Monday, 4 February 2013

How public procurement can help UK manufacturing

I was recently asked for my suggestions on how UK public procurement could help the manufacturing industry. Here's what I said, I'd be interested in your views and am happy to pass any useful suggestions on:
  1. The public sector is thought of as a provider of services and frequently not recognised as a major procurer of the manufacturing sector. I suspect this may well be due to three factors: 
    • disaggregated approach to the market; 
    • they buy through agents; and  
    • when they are in the pubic eye, as a major spender, it is often for major infrastructure construction projects and service.
  2. The public sector, as a manufacturing buyer, could therefore be more clearly articulated as a strategic customer. This articulation could start with a pan-public sector spend analysis of what is bought and, in parallel, where it is bought? At the present I doubt if such an overview is available. 
  3. There needs to be a recognition that if the public sector chose to buy services, rather than deliver them internally, there is less direct manufacturing procurement. However, that does not mean the public sector cannot shape manufacturing, through prototypes, issue of 'bounty challenges' and better interfaces with R&D and strategists - effectively procurement innovation labs.
  4. The clarity of the spend analysis is required and, on that foundation, then a national manufacturing procurement strategy developed. It needs to be clear that multiple sourcing from SMEs will need to be present in stimulating on-going innovation and competition, while at the same time long-term massive (co-ordinated) contracts will be required, quite possibly staggered dual sourcing. Visualise revolutionising the design of one commonly bought manufactured item just because the public sector harnessed its purchasing power. (For example, it strikes me that virtually everyone who is tagged (very naughty boys and girls) is likely to carry a mobile phone - why can't we issue a manufacturing challenge with a bounty, to develop an integrated solution which is more effective, stops the visual kudos associated with tagging, can be used for those with sex offences too, and is largely paid for by the user - could require simultaneous finger print recognition & GPS)
  5. While single sourcing is in vogue, I don't think it is often linked with a robust risk management assessment and relative power assessment - that needs to change. I think staggered dual sourcing may work better in achieving mutual benefits.
  6. I would use the spend analysis to do a deep dive and establish where to target attention. An ABC analysis then a line-by line analysis aimed at identifying readiness to change. There will need to be a willingness on both sides to make progress, It also strikes me that we need a few small demonstrations of what can be done.
  7. There is an absence of dialogue between the major users and manufacturers.I feel that this may have two reasons: 
    • there are intermediaries, Agents, between the users and the manufactures who are risk averse - the Agents/distributors are inhibiters as their own goals are with sales, and they lack the ability to represent manufacturers; and 
    • the absence of public sector technical knowledge.
  8. There should be greater forensic review of how 'things' have been bought - using my suggested spend analysis there could be a review, contract by contract, of what would have improved the outcome and those lessons published. This would require a resource allocation for the reviews and a high level of competence, critique, and trust. 
  9. A lot of investment has taken place in the past helping SMEs understand what is important to the public sector - there needs to be some research to establish if the wider manufacturing sector understand what is important to the public sector.
  10. There needs to be some research to establish what would be necessary to make the public sector a preferred customer - do the manufacturing sector even want to give the public sector strategic status? I suspect more aggregation of demand and longer contracts. There needs to be a clear business justification for the manufacturing sector to be concerned with the public sector.
  11. The above weaknesses act as barriers to more effective manufacturing spend within the UK - it would be useful to establish the manufacturing sector's view of where the public sector are currently positioned and where they would view them positioned, strategically, over the next 20 years.
  12. I suspect the public procurement regulations are providing a short-term obstacle to EU public sector contracts from BRICS countries. There needs to be an understanding of global manufacturing competitiveness, That should shape whether the UK wants to develop access for UK companies to the UK public sector or whether the political objectives could just as easily be achieved through encouraging the location of BRICS' businesses in the UK to access public sector and create jobs.
  13. The public sector has an over-emphasis on tight technical specifications based on what is currently used, there has been alack of progress in shifting to functional, performance and outcome based specifications - this needs a change management strategy
  14. As a result of #13, there is not enough statement of the problem to be solved and the issue of 'challenges' to the market. By way of an example, think of the procurement of mobile technology by the police, if that had been based on the collective problems which police were trying to solve a more 'joined up' and innovative solution may well have been developed. We need to bring R&D together with public sector strategists. The strategists work with design to better define problem statements for public service delivery and R&D come up with innovative prototypes.
  15. Public procurement needs to be represented on the proposed new leadership council (set out in the  Policy Exchange's 'Eight Great Technologies') by innovative 'can doers', visionaries and dreamers, as opposed to 'we can't do that because of the rules' party-poopers;
  16. Thought needs to be given to how public procurement can incentivise businesses to locate and invest in the 'Eight Great Technologies' with a compelling business justification based on a high probability of public sector purchase orders - this in itself will need some sort of procurement think-tank;  
  17. I would suggest a 'slash and burn' audit, review and recast of procurement policy to ensure it is not a shield for defence but a sword for action;
  18. Revisit Procuring for the FutureInnovation Nation and the Department of Health's National Innovation Procurement Plan implementation, establish what impeded uptake, what worked and address the lessons learnt - my own impression is that they lacked a supporting change management strategy and the associated resources;
  19. Develop an approach for prototype procurement - by this I mean quick prototypes which may or may not work but can shape the final product.

What would you suggest?

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