Case Study: Spend Analysis: A MAT in the North West of England

Client:

A MAT in the North West of England

Overview:

We were approached by a large multi-academy trust in the North West of England to identify opportunities for them to be more strategic about their procurement.

The benefits of strategic sourcing in education have helped realise huge cost savings. The necessity to acquire products and services more efficiently is a growing concern across the MAT. A major step in becoming more strategic is to conduct a spend analysis, which identifies key sourcing opportunities.

Objective:

Education Buying completed a spend analysis for the Trust’s non-staff expenditure for 2019/20 and 2020/21, which was accessed via the Trust’s finance system. We used this data to identify suppliers with whom the Trust may have contracts in place. The identified suppliers were contacted to compile a Contracts Register on behalf of the Trust. The spend analysis shows that the Trust could achieve cash savings and operational efficiencies by putting in place Trust-wide contracts for common areas of spend.

The Challenge

Collation of data

Via a Letter of Authority from the Trust, Education Buying contacted all “in scope” suppliers of the 20 plus schools within the Trust to access copies of all current service-related contracts. The initial list included hundreds of different suppliers. To contact each supplier and follow-up when there was no response took time. Finally, we had an 84% response rate from the supplier base following at least two engagements with each supplier.

Our Solutions

Savings opportunities

Target high risk areas of expenditure to develop approved suppliers lists and / or frameworks. Additionally, a deep dive into specific categories was conducted to generate savings through consolidating spend.

Contracts register

New contracts register developed for the Trust, covering high value or high risk contract areas. The exercise revealed pockets of expenditure which are not governed by contracts. All copies of contracts have been collated within a single folder.

Contractual governance

Some expenditure is subject to the PCR2015 regulation thresholds and a process should put into place to ensure expenditure is competed or the Trust use compliant contracts / frameworks.

The Results

From the spend analysis we recommended:

Use the contracts register developed for the Trust across all member schools by ensuring all SBM or finance colleagues have access and engage with the tool.
Develop a procurement strategy for the top spending categories across the Trust, including FM (maintenance, transport and furniture), Admin and General Expenditure (agency staff, photocopying, staff training and professional services) and Educational Supplies.
Adopt a tiered approach to managing the cleaning and catering requirements across the Trust by channeling more spend through the appointed contracts and reducing the “tail spend” with less critical
suppliers.
Develop core product lists across the Trust for standard goods, including cleaning materials, stationery, IT hardware and possible IT software and licenses.
Continue to engage with collaborative procurement initiatives, such as buying groups or regional procurement initiatives.

The Impact & Benefits

Contracts Register: This will help to manage financial commitments for the long-term and help with procurement planning.
Procurement strategy: Reputational enhancement, remain compliant.
Tiered approach: This will help increase the value of the accounts to these core suppliers and reduce administration costs for the Trust.
Core product list: Drive down pricing through volume-based purchasing and offering suppliers commitment over an annual period.
Reap the benefits of collaborative procurement by quickly accessing pre-approved suppliers, using larger contracts that balance cost and risk with quality and offer central contract management and strong terms & conditions of contract.

It’s been a great pleasure working with the talented team at Education Buying on this spend audit exercise. It was eye-opening to find all the ways in which we can continue to save tangible amounts by implementing unobtrusive tools and highlighting which key areas to target first. The report we received has put us on the right path to a more strategic approach to procurement, so that we can keep saving money in the years to come.