More on Capital Ambition and Supplier Relationship development

We featured a few weeks ago the launch of a set of documents by London local authorities and Capital Ambition, and we've been looking at them in more detail since then.

One of my few quibbles with this is actually the name of the initiative  -Supplier Relationship Development.  I’m not totally sure about that as a heading, as it seems to me what this excellent work covers is the whole range of post-contract supplier and contract management techniques. Some of those are not particularly focused on developing relationships –but they are all focused on delivering value from existing contracts. While they feature collaboration strongly, much of the material is certainly not at the “fluffier” end of “relationship management”.

But titles don’t really matter –the quality of the advice and thinking is key, and in those respects, this is very good work. There really is so much material, I can’t hope to summarise it all here. I’d just encourage anyone interested in post contract management to take a look.

Just picking out examples from the SRD “Implementation Toolkit”, there’s some very good material on the need to have robust information about the supplier -

Knowing who their suppliers are, what their corporate strategy is, and what pressures they face allows public sector bodies to relate to their suppliers in a more meaningful way and puts public sector bodies in a better negotiation position. It is important that this intelligence is not just a statement on financial viability. What is needed is a holistic approach, that looks at corporate ownership, corporate strategy, recent financial performance (both financial stability and viability as well as growth and margin), and a note on the customers and competitors in the industry.

 The value of good supplier information is highlighted by this example from the report.

 A global computer manufacturer initially declined to join an e-Auction programme on the basis that their public sector margins were “low enough” already. Using information Arbitrage techniques it was shown that the same global computer manufacturer was telling its investor community that UK public sector margins were very high and enough to fund expansion into other global markets. The information allowed the project team to re-engage with the computer manufacturer and persuade them to join the e-Auction programme. As a result, competition was increased and the public sector saved 35% on benchmark prices.

The toolkit also contains useful check-lists of potentially fruitful areas for supplier negotiation – and throughout the document there’s generally a good blend of high-level strategic thinking, some fairly basic content for the less experienced, and practical tools to help in implementing.

As well as the direct issues around dealing with the suppliers and looking for sources of value, there are sections covering areas such as benefits capture and realisation, and communications. There are also some nice case studies spread throughout the report, such as this one.

The Capital Ambition SRD project, by working with suppliers, found some examples where specifying materials that were different to other local authority requirements incurred significant costs to the Highways department. One local authority in outer London decided to have a different bollard style to other London local authorities. Another in inner London authority had a different flagstone for pavements as councilors wanted to have a “boulevard” look to the borough. Both options required specialist sourcing by the suppliers, which incurred additional cost to the overall servicing of the contract. This, in turn, reduced the potential for aggregation of spend in sourcing materials.

Mind you, I quite like the sound of a “boulevard”…

A final note – there’s a section on legal issues which gives a very good analysis of what is allowable under EU regulations – something that must be considered when you enter into post contract negotiations with a supplier.  It covers issues such as how to avoid “special relationship” issues if you are engaging with incumbent suppliers in this more collaborative manner.  That’s another pragmatic and helpful touch in a document that deserves to be well read and used throughout UK local government and beyond.

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