Why Sir Philip should shop locally for the big answers …

I read about Sir Philip Green’s Efficiency Review with great interest – although the wasteful procurement practices in Central Government made for grim reading.

Sir Philip’s key findings included:
• Identical goods being purchased from the same supplier – but at different prices
• A lack of control and accountability over large budgets

I support the findings. But I would, however, make two points that I feel are important if the report is to have a tangible impact.

Firstly, the Government must move quickly to set out the next steps: highlighting inefficiency is one thing, doing something about it is another. The report has given the issue momentum and there is now a once-in-a-generation opportunity to make a real change to the way that Central Government procurement is conducted.

The second is that giving Central Government the tools to self-heal is not enough – there must be a change in culture before anything else can happen. Sir Philip highlights a culture of “no motivation to save money or to treat money as your own”. This can be overcome to some extent by using the right tools, but the mindset must change as well.

My experience of working with Local Government is that changing culturally deep-rooted processes and introducing tight control through the deployment of technology is the way forward.

Only then can organisations centralise procurement for commodity goods, enforce the necessary controls to ensure compliance and achieve huge financial savings.

Collaboration can play an important role too. Organisations – such as councils – that share services can achieve economies of scale and buying power that are normally only available to much larger enterprises. And this has happened across regions of the UK for EGS’s customers.

If Sir Philip’s report describes the ‘before’ state of affairs for Central Government, I would offer some of England’s County Councils as what the ‘after’ picture may look like.

Sir Philip states that: “the prize for the tax-payer is too huge not to chase”. I welcome this message and encourage the Government to look no further than Local Government to see a clear example of what can be achieved by embracing a centralised approach and procurement technology to introduce efficiency and control.

E-Procurement Guru joins BBC debate

What do Sir Philip Green, efficiency, pension schemes and the meanings of company names have in common?

Answer: They were all topics discussed during the pilot episode of the new BBC series Show me the Money.

One of our E-Procurement Gurus, Peter Whent (pictured above left) joined host Declan Curry and other guests at the studio this month for lively analysis of big business stories making the headlines.

The debate centred on

• How EGS is making local government more efficient
• Sir Philip Green's report on savings
• The new National Employee Savings Trust pension scheme
• The significance of the name of a company

In due course, we’ll announce when this episode will be broadcast and provide a link to the BBC iPlayer. The series begins on Sunday evening.

"Show me the Money" will go hand in hand with the BBC 5 Live series "On the Money".

Expertise is worth its salt and pepper

At the weekend, I visited an old pal from my football-playing days. He’d moved to a new house and was keen to show me around.

But it wasn’t the spacious hallway, plush carpets and five bathrooms that impressed me most. It was the contents of his fridge.

“Take a look at this,” he said, as the door of his giant American-style cool cabinet opened to a reveal a shelf packed with assorted, wild fungi. It’s mushroom season in the UK.

Now, I know what you may be thinking. Exotic mushrooms = magic mushrooms = hallucinates. Right?

Well, no. These were forest fruits of the culinary kind. And he had the recipes books as an alibi.

Back to the fridge …

I don’t know the Latin names. But we’re talking about a rack of chunky mushrooms the size of cricket balls. “Press in your finger and the flesh on these ones turns blue,” he invited.

Then there was a tray of what looked like mini, bright yellow cabbages. In between them were a smattering of toadstool-lookalikes with a fantasy quality. My mind wandered to those Yes album covers of the 1970s by Roger Dean.

“Aren’t you taking a risk?” I said, safe in the knowledge that we weren’t stopping for dinner. “Ah, you’re thinking of those people who died after mistaking these … for these …” he explained. He then led me on a detailed, David Bellamy-style forage through fields, forests and woods via a stack of expert handbooks, peppered with his own tales.

I made a very weak and predictable joke: “You’re a fun guy”.

“No, the correct term is mycologist”, he replied. And then the penny dropped.

Over many years, my friend had become a proven expert in something very specialist, where the risks were great, but the rewards were high.

The right restaurants would pay handsomely for his forest fare. I could visualise the ‘specials board’. But getting it wrong would effectively turn him into a mass killer – and destroy their business. It was his expertise that made the difference.

I could see an immediate parallel. Procurement solutions and electronic invoicing are too important to take a chance on a partner that lacks experience. The margin for error is tiny, perhaps non-existent.

If your organisation is making 100,000 online transactions per year and receiving a similar number of electronic invoices from a few thousands suppliers, then it has to go right … every time. And that’s where proven solutions, best-practice processes and leading expertise are well worth their salt.

Disclaimer: This article may inspire people to go mushroom-hunting – but it should not be taken as advice of any sort. Be aware that some fungi can KILL. The E-procurement Guru takes no responsibility in this matter. Always consult an expert before picking and eating what you find!

Close encounters of the procurement kind

A new report in The Daily Telegraph says that Government procurement processes are 'alien' to some small businesses.

Apparently, an employers’ group claims that small creative firms are struggling to win design business, including contracts associated with the Olympics, because of the complex and lengthy procurement procedures.

Of course, design companies are a specialist breed. You cannot catalogue what they offer in quite the same way as Wellington boots or minibuses.

But the story highlights a problem that can be faced by all small companies attempting to sell goods and services to larger organisations.

They often speak different languages and share different business cultures. And, in particular, their processes and IT systems can be vastly different species. Worlds apart.

So, what can be done to make ‘first contact’?

The best purchase-to-pay (P2P) systems provide flexibility that suits everyone. Put simply, if large organisations take a few small steps … this can represent a giant leap for their suppliers.

• Firstly, organisations can commit to creating a level playing field, fair to everyone. So, it doesn’t matter if your supplier is the world’s biggest furniture store, or the corner cake shop.
  
  
• You can enable tiny suppliers to trade electronically, even if they don’t have a web site or even a computer – but just a mobile phone.
  
  
• You can allow their goods and services to become visible online to your buyers – just as conveniently as those of the world’s biggest stores.
  
  
• It’s possible to enable the small suppliers to receive orders instantly and electronically – with all the purchase order information they need.

• You can make it easy for them to invoice electronically in moments – and also to check on the progress of their payments.

Put simply, they can carry on being a small business … doing what they do best and providing their specialist service, not being baffled by IT and red tape, or being squeezed out by system-savvy bigger boys.

Every team should have a Plan B

The match is finely balanced … but then you go 1-0 down. And there’s only 15 minutes left. What do you do?

As football fans will know, you need a Plan B.

When your keeper spills the ball into the net, your star player gets sent off, or there’s a siege around your goalmouth, then something needs to change. And fast.

In the past, the England team has been accused of being one-dimensional … unable to make a tactical switch during a game and turn the tide. Throwing on leggy Peter Crouch and pumping long balls into the box doesn’t always save the day.

Manager Fabio Capello has tried his best at adding more to the team. In fact, many overseas managers are renowned for their on-the-fly decisions. There’s José Mourinho (now at Real Madrid), or another former Chelsea boss, Claudio Ranieri (now at AS Roma), who was even nicknamed ‘The Tinkerman’ for his tactical tweaks.

What happens in the dug-out can change games. And the same is true for ‘managed’ procurement systems. You have to be prepared for the unpredictable.

Here are four tactical examples:

• Maximising performance: Unexpected spikes in demand must be accommodated seamlessly – to avoid system slow-downs. Good hardware boosts performance. But the best tactic is to get the database working intelligently, so it answers queries efficiently, first time around.

• Smart positioning: Storage doesn’t cost premier-league prices – but server space fills up quickly. It’s essential to think several steps ahead and make accurate predictions about your upcoming needs.

• Keeping pace with the game: Any decent procurement system will always be improving. The trick is to keep re-evaluating the functionality and finding better ways of working – while second-guessing customer requirements.

• Defensive measures: It’s vital to keep checking the system architecture to avoid weak points and maximise resilience and redundancy.

But the main thing is knowing your opponent. In this case, it’s the system itself – and the fast-changing business arena. A mixture of strategic thinking and responsive, in-house expertise is the key to success.

Procurement may lack the pizzazz of the ‘beautiful game’ – but none of the importance. There are billions of pounds at stake – with a vast crowd of purchasers and suppliers watching on. The game has started. But it never ends …

Cabinet role available for the Pcard

Here’s a quick promise from the Spend Management Guru: We’ll stop talking politics … starting with our next entry!

All the recent talk about political coalitions has got us thinking. When it comes to procurement, there are many technologies that appear to compete with each other … when they can actually work well together.

Take Pcards (payment cards) for instance. Five years ago, Pcards were seen by some as the paper-free alternative to purchase orders, offering speed and convenience.

But the arrival of Electronic invoicing (e-invoicing) has exposed some of the weaknesses of the Pcard:

• Pcards aren’t immune from ‘maverick’ spending on off-contract items
• There’s no ‘commitment’ from the spending showing up in finance systems (just later on the Pcard statement)
• Transaction charges are hidden
• Supplier information appears on card statements – not in the finance system.
• Details have to be re-keyed across to the finance system, adding an admin overhead.

In short, what’s saved on the swings is lost on the roundabouts.

But before anyone feels tempted to tear up their Pcard, along comes an alliance possibility.

When teamed with the right procurement system and e-invoicing tools, suddenly the Pcard becomes a very effective tool in specific circumstances.

For one-off items or purchases like travel tickets, it’s a winner. Purchases can be tracked and accounted for in the system. And it’s possible to set limits on where and when a Pcard is used, avoiding trigger-happy spending.

So, in our P2P Coalition comparison, Pcards don’t lead from the front, like Prime Minister or Chancellor. But they’d make a valuable contribution as Transport Secretary.

Knowing it arrived – gets the biggest vote

To some, 2010 is witnessing the first “Internet General Election”.

It’s reckoned that Facebook, Twitter, web sites, podcasts and emails are playing a major role in the campaigns of political parties.

That said, traditional channels like direct mail are still rated as highly important.

There’s something reassuring about a piece of paper, an envelope, a stamp … and knowing that it WILL arrive (even if it’s binned two seconds later).

Electronic invoicing goes further. Suppliers don’t just send invoices – and hope for the best.

With a quality e-invoicing system, they can log in, confirm the arrival of their invoice … and watch its progress through the approval process. There’s no need to check and chase.

Something similar would appeal to the politicians. Imagine if they could track your movements … from opening their flyer … all the way to casting your vote at the ballot box.

On second thoughts, what a chilling prospect!

Sealed with a loving click. Love letters & invoices scanned and emailed!

As you may have read, Finland's post office has taken a controversial decision.

It’s going to scan people’s mail – and deliver it to them by email. That’s everything from pay slips and overdue bills, to birthday cards and love letters. And it's not an April Fool's prank.

The idea has only got as far as a pilot scheme for now. That said, feathers have been ruffled and Big Brother-style concerns have been voiced. But it’s won support too.

If adopted widely … think of the poor posties that no longer have to fight their way through frozen wastes, reaching far-flung cabins. And what about all the forests they pass … the trees that no longer need turning into paper?

Clearly, the idea has merit. And it’s not a million miles away from the business of scanning paper invoices submitted by suppliers – and then receiving them electronically.

In fact, the principles are very similar for both schemes to work:

• Security: It’s got to be 100% trusted and confidential.
  
  
• Accuracy: Must be spot-on. Disastrous if a crucial date is blurred or a number mis-read.
  
  
• Speed: It must be delivered faster if anything. No good if a wedding invitation arrives too late – or a cash-strapped supplier doesn’t get paid.
  
  
• Cost: If it doesn’t save money, why bother? Automation means savings.

But there’s a big difference when it comes to how the information is read.

For tax statements and love letters, viewing the contents on screen may lose some of the hands-on impact (for better or worse). No quivering fingers tearing at the seal, or that whiff of familiar perfume. A flat jpeg image will probably suffice in most cases.

However, for scanned invoices in the UK procurement business, much smarter tools can be used.

Newer technologies such as Enhanced OCR will store an image of the invoice – and also harvest its contents automatically into a business-ready format for hands-free financial processing, saving hours of time.

While Finland’s post office may be taking a giant step forward … it’s yet to become really useful in a similar way.

Maybe one day, postal services everywhere will become truly responsive ... texting your builder to question his bill against the original quote, or activating the vacuum cleaner to spruce up the spare room when Great Aunt Maude writes to say she’s visiting?