Don’t kill the product

It appears some people are beginning to wake up to the fact that our authorities will really have to reduce their spending next year, but they appear to lack understanding of how to go about it. Gone are the days of setting up your spending plans, increase directors salaries by a healthy percentage, toss in a few million of central government grants and make up the difference with an above inflation council tax increase.  A complete change in thinking is needed at the endless and very costly meetings.

One brave soul ventured onto our television screens last week and he was the Mayor of one of the London boroughs – I will not mention which borough, as I would not wish to embarrass the man.

Mr Mayorman told the interviewer how much his Council was doing jointly with other boroughs to save costs. The interviewer suggested sharing legal departments, HR, Chief Executives, etc, but no……….this Council had a much better idea. This Council did its paper purchasing centrally with other Councils. Wow! Impressive!

My imagination went into overdrive. Having bid for central purchasing contracts for local authorities I can just about imagine this one and the complexities involved.

A company approaches a bunch of authorities and tells them they can save some 15% on paper supplies if they buy centrally through them. Great! The Councils are made up of responsible people seriously watching over your tax pounds –  at least that is the line they use for everything they do – so the offer cannot be resisted.

The purchasing company then writes to everyone they can possibly think of and send a 30 or so page document to be completed in black ink giving the price at which they will sell the participating authorities whatever goods are asked for – in this case paper. Payment will be 90 days after – ehhh – after some date in the future.

A memo, or these days an email, goes to all Council staff, telling them they have to buy their paper through J.B.S. Worth in the purchasing department. Please to fill in form PUR1221 (in black ink), have it approved by your manager and mail (we must have original signatures after all) a copy to J.B.S. Worth. Please allow 3 weeks for delivery.

Now let’s imagine you are the sad person who actually works for this authority and provides front line services. You find out one morning that the paper in the office is finished and nobody has ordered any. Ouch!

You have seen the email, so you get an admin officer to complete the form, get the manager to check the budget and sign it. The admin officer copies it and mails it to J.B.S. Worth.  Let us assume everything goes right at your end, which is doubtful.

The form must then be signed off by a manager in the purchasing department, who is on a health and safety or time management course, then has four days annual leave, at which point J.B.S. Worth has a few stress days, etcetera, etcetera, so the form does not get processed for 2 weeks. The much needed paper eventually arrives at your office, 5 weeks after the initial order.

The price of the paper? About what you would pay at a volume stationer in most towns in the country. The cost you do not see though is that of the whole department which now does this purchasing and the cost of the frustration and anger caused by waiting for everyday things, the wrong items being delivered, etc. In fact there is no cost savings at all – the cost is much higher than going around the corner and buying it because of the added bureaucracy.

Only the purchasing company does well out of it.

We have all heard the many other reasons for central purchasing and there are good ones. But spare me the Mayorman who thinks that because his Council buys paper centrally he is already saving the kind of money that needs to be saved.

When cutting costs, start at the top, examine the bureaucracy, go for simplicity and leave the front line services – this is your product.  Don’t kill the product – kill the costs of bringing it to market.

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