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Showing posts from December, 2013

How transparent are some sectors?

The Israeli missile Barak missile has now finally cleared the procurement process in India, 5 years since it started.  What was the reason fro the delay? Allegations of corruption (  http://www.firstpost.com/india/defence-ministry-clears-procurement-of-barak-missiles-1303271.html  ) In this particular case there was no case to answer. Indian defence procurement has had recent problems with allegations of corruption, the most notable of which has been the recent case of Finmeccanica resulting in the loss of a significant helicopter order $750m that could have led to a further order of $250m.  Not only was the first order cancelled but subsequent investigations into the original deal resulted in the successful prosecution of the Finmeccanica CEO. However, the Finmeccanica story is not the first, in fact it is someway down the list of previous defence procurement scandals within the Indian defence sector with cases stretching back over thirty years. What is really in the article W

Diversification - The art of survival

Congratulations to BAE Systems on the recent contract with South Korea to upgrade aircraft. "Nothing new!" many will shout; but what is very interesting is the fact that BAE Systems are not the OEM of the aircraft. Yes, BAE Systems are a world leading manufacturer of aerospace vehicles and equipment and yes they provide outstanding support to the armed forces who operate BAE Systems aircraft. This marks a real departure in their strategy of providing services. Upgrading an aircraft system from another OEM. Understanding the different engineering layouts and getting the bill of materials correct will prove to a real challenge, especially as the OEM of the aircraft (who will also have very strong relationships with component suppliers) was beaten in the competition. A great story, which could only have been better was if the work was being undertaken in the UK. Let's hope that this departure for BAE Systems in upgrading other OEMs aircrafts for clients is successful

Risk in the supply chain and unexpected consequences

We've always known that risk in the supply chain is difficult to capture in totality and there has always been unforeseen risk lower down in the supply chain that results in significant problems.  The analysis from +MIT and +David Simchi-Levi. Recognising the impact that problems in low cost component supply can have is important and recognising that the impact can be disproportionally greater than the cost of the item is worthy of note.  Without re-visiting our previous article on managing by clichés this is perhaps worthy of "ruining the ship for a ha'penny of tar". The summary article in +Supply Management also raises the need for mitigation strategy.  The article and the need to manage risk are timely reminders following on from our recent article on the project management problems experienced by the BBC on its DMI project. http://www.supplymanagement.com/news/2013/supply-chain-risk-occurs-in-unexpected-locations-and-components

OJEU 2014 Thresholds Published

The revised thresholds requiring OJEU competition have been published.  Slight differences in the values over the published 2 year rates are due to inflation and currency fluctuations. For more information view the following link: http://www.walkermorris.co.uk/business-insights/new-public-procurement-thresholds-1-january-2014-published The link has some interesting points and especially the question of VAT applicability will be raised.  Hopefully the following link will help in identifying the limits: http://www.ojec.com/Threshholds.aspx

Christmas Tree Procurement

The excellent article in Supply Management identifies the costs incurred by government departments for Christmas trees in 2012, http://www.supplymanagement.com/news/2013/50-fold-price-difference-on-government-christmas-trees-0 Some questions fall out from this: "What types of trees did the FCO buy for £750 each?" "What Christmas tree do you get for £15 at the DfT? and was it on public display?" "No detail on the Christmas tree at the Treasury, does this mean the Chancellor has cancelled Christmas? austerity measures?" From our earlier comment on the BBC it would be interesting to see what the expenditure on Christmas trees by the BBC was for 2012.

Government Procurement Skills

It would seem that now is the season for airing government procurement and contract management failings: Local government - http://www.supplymanagement.com/news/2013/local-government-not-taking-advantage-of-procurement-advice Central Government - http://www.supplymanagement.com/news/2013/review-of-g4s-and-serco-contracts-reveals-deficiencies-in-key-controls The actions from Messrs Crothers and Hurd will be decisive in improving the performance of procurement and contract management within central and local government.

Central Government failings in Contract Management

We've covered this story for the last couple of months and have always said that there were problems in the contract management of the G4S and Serco Ministry of Justice (MoJ) contracts.  The report makes for sorry reading, page 13 is the Executive Summary ( https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/267693/contract-management-review.pdf  ) There are three crucial questions following on from this report and its publications are: What will the government do to resolve the skills shortfalls? Will Serco and G4S be welcomed back in to the government? Despite some contracts being reviewed further, the government exclusion of G4S and Serco from competing for government contracts at present has the door been left open to compensation claims should no fault be found? The following government report heaps yet more worries on the government, 28 contracts reviewed and any shortcomings are not the contractors.  To quote from the report "the most sig

High technology project derailed by project management skills

This week has seen widespread coverage of the former BBC Director General, Mark Thompson, being interviewed by MPs on the Public Accounts Committee (PAC) on the failure to deliver the Digital Media Initiative (DMI).  Apart from the detail of the report from PwC what is staggering are the costs associated with this project. Project budget spent - £100m Project failure report - £263k Chief Technology Officer (CTO) salary, who has ben suspended on full pay - £280k This doesn't include the cost of the PAC and the costs associated with bringing Mark Thompson back to the UK.  What must not be forgotten is that all of the money detailed is public money; obtained either through the TV licence fee in the case of the costs listed above or via taxation in the case of the PAC.  Putting aside the gargantuan costs being suffered by the public purse the report has some salient project management reminders. Lack of appropriate oversight. Ineffective governance, risk management and report

The fallout from G4S and Serco

The government identifies the preferred bidders to fulfil the tagging contract. http://www.supplymanagement.com/news/2013/capita-awarded-interim-electronic-tagging-contract Check out the bidders: Capita, Buddi, Astrium, Telefonica. So what does this mean? a large outsourcing firm, a niche specialist technology firm, an element of EADS making redundancies in its   satellite business and a giant Spanish telecoms firm. Which one will the government chose and what will be the ramifications for UK taxpayers and businesses? The fall out from the original findings of the tagging issue is now being played out. It should be hoped that for the credibility of the government and the for sake of the tax payers purse that the government was right....

The problem with public sector procurement?

There has been a great deal of coverage in the recent days in the press regarding public sector procurement and shortcomings.  Hopefully the following article will draw a thread through the themes and come to a conclusion that might not be appreciated by the establishment. There are three articles that create a theme.  The first relates to the hesitancy of the public sector to embrace electronic invoicing. The second reports that the Civil Service are failing to effectively contract manage and finally an article about a shortage of contract management skills in the Civil Service. In brief the article will link the articles together and conclude with a hypothesis that links these problems with the Chancellor's autumn statement making yet more savings in government departments and ask whether in light of all this where improvements will come and who will champion the improvement. The first article from the link below identifies a problem with electronic invoicing and how electr

What gets measured, gets done

Some really good advice on the article, whose link is below, on managing contracts and relationships with suppliers. http://www.supplymanagement.com/news/2013/making-the-relationship-work Here are some further thoughts: If it is nothing more than an opportunity to use cliches then the following might be as good as a start as one might need: What gets measured gets done .  Set your KPIs that are meaningful to the success of the business ans ensure that they are SMART. I appreciate that this may sound obvious but making sure that you can actually meaningfully measure success is essential; setting a KPI that is not measureable is pointless.  This can also be further explained as " garbage in, garbage out ". It takes two to tango .  The relationship between supplier and buyer is very much a 2 way street; both parties have a vested interest in making the arrangement a success.  Fundamentally, the buyer wants value for money and the  supplier wants repeat business.  Beating the sup

The importance of an effective supply chain

This article in the Daily Telegraph is thought provoking and as relevant to the industry sector as any other sector: http://www.telegraph.co.uk/finance/newsbysector/energy/10503106/UK-missed-chance-of-offshore-wind-jobs.html The significant investment and potential to build a really strong professional knowledge and skills base has been lost due to the failure to ensure an effective supply chain is in place. Time for all to start thinking about the importance of capable supply chains.

Government procurement and time to contract

Back in the news is the problem with government procurement and time to contract. http://www.supplymanagement.com/news/2013/labour-mp-hillier-attacks-public-procurement-processes Whilst encouraging small and medium size enterprises there are a number of worrying counter points to the political suggestions (it should be noted that only one other country in the article is in Europe and subject to OJEU regulations): Quicker procurement versus the need for due diligence Breaking down bigger contracts versus reducing the supplier base and reducing costs. With government departments struggling to manage contract delivery increasing the number of contracts presents the very real potential to exacerbate the problem. The article raises a very interesting point regarding the ownership of IP.  The government departments should be taking a much more individual and relevant approach to the ownership of IP and when it applies. What is absolutely spot on is the need to improve the compe

Managing Suppliers and the Supply Chain

Appearing in the Daily Telegraph this article is excellent and offers some great advice on dealing with suppliers. http://www.telegraph.co.uk/sponsored/business/innovation-work/10460804/business-tips-suppliers.html Subjects range from getting others parts of the business involved in the selection process, the need to build relationships with suppliers, the implications of geography on cost and responsiveness and really key to start ups - payment terms.

The Importance of Effective Supply Chain

A fantastic article in today's Telegraph about a new venture breaking in to a market with an established sector leader. http://www.telegraph.co.uk/finance/yourbusiness/10486175/Start-up-rivals-Nestle-with-coffee-capsules.html The article incorporates salient notes on getting on board professionals with the relevant expereince and creating a suitable supply chain strategy that ensures that the supplier-buyer relationship is balanced.  The outcome of these activities and minimising wastage in the manufacturing process has enabled the new entrant to challenge the established players