Running costs
the need to cover your cyber policies, supplier risk management and social value initiatives - especially considering the UK government’s procurement green paper.
Case study 1 – commodity product savings There are many areas of indirect spend - general business expenses on goods or services that keep a care business operating i.e., admin, personnel, security, IT, cleaning, etc. - and these can be easily reviewed to deliver cost savings. An example of this could be stationery, a commodity item and needed daily by staff. A good case study example is a
care sector client that had previously consolidated their stationary spend and suppliers under a robust single contract. However, because of a lack of resource to ensure an ongoing supplier management review of the products being ordered and associated costs, we were still able to deliver a 15 per cent saving from a spend of £172,000 per annum. How did we do that? Within a few
weeks we ran a benchmarking process of the incumbent against other suppliers to create a competitive environment on costs and enhanced service levels. This identified 15 per cent lower product costs than originally secured for like-for-like products. It required minimal input for the client
- literally a few hours to pull out invoices and liaise with us on specifications - because we analysed all the data, ran the process and created a new contract and implementation plan. Just because it is in the contract and deemed ‘already reviewed’ does not mean there is not a saving to be made. This example was a quick and effective cost that was used to reinvest in another member of care staff.
Case study 2 – critical goods savings Food is a critical area of spend for care providers and it is usually a good area to identify and deliver savings. This case study involved a care provider that already had a single incumbent supplier for their repeatable food purchases; it is key to separate out repeatable group wide spend from specialist, local one-off purchases. The client was spending £1.3m per
annum on food. Over a three-month period, we ran a competitive tender
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process, requiring only a few hours of the client’s time to gather invoice data and agree specifications with us. Despite an inflationary market, through
our care market knowledge, professional buying and negotiation, we reduced the client costs by £172,000 per annum and that was based on the same volume and mix of products and did not impact on quality or the need for local food purchases. Further to this, over the next few
months, we monitored the product ranges being purchased in collaboration with the supplier and presented specification change options monthly to the client - swapping branded product for non-branded, or alter pack sizes etc. This identified and delivered a better fit product range and additional savings of over £100,000 per annum - near £300,000 savings to the bottom line! We also facilitated resident tasting sessions and a greater focus on waste reduction and quality by emphasising the provenance and traceability of food. Food in the care environment is such a critical aspect of a resident’s daily life so it is worth bearing in mind that sourcing food is not just about the cost. The key in both these cases is that
the clients felt they already had a good contract and service yet we identified and delivered significant cost savings that made a tangible difference to the client and without compromising on quality. There are many great suppliers
out there proactively supporting their clients, but you really do need to check and benchmark regularly to ensure your budgets are not being eroded unnecessarily.
TCHE
Christoph Marr
Christoph Marr is managing director of Marr Procurement, a health and social care procurement specialist. Christoph has 25 years of experience in procurement from IBM, Marks & Spencer and as the chief procurement officer for Care UK. He has spent the last 13 years working in the care sector, setting up his business in 2015. Marr Procurement is a key partner to care associations including Care England and National Care Forum. It also helps Voluntary Organisations Disability Group-supporting members with procurement queries, market intelligence and legislative changes.
www.thecarehomeenvironment.com • October 2021
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