Latest articles on analysis
08 August 2002
Purchasing was in chaos at one of the UK's top universities until its first procurement director brought some order to its orders. Helen Riley looks at the progressWith more than 23,000 students from more than 100 countries, 5,000 members of staff, prestigious research departments and a reputation as one of the most popular universities in the UK, the University of Nottingham represents a complex purchasing challenge.
Peter Simmonds, the university's procurement director, likens it to a small town. "It's dynamic, interesting and constantly changing," he says.
His role is to ensure that the university's £250 million annual spend is targeted and used efficiently, to deliver the right goods and services at the right price.
It's a varied job. One day Simmonds might be meeting student representatives to discuss facilities for new halls of residence, the next he may be involved in the purchase of expensive and complex medical equipment.
Simmonds works with staff and student groups, which all have an input into purchasing decisions. A core team manages the overall procurement strategy, although many day-to-day purchases are made by other staff across the university.
Nottingham's teaching and research is organised into six faculties: arts, law and social sciences, education, science, engineering and medicine and health sciences, which are themselves divided into 32 schools.
When Simmonds arrived in 1997 to take up the newly created post of procurement director, he discovered that at least a dozen different purchasing systems were in operation - some of which were very slow - involving thousands of suppliers. Simmonds, who has a background in purchasing for major organisations, including the NHS and Safeway, saw immediately that it was crucial to introduce a single corporate purchasing system and reduce the supply base, while remaining sensitive to operational needs.
"University chiefs had realised that procurement needed to be developed and taken more seriously. It represents an area where savings can be made while, at the same time, students and staff can be given access to the best tools for the job in top-class academic surroundings," says Simmonds.
"I was effectively given a blank sheet and simply asked to develop a purchasing policy with the schools. I had to make the case for efficient purchasing with the heads of the individual schools and find out their needs.
"The range of purchasing decisions is huge, from pens, paper, tables and chairs to setting up deals for expensive research equipment. In the latter case, I am buying on behalf of a consortium of 13 universities to ensure we all get a good price."
One of Simmonds' first tasks on arriving at the university was to set about creating a procurement directorate - a core staff of 10 - with the ability to negotiate high-value agreements. These included a £2 million contract in support of a new information services strategy that then achieved savings of £200,000. Other savings included £300,000 on business travel costs and £50,000 on laboratory chemicals.
Purchasing cards were introduced for low- value orders and are currently used by around 450 staff. In addition, key sponsors of research projects across the university were brought into discussions about a properly planned funding programme for vital scientific equipment to ensure value for money.
These were all significant improvements that made an immediate difference to the purchasing strategy. But Simmonds decided that a corporate business software system was needed to capture purchasing information from across the campus and to set firm foundations for future growth.
After a thorough review of the market, an Agresso Business Manager system was chosen, which has since emerged as the leader in the higher education business software sector. It offers financial planning, procurement planning, a projects and research tool and the capacity for web requisitioning. It was easily installed across the university and, as Nick Gibson, higher education business manager for the company, explains, the Agresso system works especially well in "people-centric" organisations.
"We designed the software with the public sector and companies with a large number of employees in mind," he says. "We have successfully worked with higher education institutions, central government departments, local authorities and big companies. It's proved to be a very adaptable system with a strong management information side."
Nottingham's first Agresso orders were raised in June 1999 with a 15-month implementation programme. This included offering training and support to 800 or so members of staff involved in purchasing, using tailor-made programmes to suit individual needs.
"It was a lot of people to get through, although staff involved in low-value ordering or who purchased in specific areas only needed a certain level of training, while others who might be making regular purchasing decisions were given a more in-depth programme," explains Simmonds.
Although procurement professionals in other sectors may look askance at an organisation of 5,000 staff needing 800 people to support purchasing and logistics, Simmonds says this will benefit the university when it comes to implementing e-procurement.
"We wanted to ensure that the identification of need and ordering are carried out close to the point of use and that purchasers are reasonably free from day-to-day routine ordering."
The Agresso system allows individual purchasers to place orders and track their progress, while details of the purchase are automatically transferred to the central procurement department, giving Simmonds and his team an essential overview.
In the three years since the system was installed, a raft of rather hit-and-miss purchasing systems have been replaced with a single clear system where staff can deal with their own requirements in their own schools - within the overall corporate framework. This has paved the way for the university to implement web-based, paperless sourcing, repositioning, ordering, invoicing and payments.
Once the programme was up and running, Simmonds enlisted consultancy Deloitte & Touche to undertake a strategic review of progress to date. In particular, he wanted to know whether he could use e-procurement techniques to achieve greater savings. Among the recommendations from the consultancy were a concentration on commodity purchasing in high-spend areas and related supplier management to position the university well for the adoption last year of e-procurement.
Also highlighted was the need for better internal marketing to make people more aware of any procurement contracts already in place. Purchasing advisers now spend around 80 per cent of their time working with colleagues in the academic schools that make up the university, a close collaboration that is paying dividends. Suppliers recognise that the procurement team can bring almost all of the university's purchasing requirements to the marketplace and have responded to this with better prices.
Although major changes to the university's purchasing strategy have been put in place by Simmonds and his team, they are determined not to rest on their laurels. E-procurement options have been assessed, and in particular the shift from public marketplaces to e-enabling business processes. In addition, the university is working with Northern Foods to pilot e-auctions for purchases of more than £100,000. So far, two e-auctions have been held and savings in excess of 15 per cent identified.
"We haven't been carried away by the hype surrounding e-procurement," says Simmonds. "Instead, we made sure our internal systems and approach to buying were right before venturing into this new area. We now have the experience under our belt to implement e-procurement effectively."
Helen Riley is a freelance journalist specialising in business issues
SMaug2002Purchasing was in chaos at one of the UK's top universities until its first procurement director brought some order to its orders. Helen Riley looks at the progress Features analysis features 2002