Posted in education, procurement, school business management, school leadership

7 deadly sins of procurement

This week, we are pleased to welcome Minerva Procurement Consultancy Services on board as a new contributor to TheSchoolBus. Minerva PCS was set up in response to feedback from the bursar and school business manager community in independent schools and academies. Today, they have great advice on procurement in your school. Read on..

Sloth – not having a contracts register/database meaning renewal dates are missed.

This results in missed opportunities to renegotiate contract terms and influence renewal pricing. This is especially prevalent in the area of utilities but also impacts photocopiers, maintenance contracts and franking machines. In many cases you need to be giving notice on contracts 1, 3 or even 6 months in advance.

How to avoid this:

  • Keep a contracts register with all relevant dates.
  • Make sure you include those categories where others are in charge of renewal too as if the individuals move on, or happen to be off sick when a renewal is due it could very easily fall down the cracks and get missed. It also enables you to engage with colleagues throughout the renewal process to ensure they’re getting ‘best value’ on the school’s behalf.

Pride – thinking that loyalty means something.

Sadly, the opposite often applies with complacency setting in with suppliers where contracts have been in place for many years. If your contract with your supplier is really delivering good value, then they won’t have any concerns about you ‘testing the market’ as this will surely prove it. Benchmarking longstanding contracts is a ‘no lose’ strategy for schools as it will either prove value, result in your supplier ‘sharpening their pencil’ or enable you to change to a supplier that is offering better value.

How to avoid this:

  • Make it standard practice to regularly benchmark all of your suppliers, even those who you are happy with. It ensures that your suppliers are always ‘on their toes’ with respect to your pricing and service as they know that at any time you are likely to test the market.

Wrath – not reading the small print.

In defence of the School Business Manager/Bursar this is most likely due to the enormous time constraints placed on them. However, that matters not if something goes wrong costing the school money. The Panorama programme ‘Read, Write, Rip-Offs’ shows just what an expensive mistake it can be not reading the small print. Many schools have been left with debts of hundreds of thousands of pounds for what they had believed to be ‘free’ laptops, printers and copiers.

How to avoid this: Never, ever, sign a contract without reading the small print. Ever. (Have we made the point)?! It really is that simple. If you’re not sure about some of the clauses, ask the supplier for a full explanation and keep asking until you are 100% comfortable you understand what you are signing. If you’re still not happy, engage a third party expert to review documentation for you. A small fee here might prevent bigger costs, and time consuming problems, later on down the line.

Greed – confusing low cost with value for money.

Stationery companies are particularly notorious for this. They’ll happily show you what savings you will make on a select basket of goods but forget to mention the massive mark up on all the other items you’re purchasing. Another area to be wary of is maintenance contracts. The headline cost of an annual maintenance contract may look very attractive but delve in to the details of labour and parts costs and you may discover that the low price will work out as anything but. Likewise, we all know that poor service often negates the benefit of low cost. Think too about items such as desk top printers. The printer itself may look like good value for money but what about the ink cartridges? These days you might be better off looking at a MFD (Multi- Functional Device) with toner included as a more cost effective option.

How to avoid this:

  • Look into the details of ALL of the potential costs of a contract including those aspects that might initially be a little ‘hidden’.
  • Ensure when benchmarking goods you don’t just use a select basket, do the whole lot. With regard to the service element, always take references on potential suppliers to check they’ll be able to deliver. There is nothing worse than choosing a new supplier based on a good price only to discover you have to waste hours of your valuable time because their service is not up-to-scratch.

Lust – not having a brief of what you want before engaging with potential suppliers.

Trust us when we say that if you don’t know what you want before approaching suppliers you’ll be faced with a number of problems in the procurement process. Firstly, the suppliers themselves have the ability to add in additional features, functionality, upgrades etc. Not only will this then confuse as to the best options but you will end up with an inability to compare like-with-like (see Gluttony below). It’s actually unhelpful for the suppliers too as an inadequate brief makes it hard for them to understand your true requirements.

How to avoid this:

  • Before you start any negotiations for a product or service ensure you have a detailed brief of what you are looking for. This helps both you and the potential suppliers. If it’s a cleaning tender, have a floor plan and specification document. If it’s a requirement for photocopiers, have details of the functionality you require, how you wish to finance it, what additional features you require. From your own perspective you can note which requirements are the ‘need to haves’ and which are the ‘nice to haves’. The brief is just that and it can be changed once you have chosen your preferred supplier.

Gluttony – comparing apples with oranges.

This is probably the single most difficult aspect of procurement. To make a decision about offers on the table it is imperative you are comparing like with like. This ‘sin’ encompasses a number of the others i.e. not reading the small print, not having a detailed brief and confusing low cost with value for money. All of this will lead to you making an ill-informed decision.

How to avoid this:

  • If your current supplier is providing a service which you feel may need to be changed, ensure that prospective suppliers provide two quotes – one like-for-like and one based on an enhanced specification.
  • Draw up a robust RFP (Request for Proposal) document asking for all sections to be completed as detailed but then having an additional section for the supplier’s own suggestions about how to improve the current offering.
  • It’s also helpful to add a weighting to the responses in a RFP i.e. 10% of the marks for product specification, 10% for financial strength, 20% for customer service and so on. This ensures every supplier is benchmarked in the same way.

Envy – inadequate implementation processes.

Unfortunately, this is a very common sin and means that all the hard work up to this point can be wasted. Once a new or renewal contract has been signed our usual mantra here at Minerva is “now the hard work begins”. It’s imperative that you implement the new processes/systems/logistics as quickly as possible in order not to lose momentum from the negotiation phase. Many’s the time where we see schools not realising the potential benefits from a deal because they get side-tracked during the implementation phase and things aren’t set up properly. Photocopiers that never have their full functionality used or MI used to assess who’s doing what, stationery being ordered from the old suppliers because staff haven’t been consulted or trained on the new system for the new supplier. The list goes on.

How to avoid this:

  • Have a proper implementation plan in place.
  • Ensure that during the entire procurement process those involved in the area being reviewed are included. Invite them to comment on, or even assist in the development of, the Request for Proposal.
  • Ensure they are consulted on the choice of supplier.
  • Most definitely get them introduced to the new supplier as early as possible once a decision to change has been made. The more they feel a part of the process and decisions made the more likely they are to embrace it and implement it in full. This ensures the school gains maximum benefit from the savings identified in the procurement process.

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