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Procurement

Procurement Outsourcing - Retearn Procurement Consultants

Will 2020 witness a surge in procurement outsourcing?

By | Procurement

The benefits and the challenges

Now that we’ve finally reached a more stable political situation, many private and public sector organisations are dusting off strategic initiatives. Will 2020 be the year that procurement outsourcing makes a comeback?

Whilst we must declare a vested interest (as a transformation and procurement consultancy), we are very much in favour of clients outsourcing their procurement function as it really can drive 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 advantage of these benefits.

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

– headcount – 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 outsourcer 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 costs of a company but is often under supported creating missed saving opportunities and at worst 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 outsourcer is already proactively results driven in its 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.

Where would you invest your cash!

If you want all of this, one part of it, or simply to talk to some people who have operational experience and an allergy to excuses, jargon and politics, get in touch.

Call us: +44 1344 874 707
Email us: hello@retearn.co.uk

66-67 Newman Street, Fitzrovia, London, W1T 3EQ

Contact us
Facilities management insourcing

Facilities Management – our key takeaways from this year’s London Build exhibition

By | Facilities Management, Procurement

After attending this year’s London Build, the UK’s leading construction and design show, Marcus Hill, Head of Facilities Management at Retearn shares his key conference takeaways on how the construction industry has moved from a focus on “bricks and mortar” to a greater focus on diversity, sustainable procurement, well-being and the role procurement has in championing these issues.

1: Inclusion starts with an I

The panel discussion on Diversity was by far the best attended session with standing room only!
Chaired by Christina Riley, Head of Equality, Diversity and Inclusion at Kier Group she was joined by other panellists from Mace, The London Borough of Lambeth, VolkerWessels UK, A Traffic Signal Engineer who managed to overcome her disability (having had her leg amputated when she was a child) to become a Highways Engineer with Amey .
Covering all aspects of diversity it was clear that this is a key issue that modern day organisations need to address better with open dialogue and good communication central to deal with the range of prejudices and unconscious biases that exist when it comes to racism, homophobia and wider LGBT+ matters in the workplace.

2: Don’t buy cheap, unless you want to buy twice

No surprise, but a relentless focus on quality in construction is paramount – this was a theme championed in a session presented by Gary Edwards – Head of Engineering from the Royal Household. Gary has had a fascinating career working on many flagship UK projects and is currently working at Buckingham Palace. Gary passionately talked about how lifecycle costing is key and there should be a relentless focus on attention to detail and not selection based on the lowest initial price. A need for accuracy and not engineering down to a price should still be the guiding principle, as procurement professionals in Retearn, we are acutely aware of this.

3: Don’t let the small things build and build and impact on mental health

Or as Chrissi McCarthy managing director of Construction Equality Ltd who led this session shared – it can be the “last camel that breaks the camel’s back”
Chrissi’s passion for the social and economic impact of the construction industry led her to create Construction Equality Ltd, a consultancy with the aim of advancing diversity in the construction industry. She shared how she is developing new approaches to overcoming inappropriate behaviour in the workplace through the Duck project. Its key focus is on how emotionally draining exclusion and prejudice, be it direct or indirect effects individuals in the workplace along with strategies companies can adopt to overcomes this.

4: Procurement must play a key role in eliminating modern day slavery

The facts shared by the panellists (which included Helen Carter, Lead Consultant for Sustainable procurement, modern slavery and human rights, a Legal Counsel for a large infrastructure project in London and a Project Manager from “Buy with Confidence” – part of Trading Standards.) were
sobering to say the least.
The official estimate is that over 13,000 people in the UK are victims of modern slavery but the actual figures are hard to define as modern slavery still sits under the radar and could be as high as 100,000 and globally is estimated to affect over 40 million people. When the Modern Slavery Act first came in to being, it was based on the theory that it is largely an overseas problem and if tackled from the top down it will be reduced or eliminated.
The reality however is very differentas recent shocking events demonstrate. It is a global and not a UK issue as witnessed recently with the death of over 39 Vietnamese civilians found in a lorry in Essex. Modern Slavery exists from the bottom up with small business ranging from cleaners, kitchen porters as well as the more publicised professions such as nail bars and car washes impacted.
To tackle Modern Slavery, procurement functions and leaders must:

• play a key and active role in tackling and supporting its elimination through robust policies, processes and planning
• assess their whole supply chain and not just the companies they contract with
• ensure they have open dialogue and clear communication channels
• learn to spot the signs and confront it, using the myriad of resources that are available for example the Modern Slavery Helpline, Website and App.

Marcus Hill is Head of Facilities Management Consulting at Retearn. He is a seasoned Insourcing and Outsourcing Facilities Management expert and Fellow of the Chartered Institute of Building and a member of the Institute of Workplace and Facilities Management (formally known as BIFM).

We have experience and expertise to help clients with insourcing facilities management be it a full insource or a partial insource to reflect your business needs. To find out more about facilities management click here, or contact Marcus on the number below or via LinkedIn.

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

Marcus Hill

Head of Facilities Management Consulting

tail spend

Can GDPR and Modern Slavery elevate investment to help you better manage your Tail Spend?

By | 10 minute read, Procurement
tail spend

A view on how Procurement can turn legislative requirements from the feeling of administrative burden to a strategic benefit

If you would like to read the PDF article – please click here

Without doubt, procurement leaders and their teams, today, face increasing pressure to deliver sustainable savings, and drive additional value and risk mitigation from their supply chain—all while minimising the overall cost of delivery and very often without any additional funding being made available to create the additional value that is being asked of them. However, think differently and there is a greater opportunity for procurement to utilise current tail spend regulatory requirements such as Modern Slavery or GDPR to create the paradigm shift needed to help drive a more strategic agenda and increase investment in cost effective and sustainable tail spend management, which in turn will identify and create savings that can be reinvested in transformative opportunities – enabling Procurement to continue to demonstrate its value add to the organisation.

Take Modern Slavery for example. According to the Global Slavery Index a staggering 40 million people are living in modern slavery today, of which 25 million are in forced labour. The G20 countries are importing risk of modern slavery on a massive scale, collectively, importing US$354 billion worth of at-risk products annually. The numbers are staggering and it makes you realise that this is not just a ‘tick in the compliance procurement box ‘ exercise but is a critical business issue – to seek out abuses in their global supply chain and reward leaders who take on the responsibility and challenge of addressing modern slavery. In addition to potential prosecution and jail time, several high-profile cases in the press show that there’s also significant potential for breaches of the Modern Slavery Act to have a devastating impact on a company’s reputation, its directors, and company profits. As well as these regulatory requirements you only have to read the most recent Deloitte Global Chief Procurement Officer Survey to understand the other pressures facing procurement teams:

78% of procurement leaders say that cost reduction remains their overarching business strategy
54% of procurement leaders state that managing risk is a top priority, although 65% have either limited or no supplier visibility further than their Tier 1 suppliers
16% of procurement leaders want to reduce transaction costs
37% of procurement leaders are focused on consolidating spend

These pressures exist across industries, and across market sectors. But meeting them involves addressing a number of challenges, many of them long-standing. Who doesn’t recognise these, for instance?

• An obligation to provide clear accountability and reduced risk in the supply chain
• Commodity price volatility • Evolving supply market demands
• The need to free-up procurement resources, and other resources in the organisation, in order to focus on higher-value strategic procurement activities
• The need to reduce the total cost of the procurement’s service operation, and deliver ever-increasing levels of cost savings for the business
• The importance of retaining key talent
• Ever-changing business requirements
• A growing focus on technology enablement and self service

With the moral, ethical and pressure to demonstrate value, the stakes are high and the time is now for procurement functions to be banging the drum regarding maximising the ROI of addressing tail spend.

Tail Spend in Context

 

Tail spend is variously defined as those suppliers below a specified annual spend threshold, for instance, or spend that has been delegated to business stakeholders, or spend falling into certain categories—tail spend means different things to different organisations.

Typically constituting a small proportion of overall spend, spread across a number of spend category areas, and typically fulfilled by a large number of transactions and suppliers, tail spend often remains unclassified due to its very nature, which can prove challenging when seeking to identify it and therefore manage it.

Consequently, tail spend can be seen as too minor, and too diffuse, to bother with.

Such disengagement might not always be conscious, or formally defined, but the effect is the same. Consciously or unconsciously, addressing tail spend is not seen as a priority. Which is where the danger lies. For the result of this view of tail spend as too trivial to bother with are higher costs of procurement, supplier proliferation, a loss of pricing power—and missed opportunities for collaboration, risk mitigation, and innovation. And those are just the headline impacts.

For instance, better addressing tail spend can deliver these benefits to an organisation:

• Faster, more efficient—and lower-cost—procurement and finance processes
• Significant vendor reduction, if desired
• Lower prices on spend, delivering cost benefits
• Increased visibility of expenditure, to enhance informed decision making
• Reduced risk to the organisation • Increased compliance
• Significant improvement in contract database management, knowledge of supplier numbers and services, and more efficient access to terms and schedules

Don’t overlook, either, the considerable secondary ‘spillover’ benefits that can come from concentrating spend on fewer suppliers—suppliers, moreover, about which more is known, especially if those suppliers are already part of a business’s strategic, or actively-managed spend.

Consider, for instance, GDPR compliance. For an organisation with a long tail spend, there may be hundreds or even thousands of incumbent suppliers, all of which will need formal and relevant GDPR-specific contracts and contract amendments, as well as a process to ensure all new suppliers are placed on appropriate terms.

Or looking at Modern Slavery Act compliance again, the duty of care imposed on organisations to ensure that their supply chains are free of modern slavery can be onerous, and the more focused the supplier base, the less burdensome this becomes. When organisations think of Modern Slavery Act compliance, their first thought isn’t naturally to consider tail spend and we believe going back to the morale, reputation issues, it should be.

Such ‘know your supplier base’ legislative requirements aren’t going to go away—and nor are these two pieces of legislation the only ones in question. Bribery Act compliance, for instance, also falls into this category.

So how might we better manage Tail Spend?

Public Sector vs. Private Sector: The Tail Spend Challenge

First, let’s home in on what exactly we mean by ‘tail spend’. This is important, because the private sector and public sector see tail spend differently, and so see the tail spend challenge differently.

In the private sector, the view of tail spend is of an amount of spend that is of low level, low strategic importance, and with low levels of potential benefit to come from better management. That isn’t to say that procurement functions might not be incentivised to periodically address tail spend, but that the gains to be had from doing so are perceived to be of a lower order of magnitude than is the case with more strategic spend.

Typically, a private sector organisation strategically manages approximately 75% of its third-party spend, and so consequently has about 25% of spend in the ‘tail’. Our view at Retearn, echoing generally-accepted good procurement practice, is that companies should aim to have a minimum of 80% of total spend strategically managed. So while the figure of 75% isn’t too far from this minimum level, it is still some way from the ideal.

In the public sector, on the other hand, spend is typically managed via an agreed process, with the result that there is generally seen to be little incentive to tackle the issue any further at all. As a result, ‘tail’ levels are higher: a figure of 60% is of spend being managed strategically is common, leaving around 40% in the tail.

Tail spend challenges commonly encountered in the public sector include:

• Business users keep procurement activity to themselves, working in silos with little oversight as to what is purchased, and from where
• Business users have a variety of methods to procure goods and services, and often choose the path of least resistance
• There are multiple ways of working, with each department having its own systems and processes
• No “One-Time” vendor management, resulting in potentially hundreds or thousands of new suppliers being added. To create a full vendor record with all details for these vendors is time-consuming, and unnecessarily increases the supplier base
• Lack of visibility around the items that are purchased
• Lack of competitive leverage of total spend, resulting in decreased savings performance

So how can you recognise when your organisation – public or private sector – has a problem with Tail Spend?

 

Typically, we’d suggest, if two or more of the following statements apply, in relation to your organisation and tail spend, then you need to get a tighter grip on tail spend:

• The number of suppliers is greater than the number of employees
• Fewer than 70% of orders are negotiated by procurement
• New suppliers are being added at over 10% each quarter
• Fewer than 50% of transactions are with preferred suppliers
• Fewer than 50% of purchases are automated e.g. through catalogues
• The risk register has a regular high proportion of tail spend suppliers

Getting to grips with Tail Spend: a focused, four-stage process

 

Typically, we would encourage organisations to follow four key steps to manage tail spend:

This robust review process ensures that the business has validated the governance, spend, delivery and sustainability of the purchasing cycle and supply chain to identify and implement efficiencies and optimisations.

In one public sector example where this process was followed, closer management and process transformation of the tail spend resulted in the following:

• Average savings of 7% of the total value of tail spend
• Productivity efficiencies gained from a streamlined, centralised process
• Systems enhancements that provided greater visibility and control over low-value suppliers and improved influence of spend on SMEs, local businesses, and the third sector
• Better inter-departmental collaboration, and more consistent messaging and branding

When it comes to managing the tail, such an outcome clearly runs distinctly counter to the widely-held assumption that the cost and resources needed to review tail spend are not worthy of the time or investment. Typically, it is thought that as the savings will be modest it is not worth the effort to dedicate any time. However, a different view would be that the organisation or Procurement function is lacking a group savings and innovation culture and focus from not actively managing the tail spend which would yield significant returns from leverage and collaboration.

The level of control (or lack of) an organisation will have on its tail spend depends on a number of factors including maturity, focus, strategic intent, business \ stakeholder alignment and could be for any number of reasons:

One of the largest hidden costs is process – market insights suggest a large blue chip organisation typically spends up to £350 per supplier to manage and maintain their systems (covering set up, contract management, queries, purchase order management and invoice payments). Invoicing costs often categorised separately and ranging anywhere between £10-£50 per transaction depending on the company systems and processes.

Other typical tail management benefits can be categorised as:

 

Tail management benefits

That said, tackling tail spend can prove difficult. Many businesses which target tail spend think that they can do so by implementing e-sourcing or conducting ‘blanket’ negotiations with suppliers. While these techniques can result in quick wins, they can also fail to take advantage of all the potential opportunities, and the benefits can soon be lost when decisions are reversed or new practices not maintained.

In addition, asking suppliers to comply with new terms, or deliver further cost reductions, can run the risk of backfiring when the supplier looks to increase prices at the first opportunity. Running contract compliance processes or price negotiations without credible supply chain alternatives—which is often the case in the tail spend—can lead to supply risk issues, as it can be challenging to undertake successful supplier changes within short timescales.

Delivering a successful Tail Spend process

 

To successfully deliver a tail spend management process, there are a number of issues that it is important to ‘get right’. Failure to do so risks expending time and resources on a tail spend project that does not deliver on its full promise.

Identify objectives and resources: At the start of the process, the objective(s) need to be clearly defined and communicated to all key stakeholders, and the business needs to commit the necessary ongoing resources. It is important to have a dedicated team or dedicated focus from individuals within their roles for the tail. Be warned: if tail spend rationalisation is treated as ‘add-on’ work for an existing team, then day-to-day activities will always tend to take priority. Likewise, they will also need appropriate resource, collaboration and buy-in from other functions.

Identify the tail: it is important to define the tail at category level (through regular accurate spend data and ongoing supplier relationship matrix per category), in order to enable clarity and rationalisation. Consider how many suppliers are needed in each category, and how often buyers will need to meet the suppliers in each spend category. Often the most neglected category spend areas are a good place to start looking for ‘wins’, in order to help quickly demonstrate the value of the initiative to business stakeholders.

Subset the tail: it is also important to recognise that the tail is not some single homogenous mass. In practice, it can be regarded as falling into several parts—including a ‘hidden’ tail. Both the ‘hidden’ tail (which are generally services or goods bought from normally strategically-managed suppliers, but which have been purchased non-compliantly) and the ‘head’ of the tail can contain sizeable portions of total spend. However, since this spend is not covered by professionally-negotiated contracts that are centrally approved as acceptable to the organisation, or is conducted without use of existing contracts, then there is a high potential for savings in these segments—even though most companies lack visibility into this spend, and therefore fail to understand the total volume of business they do, or could do, with known and approved vendors, thus missing out on opportunities for bundling demand and achieving volume discounts. Alternatively, to choose another example, organisations may not know that they are using several suppliers for the same items, thus missing out on chances for supplier consolidation.

In summary, the key to realizing the high potential savings in both the ‘hidden’ tail and the ‘head’ of the tail is to drive as much as possible of the purchasing into strategically managed spend—the goal, indeed, should be to have a minimum of 80% of total spend strategically managed.

Savings in hidden tail

The ‘middle’ of the tail, and the ‘tail’ of the tail usually do not present the same savings opportunities in absolute terms, for the obvious reason that they contain a smaller percentage of total spend. In the ‘middle’ of the tail, though, it is still possible for companies to achieve significant spending reductions in percentage terms, along with significant operational efficiencies.

Identify value levers: To enable sustainable savings with minimum maintenance, procurement functions should focus on value levers that can take out inefficiencies that have arisen in the supply chain over the years. Some of the key value levers include supplier rationalisation, global sourcing vs local sourcing, minimum order quantity optimisation, specification reviews, and competitive tenders or negotiation using market benchmarking.

Develop an implementation roadmap, and then execute it: Quantify the savings potential and risk involved in the tail spend management process, and then review these regularly with a cross-functional steering group (call them Procurement Champions?) in order to identify costs and timescales, and prioritise projects.

Communicate: At every stage, and even more so when engaging cross-functional teams, it is important to maintain good communication with an executive team—who will help maintain focus on tail spend as a priority—highlighting positives, as well as escalating challenges that can be addressed on time. It is important to avoid the misconception that because tail spend involves low spend items, a tail spend project is somehow less important than other strategic projects, as it is easy to then lose track of projects if issues are not managed quickly and efficiently.

The bottom line

 

Correctly implemented, tail spend management initiatives deliver not only significant savings, but also broader benefits to the wider business. Rationalising supply chains at this level helps to differentiate between transactional spend and critical spend, resulting in renewed focus, clarity and innovation. Operationally, too, making an impact on tail spend usefully reduces duplication and complexity, cutting down the number of materials/services/invoices/suppliers that are involved in the supply chain.

As a result, the procurement function, the quality assurance function, and the organisation’s supply chain teams can more efficiently manage the supply chain, and redeploy resource elsewhere. It is not an exaggeration to describe the effect as being a ‘virtuous circle’, where distractions and irrelevancies are winnowed away, enabling a greater and greater proportion of spend to be professionally and strategically managed. Other key reasons to point towards regular tail spend rationalism and collaboration of suppliers as best practice is:

Regulation 6 of the Public Contract Regulations 2015 which stipulates that supply or service contracts which are regular in nature or which are intended to be renewed within a given period must be aggregated.

Known examples of a number of established central purchasing bodies, who establish framework agreements which Councils can use via a ‘mini-competition’ to select the best value supplier from a framework.

Cost Avoidance: While hard savings have a quantifiable P&L contribution (or are more easily tracked and reported upon), on-going cost avoidance created from maintaining rationalism and collaboration of the supply base creates important strategic value.

Methods of cost avoidance delivery can include:

Price protection – delaying supplier price increases, or slowing the rate of price increases with price protection

Negotiation – negotiating prices that are lower than initial quotes

Value-adds – including additional value-added goods and services free-of-charge to an agreement. For example, when bidding on a large piece of equipment, the supplier can also include installation and maintenance services free-of-charge

Continuous improvement savings – signing long-term contracts with continuous improvement savings requirements. These are provisions in contracts that require the suppliers to create ways to reduce the organisations total cost of use

Substitutes – identifying supplier substitutes that perform the same or similar functions at lower cost, or those that are the same cost with greater quality/efficiency

Even so, a tail spend management initiative is not something to be lightly undertaken. The investment in time and resource can be significant—significant enough to possibly prove to be a barrier. If so, canny procurement functions would do well to recall the secondary ‘spillover’ benefits of tackling tail spend, in terms of improved—and easier—compliance with the requirements of GDPR, the Modern Slavery Act, and other ‘know your supplier base’ initiatives. If the wider organisation proves reluctant to invest in tail spend reduction, then the compliance argument may well help to tip the balance.

Using our procurement expertise, we can help you rationalise your current tail spend to improve compliance and greater utilise your volume spend to a relevant number of suppliers to enable you to make informed and improved procurement decisions Click here for further information.
Read our Case Study on how we partnered with Serco’s internal procurement team to deliver over £1million savings and reduce their risk of non-contracted supplier spend in line with their values including key GDPR and Modern Slavery clauses.

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

About the author

James Ball is a consultant at Retearn and has over 20 years procurement, supply chain and operational experience across private and public sectors. He is a CIPS member and regular contributor to procurement online channels.

James Ball

Consultant

How procurement can help you utilise your Apprenticeship Levy funds

By | Procurement

According to the Government Skills Minister, employers lost access to £37 million of their own investments in just 2 months. This was from not utilising the Apprenticeship Levy. A collaborative Procurement team can support their organisation to greater utilise their Apprenticeship Levy funds.

 

Shockingly, 8% of the £135 million employers paid into their digital funds were lost in May 2017. The CBI state that two years after the Apprenticeship Levy introduction, many employers still do not understand how their levy payments are being spent. Many employers could have unspent funds in their Apprenticeship Levy accounts. A fact that Retearn has seen first-hand across multiple clients we’re working with as a procurement consultancy.

Those are staggering quotes and figures, and if similar losses were being made in other areas of a business there would be some serious investigations and consequences. This leads us to ask:

Why are these losses often going under the radar of Finance and Procurement? and why are organisations squandering so much of their own money?

To answer that, first we need to understand what the Apprenticeship Levy is. Employers with an annual pay bill of more than £3 million, invest 0.5% monthly of their total pay bill into a digital account. They can draw down from this account by appointing external providers to deliver apprenticeship programmes to enrolled employees.

This is essentially a UK tax on employers, but if used effectively it can fund skills and career development of existing and new employees.

Details of all the Apprenticeship Levy (somewhat complex) rules can be found on the government website here. A summary of the key rules are also listed at the end of this blog.

What are the benefits to the Apprenticeship Levy?

Some organisations have truly embraced the use of their Apprenticeship Levy investments. They are improving skills of current and future employees, enhancing their brand and positively impacting their corporate social responsibilities. However, many organisations have struggled to put the required structure and ownership in place. Therefore, many are sitting on both a significant levy fund pot and ongoing monthly investments. These organisations may now struggle to ever utilise all they have invested.

How you can utilise the Apprenticeship Levy

Often a quick win in spending your levy investments may be to look at your current Professional Qualifications, such as CIMA, CFA, CII and AAT/ACCA. All of these are now available in levy funded programmes that are recognised and awarded by the same governing bodies. There has been very little information shared about these initiatives by suppliers, but many of them can deliver levy funded programmes. It is also worth noting that many employers do not need to pay National Insurance for any employee on an apprenticeship that is under 25, a saving of 13%.

There are now 686 different apprenticeship standards in the UK. These are in all subjects, from the vocational plumber to a Masters level data scientist. No longer are apprenticeships a way to train young people just in practical skills. Any employee, at any age, with any educational background could be up-skilled to support your business’ goals.

Creating collaborative ownership

Ownership of the Apprenticeship Levy sits somewhere between HR and Learning and Development teams and business functions. Typically, Learning and Development own access and tracking of the digital levy £ account (often supported by Finance), are responsible to the employees undertaking an apprenticeship, contracts and performance of the external apprenticeship providers. There is also the critical need to regularly engage with the business to agree where to best invest the digital account funds, depending on the business strategy.

HR/Learning and Development tend to have ownership, and the funds sit in a separate digital account, rather than being visible in typical Procurement analysed spend data. Procurement are often unaware of the scale of the organisation investment. This includes spend with external parties, contractual and service challenges and risks and most importantly how they can add value. This is all while Finance may have already written it off as a legislative tax they have little control over.

For those behind the curve, there is still much that can be done to review and improve the organisation investment position. Or at least ensure decisions and actions that are made are done so from an informed position.

Here are a number of ways that Procurement can collaborate with HR/Learning and Development to support greater utilisation of their Levy funds:

Ownership of Levy digital account

Understand and agree who owns access to and overview of the digital levy account.

Understand how much is in it now and how much is invested monthly. This will create context.

Monthly fund accuracy

Are the monthly investment funds correct?

You need to check that it is correctly capturing permanent and temporary workers. This has the potential to identify over-investment of funds. It can also act as a baseline for the future internal and external investment strategy discussions. Therefore helping to ensure informed utilisation of the funds.

Tracking of funds and investments

Who is tracking the funds, investments and dates to ensure the fund is adequate for all?

This will including exiting apprenticeship provider committed investments, and tracking that additional costs outside of the levy fund are accounted for.

Apprenticeships are periodically drawn down from the digital levy fund over the length of the apprenticeship. This could be 80% in equal monthly payments, with 20% at the end. Areas such as assessments can be additional costs billed separately to the organisation by the provider.

Signed contractual coverage

Does your organisation have defined signed master terms?

These (including individual training plans) need to be in place with each Apprenticeship provider you are using.

If not, parties may be breaching Education and Skills Agency rules. This could create risk and liability, undermining commitment between employee/employer/provider and open up risk of service and performance management gaps or challenges with the provider.

Business stakeholder engagement

Can Procurement support Learning and Development in analysis and engagements with business stakeholders?

Creating compelling commercial recommendations of how the available funds could be invested adds value. The business functions commitment to help develop senior and junior roles, reduce parallel training costs, recruitment fees over a sustained period, or support development of innovation/new service lines will create a wider business profitable return.

Market knowledge and supplier selection

As HR/Learning and Development agree investment strategies with business functions, this will start to identify the types of courses and providers needed.

Does the organisation need support from individual specialist providers, or would the organisation benefit from a managed service to help with strategy, reporting and supply chain management?

Procurement should understand their market to aid HR/Learning and Development decision making. This can be across internal cost modelling, market provider engagements, provider selection, contracting (especially around understanding how providers will maximise funding, total service offering and key performance indicators) and post contract ongoing performance management.

These topic areas would ensure Procurement is collaborating with different internal functions and adding value, but most importantly ensuring that the organisation is well informed of their levy position and market options to make an informed decision of how to best invest their funds.

A summary of Key Apprenticeship Levy rules from Government website

Organisations can only use funds in their digital account to pay for apprenticeship training and assessment for apprentices that work at least 50% of the time in England. Cost of learning is determined as a funding band maximum for each apprenticeship.

If the costs of training and assessment go over the funding band maximum, your organisation will need to pay a 5% contribution to non-funded training costs, the government pay the other 95%.

You can’t use funds in your digital account to pay for any other costs associated with your apprentices (such as wages, statutory licences to practise, travel and subsidiary costs, work placement programmes or the setting up of an apprenticeship programme).

To spend funds in your account, you need to choose a training provider(s), agree a suitable course, and pay for training and assessment with funds through your apprenticeship service digital account which you give the training provides access to.

The amount of funding entering your digital account each month is calculated as:

  • 0.5% of your total PAYE each month
  • multiplied by the proportion of your bill paid to your workforce who live in England
  • plus a 10% government top-up on this amount

Pay bills can include permanent and temporary workers as well as any bonuses that are paid. So depending on an organisation’s service and structure, this could be much higher a monthly investment than you might think and can vary month to month.

Levy contributions can be used for existing and new employees. Also, up to 25% of unspent funds can be reallocated to fund apprenticeships in other, non-levy paying, employers such as companies in your supply chain or affiliated charities.

Organisations have a rolling 24-month time limit to spend their funds or lose them on a month by month basis.

About the author

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

We are supporting a number of clients with their Apprenticeship Levy requirements by providing:

  • Contract risk mitigation (existing and new apprenticeship programmes)
  • Market knowledge and introductions to strategic experts who can support leaders make informed decisions on how to maximise the levy for their business and the right fit course providers to support the business strategy
  • Business wide clarity of Levy pot, underspent funds and estimated future monthly contributions
  • Driving engagement and collaboration between departments to make informed decisions on best future use of funds
  • Benchmarking organisations and showcasing best practice, budgeting and tracking funded and non-funded costs

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

Facilities management insourcing: above-average risk, above-average complexity?

By | Facilities Management, Procurement

Sometimes, it happens through choice, as the result of a conscious board-level decision and sometimes it doesn’t – a facilities management service provider may have collapsed and businesses must rapidly plan to insource a previously outsourced facilities management provision.

Either way, the decision to insource your facilities management can launch your business on a complex project, affecting all parts of your operation including staff.

For example if your business’s catering, security, or maintenance service ceases to function properly, it is going to be quickly noticed putting your business at risk. If a Facilities Management operator ceases to trade then the staff have a legal right to transfer to the client organisation provided the service continues, so companies could overnight inherit a team of cleaners and all the challenges and distractions of delivering such a service.

In the meantime, your ability to operate—to serve customers and look after stakeholders could be impaired.

Skilled expertise is essential if sub-optimal outcomes are to be avoided. Below are some of the main factors that we would take into account to help clients achieve a successful insourcing solution.

1: Ensure you have high-calibre project management

Be under no illusions: particularly when insourcing a facilities management provision voluntarily, perhaps on cost grounds. Facilities management service providers won’t automatically grant you an extension if your business’s plans and preparations for insourcing are running late.

Why? Because they will have already looked at redeploying key people who may not be eligible to TUPE transfer, and their own suppliers, and will be unwilling to either expose them to uncertainty or re-negotiate term extensions with people and suppliers.

The problem, of course, is that insourcing a facilities management provision isn’t a project with which most businesses will have had much experience.

Some companies have outsourced for more than 20 years so first-generation outsourcing is but a distant memory. There’s a lot to consider if business continuity is not to be compromised, and the proper legalities correctly observed. Remember: even if your existing staff—those who are already in place, doing the work—are retained, they will be switching employers, and will be entitled to certain legal protections, under TUPE legislation.

Insourcing a facilities management provision isn’t something to learn about ‘on the job’. Skilled expertise, backed by high-quality project management, is essential.

2: Complex requirements must be met

Many businesses fail to understand exactly what an insourcing project entails.

A common failing, for instance, is to focus excessively on the TUPE requirements that must be observed when employees transition from one employer to another. These are obviously important, but TUPE’s impact on the timeline is the legal requirement to provide key data on the employees at no less than 30 days before the transfer and within an overall insourcing project timetable that typically stretches over six to nine months.

More fundamental issues such as the overall business case, establishing an appropriate supply chain of resources and subcontractors, developing the IT systems that will be required, and making payroll and human resources preparations for those employees who will be transitioning to the insourced facilities management organisation also need to be high on the list to ensure the full benefits of an insourced facilities management model are to realised.

3: Understand the failure points

Risk is another critical dimension of a facilities management insourcing project. Principally, although not exclusively—these revolve around two of the most important facets of the project: people-related issues, and procurement-related issues (both of which will be the subject of future blogs).

People-related issues are perhaps the simplest to understand. At a stroke, a business can experience a significant increase in headcount and potentially, an increase in headcount of a very different nature from the existing employee base. A professional services organisation, for instance, might for the first time find itself managing cleaners, caterers, security personnel, technicians and tradespeople.

Clearly, systems and procedures will have to be in place for any management and supervision issues that may arise;

 

  • How are training and discipline matters to be handled?
  • How is staff cover in case of sickness and holiday to be organised?
  • Who is going to be responsible for securing appropriate supplies and equipment—workwear, personal safety equipment or required cleaning consumables for example?

Procurement, too, is a risk

In theory, insourcing facilities management can result in cost savings, and a boost to the bottom line. But don’t forget that the organisation to which facilities management was previously outsourced will not only have longstanding supply chains and relationships with suppliers, but also possess in-depth knowledge—built up over many years—as to how to manage and negotiate with the specialist suppliers within its supply chains.

Put another way, if a business can’t match those supply chains, and manage them with equal skill, then a facilities management insourcing project can result in a facilities management cost that is higher than before, not lower than before and no guarantee of improved service.

In conclusion – let sleeping dogs lie?

Very easily, a business can come to imagine that insourcing its facilities management provision is too complicated and risky to carry out. Better by far, goes the logic, to let sleeping dogs lie, and continue with the existing outsourced provider.

Naturally enough, the existing provider won’t rush forward to rebut this conclusion, and is doubtless very happy for businesses to make this mistake.

For that’s what it could be: a mistake. Insourcing a facilities management provision if executed correctly doesn’t have to be too complicated or risky to carry out. A business might want advice, and help, but the eventual gains can make the exercise very well worthwhile.

Marcus Hill is Head of Facilities Management Consulting at Retearn. He is a seasoned Insourcing and Outsourcing Facilities Management expert and Fellow of the Chartered Institute of Building and a member of the Institute of Workplace and Facilities Management (formally known as BIFM).

We have experience and expertise to help clients with insourcing facilities management be it a full insource or a partial insource to reflect your business needs. To find out more visit https://retearn.co.uk/facilities-management/or contact Marcus on the number below or via LinkedIn.

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

Marcus Hill

Head of Facilities Management Consulting

How integrated are your Facilities Management and Wellness programmes?

By | Procurement

We could learn a lot from the Finns and the Danes who once again top the World Happiness Survey, whilst the UK languishes down in 19th place. At Retearn, we firmly believe that the Facilities Management function of the future is one that genuinely embraces premises and people and is directly involved in providing working environments that demonstrably improve the working lives of all occupants.

Increasingly, research clearly shows the link between happy, healthy building users and the quality and quantity of their output at work as well as their experience of the workplace they have been to. There is also strong and mounting evidence of how organisational culture and the workplace environment influence the quality of our work and working lives.

Facilities Management is changing and the traditional view that focused largely on the delivery of services into buildings or taking 10% out of the cost of a cleaning service or providing the right level of lighting or ambient temperature no longer rings true. We have gone from Investors in People (which was the “in thing” back in the 1990’s to Corporate Social Responsibility and now the term “Social Value” seems to be everywhere, much of this leads back to well-being. So, with this in mind here are 6 tips we believe will help FM leaders react to this change in the industry:

1. Ensure your business plans for Facilities Management (FM) actively consider the well-being of all building users as a key element for the provision and delivery of your services. Wellness is particularly close to the hearts of the “millennials” who have a strong focus on health and well-being.

2. Work collaboratively with your peer group across IT Corporate Real Estate, Procurement, FM and HR on well-being issues to deliver these programmes. There is growing pressure on FM professionals to provide wellness programmes that boost productivity, ensure the right talent is attracted and retained and that sickness and absenteeism levels are minimised.

3. Create buildings with adequate provision for social and interaction space – break out areas, amenity space, sports facilities etc. Whilst this can be difficult to plan for and to do, increasingly it is acknowledged through research that such space has a direct positive impact on productivity and the bottom line.

4. Have programmes in place to ensure you embrace the needs of all ages, abilities, genders & generations working in your buildings. The workforce now spans five generations and inclusivity in a diverse workforce is key. Skills shortages, people living longer and retiring later all influence the procurement and delivery of FM.

5. Ensure your current service specifications and supplier management process take account of well-being to ensure that the core services at the heart of FM support your overall plans for wellness.

6. Assess the well-being programmes of your potential suppliers during your FM services tendering processes. Much has been said about Corporate Social Responsibility in the supply chain but the next area to consider without a doubt will be the well-being and Social Value of the people within your supply chain. If this is improved it will lead to lower turnover of support staff, greater consistency of service delivery, greater scope for innovation and a more cost-effective service.

FM leaders can’t afford to ignore this shift in the industry. Badly designed workplaces, poor quality of FM services and unsympathetic workplace cultures will almost inevitably have a negative impact on physical and mental health, which in turn is likely to have a damaging impact on productivity, however we define it.

Marcus Hill is Head of Facilities Management Consulting at Retearn. He is a seasoned Insourcing and Outsourcing Facilities Management expert and Fellow of the Chartered Institute of Building and a member of the Institute of Workplace and Facilities Management (formally known as BIFM).

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

Marcus Hill

Head of Facilities Management Consulting

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

ConsiderDesired 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

ConsiderDesired 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

ConsiderDesired 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

ConsiderDesired 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

ConsiderDesired 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

ConsiderDesired 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

ConsiderDesired 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

ConsiderDesired 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

ConsiderDesired 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

ConsiderDesired 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

ConsiderDesired 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?YesNo
Do you need to streamline, document or automate processes?YesNo
Do you have statutory reasons to manage your supply base efficiently?YesNo
Do you need to set up a procurement function and achieve immediate in year results?YesNo
Do you need a catalyst to transform your existing procurement team?YesNo
Would you benefit from installing a procurement culture throughout your organisation?YesNo
Do you wish to introduce latest/innovative thinking or technology to better analyse spend data and manage your supply chain?YesNo
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?YesNo
Does your corporate culture lend itself to an outsourcing environment?YesNo
Would strategic activities or projects benefit from additional expert resource and focus?YesNo

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