Public Procurement

Demanding More of Suppliers
The charity Jewish Care is the largest provider of health and social care services for the Jewish community in the UK. It has 2000 staff, 2,500 volunteers, a budget of £43 million, and it needs to raise over £14 million a year to continue providing services to the 7000 or more people (ranging in age from three to 103) who use its facilities throughout London and the south-east.

Jewish Care runs 13 residential and nursing homes, six community centres, and seven sheltered housing schemes, and offers a range of services including home care, social care, counselling, befriending schemes, carers' services and respite care. In addition to older people, it caters for those suffering from disability or mental health problems and the unemployed, among others.

In common with other charities, which operate in an increasingly competitive environment, Jewish Care has become more commercially minded over recent years and works hard to get the best value from its limited resources. Anthony Draper, himself an interim executive, joined Jewish Care in January 2002 as Director of Operations. His brief was to review the charity's structure and processes to see if there was scope to deliver its service more effectively and efficiently. One of the first things he identified was that it was paying a round 1000 suppliers £18 million per annum for the goods and services they supplied - not much less than its salary bill of £26 million. Draper wanted to introduce an electronic purchasing catalogue to Jewish Care in order to streamline the purchasing process and allow staff to focus on what they do best - caring. In the past they had had to negotiate a cumbersome paper-based system which involved working through the central purchasing department whenever they wanted to buy goods or services. But to create an effective electronic catalogue meant significantly rationalising the supplier base. Draper approached Impact Executives, who drafted in Colin Masters, a 46-year-old purchasing and supply chain management specialist, to handle the ten-month project, which ended in December 2002.

Masters' brief was to reduce the number of suppliers down to a core of preferred suppliers who would feature in the electronic catalogue, without sacrificing quality to price. "This was clearly going to be a discrete and detailed project," says Draper. "We needed to analyse our spending patterns very quickly and that required someone's full-time attention for several months. But we didn't have the resources in-house to do it."

Draper briefed Masters to work on an expenditure area totalling £6 million per annum. He began by breaking down the suppliers into categories - from textiles and medical supplies, through agency staff and maintenance, to stationery and document processing, for example. He then had to determine the best suppliers in each of those categories, negotiate new contracts with them (including significantly improved service levels and lower prices) and carefully let the rest know that they had not been selected as preferred suppliers. At the end of the exercise the number of suppliers had been reduced to 300 and Masters had cut £500,000 from annual costs, which as Draper points out, is "not an insignificant saving for a charity". Masters brought the benefit of "absolute focus", says Draper, but his input went far beyond that. "Colin was diligent, reliable, thorough and tenacious," says Draper.

But critically, he handled the inherent sensitivities surrounding the project very carefully and was "an excellent communicator". "He was very good at keeping all our stakeholders - from our senior managers through to staff in the homes - involved and informed about what was happening," says Draper. "He also ensured that there was continuity of supply throughout the changes."

Masters says: "As an interim you can isolate yourself from the politics, but you have to be very sensitive to agendas and how to pull levers and get things done." He involved some of the key Jewish Care staff in the decisions on suppliers, which both helped to ensure the decisions were appropriate and secured valuable buy-in' that made it easier to 'sell' the changes to others in the organisation. So, for example, in the area of agency labour he worked closely with the charity's HR people, the nursing services manager and key care staff in the homes to identify critical criteria. They cut the number of suppliers from 12 to one, stipulating that the preferred supplier would provide them with a minimum 97 per cent fill rate for their shift requirements with clearly stated response times. Failure to achieve this would incur financial penalties. Not only did this secure quality and consistency of service, it saved 12 per cent of the budget. Draper replaced the charity's six-strong buying department with a three-person team. Now that field staff can order directly through the electronic catalogue, the purchasing department concentrates on negotiating deals with suppliers and keeping the catalogue up to date. They also hold regular quarterly performance reviews with suppliers. "We are confident that we can gain more savings and efficiencies over time for Jewish Care," says Draper. "Colin's work kick- started the process."

More about the interim manager
46-year old Colin Masters has 25 years' experience of purchasing and supply chain management in a variety of companies and industries. He has worked for Ford, Sainsbury, Tesco (where he was trading manager for citrus tropical fruits), Compass Group (where he was purchasing director), Whitbread (where he was food procurement director) and the Rank Organisation. Since becoming an interim manager three years ago he has worked on assignments with PricewaterhouseCoopers, a major pharmaceutical company and Jewish Care, and he is currently at Le Meridien hotel group.

Previously published on the Impact Executives website – read the original public procurement article.