make better purchasing decisions – data analytics, management information, spend/risk analytics and dashboards – good outsource providers thrive on the technology and skill they provide in analysing and making best use of data

Some organisations may wish to outsource only indirect areas such as Marketing, IT, Telecoms, Professional Services, Travel, etc. which can often be up to 40% of the total revenues of a company but is often under supported creating missed saving opportunities and at worse significant risk issues.

There are of course some challenges that can arise from procurement outsourcing such as:

• Loss of control – there can be concerns that the business will lose the control it retains from an internal resource. This can be mitigated with a well-controlled outsourcer with clear deliverables, SLAs and KPIs, especially where the outsource service is already proactively results driven in their culture

• Weakened supplier relationships – organisations may be nervous about handing over management of supplier relationships. However, with key SLAs in place between all parties, there should be little risk (if not improvement) to existing supplier service performance and no reason why internal resources cannot continue to be involved with key suppliers

• Continuity of service – transitioning to and exiting from an outsource provider may be time consuming or costly. Counter argument would be is this any real less time consuming or costly than replacing key permanent staff?

• Integration of outsourced technology – this can be de-risked by adopting a modular approach to technology to avoid putting all your eggs in one basket. This can be tricky if you are storing all your supplier contract data on an external system, however some due diligence means most external systems are adaptable, with data easily transferred in multiple formats or brought in-house at a minimal cost if required

Procurement can be complex, costly to develop and maintain and with more and more businesses focused on the in-year number. CFOs/CPOs are being asked to deliver more with less so it’s worth considering what will maximise savings and deliver business performance – creating a new high performing in-house procurement function, developing your existing procurement function or outsourcing procurement to an already high performing team.

I know where I’d invest my cash!

 

 

 

 

James Ball is a consultant at Retearn and has extensive procurement, supply chain and operational experience across learning and development, IT and healthcare industries.

Thoughts? Questions? Need more help? We’d love to hear from you at hello@retearn.co.uk or

Call us on +44 (0) 7795 236664

6 Ways To Embed Great Procurement Into Your Company Culture

By | Procurement

Why is a strong procurement culture so rare?

Just as every individual has a personality, every organisation has a culture. Cultures usually come from the top, starting with the ideals and actions of the senior leadership, which then influence the rest of the business, consciously or not. They can be positive or they can be poisonous, but one thing’s for sure – organisational cultures are a very powerful force.

It’s unsurprising, therefore, that there’s a whole industry of books and blogs and TED Talks out there dedicated to helping companies create great cultures, from building inspiring visions to improving employee engagement. You’ve probably read or watched one or two yourself; but I bet you’ve rarely come across one that mentions procurement.

Which is, if you think about it, pretty bizarre.

Create a procurement-minded culture, and you add tangible value to your business, every day. When it becomes second nature for your people to strive for the best possible value in whatever area they’re working in, whether that’s through a supplier discount, a cost avoidance project, operational streamlining or collaboration with other departments, the impact is huge – and measurable. With a shared mindset around procurement, an organisation can become far more powerful than the sum of its parts.

So why is a strong procurement culture so rare?

I’ve worked with dozens of organisations from UK start-ups to global corporates, in both public and private sectors, across industries including telecoms, healthcare, financial services, manufacturing, utilities, and government. In only a handful of examples have I encountered a culture where all the employees could be considered truly engaged with procurement.
The majority of the time I find a compliance and/or savings target model that has been championed by finance and rolled out by procurement, but which everyone else is highly resistant to. Most employees feel wary or confused of the policy, and most business units either continually seek out reasons as to why they are exempt, or figure they can do it better themselves. If you’re familiar with the CIPS Six Building Blocks to Bolster Procurement Capability, this is the opposite.
Why does it happen? A dehumanised corporate approach, siloed departments, lack of time, and competing business priorities are just a few of the common culprits behind a procurement-shy culture. But whatever the reason, you can take some clear and proactive steps right now to break the deadlock and encourage every single person in your organisation to make procurement part of their everyday work.
Here’s how.

1. Nail the basics

It may sound obvious, but it’s tough to kick-start a procurement culture if you don’t have an inhouse or outsourced procurement function of an appropriate size and capability (whether centralised or decentralised), with a strategy that is supported at executive level, and key policies, guidelines, mandates and targets that are clearly communicated and maintained.
You have to get this in place if you’re to spread the mission throughout the business. If you’re not quite there yet, start developing one right now, or identify where you need to make improvements. You can still take our other actions while it’s a work in progress, but you won’t get anywhere if you haven’t set off in the right direction yet.

2. Connect

People love to work together. But the key word here is together. Fostering a spirit of togetherness takes far more than just putting people in the same room. It requires a climate of trust, and a company-wide willingness to listen – which is harder to establish than it sounds.
Togetherness is particularly rare when it comes to procurement. All too often, procurement is seen as a compliance function or enforced requirement that’s a hindrance to, rather than a driver of, value (unless you can find a loophole!). With this in mind, your procurement people need to be regularly visible and available, fostering the impression that they’re there to support, help and add value to their busy colleagues. By connecting regularly, the various procurement stakeholders can understand each other’s strategies, pressures and needs. This will help them forge collaborative working practices with levels of control, empowerment and ownership that work for everyone.

3. Model values and behaviours

If culture starts from the top, then it’s up to the leadership team to model the procurement values and behaviours they want to see in the rest of the business. All too often, leaders ask employees to observe top-down policies and guidelines but then create a mass of exceptions, usually driven by internal politics rather than good business rationale. Either that, or they just let their tick-box policies collect dust on the shelf.
So if you’re rolling out a travel policy, everyone should observe it and be encouraged to directly call out others who don’t. If you have a training framework, you should stick to it, refusing to allow a siloed individual or department to bring in their preferred supplier of choice without due diligence and alignment to group strategy.
Whatever the scenario, this is about being clear on how the entire business should think and act around procurement, as one unified front. This won’t just ensure internal consistency and drive results, it will as a powerful piece of external brand-building. And it’s even more important if your procurement function has been decentralised. If most of your sourcing activity has been delegated to individual business areas, and periodic spend is only accounted for by budget numbers rather than value within the budget, it is incredibly easy to end up with inefficient inconsistencies.

4. Share successes

Procurement is a boring, specialised skill-set, owned by an unlucky few… right?
Wrong. Try sharing stories and facts about how individuals or departments have used procurement to add value or mitigated risk, and thereby contributed to the stability or growth of your business. Use newsletters, meetings, emails, podcasts – whatever works best for your organisation. Just ensure you communicate these successes on a regular basis, and you’ll provide a constant reminder of just how much procurement matters. You’ll also make people feel ‘they’re in it together’, and inspire them to play their part.
However, don’t be tempted to share scare stories about how procurement failures have detrimentally affected your business and employees. Although this might seem a helpful way to explain how mistakes could have been avoided, it will simply reinforce to employees that procurement equals compliance, and shroud the topic in a cloud of negativity and fear.

5. Challenge

What great accomplishments have ever been achieved without a sense of challenge?
Your departments will doubtless already be struggling to hit budget targets or labouring under cost-saving pressures, so you need to make the procurement challenge feel enticing and fun. Work with senior management or finance to introduce initiatives that celebrate and reward examples of success. If an individual has identified an outstanding cost saving or avoidance, or spotted a powerful innovation or risk mitigation, the cost of rewarding such success (which could be as simple as a tasty meal or a must-see theatre ticket) will be far lower than the return.

6. Certification

Organisations that adopt corporate certifications like CIPS, BS 8903 or the more recent ISO 20400 create a company-wide formal framework to follow – which is incredibly helpful if you’re attempting to build a consistent procurement culture. OK, you might ask, how is that different to the usual procurement capability or compliance? Well, in the best examples I have encountered, these frameworks help foster pride in employees and a genuine hunger to maintain the badge. It’s a way to show their clients that they follow sustainable and best-value procurement, a sign that they can be trusted – and they strive to live up to their promise.

James Ball is a consultant at Retearn and has extensive procurement, supply chain and operational experience across learning and development, IT and healthcare industries.

Thoughts? Questions? Need more help? We’d love to hear from you at hello@retearn.co.uk or

Call us on +44 (0) 7795 236664

Training and development contracts – 3 factors to consider

By | Procurement

Training and development programmes can be sensitive and high-risk, so make sure you pay attention to the small print

If you’ve been following our guide to procurement training, you’ll already have learnt how to manage the category and how to source and select the suppliers that will drive the best results. Now, in our third and final part, it’s time for the small print: contracts.

Clear terms

Training and development programmes can be sensitive and high-risk, so it’s very important to put standard clauses and processes in place to ensure organisational compliance, from both your own L&D team and external suppliers.
It’s efficient to have your own standard terms to provide to suppliers for 80% of your organisational spend; this will help create common understanding both within the company and between the company and suppliers, as to what is appropriate and expected. Standard terms usually cover areas such as payment terms, personnel and organisation vetting, confidentiality, IT security, and applicable territory laws and policies, as well as organisation policies. Of course, for high spend or niche requirements, such as technology platforms or professional bodies, you might need to negotiate the terms.

Hidden costs

One way procurement can really make a difference here is by understanding the whole costs involved with a training workshop and ensuring adequate cover in a supplier contract for intellectual property and cancellations. In terms of IP, if a provider is tailoring content or developing materials as part of the workshop, consider whether your organisation will want to keep and use any of this at a later date; if so, ensure that’s covered within the agreement and that you have an understanding of the costs. When it comes to cancellation, terms are often stipulated to incur charges if a client calls off training at short notice. While this is fair in principle, be aware of the notice period required – two or three weeks’ notice should be ample time in most cases for a supplier to reschedule their trainers.

In-company training will often be quoted on a day-rate basis for the trainer’s time. But be aware of other costs that might emerge. These may include:

• Intellectual property (IP) ownership or license costs
• Trainer travel expenses
• Venue costs
• Design costs
• Materials (hard copies)
• Charge per delegate over and above a maximum number

Another important factor in calculating the total cost will be the number of delegates that are trained at any time. Smaller groups will require more sessions, but there is a trade off between group size and individual attention. One cost-effective option to consider, if there will be an ongoing training requirement and IP costs are not prohibitive, is identifying and teaching internal trainers to deliver the workshops.

Real results

Depending on the subject, it might also be worth discussing the possibility of linking supplier fees to the results of the training intervention – where, indeed, it can be measured. You might agree part payment at milestones, or post-delivery of all services depending on proven ROI.
Don’t forget: the purpose of training is to improve the productivity, effectiveness and capabilities of your staff – however, if this is not also continuously commercially focused then both L&D and Procurement can lose credibility. Both procurement and L&D should be mindful of this at all times to ensure and drive consistent best practice, value for money and compliance. And if you do learn to working together smoothly and creatively in the area of training, you can achieve great things: more skilled and engaged staff, happier stakeholders and a more profitable business. Which is what it’s all about.

 

 

James Ball is a consultant at Retearn and has extensive procurement, supply chain and operational experience across learning and development, IT and healthcare industries.

Thoughts? Questions? Need more help? We’d love to hear from you at hello@retearn.co.uk or

Call us on +44 (0) 7795 236664

Five key factors to help you source the right training suppliers

By | Procurement

The delivery of large-scale training programmes by external consultants can be expensive, how do you ensure you select the right external training partner?

In our last procurement training blog, we began by focusing on managing the category, using ten key steps to achieve cost savings and strategic clarity. Now it’s time to make sure you’re procuring the right suppliers for the job, in the right way.

Large-scale training programmes delivered by external consultants or organisations can represent a significant investment for a business, and potentially have a lasting impact. So selecting the right one, and injecting some professional rigor into the process, won’t just ensure that your business is compliant and getting good value for money; it will make you flavour of the month with both stakeholders and L&D.
However, many L&D teams won’t even have considered seeking support from procurement, or running a professional tender process, when selecting training providers. That means that, to effectively engage them, you’ll need to be efficient, professional supportive and knowledgeable.
Of course, you’ll bring your own preferences and techniques to bear, whether you’re implementing strategic sourcing processes or creating competitive tender exercises, but whatever your approach, there are five main factors to bear in mind when sourcing training suppliers.

1. Organisational fit

Training interventions stand or fall on how well the provider understands an organisation: it’s structure, culture and industry, as well as the issues its stakeholders face. It’s your job to assess whether their training methodology, approach and values will be a good fit for your people and company. Arranging a taster session to see them in action can be a great way to test the chemistry.
Remember, most training consultancies are founded by small groups of people who have come from particular industries. By uncovering their backgrounds, and the clients they work with, you can get a feel for the types of organisations they understand best.

2. Content

Some training companies offer a bewildering array of topics and courses. However, there will usually be a core few topics which they deliver most often or in which they have particular expertise.
So be mindful of whether the specific training areas you most need are simply something they ‘can’ deliver as part of the menu, or a specific speciality.

3. Experience

Asking for case studies is an excellent way to gauge how experienced the training provider will be with your specific issue. Request examples of workshops they have delivered to other relevant clients that clearly outline the problem, the solution, and outcomes for staff, business and customers.
Client references can also help give a sense of what it feels like to participate in a supplier’s workshop and what aspects of the training worked best. Be careful here, though; look for examples of tangible ROI, rather than simple stakeholder satisfaction, which may have proven to be misplaced.

4. Trainers

The ability of a trainer to be instantly credible to delegates can make or break a workshop. With training, you’re essentially buying into people, so the individuals who will be delivering the work deserve close scrutiny.
Biographies of trainers can provide useful insight as to whether they’ll be able to command respect and relay relevant experiences from their own career. When it comes to engaging and motivating your staff, they’ll need both the right business experience and the right personality.
It’s also important to make sure the trainers have experience delivering at the business level your delegates come from. The best way to assess this is to meet or trial the trainer in person – not just the sales rep.

5. Due diligence

As we saw in part one, the UK training and development industry is highly fragmented. There are huge national training companies and small, niche teams; ‘open’ courses, uniting delegates from multiple organisations, and bespoke in-company programmes. Given the relatively low barriers to entry in the market, there are lots of new companies cropping up all the time, so it makes sense to assess their stability if you’re after a longer-term relationship, or if this is high risk or politically sensitive area of spend.
It’s also important to check how a provider will provide administrative support. A dedicated account manager and logistics team can help ensure course arrangements run smoothly, and while a larger company may have clearer processes, a smaller organisation may be more flexible to your needs.
Finally, don’t forget to check how compatible the supplier’s technology solutions are with your organisation’s existing systems. It could save you a lot of time, money and effort if you opt for tech that won’t clash with your own.
So now you’ve managed the category and selected the best possible suppliers, it’s time to turn your attention to the contracts. Drop into the blog next week for part three.

 

James Ball is a consultant at Retearn and has extensive procurement, supply chain and operational experience across learning and development, IT and healthcare industries.

Thoughts? Questions? Need more help? We’d love to hear from you at hello@retearn.co.uk or

Call us on +44 (0) 7795 236664

10 Steps to reducing your training budget

By | Procurement

Investing in good external training can have huge benefits for a business – yet  why is it not usually on the procurement professional’s agenda?

Investing in good external training can have huge benefits for a business – yet  why is it not usually on the procurement professional’s agenda?

Mainly because it is not their area of focus and is typically handled by HR or L&D departments.  It’s a highly-fragmented market and spend with external training providers is notoriously difficult to measure and manage, and it can be both costly and risky if left unmanaged.

But taking the time to develop just a little attention and category-specific know-how can lead to significant cost savings, improved contractual protection and more quantifiable business benefits – fast.

With this in mind, we’ve pulled together a comprehensive, jargon-free three-part guide to training procurement best practice. First up, we’re focusing on how to effectively manage the training category.

Know your market

Comparing like-for-like training courses and suppliers can be bewildering. There may be specific reasons why a certain course or supplier is suitable for a particular audience, but it can be hard to know when it’s truly justifiable to add a new candidate to an existing preferred list. The first step is to develop a better knowledge of the training market (either internal or external), and here’s where a close relationship with your L&D team can really help.

Thanks to a lack of formal regulations, the outsourced training market is highly fragmented – there are more than 25,000 training organisations and associate trainers in the UK alone. Run a spend analysis for a large company, and you’ll often find that they’ve used more than 500 suppliers in the last year; run one for a global organisation, and it’s likely be in the thousands. As a procurement specialist, your first task is to understand the reasons why this long tail of suppliers may legitimately exist (such as location and/or niche specialism) and to identify why standard rationalisation approaches may be inappropriate.

10 cost-saving steps

Conducting a benchmarking analysis of trainer day rates and course costs, both within and without the organisation, is an obvious way to identify immediate opportunities for price negotiations and savings. However, if you want to achieve really impressive cost reductions, there are ten further steps you need to take.

 1. Establish clear spend control and authorisation processes for the review and approval of all learning requests. Such processes should be linked into wider organisational spend control processes to ensure spend doesn’t get pushed underground, such as being hidden via expenses, or buried in different cost centres such as consulting. This also ensures maximum utilisation of existing materials, e-learning licenses or in-house expertise before approval of new external spend – helping ensure that L&D is seen as thinking commercially as well as capability. 

2. Control the type of training courses purchased. For the cost of sending two or three delegates to a public course (an open course delivered at the external training company’s venue) it’s often possible to run a much more efficient, effective and tailored course in-house for up to 12 people.

3. Maximise the ‘fill’ rates on in-company courses. Work with L&D to schedule the optimal number of events and to improve delegate attendance, which can drastically reduce the overall cost per head.

4. Source the correct ‘blend’ of training, from online self-study to traditional classroom learning. Rather than treating e-learning and face-to-face training as separate categories, it’s better to design a hybrid of different approaches that will achieve greatest value for the learner and best fit with corporate strategy.

5. Monitor the quality of training delivery and phase out ineffective interventions. Consider implementing ongoing benchmarking and supplier relationship matrix grids – this will help you better understand how well your go-to partners and suppliers are meeting your transactional and strategic requirements, but it’ll also help you identify where you need to introduce specific sourcing strategies because you don’t know the market well enough.

6. Put in place policies for attending external events and conferences. All too often this spend goes under the radar by being reclaimed through expenses, so clear policies can help save thousands every year – as well as ensuring that attendees maximise team learning by sharing their knowledge post-event.

7. Extract, categorise and analyse periodic spend data – preferably categorising at point of booking, and analysing the previous 12 or 6 months. This will allow you to identify spend trends, so that you can support strategic saving opportunities, improve future demand/spend planning and reduce wastage. For example, if you’re spending thousands on learner re-sits for financial or project management courses, this will help you work out whether there’s an issue with the supplier, or whether the supplier can support you in reducing costs and improving capability.

8. Provide a clear engagement process for internal and key stakeholders. This should include a user-friendly online toolkit or technological sourcing process; regular scheduled updates on new policies and processes, as well as any preferred supplier status decisions or restrictions; and regular feedback on results.

9. Create engagement strategies for your partners and suppliers. Sure, these organisations want your business, but you also need their expertise, so it pays to collaborate!  Hold regular one-to-one meetings or open days to discuss how you can support one another on upsell and saving opportunities, innovations, efficiencies and award entries. It’ll also foster a positive, creative relationship rather than a purely transactional one (although that can be okay, as long as it’s clearly agreed to be what you both need and prefer). And don’t forget to monitor how suppliers are representing your brand and your values within assignments, or as resellers – you want them to be passionate on-message ambassadors.

10. If you outsource the management of your suppliers to a third party, question how well they’re doing on the previous nine steps, and make sure you’re monitoring them effectively, with the right KPIs and SLAs. Be careful to put in place the right measures that drive the right behaviours for your business; for example, strict savings targets or unrealistic sourcing timeframes might drive delivery options that are low-cost but inappropriate, leading to low stakeholder satisfaction and poor ROI.

It takes a bit of work, but once you start consistently and proactively managing the training category, you will soon notice results that more than repay your time.

However, that’s just the beginning. Next, you need to review how you source and select your suppliers. So stay tuned for part two of our training procurement 101.

James Ball is a consultant at Retearn and has extensive procurement, supply chain and operational experience across learning and development, IT and healthcare industries.

Thoughts? Questions? Need more help? We’d love to hear from you at hello@retearn.co.uk or

Call us on +44 1344 874707

The new IR35 tax legislation – what’s the story

By | Procurement

and what do you need to do

If you work in the public sector, Thursday 6th April 2017 might be a very important date.
The Chancellor of the Exchequer’s Autumn Statement last November confirmed reforms to IR35, otherwise known as the intermediaries’ legislation. IR35 is designed to ensure that individuals who work through a PSC (personal services company, sometimes known as a limited company) pay employment taxes in a similar way to employees. The new reforms kick in – in a couple of weeks.
So do you fall under this new legislation? How will it really impact you and/or your business? And what do you need to do to make sure you comply?

Does IR35 apply to you?

First, you need to establish whether you do indeed work in the public sector. For the purposes of IR35, this is the case if your organisation is subject to the Freedom of Information Act. Simple as that.
Next, you’ll want to identify whether IR35 applies to you, or any individuals working for your business. The answer is likely to be yes if any of the following apply:
You’re told how to do your work
You’re named in your contract as the sole provider of your services
You agree to work on anything that comes along
You allow your client to change what you are working on
You have long termination notice clauses
You’ve got minimum hours specified in your contract
Other people may well think of you as an employee – you’re ‘part of the furniture’
You undergo a performance appraisal
You’re paid for time off sick or holidays
You’ve contracted with a former employer the day after leaving work
You don’t currently assess your IR35 status

What do the changes mean?

 Sound like you or people who work for you qualify? Then you need to understand exactly what these reforms mean.
The new IR35 has two main features.  First, it makes the public sector organisation (not the PSC) responsible for determining if their assignment is one of employment or self-employment. Secondly, if the assignment is confirmed to be employment rather than self-employment, again it is the organisation (and not the PSC) that has responsibility for deducting tax and National Insurance Contributions (NICs), and accounting for Employers’ NICs.
The upshot is that public sector organisations will soon (if they are not already) be seeking to assess the IR35 risk of their workers prior to 6th April. They will need to Identify any PSCs working directly into the local authority, and assess roles rather than individual workers, asking questions such as “does this assignment cover a permanent role?”

What should public sector organisations do?

HMRC’s own tool will now help you classify roles, but you may still struggle to find enough time to assess your existing PSCs. Thankfully, these seven steps will help ensure you’re compliant:
1. Set up a new RTI PAYE scheme for PSC workers, to avoid mixing them with your permanent employed workforce
2. Start to gather the information you will need to add PSC workers to the new PSC RTI scheme. Much of this will be personal to the worker and unlikely to be held on current systems e.g. NI number, date of birth
3. Update the contracts with your PSCs, authorising PAYE/NIC deductions to be made based on the assessments made by the public authority
4. Implement accounting controls to reconcile gross invoices with net post-tax payments
5. Flag accounts payable systems accordingly and make payment blocks on PSC accounts, subject to processing through RTI by your payroll department
6. Ensure all invoices associated with work undertaken are paid prior to 6th April 2017
7. Renegotiate the price of contracts. Revised pricing will need to be calculated based on the preferred engagement model. Consideration might be given to both incumbent and new workers’ assignments, for example:
Incumbent workers – recruitment provider to apply NIC and other employment costs e.g. Apprenticeship Levy, if applicable, on top of the current pay rate as well as making deductions from the current pay for NIC and other employment costs, if applicable
New assignment – recruitment provider to factor in NIC
The important thing here is to take a positive, proactive approach so you don’t end up caught in the unproductive buck-passing cycle.

What should individuals do?

If you’re a PSC whose assignment falls within IR35, you have three main options:
1. PSC: remain as a PSC, but be aware that your pay will be subject to PAYE and NIC deductions. This means that your hourly or daily pay rate is likely to be reduced, because the organisation you’re working for now has to account for employer’s NIC
2. PAYE: become a PAYE temporary employee instead. Again, your pay rate will probably suffer or the same reason, but on the upside you’ll now get benefits such as employment rights and holiday pay
3. Umbrella: get in touch with a vetted Umbrella Company provider. They’ll become responsible for administering PAYE income tax and NICs deductions, as well as providing benefits such as employment rights and holiday pay. Although again – you guessed it – your pay rate will likely take a hit
Most importantly of all, don’t panic! HMRC aren’t out to get you, just because you’re self-employed – the new legislation is purely designed to enforce better PAYE/NIC compliance. As long as you put in a little thought and effort to ensure that your tax and NI deductions comply, you can keep working for your existing public sector clients with all the benefits that self-employment brings.
Any questions? Still worried? Just send us an email, give us a call or shoot us a tweet.