Is it possible to believe the subsequent 2009 review of the results achieved? The Operational Efficiency Programme: Final Report concluded "good progress has been made in recent years on efficiency, with government having over delivered against Sir Peter Gershon's Spending review targets by 20 percent, saving £26.5 billion."
How did it go so wrong, so quickly? Did we actually achieve the savings? Was Sir Peter's challenge too soft? Or was it, as many people suspect, we just can't count!
The recently announced cuts and the proposed actions are based largely upon the same set of issues that the Gershon Report identified, so fingers crossed the same "bean counters" are not used.
In fact, it doesn't matter how many efficiency reports are completed by ministers, leaders or quangos; when it comes to assessing the health of the operating environment and ability to achieve value for money, the UK Public Sector has been in denial - almost delusional.
The Gershon Report, for example, pointed out a very obvious technique (amongst many) to reduce costs by trading with suppliers electronically. So let's do the litmus test: how much is currently traded using electronic means? Cynics argue that many traded electronically just once in order to get a tick in the box and ensure their budgets were not affected. Is that what Gershon meant? He is still around, why not ask him?
There are practical steps that can be taken today to achieve efficiencies that are cashable and real. The focus must be on actions not publicity, on doing not talking and on taking the initiative and not worrying about the "old way" of doing things.
We are where we are, so let's just get on with it. Be pragmatic - look for opportunities to eliminate duplication and non value-add activities and automate manual processes.
Top Tips for Cost Reduction: Supplier Engagement
- Be realistic and understand your current position: Profile historic expenditure, measure it, work out whether you actually need it and examine any gains that could be exploited by doing it differently (e.g. electronic versus paper). We call this a Spend Analysis.
- Rationalise the supplier database: And if you need a mantra - More is the Enemy of Better - This alone can reduce the administrative overhead by 80 percent, by cutting a swathe through the volume of enquiries about invoice payment status.
- Push management costs out to suppliers: Let suppliers answer their own queries and update their own details. Use electronic tools for RFP (tender) publication, supplier bid submission, buyer bid evaluation and supplier management processes. How can you possibly manage thousands of suppliers effectively otherwise?
- Remember one-size doesn't fit all: Adopt electronic ordering/invoicing strategies to suit a varied supply base and transition them to electronic trading: Supplier Punch-Out, Purchase Order Flip, PCards, eInvoicing, etc.
- Eliminate error: Use an automated system to categorise suppliers, goods and services so that everyone can find what they need, based on the best prices, lowest risk and right engagements. Connect users to pre-negotiated contracts and ensure compliance.
The staff working in Public Sector Procurement know what to do, give them the support they need and allow them to work smarter. Having the right systems and processes in place will reduce cost, improve control and increase visibility of spend. Settle for simple quick wins to make your people more efficient and take the gain.
Was Sir Peter Gershon right? We think so. Let's hope the new efficiency recommendations do not fall on industry deaf ears.