£26m procurement savings for UK central government department
The Department for Business, Energy and Industrial Strategy (BEIS) engaged us to help them implement category management. We worked with BEIS to design and implement a new operating model which has delivered major efficiency improvements.
Following a period of restructuring and cost reduction across the department, BEIS’s Director General Finance and Commercial was still very concerned that sufficient improvements had yet to be made across the procurement and commercial functions.
The BEIS senior management team wanted to drive improvements by implementing category management, but they realised they needed external, practical expertise to help them achieve this.
Key problems and challenges
At the outset the major customer concern was the disjointedness, complexity and inefficiency of procurement across the central BEIS department and its 47 separate agencies. The £2 billion total annual spend on products and services was managed by over 20 separate procurement teams.
BEIS also faced a number of cultural and behavioural challenges commonly seen in large federated organisations, including poor communication and a lack of trust between the centre and the individual agencies. The organisation was also suffering from serious f “change fatigue” having recently been through several waves of re-organisation and austerity-driven cost reductions.
Our first step was to engage a very experienced procurement professional, with 30 years in line management, director roles, consultancy and interim management roles across the private and public sector. We established a small, focused team around this individual and started to design and deliver the solution.
Phase 1 – Design
The key objectives of phase one were to design a new operating model, secure the buy-in of the procurement professionals across the organisation, and build a programme to deliver the change. We engaged successfully with the key stakeholders – the Heads of Procurement (HoPs) – pulled together category management best practice, and jointly designed a new operating model with a strong focus on the key roles to make the change happen – the new Category Leaders.
Phase 2 – Delivery
Once the design had been agreed, the core joint team of BEIS and Monro Consulting resources drove the delivery of the Category Management programme, focusing on a first wave of categories. We worked with the HoPs for Wave 1, to develop the Category Plan, from concept and template, to a finished product for each category.
Early on during the implementation we faced a significant challenge: the election of a new government and a renewed focus on driving out savings. However, we turned this into an opportunity as it gave our category management implementation a further impetus – the need to deliver significant financial savings against the annual spend. Monro Consulting also worked closely with the Cabinet Office’s key consultancy – McKinsey & Company – to support them in establishing the commercial accelerator (CAP) programme for BEIS, whilst ensuring it also acted as a catalyst for the existing Category Management work.
The practical transfer of commercial skills and experience was a key part of our work. In particular, the Monro Consulting team leader provided the day-to-day tasking and management for two civil service fast streamers and provided them with broader coaching and mentoring support.
Phase 3 – Transition
The final, critical stage of our work was to ensure a smooth transition to a steady-state BEIS team to carry forward the momentum and value from the Category Management programme. Specifically, Monro Consulting supported BEIS in the induction of new managers and staff, helping them up the steep learning curve and ensuring the ongoing implementation was a success.
As a direct result of the Category Management programme and supporting initiatives, BEIS made a saving of £26m in the first year and was on track to make £60m savings in the second year. Monro Consulting helped the central team to establish very effective, trusting working relationships across this complex, highly dispersed government organisation.
“Monro Consulting has had a major positive impact on the BEIS commercial function and helped us to deliver £26m in the first year of the programme”.
“We are extremely grateful for Monro Consulting’s hard work and commitment to ensure the programme’s success”.
Head of Major Projects and Commercial Assurance, Department for Business, Energy & Industrial Strategy (BEIS)