344,000 people in Wales work in the public sector, according to official statistics. This amounts to 27.5% of all Welsh employees – a proportion higher than the rest of the UK – that makes Wales far more vulnerable to public spending cut.

With the BBC reporting yesterday that dramatic costs to Welsh public sector spending are in the offing – with councils alone cutting their budgets by over £146m, this sensitivity is of particular concern.

Sir Bob Kerslake (recently retired head of the civil service) said that the “cuts would carry on regardless of which party held power after next May’s General Election”, and Steve Thomas from the Welsh Local Government Association believes that “parts of Wales could be decimated by the cuts”.

More worryingly though, another spokesman for the Welsh Local Government Association said that “Welsh councils will need to make savings of up to £900m just to balance the books in 2018”.

The harsh reality for procurement

This paints a pretty bleak picture for Wales, and the harsh reality is that austerity is not going away anytime soon. The options from a procurement perspective therefore are simple: either accept the cuts in public sector spending, or take on the challenge head on and look at innovative ways of buying more for less.

Granted there will always be a time and a place for a direct approach from procurement, bashing the supplier and reducing the “ticket” price is a trusted and well used tactical approach that has worked successfully in the past. However it cannot and will not deliver sustainable cost reductions. The procurement practices used by the likes of Tesco that have been vilified on the news and via social media recently suggests that strong-arming is not effective anymore. The supply chain is rebelling and, in times like these, building positive relationships with suppliers will be more effective than a tougher approach.

At the recent Innovative Procurement in Wales seminar held at the beautiful Senedd building for the National Assembly for Wales, the key note speech was given by Finance Minister Jane Hutt who talked about the need to:

• Deliver community benefits
• Engage with and award contract to Welsh SME’s
• Remain ethical
• Maximise e-procurement opportunities
• Maximise and share supply chain benefits
• Adopt, share and embrace best practice and continuous improvements
• Develop and upskill procurement people
• Maximise the benefits for Wales

She also suggested that there are some 4,000 new public sector projects either underway or in the pipeline under the sell-to-Wales scheme. This news gives procurement professionals ample opportunity for to roll up their sleeves and respond to these challenges. By becoming more involved and more innovative, there is a real chance to make a positive impact on the Austerity Challenges being faced by the Welsh Public Sector.

Procurement can and will help deliver more for less.

The moral of the story…

In times of Austerity, and beyond (a bit Buzz Lightyear but…)

• Endeavour to take a strategic approach with the supply chain, share your vision and build trust and understanding between parties.
• Encourage the supply chain to be innovative, share best practices and ensure there are mutual benefits to be had. These are all essential elements in developing long-term sustainable relationships.
• Avoid the size 10 treatment or the tactical approach: Giving suppliers a “good kicking” will only have a short term effect, as it will simply switch suppliers off and have them looking elsewhere for business. This ultimately makes the task of delivering sustainable cost savings even harder.

To find out how good procurement practices can deliver you competitive advantage, call us on 01543 466 835 or email [email protected]

We’d love to know what you think. Can the public sector do more to spend more effectively? Let us know in the comments below…