All the more surprising, then, that Damian Reece hasn't understood it, writing that:
Francis Maude, who commissioned the report, must act and appoint a commercial director to each government department to impose the best commercial terms on suppliers.No. The report's message is that purchasing has to be centralised and controlled. Did you get that, Damian? Centralised.
So what you don't do is to create or increase purchasing empires in each government department (think subsidiary companies in a business).
You need a central procurement function. Well, apparently Gordon Brown set one up, so that's gone well, hasn't it.
The last thing each department needs is a commercial director, each keen to demonstrate their worth.
The departments need hatchet men. Central procurement needs to start with the big items. Take fixed phone lines. The job of the departmental hatchet men is to list all their department's contracts and make sure none of them are renewed. Then it's up to the central purchasing function to make use of the combined database.
Similarly (for instance) with paper. Basic paper requirements can be easily standardised. So do it.
One of the shortcomings with the NHS centralised purchasing is that it covers too many individual items (sometimes by the way poorly specified, with end users having little chance to influence it).
Start big and simple. Hit the big items which can be easily standardised. Then each department needs to grip these purchasing cards. What are they being used for? Why? Again, this is not a job for a commercial director, but a task for an implacable hatchet man with a lust for detail. Note, we are not talking auditors here, but doers.
If you try to do everything at once, nothing will get done. Sir Humphrey would probably have approved.
Start with the big wins.
2 comments:
Getting the balance right between central control and local initiative is difficult in any organisation. Visiting commercial customers over thirty years, I saw some firms which really got it right, others paralysed by centralism and some where branches got out of control and even conducted vendettas against each other. Then I saw firms which did have it right crippled by incoming jobsworths and, occasionally, by corruption.
I expect all these things happen in the public sector too - but without the ever present pressure of customers who are able to take their business elsewhere.
I could never discern a common system among the firms which did get it right. It depended more on ethos and personalities than on system.
There was a civil service ethos which was pretty decent, if occasionally bone headed, blinkered, petty and within a system which compelled departments to spend up or lose a slice from their budget next year.. Now, I suspect over-funding, repeated waves of complex management structures, consultant snake oil salesmen and a confetti of "Mission statements" has destroyed it without putting anything better in its place.
"No. The report's message is that purchasing has to be centralised and controlled. Did you get that, Damian? Centralised."
John did you see the channel 4 program on defence spending?
It showed that the SAS (who can buy their own equipment) often buy cheaper and better than the MOD does centrally.
I am not sure that central purchasing will help.
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