How to procure effectively to achieve economies of scale

Arbor - 19 April, 2018

Category : Blog

How to procure effectively to achieve economies of scale

In April 2018, our conference on ‘Scaling Sustainably: Centralisation vs. School Autonomy’ in London bought together CEOs and Senior Leaders from over 70 MATs, as well as eight speakers with a mix of business and education backgrounds. John Leonard, independent consultant and tender expert spoke about the key things MATs should consider in order to

In April 2018, our conference on ‘Scaling Sustainably: Centralisation vs. School Autonomy’ in London bought together CEOs and Senior Leaders from over 70 MATs, as well as eight speakers with a mix of business and education backgrounds. John Leonard, independent consultant and tender expert spoke about the key things MATs should consider in order to get the most out of the procurement process, including knowing exactly what it is that you want to get from your new system before you set out to procure. Below we’ve transcribed the first part of John’s presentation!

In this blog, I’m going to show you why you should be streamlining your procurement to benefit from the massive economies of scale it can bring. A common theme in education is the 5 ’W’s (Who, What, When, Where, and Why) – and in procurement this is no different – but with one addition – how

Consider the following questions as a “toolkit” for gathering all the information you need to run an effective procurement exercise. If you spend the time understanding your requirements and what your expected outcomes are, procurement is substantially easier.

Procurement can be complex, but working through the questions and suggestions made here will help you be the best prepared you can be for effective procurement that gets you what you want, at a price you’re happy with, from a supplier who will work with you and understands you.

Let’s get started.

1. Why procure?

There are countless reasons why, but the most pressing one is to achieve economies of scale, while still getting the technology or platform that you want. By the way, your wants are defined as an objective exercise which we’ll cover in a moment.

Let’s start with an example. Assume you have 15 academies in your trust, and across these academies you have three groups of five – with each group using a different system or technology platform.

Each group has its own costs:

  • Implementation
  • Support
  • Training
  • Maintenance

And also consider the cost to you as a Trust to get consistent data from three platforms – whether that is specific reporting information, or simply an assessment of its effectiveness.

Staff moving between academies have to know more than one system, integration between systems either doesn’t work at all or requires another overhead – it can be very very expensive to manage this.

That’s not to say that you have to force each academy to accept a standard, cookie cutter system. You can achieve a balance between low cost/standard systems and high cost/customized systems – and that is achieved through effective engagement with your staff and potential suppliers (see ’Who’ for more detail on that).

Another “why” is the simple legalities of purchasing – in order to demonstrate fairness, every purchase that’s greater than £181,302 ex VAT (click here for the current threshold) over the lifetime of the product HAS to follow procurement guidelines as set out in the Public Contracts Regulations 2015. You may have your own procurement guidelines for procurements below that threshold – and will certainly be bound by the requirements for three quotes as a minimum – but above the threshold, EU procurement legislation as embodied in the Public Contracts Regulations takes effect.

2. What (do I want to procure)?

The exercise you will conduct in engaging your academies goes a long way to defining what it is that you want, and allowing you to get a clear picture of your expectations.

You’ll make the process even easier by defining your requirement in terms of outcomes:

  • What is it that you are wanting to get from the system?
  • What would you define as a success?

This is where it’s also important to consider the balance between simple/cheap and complex/expensive – neither extreme is advisable, but the right balance depends on the system you’re purchasing and the requirements you set as a Trust. Outcomes-based criteria ensure that you capture requirements from a more holistic perspective – and also ensures that you don’t get caught out later with a system that’s not fit for purpose.

While you can refine a specification to get the closest match to your requirements, if it doesn’t perform the way you want it to, then you’re in trouble. If you define the specification in terms of your outcomes, it makes subsequent management of the platform (and your suppliers) far easier.

Consider the following as a sample:

  • What common tasks do you want to perform?
  • How long should these take to run, given a suitably trained operator?
  • How long does training take?
  • What level of training do you expect to get?
  • How often is the system refreshed or updated?
  • What effort is required from you to keep the system functioning day to day?
  • How fast does support respond to questions?
  • Do you have a knowledge base of common problems you can solve yourself?
  • What’s the cost per student over a 1/3/5 year period?
  • Can you add/remove users easily?
  • Can you gradually move to a self support model if you need to?

Knowing what your expectations are here will enable you to build them into a the scoring criteria for the tender itself as a wholly objective series of scores – the Service Level Agreement (SLA) or Key Performance Indicators (KPIs) that allow you to measure the performance of your system and the supplier you’ve engaged.

Procuring a platform on this basis that subsequently doesn’t perform also gives you far better methods of redress later on.

3. Who needs to be involved in the procurement process?

Well, first consider who can benefit from the system you’re planning to procure. If it’s going to have a wide impact on a large number of stakeholders, then centralising the procurement exercise and making it applicable to all your academies can lower the overall cost, greatly simplify the process, make contract management easier, and get you far better contractual terms. Suppliers will obviously be more attracted to larger procurement exercises too!

You also need to consider who can participate in helping you define your specification. Careful engagement across your academies will make life a lot easier – as the definition of your specification and requirements needs input from your vocal champions – the ones who point out the good and the bad – and your quiet champions too – the ones who just get on and use the system. Being clear about what works for you at present and equally, what doesn’t, helps you get the most out of a procurement exercise – the clearer you can be about your requirements, the better off you’ll be.

If you’re not sure what you need, or need opinion from potential suppliers, this is the time to invite them in for market engagement. You’re perfectly entitled to invite a range of suppliers in to discuss your requirements; good suppliers will also know their market well enough that they will come up with suggestions you may not have thought of.

Once you’ve met a fair representation of suppliers, then it’s time to go back to your internal team, and refine the specification again, so you all agree on what is needed. (N.B. Aa fair number of suppliers is a representative sample of providers for the type of solution providers you’re looking for – one is not a fair number! I’d recommend you see at least three, and more if you can).

I can’t say this enough times – the more collaboration you engage in, the clearer your expectations will be, the specification will be easily understood by potential suppliers, and the procurement exercise will get you the system you want at a price you want to pay.

You can read the second part of John’s presentation here