Chancellor George Osborne finally wielded his axe last week and after several months of fretting about significant budget cuts, local government officials now have to start cutting.
After factoring in grants from central government, local government can expect to see a 26% overall decrease in funding across the next four years (see further reading, below). The effects will be felt everywhere, whether at the broader administrative level or at the individual point of the household.
Consultant KPMG has gone as far as to warn that local authorities and a number of companies in the government supply chain could be bankrupt within four years (see further reading). Such concern means that smarter procurement and having the right systems in place to enable intelligent purchasing, have never been more significant.
Rather than knee-jerk cuts, organisations must manage transformation in a systematic manner. Smart leaders need to concentrate on technologies in four key areas to help deliver cost-effective and efficient procurement – analytics, sourcing, requisitioning and invoicing.
Spend analytics will enable procurement professionals to identify direct cost savings and crucial process improvements. By using metrics, measures and reports, officials can ensure that best practice is followed and value is derived from continued areas of public investment.
Electronic sourcing makes the most of web-based collaboration tools. Across tendering and auctioning, e-sourcing will help government professionals to utilise the best and most competitive suppliers across the procurement lifecycle.
Electronic requisitioning and invoicing solutions help the public sector to streamline the purchase-to-pay (P2P) cycle from the electronic creation and approval of purchase orders through to the imaging, electronic approval and reconciliation of invoices, providing further procurement control whilst ensuring purchase-to-pay efficiency. With automated P2P solutions, controls are in place to ensure invoices are paid within the suppliers’ payment terms, thereby avoiding late payment penalties.
Whatever happens and whatever cuts are made, local authorities are likely to remain under continued scrutiny. Already they have been called to report to government in early December about their progress on savings and reforms (see further reading).
One of the only possible solutions to the public sector spending cuts is that local government officials roll-out the use of smarter procurement strategies underpinned by intelligent procurement technologies to achieve the deep public sector spending cuts required of them. Those that procure smartly will survive the dark years ahead without dramatically impacting the quality of front line services.