Ian Holliday is Head of commercial development at Pelican Procurement
Q. What exactly constitutes effective procurement? Is it simply about getting the best price-to-quality ratio in each sector of university life or is there much more to it?
Effective procurement is when the client finds a solution that fully meets their specific needs.
This is not just about getting best value for all the products they buy, without reducing quality or service levels; it also includes ongoing supply chain management, control and visibility over purchasing across all the sites, compliance with legislation, streamlining day-to-day operational tasks, sustainability and so on.
Q. How much does effective procurement vary depending on the department and/or type of resource involved?
The procurement strategy and the level of resources will differ based on the product or service category. For example, food procurement is a highly volatile commodity market.
There are several reasons why food prices rise and fall, including economic (international exchange rates), legal (new legislation), the cost of raw materials (fuel, packaging), increased global demand for certain products (meat, dairy), weather conditions – just to name a few.
Furthermore, buying products outside of an agreed list and being charged the wrong price creates additional problems that will impact on universities’ budgets. Few universities have the dedicated resources, time and specialist food market knowledge to manage supplier price negotiations, check invoice prices line by line, and monitor contract compliance.
Q. Open, restricted, negotiated, competitive – tell us about the different procurement routes and which are most suitable for which university department.
When it comes to high-volume, low-value products (such as stationery, cleaning and catering items) framework agreements work well for smaller organisations. However, universities are big business for suppliers, so their procurement departments are able to attract very competitive rates and generate significant savings through their own bespoke tender – as their contract will reflect 100% of what is being purchased by the university.
Q. How much of the procurement process can be carried out in-house, and how much benefits from specialist external oversight?
Budget reductions, limited in-house specialist knowledge, and the time constraints of hiring and training in-house staff are all factors that lead to a rising number of universities choosing to work with an outsourcing specialist as their preferred route.
It makes sense to outsource the services that you can’t provide as well as another provider. This will not only generate money and time savings, and ensure compliance, it will also help to drive improvements.
However, as with any business, universities need to protect their reputation. So, there needs to be substantial vetting and background checks to select a new partner that is reputable and will meet all their needs, both short- and long-term.
Q. Should universities be looking to source goods and services with small and medium-sized enterprises (SMEs) wherever feasible?
We recognise that there is a need to support local suppliers, so that local communities can flourish. However, our approach to local suppliers is no different to regional or national suppliers.
As part of their procurement practices, universities need to demonstrate that they are treating suppliers professionally with respect to:
● equal treatment – the procurement process must give equal opportunity to every supplier
● transparency – the procurement process must be
open to scrutiny
● proportionality – smaller suppliers must not be
disadvantaged by lengthy procedures
● mutual recognition – every supplier has the
right to bid for business.
So, our recommendation to all clients is to follow the principles laid down in EU procurement law and the Public Contracts Regulations of 2015, both of which are underpinned by non-discrimination, equal treatment, transparency, proportionality, mutual recognition: the key procurement principles, all safeguarded by UK law.
Q. With all these variables and factors to weigh up, it’s clear that universities need a competent, well-trained procurement team. Do you think the expertise is there, in most UK HEIs?
Many universities have their own in-house procurement team, but not all of them will have the specialist knowledge for each product category. For example, food is a very complex commodity to manage. There are hundreds of thousands of food items in the marketplace, while food prices fluctuate often, for a number of reasons. To get a true impartial view of what is actually happening in the marketplace is not easy and it requires detailed in-depth knowledge of the food supply chain.
You really need that specialist inside knowledge of the food distribution industry, along with a clear understanding of the ‘tricks of the trade’ that are common practice, in order to achieve prices higher than the market should bear. With 30 years of expertise in the foodservice procurement and pricing database, the Pelican team has this knowledge and uses it to unwrap the hidden costs, driving efficiencies and savings for our clients.
To find out more about Pelican Procurement, visit: https://www.pelicanprocurement.co.uk/