Christos Tsinopoulos, David Greenwell, Professor Macaulay, Ian MacFadyen and Oliver Vogt (Durham and Teesside Universities)
Procurement…a dry word, and one which means little to many of us. But procurement – the process by which the supply of goods and services is identified and secured – not only involves the expenditure of large amounts of taxpayers’ money but also has significant impacts on local economies. Different criteria may be employed in the choice of a contractor – for example, experience and cost may be weighted differently – and the choice of these may influence the eventual selection of supplier.
Researchers from the universities of Durham and Teesside were engaged by the North East Procurement Organisation (NEPO) to conduct research into the consequences of current procurement practice in the North East of England and to make recommendations as to how these can be changed and adapted to improve the performance of the supply chain.
Three strands of research, both qualitative and quantitative, were involved in the study, which followed on from earlier work by lead author Christos Tsinopoulos. Evaluation of financial information on procurement from existing databases was supported by information obtained via an interview programme and through workshop sessions.
The findings of the research, which was presented in March 2012, demonstrated that procurement practices had an influence over which supplier was successful in winning which project. It was established, for example, that larger companies were awarded more of the larger and longer-lasting projects than smaller local firms, which were more likely to compete successfully for smaller, short-term contracts.
A major concern to emerge was the perception among the smaller local firms that the procurement process was effectively weighted against them, with consequent negative impacts on their business – a concern apparently borne out by the study’s finding that both the timescale of procurement and the costs involved count against the smaller potential suppliers.
The team put forward key recommendations, the adoption of which will, it’s hoped, have a positive impact on the local economy. Most notably, they recommended that information on forthcoming contracts should be made available much earlier than is currently the case, giving potential suppliers longer to prepare their submissions. This could be achieved both via personal ‘meet the buyer’ events and by developing an online portal with open access to procurement information. Both of these suggestions are currently being implemented.
The study also addressed the disproportionate success of larger companies in terms of project experience, recommending that expertise should be given more weight in the selection process. This and a number of other recommendations aimed at increasing the success of smaller local companies in procurement are being taken forward. It’s hoped that the changes will prove beneficial not only for suppliers and procurers, but also for the local communities in the North East, on whose behalf the money is spent.