Blog & Press Releases
Posted 16 July 2018 | | 0 Comments
BSA Buying Group is pleased to announce its latest trade association member benefit offer, this time with the Professional Golfers' Association (PGA). This has been arranged thanks to BSA's long-standing partnership with Parliament Hill, which manages the member benefit service on behalf of the PGA.
Tristan Crew, PGA executive director – Member services, said: “Over the past year we have been focused on improving the range of benefits available to PGA Members.
“With the launch of PGA Benefits it will be easier for our Members to take advantage of these new offers and, more importantly, save them money on everyday expenses.
“We will continue to develop new benefits as we move into the future, taking guidance from the recent Members Survey results, and we will also looks to develop benefits which are more accessible to our Members in Ireland and further afield.”
To access PGA Benefits, Members simply have to sign into the Members’ area on www.pga.info and click on ‘my benefits’.
Calling all trade associations: BSA Buying Group has partnered with many well known trade associations over many years, helping to provide members with business cost savings. If your trade association would like to find out more about how our service works, and the benefits we can bring to your members, please call 0800 254 0344 and ask to speak with the CEO, Matt Roper.
by M Roper | 16 July 2018
Posted 9 April 2018 | | 0 Comments
For most small and mid-market UK Companies, times have been getting steadily tougher when it comes to keeping a lid on supply costs. The UK has recently experienced significant inflationary cost pressures on imported raw materials thanks in part to the weakened pound, and the threat of import customs tariff costs grows by the day. Even if this isn't directly impacting on your business, the chances are that it's hitting much of your supply base, which will be either looking to pass some of this extra cost onto you or taking the hit and suffering financially (which ultimately ups your own risk of supply chain failure). These increased costs and risks mean that it's vital that companies have highly experienced procurement professionals in place to protect profits and mitigate supply chain risks.
Adding to the pressure, the large corporate competitors are able to leverage their size for competitive advantage. They have highly skilled procurement teams, busy developing future strategies not just to keep a lid on costs but to seize new supply innovations to make their products or services even more appealing to customers; their suppliers (some of whom also supply your company) are attracted to supply them so as to maximise sales revenues directly, and indirectly through bolster their own marketing by citing these well-known companies as clients, thereby demonstrating their credibility to prospective new clients (who may currently be served by your company).
So how can your small or mid market company enjoy similar advantages of cost/risk management, supply chain innovation and maximising your attractiveness to suppliers and clients alike? There are two challenges. First, finding high quality procurement leaders. Just as the largest companies can attract the best suppliers, so they can attract the most talented procurement professionals. With UK unemployment at its lowest for decades, procurement skills shortages make it even harder to find good people. The second challenge is that the most effective procurement leaders don't come cheap and as a smaller company you may not have the budget to attract or keep them.
So on the one hand you have an urgent need to develop an effective procurement and supply chain function, but on the other you may struggle to develop the skills or find the necessary salary budget to make the necessary change. How do you solve this business challenge?
Buying Support Agency (BSA) can solve it. We have a ready-made team of passionate procurement leaders, all with 15+ years of operational and leadership experience. They've worked in the corporate world but want a more flexible work-life balance which is why they want to work with BSA as associates. This flexibility for them is also flexibility for your business - our team tend to work with a client for typically 4-5 days per month, delivering exceptional value to the client, who avoids the cost of having to pay for all the traditional costs of having a senior level member of staff on their books. Clients have complete flexibility and can therefore expand or reduce our resource as needed. As an additional value add, all associates bring to clients completely free access to our BSA Buying Group, which enables them to quickly cut your overhead costs whilst also tackling some of the more fundamental strategic issues facing your supply chain.
Want to know more? Call 0800 254 0344 today and we'll arrange a conversation without obligation.
by M Roper | 9 April 2018
Posted 26 July 2017 | | 0 Comments
Now that the UK’s GDP estimated growth figures for the first half of 2017 have been published, it is apparent that we’re experiencing an economic slowdown in 2017 versus 2016. Official figures from the Office for National Statistics estimate that the UK economy grew 0.3% in April to June 17, slightly up on the 0.2% growth seen in quarter one. This shows that the perhaps surprisingly strong economic growth witnessed immediately after the Brexit referendum has faltered significantly – the UK and Germany were the fastest growing economies in the G7 last year, but now we’re in the slow lane. Year-on-year growth has slowed from 2 percent to 1.7 percent. The International Monetary Fund (IMF) has recently revised downwards UK GDP growth for 2017 from 2.0 percent to 1.7 percent.
So why the slowdown? Well against the obvious back-drop of political and economic uncertainty caused by Brexit, and most recently, the unexpected failure of the Conservatives to secure an overall majority at the general election, it is widely predicted that the UK economy will experience less growth than would have otherwise been the case.
But we can add another dampening factor too, caused in part by Brexit – namely the recent uptick in inflation which has not been reflected in wage inflation, thereby hurting consumer spending. And weaker sterling against the major currencies since the Brexit vote has also caused import price inflation. Most economic commentators also remain concerned about the UK’s productivity gap versus the other major economies, with relatively weak investment in infrastructure and skills training. This is keeping a lid on wage inflation, as is the government’s resistance to growing calls to scrap the 1 percent public sector wage cap.
Most of the growth is coming from the services sector, which grew 0.5 percent in the last quarter (up from 0.1 percent in quarter one). But construction and manufacturing have contracted by 0.9 percent and 0.5 percent respectively.
With three quarters of the UK economy coming from household consumption, the slightly increased inflationary pressures rising faster than wages is dampening the growth forecast. This in turn will have a negative impact on businesses, many of whom are already dealing with a squeeze on margin, particularly if exposed to import prices, due to the ongoing weakness of sterling.
Expect the same in the second half of 2017
Growth in domestic consumption will only happen if businesses feel confident enough to increase wages. But it is difficult to see where this confidence will come from, given the dampening factors highlighted above – the weak pound, higher import prices, low investment in skills training, increased inflation and above all the continued lack of any certainty on how Brexit will be negotiated. Expect the UK to continue to under-perform against its major economic competitors.
How is sterling faring on the international trading markets?
The Bank of England Monetary Policy Committee (MPC) has recently voted yet again to keep interest rates at their historic low point. But the markets were taken by surprise by the fact that more members of the MPC voted for an interest rate rise than expected. Some commentators think that a rate rise may be on the cards in 2017 and this has slightly strengthened sterling in the last few days (as a rate rise would likely result in a surge in global investment funds, thereby increasing the value of sterling relative to other currencies). That said, most commentators expect the current weak position of sterling to remain stable over the next few months with nothing on the horizon expected to create a buying surge of sterling. Despite Article 50 being triggered four months ago, the markets still don’t see clarity surrounding the UK’s negotiating position and the threat of a no-deal remains. Until the market feels more certain (and positive) about the outcome of Brexit, and with the economy looking sluggish, it remains likely that sterling will mirror the weak economic position and remain weak for the remainder of 2017 and early 2018.
The only factors which may help to boost sterling, but perhaps not by a significant margin, might be external global events, such as a political shock in the US or EU caused by President Trump being impeached, say, or Merkel losing the German elections in September. Neither looks likely, but given the political turmoil experienced in the last couple of years, all bets are off. And that’s without considering China, North Korea….
How can my company protect itself against damaging foreign exchange movements?
With sterling remaining weak, increasing number of UK based companies are having to face increased import prices and reduced values of repatriated overseas revenues. This increased financial risk which needs to be mitigated. I cover some aspects of this in my previous blog relating to how procurement functions should react to the increased risks resulting from Brexit, in particular managing EU based suppliers. In terms of currency swings, a key start point is to understand not just what level of price needs to be obtained for a given product or service sale to be profitable, but also how this price level is impacted upon by currency fluctuations. Then evaluate the degree of risk the business is prepared to take in hedging that risk away, such as buying forward versus spot buying currency for example. This is where external currency specialists can help.
Which is where Buying Support Agency can now assist…
Given the currency market uncertainty, Buying Support Agency is delighted to announce the launch of two value for money services within the ‘Professional Services’ section of its BSA Buying Group.
The first is our sourcing of a multiple-award winning foreign exchange broker, meaning that members of BSA Buying Group can enjoy heavily discounted exchange rate charges, reduced still further thanks to BSA Buying Group’s buying power that could save your company money compared to your bank, with no hidden fees or charges.
Secondly, our BSA Buying Group members can now benefit from our partnership with the UK’s number one source of part-time Finance Directors. This makes it possible and practical for SME businesses to take on one of the UK’s leading Finance Directors on a part-time basis for a fraction of the cost of employing a full-time FD. These experts are well versed in successfully steering companies through volatile trading conditions, in securing funding and so forth.
For more information on either of these services, to find out how to join BSA Buying Group to access up to 24 areas of overhead cost, or to seek support in preparing your supply and procurement functions for the post-Brexit world, call 0800 254 0344 today.
Author: Matt Roper
(CEO, Buying Support Agency Ltd)
by M Roper | 26 July 2017
Posted 5 May 2017 | | 0 Comments
With the UK triggering Article 50, now starts the challenging task of negotiating our exit in a way which delivers the best possible outcome for UK businesses.
I’d like to consider how those with purchasing and supply chain responsibilities in your business should prepare to cut the risks and seize the potential opportunities that reveal themselves through the Brexit process. Let me first consider the potential risks.
Increased market uncertainty and inflationary pressures
The weakening of Sterling against the key international currencies will make it more expensive to import raw materials. Oil prices, set in dollars, may rise due to currency movements even if your overseas suppliers are not themselves experiencing an uplift in costs.
The economic and political uncertainty risks dampening corporate and institutional investment within the UK, though a weak pound may encourage foreign investment despite the uncertainty. Lower investment could curb employment levels, thereby cutting domestic consumption and damaging UK economic growth. Should consumer demand and corporate investment fall, suppliers from the UK and overseas may seek price increases to protect their profit margins.
Barriers to travel and movement of goods to and from the EU
A further inflationary threat is the raising of customs duties and greater administrative hurdles imposed on EU goods and services being imported into the UK. Added to this is the delays caused by customs checks. UK buyers need to think about the impact on their business of lengthy delays at UK ports and increased prices.
But with risk comes opportunity. Buyers dealing with EU based suppliers can turn negative into positive by engaging fully with them to both reassure and protect the supply chains. Conversely, even if relationships with EU suppliers sour, buyers may be unaware of some highly innovative and value add supply chains in the rest of the World, including within the UK itself. Positive consequences may well result in switching to non-EU suppliers, but only if buyers can develop the appropriate alternative supply strategies.
Our 8 tips to help buyers navigate Brexit
1. Most importantly, prepare an action plan that considers the short, medium term and long term impact of Brexit on your business. Don’t put your head in the sand, thinking that Brexit won’t impact your business. No-one really knows the consequences of Brexit, and you can’t control it, but you can at least plan ahead. You need an action plan to ensure that your supply chains are both flexible and secure;
2. Audit your supply chains, looking for risks and opportunities. Classify suppliers by degree of risk to the business, and do some ‘what if’ scenario planning, involving the whole business;
3. Consider your own internal business and the risks caused by supply chain disruption. Make sure that the buyers are working alongside colleagues in other parts of the business so they can discuss risks and options for mitigating those risks. And consider the opportunities too, such as exporting outside of the EU - though moving into new non-EU markets may require changes to product specifications and the adoption of new suppliers. This will all require a lot of time and resource, hence starting the planning now is vital;
4. Review the contractual arrangements with EU based suppliers, and consider re-negotiating terms such as contract duration, break clauses;
5. Prepare for negotiations should existing suppliers press for price increases as they seek to protect margins. Resist demands for price increases unless the suppliers can provide clear evidence that their demands are genuine. Consider switching suppliers if the impact of cost inflation is too severe;
6. Start talking openly with EU based suppliers and where appropriate begin planning joint strategies to mitigate risks (remember that your suppliers will also be concerned about losing your business so will want to work with you). And keep showing your support and appreciation of your EU suppliers, as anti-British sentiment in mainland Europe could increase your risks;
7. Ensure that you have good quality supply market intelligence gathering, so you can monitor potential supply risks or opportunities;
8. Check that your internal finance and ERP systems can be adapted to reflect changes such as lengthening order to delivery lead times, greater currency fluctuations, customs duties, etc. System changes will need planning and testing in advance otherwise risks will increase. Plus review all purchasing related online or offline documentation such as purchase orders, terms and conditions, delivery notes. Will these need to be amended post-Brexit to comply with any diversion between EU and UK legislation?
Change is the one certainty
In summary, Brexit poses threats and opportunities for UK based purchasers. The one certainty is that big change in the business landscape is happening, for good and bad. It is therefore critical that you start to plan now. But there is no need to panic. By planning now, your business will be in much better shape to not only withstand any shocks but to seize upon the opportunities that will inevitably come from Brexit too.
by M Roper | 5 May 2017
Posted 26 April 2017 | | 0 Comments
Academies are increasingly being encouraged to protect themselves from the impending funding cuts through collaborative procurement. Whilst we're seeing a growth in such collaboration, there remain considerable barriers which are putting brakes on the trend, resulting in a fragmented picture across the UK. In this article, Matt Roper, CEO of Buying Support Agency (BSA), procurement specialists, considers how schools can overcome these barriers and take full advantage of the benefits whilst avoiding the pitfalls.
As funding cuts start to bite, Academies - particularly those not within Multi-Academy Trusts (MATs) - are vulnerable to financial difficulties if they don't tackle their back-office efficiencies, such as their management of procurement. No longer can they rely on their Local Authorities own procurement resources, as Local Government have experienced significant budget cuts themselves and are experiencing a decline in their buying power as more and more schools go it alone.
Degree of take up of collaborative procurement
A logical way of combatting the funding cuts is for every Academy to join forces with other like-minded schools, pooling resources to re-gain the economies of scale previously enjoyed from Local Authority procurement support. Many MATs are already doing this. And as well as economies of scale, schools also benefit by sharing insights into markets and supplier performance through benchmarking prices and service levels. Buying collectively puts the cluster of schools in the driving seat whereas those going it alone are less able to stand up to suppliers or compare alternative supply options from a value for money perspective. It should also be noted that the EFA and Ofsted are increasingly seeking evidence of value for money when auditing school finances.
The Department for Education's March 2016 White Paper ("Education Excellence Everywhere"), places great importance on strong financial health and recognises that collaboration between schools will play a big part in the future of academies, especially through Multi Academy Trusts, in helping schools to share expertise and reduce costs.
However, despite the obvious benefits of joint procurement there remain factors which are slowing down the take up. According to a recent National Schools Procurement Survey, carried out online by Incensu with support from the National Association of School Business Managers (NASBM) and with a sample of 106 schools, the main reason for schools not working together when procuring goods and services was a perceived lack of time (72%) and expertise. 87% thought that savings were possible from collaborative procurement but over 60% said they lacked someone who could take responsibility for facilitating the partnership of schools within a cluster; only 24% could demonstrate that they were already working jointly with other schools. So clearly the majority have yet to benefit from collaborative working.
Some schools surveyed didn't see shared procurement as being a priority - perhaps because they see most of their budgets being spent on staff wages, pensions, and so forth. But whilst this is true, across the UK schools spend £9.2 billion on non-wage costs such as energy, catering, cleaning and back-office costs. And whilst funding is falling, it will be challenging for schools to be able to make significant in-roads into their staff salary costs. There is already a shortage of quality teaching staff, and this combined with inflationary pressures, constant pressure on exam results performance, and even Brexit, will make it unlikely that cutting salary costs will make up the funding gap in many schools. As the pressure mounts on budgets, more Academies will need to focus on back-office efficiencies and lower supplier costs.
Those surveyed did however come up with suggestions as to how this barrier could be removed. These included the setting up of a formal framework, freeing up time and providing training e.g. collaborative procurement, legal issues, contract performance management. It was also suggested that suppliers could do more to encourage schools to procure together rather than as individual customers.
Types of collaborative procurement models
There are various collaborative models available to Academies. At the simplest end of the spectrum is the informal cluster - where procurement isn't shared but ideas and issues are shared and discussed; then there is the contractual collaboration where two or more schools create a joint contract - though a formal agreement must be signed between the schools; next comes joint committees; the most formal arrangements include setting up an umbrella trust, a joint venture company or a MAT. Each option has advantages and risks, and should be considered based on the needs of the individual schools within the group.
How to make a success of collaboration
Ensuring that collaboration delivers maximises commercial benefit requires an investment of time on the part of each school participating. Given that the majority of Academies cite lack of time as the key barrier to collaboration, then it is important to make the engagement process as time efficient as possible.
Before deciding on the approach, and which collaboration model to develop, it is crucial to consider a number of key questions; all stakeholders must recognise the time investment and be prepared to allocate such time consistently – if one school feels it has the lion share of the work load, the collaboration will soon collapse; everyone must agree on what is to be jointly procured and the priorities; there must be clarity about the outcomes of joint contracting and the benefits to all parties; what the legal implications are of the collaborative model being adopted and the need to comply with the Public Contracts Regulations (see section below); what funding requirements will there be on each school in the group; what happens if one school wishes to withdraw from the arrangement, or a new one wishes to join an established group?
Other critical success factors include the need to establish a clear and realistic vision and business case; maintaining good communication with all stakeholders; setting clear targets; establishing sound governance arrangements; remaining sensitive to the different needs of each school within the cluster and listening to any staff concerns about job security.
Compliance – the EU Procurement Regulations & Public Contract Regulations (2015)
Regardless of whether an Academy decides to collaborate with others, it must realise that poor procurement decisions and a failure to comply with EU procurement legislation can result in legal challenges from suppliers, contracts being cancelled and financial penalties which can be costly, time-consuming and impact negatively on the school’s reputation.
Academies are deemed to be ‘contracting authorities’ because they receive their funds predominantly from the tax payer via the Education Funding Agency (EFA). This means that they must comply with the Public Contracts Regulations (2015) when contracting higher value goods, services or building works. ‘Higher value’ will depend on what is being procured – for goods and the majority of services this is £164,176; for building works contracts it is £4,104,394 and for social and other specific services (including education, catering) it is £589,148. If the total contract value of the spend (i.e. not just one year’s spend – you’re not allowed to artificially disaggregate a large contract into smaller sections to bring it below the threshold) exceeds these thresholds then the tender has to be advertised across the EU and EU Procurement Regulations must be applied.
Where clusters of schools can go for assistance
One way of cutting down the amount of time needed from each school is for the group to take advantage of ready-made procurement consortiums or buying groups. More Academy Trusts are showing interest in buying organisations, not only for large scale contracts such as IT and classroom equipment but also for more complex services such as building management and professional services. As Academy Trusts expand, their supply chain needs will be less served by the local supply base.
These buying organisations have significant buying power and will already have spent the time vetting suppliers, seeking invitations to tender, completed the competitive tendering process and set up supply frameworks which comply with EU Procurement Regulations. Organising EU compliant tenders take up a lot of resource which Academies may not realise.
The contractual terms will also have been negotiated favourably on schools behalf. Plus should anything go wrong with the contract the schools will have the support from the purchasing consortium who set up the framework.
Utilising these resources will mean your cluster won’t need to have legal or commercial expertise and can save the group having to tender itself. In short, why re-invent the wheel? The best consortia also provide contract templates and training, helping to share insights when procuring educational supplies and services.
Price and value benchmarking is another benefit of utilising purchasing consortia. By comparing prices and value prior to going to tender, Academies can see the opportunity for total cost savings and this can help prioritise which cost categories to tackle.
Examples of professional buying organisations in the public sector include the Crown Commercial Service (CCS), Pro5, Crescent Purchasing Consortium and EduBuy. In the private sector there are several alternatives, including the company which I lead - Buying Support Agency Ltd (BSA). BSA operates a Buying Group ideal for spends under the EU Procurement spend thresholds, plus it can offer cluster procurement support for higher value tenders and benchmarking.
To maintain enthusiasm and to justify the resource, the school cluster needs to see a decent return on investment and hence identifying and then targeting those cost categories likely to secure the greatest level of cost savings and service level improvements is critically important. But the value benefits are clear. One recent example is the National Church of England Academy Trust (NCEAT) which led a procurement for insurance services on behalf of five academies. NCEAT used the Pro5 Insurance Services framework agreement (RM958) and saved over £40,000 on their previous year’s premium and brokerage fees.
As funding is squeezed across the education sector, and the traditional sources of procurement support (i.e. local authorities) declines, Academies are being forced to evaluate ways in which they can save money. Once a school has made its own efficiency savings, the most effective way to achieve significant further economies is to combine with other schools and to consider outsourcing certain back-office functions.
The good news is that schools can already draw on excellent practice within other schools which have already organised themselves into collaborative clusters and via a wide range of training, tendering tools and supplier frameworks delivered by public and private sector organisations.
If you’re on the School Management Team or a Governor at an Academy Trust or individual Academy and want to find out more about collaborative procurement and external procurement support that is available, please contact Buying Support Agency Ltd (tel: 0800 254 0344)
by M Roper | 26 April 2017
Posted 31 March 2017 | | 0 Comments
So the UK has finally triggered Article 50, formally initiating our divorce proceedings from the European Union. Now begins the extremely challenging task of negotiating our terms of departure to deliver the least negative consequences for the United Kingdom and the remaining 27 members of the EU.
From a procurement perspective, I’d like to consider how procurement functions in both private and public sector should prepare over the next couple of years and beyond to mitigate the risks and seize the potential opportunities out there. First let’s consider the possible impact on public procurement law.
Procurement Procurement Legislation
The UK implemented the Public Contracts Regulations 2015, Utilities Contracts Regulations 2016 and the Concession Contracts Regulations 2016 which all make up the EU Public Procurement rules. These laws seek to ensure transparent competition whilst ensuring non-discrimination on the grounds of nationality. Whilst on exit (but not before) the EU Procurement Directives will cease to apply, the UK version of these rules will continue to be applied in law unless and until the UK repeals them. The Great Repeal Bill lays out how this hugely complicated process will happen.
Why the existing Procurement Laws in the UK are likely to remain
The extent of legislative change surrounding public procurement may well depend on the outcome of the Brexit negotiations relating to trading. However whatever the outcome, I expect the existing procurement laws in the UK to remain broadly the same (though without the need to demonstrate cross border interests being considered) for the following reasons.
If we have a ‘soft’ Brexit
If the UK agrees to a ‘soft’ Brexit, it will leave the EU but will either remain part of the Single Market (unlikely, if Theresa May’s sticks to her recent comments) or perhaps the European Free Trade Agreement (EFTA), it will remain bound by the existing EU Procurement Directives anyway.
If we have a ‘hard’ Brexit
If on the other hand the UK takes the ‘hard’ Brexit line, and doesn’t sign multiple bilateral trade agreements with each member
of the EU, it will likely to become a member of the World Trade Organisation (WTO). The WTO has its own procurement rules, laid out in the Government Procurement Agreement (GPA) which it requires members to adhere to. The GPA requires that its members treat suppliers from other member states as favourably as domestic suppliers, as well as ensuring transparency and impartiality. And many developing countries have adopted EU Procurement Regulations as a blueprint for their own procurement rules, in order to reassure funders such as the World Bank.
Other reasons for status quo
First, the current UK Government will remain focused on cutting public spending and seeking value for money across all government departments. Removing the key principles of public procurement law could result in a potential loss in competitive challenge and innovation, resulting in poorer value for money for UK taxpayers. It should be added that the elements of procurement law relating to supporting SMEs in public sector bidding and the opportunity for bidders to challenge public and utility procurement decisions would be difficult to repeal without an outcry from UK business due to the perceived negative impact on fairness and transparency.
Secondly, with so many complex legislative changes required to be made in a relatively short period of time, I think that there will be little urgency to simplify the public procurement rules in the short to medium term. Any adjustments to public procurement legislation would require significant consultation across large numbers of public sector and industry bodies. Bear in mind that significant consultation happened prior to the most recent changes in EU law. Any deviation in public procurement law will also add complexity to UK companies sourcing from EU supply chains.
Increased currency market volatility and inflationary pressures
Whilst the view is that legal changes to UK Public Procurement are unlikely to be significant, other factors will have an ongoing impact on procurement and supply chain management. The current political and economic uncertainty risks dampening institutional and corporate investment within the UK. The consequence of lower investment could be a fall in employment levels, thereby cutting domestic consumption and damaging UK economic growth. Procurement departments must evaluate how they should respond to these threats.
One early challenge for procurement is the weakening of the Sterling exchange rate against the key international currencies. Whilst this is good news for exporters, it also means a higher risk in the medium term of increased import costs (e.g. raw materials, oil prices which are priced in dollars), even if their overseas suppliers are not themselves experiencing an uplift in costs.
Barriers to travel and movement of goods to and from the EU
The tightening of UK borders is likely to increase the time taken to ship goods and increase the administrative burden of moving goods and people to and from the UK to EU Member States. One example of this would be the introduction of security checkpoints and customs posts between the Republic of Ireland and Northern Ireland. It could also create political tensions.
And add into the mix the risk of Scotland voting to become an independent country outside of the United Kingdom, now that the SNP has secured a mandate from the Scottish parliament for a second independence referendum. The consequences of independence would be far reaching and procurement on both sides of the border would have to manage the new complications involved in managing cross border supply chains.
A further inflationary and logistical threat is the raising of customs duties and additional administrative hurdles imposed on EU goods and services being imported into the UK. UK buyers need to think about the impact on their business of lengthy delays at UK ports, or the introduction of a land border between Northern Ireland and the Republic of Ireland. When we experience delays at ports caused by French strikes at Calais it hurts UK companies but only happens infrequently. Imagine if such delays became the norm.
Re-evaluation of existing suppliers
With UK companies under pressure to maintain profitability and protect cash flow, buying departments will feel the heat from their Boards of Directors to keep a lid on these inflationary pressures. This will in turn force procurement to re-evaluate their existing supplier relationships, particularly those suppliers based in the EU, and to consider other non-EU supply options to mitigate risks for their organisations. It may encourage buyers to consider contracting with alternative suppliers in other parts of the World, though this introduces other risks, such as delays in logistics due to increased transport distances, cultural differences, new language barriers, new currency dealings, commercial laws which may differ from EU law, and so forth.
Procurement professionals will not only need to consider their own concerns but must also be sensitive to the concerns of their EU suppliers who may themselves wish to re-evaluate existing trade with UK customers. Trade is after all a two-way street. If the nationalist movement continues to flourish (as demonstrated by the Brexit vote), or if anti-British sentiment develops after a difficult Brexit process, some EU based manufacturers and service providers could decide to re-focus their energy on selling to EU member states and away from the UK market. Other economic and legal factors could also dampen the enthusiasm of our EU neighbours to export to the UK. This could include a significant deviation in UK commercial law versus EU law over time, a continued weak pound relative to Euro, administrative barriers such as import border checks and paperwork, UK imposed import tariffs. Any of these factors could result in lower profit margins or lower UK demand, which in turn may result in inflationary pressures or a fall in supply to the UK.
So sourcing is likely to become more of a challenge from the UK’s perspective. UK buyers will need to keep a close eye on their existing EU suppliers to spot any change of approach as early as possible, and to build a contingency and costings plan for switching supply out of the EU if supplier relationships become more challenging within the EU.
But with risk comes opportunity. Buyers may be currently in a comfort zone with certain EU suppliers, blissfully unaware of some highly innovative and value add supply chains outside of the EU in the rest of the World, and even back here in the UK. If Brexit forces buyers out of their comfort zones, some positive consequences may well result, but only if buyers develop the appropriate alternative supply strategies. And they will need to work closely with their colleagues in sales, operations, quality assurance and so forth to ensure that the non-EU sourced alternative products and services are fit for purpose for the needs of their client base whilst complying with UK law.
A shrinking supply of cheap labour and increased wage costs
Cost pressures will grow in those industry sectors reliant on cheaper labour recruited from overseas, such as construction, hotels and hospitality, food production, contract cleaning and logistics, if these people leave the UK. The government will be under pressure to show that they have cut immigration numbers as this was a key reason for voters choosing to leave the EU. Yet UK companies will still need to employ resources and if there is a skills shortage they will have to either pay more to recruit new staff. Buyers will be under pressure from recruitment agencies who may decide to increase their fees if staff search costs rise or who pass on higher wage demands.
And the pool of talented procurement staff may well diminish if migrant numbers are cut. What impact will this have, and what plan can be developed to safeguard talent within the organisation?
Change is the one certainty
In summary, Brexit poses both threats and opportunities for UK based procurement people. And in the short to medium term it also brings uncertainty. The only certainty is that big change in the business landscape is going to happen, for good and bad. It is therefore critical that procurement starts to plan now, even though much is unclear, otherwise they are likely to miss the biggest opportunities and be more vulnerable to supply chain risks and cost increases. They must review their existing EU supply base and regularly assess the degree and risk of cost increase, time delays, relationship tensions. And they must consider new alternative sources of supply outside of the EU (or even within the UK) and weigh up the risks versus rewards of switching.
by M Roper | 31 March 2017
Posted 24 October 2016 | | 0 Comments
Watch any television news programme, read any newspaper, and you could be forgiven for thinking that the world is increasingly in a state of chaotic change and heightened risk. Examples include changes in consumer buying behaviours caused by technology (e.g. Uber), the current political and economic instability (e.g. Brexit, Syrian civil war), the early signs of the negative consequences of global warming (e.g. more flooding and extreme weather events), the explosion in frequency of cyber attacks (e.g. TalkTalk), grass root revolt against the institutions and wealthy (e.g. Brexit, the rising popularity of extreme left and right wing politicians).
The unethical behaviour of many businesses have contributed to these growing pressures. There is growing social revolt against company wealth being kept by a tiny proportion of the population, and growing corporate tax evasion at a time when government debt has been rising, public services have been crumbling and real wages have been stagnating at best. Added to this is the growing threat of climate change, environmental challenge and animal extinctions, caused in part by irresponsible, inefficient or unethical business practice.
To begin resolving these threats, all companies have a duty to evaluate and manage their impacts of doing business on society and the environment. With the dual threats of being named and shamed on social media and increasing legislation, companies will fail if they don't take positive action quickly.
One such action is for procurement functions within organisations to focus their efforts on mitigating supply chain risks caused by these global changes. My concern, having audited countless procurement departments over the last 15 years, is that too many procurement departments remain stuck in the same old cycle of fixating on cost reduction and thus reducing its value within and outside the organisation, including tackling supply chain risk management and sustainability. This is perhaps not surprising given that procurement tends to be measured by how much cost saving it has achieved. Measuring the degree of risk mitigation, environmental impact or innovation is less easy to measure, and often isn't measured or even talked about.
Companies that allow their procurement teams to purely focus on cost reduction are missing a trick which could come back to bite them at a later date. Procurement can (and should) have arguably the greatest leverage within a business to making things happen within supply chains for the good. Examples of action include adding ethics into supplier evaluation criterion pre contract award; challenging marketing to cut the need for energy-hungry packaging; sourcing energy efficient, eco business supplies; cutting waste through supply chain partnerships; evaluating the potential impact on suppliers of political/economic shifts at a national, regional and global level.
For Boards of Directors worrying about the potential impact of global change on the health of their companies, now is the time to provide leadership to their procurement teams, building procurement strategies that not only start to address the external threats, but on a more positive note, position the company's supply chains to seize the opportunities that are also there to be taken. By doing so, they will be making a positive difference not just to their own companies but also to their communities and the planet. It's time for business and procurement leaders to step up to the plate. Don't worry, just take action.
by M Roper | 24 October 2016
Posted 11 August 2016 | | 0 Comments
Effective Negotiation eBook (NEW)
All business professionals, particularly buyers and sellers, need to master their negotiating skills if they are to succeed in their careers. Following on from our highly successful Effective Negotiation training course, our CEO Matt Roper has written an eBook "Clinching the Deal...43 minutes to Negotiation Success" (PDF format). which you can now download.
Just click on the appropriate button below (there are 3 currency options, Pounds Sterling, Euros or US Dollars):
by M Roper | 11 August 2016
Posted 28 July 2016 | | 0 Comments
BSA Buying Group is delighted to launch a partnership with cloud-based expenses management software provider, webexpenses.
Thanks to the partnership, BSA offers all BSA Buying Group clients a 10% discount on webexpenses software.
Since 2000, the powerful feature set is designed to help companies fully manage employee expenses in one integrated solution for greater efficiency. Webexpenses software is simple, intuitive and significantly reduces the time staff spend submitting expenses.
The award-winning software is proven to save businesses time and money by automating the expenses process. Webexpenses can save businesses to 25% in T&E processing costs.
Configured for your company
Webexpenses software can be configured to your company, whether you are a SME or an international business - webexpenses can work with all sized organisations.
Webexpenses integrates seamlessly with all major financial software providers; including Xero, SAGE and SAP. Webexpenses talks to your existing finance software; providing the flexibility to choose the best solution for your set-up. Whichever option you decide, the set-up is a simple and hassle-free process with no disruption to your business.
Click here to read more...
by M Roper | 28 July 2016
Posted 21 July 2016 | | 0 Comments
BSA Buying Group has recently launched its 24th overhead cost category - Vehicle Fleet. We've developed a framework of commercial vehicle leasing brokers to provide members with access to significantly improved vehicle fleet leasing deals.
All brokers have been carefully selected to ensure high levels of customer care, and all are members of the British Vehicle Rental and Leasing Association (BVRLA).
If you're looking to reduce the cost of leasing your commercial fleet, why not use our buying power? Give us a call on 0800 254 0344.
by Matt Roper | 21 July 2016