There is a need for a strong purchasing function – also in the public sector. Three Danish municipalities have taken the first step in the right direction, creating a modern purchasing organization. Prokura has provided support for an in-depth procurement analysis, which has formed the basis for a fact-based purchasing strategy – an action plan, anchored in the municipality.
The procurement analysis consists of four process steps that addresses and solves a number of purchasing-related problems in the municipality, which an analysis tool does not have the opportunity to solve:
- The purchasing analysis affects the entire cost base, by including the municipality’s external consumption and internal costs, and validates this against the municipality’s own figures
- Along with a structured categorization logic, the analysis gives a detailed breakdown of costs and a nuanced picture of what and how money is utilized
- The categorization logic allows categorization of inter-municipal consumption and gives increased understanding of a considerable part of the municipality’s consumption
- The consumption analyzes are tailored to each municipality and are sufficiently comprehensive with a TCO-approach to the categories’ maturity
- As part of the project, sustainable change was secured through a formalized procurement capability building program. The capability building program was a combination of class-room training, real-life homework with new tools as well as hands-on coaching
As a result, an action plan is established with a four year plan for category optimization projects and the respective savings potentials. At the same time, modern procurement and anchoring procurement strategy has been initiated in the municipality. On average, modern purchasing organizations achieve 2-8% savings each year on addressed consumption and address 82% of their total consumption on average. If your municipality has an external consumption of 1.3 billion DKK a year, and the same result can be achieved, this will mean approximately 20-80 million DKK in new savings every year.
To hear more about procurement analysis or possibilities for modernizing procurement in the public sector, please contact Christian Svane.