Wax News Archive
Public Sector Purchasing Leaders Eager to Fight Deficit
Durham University sponsored research shows that purchasing teams keen to lead the charge against government waste and spending excesses may be dangerously ill-equipped.
Public sector procurement leaders recognise the scale of their UK deficit reduction challenge but are undaunted and eager to play their part, new research sponsored by Durham University and Wax Digital has revealed. Bureaucracy, poor spend-management and lack of automation however, could stand in their way.
Conducted immediately after the General Election, the research, Doing Battle with the Deficit, found that despite forecasting increased cuts, procurement heads and their teams are surprisingly positive about the election result, 75% expecting deficit improvement by 2015. The war against excess and government waste is inevitable but 64% were keen to climb the spending mountain and to urge the government to “find efficiencies in public sector spending”.
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 public sector procurement teams want to invoke change in how purchasing is done in the sector and achieve greater savings Wax Digital
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They are not expecting an easy ride however, with 78% anticipating cuts exceeding 5% this year and 22% looking at ‘significant’ or ‘extensive’ cuts exceeding 15%. Expected cuts cited by the majority equate to between £30bn and £90bn across the public sector this year¹.
Public sector procurement staff may be ambitious about saving money with 82% saying spending efficiency was where they expected most savings would be made, but the research also questioned how able or equipped they currently are to do so.
Bureaucratic controls, lack of spend management processes and limited automation reduces their chances of success. Whilst 98% of respondent organisations have engaged in collaborative purchasing, 56% of those in full consortia led approaches, 71% saw only ‘moderate’ success at best from such activities.
The deputy director of procurement, Durham University, said: “Public sector organisations and their suppliers face challenging times. As this research shows, purchasing professionals are ready to lead the fight and drive increased value from the purchasing of resources required to run their organisations effectively. Maintaining front line services at a premium despite back office spending cuts requires creative thinking and new approaches. Procurement has changed massively in the last decade but it needs to continue the fight and go further.”
Only 6% thought their spend management processes were ‘highly efficient’. For 68% they were only moderately efficient or inefficient. Drilling deeper, just 21% of respondents felt they had been able to reduce levels of maverick spend to ten percent of total spend or less. 25% couldn’t quantify the reductions their flagship cost saving initiative achieved and savings in excess of 20% were only enjoyed by a minority.
New IT systems have proved productive for procurement teams, coming second in top cost saving initiatives. At present however, automation of manual processes is still restricted in many areas which will hold procurement teams back in their development of strategic spend management initiatives. With these new IT systems contract management has been a key area of success and ease of use and integration with ERP and accounting systems were top priorities.
Many ideas tabled as central government initiatives to most effectively address the deficit focused on greater powers for procurement over departmental spending, improved procurement capability and skills and bringing auditing and compliance in line with needs for rapid action on spending control. Keenness to follow dynamic commercial market procurement models with intensive category management was also apparent.
Daniel Ball, director, Wax Digital said, “This research shows that public sector procurement teams want to invoke change in how purchasing is done in the sector and achieve greater savings through smarter means and more strategic buying. Purchasing efficiency alone can’t solve the deficit crisis but it is critical in minimising front line service cuts and tax rises which would impact the UK population much more negatively, and therefore it must be addressed. Given the right tools and the freedom to use them they can lead the charge.”
For a full breakdown of the research results, download a copy of the report here.
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