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Focus On Best Practice in Sourcing Can Save an Organisation Millions

Jim Hemmington, Procurement Director at the BBC tells us about how sourcing and the Global Sourcing Standard has helped the BBC and saved the organisation millions.

“With the Digital age coming, competition is growing for the BBC – we had fixed income via the Licence Fee income but big competitors with big bags of cash were coming thick and fast from places we never even expected -  today Netflix is one of our most feared competitors.
So we needed drastic action.  Part of that action was this - a programme of rapid outsourcing.  That started in 1996 with Finance and now includes activities like collection of the Licence fee, audience services, technology, playout of our channels, and transmission. 

Because we did so much outsourcing relatively quickly we learned quickly and now some of our contracts are 2nd even 3rd generation.  We have found and, still find, incidences where we didn’t really know best practice, or how to get to it.  It can be very confusing – for example we have seen suppliers in the same market telling us to measure different things and consequently some contracts having 100s of KPIs and others having just a handful.  And in the same vein in the area of risk, we found some suppliers enthusiastically taking on risk, like volume risk, while others told us it would be cheaper to manage the risk itself.  But while we continued to address these types of issues and thought we had become excellent at outsourcing, we didn’t really know how good we were, so I wanted to find experts that could check our work and appraise what we were doing objectively.  That brought us to the NOA (now GSA).

So first what was the process? What did we find in going through accreditation and achieving the standard?

The benefits are compelling.  For the BBC if we can achieve the improvements identified from the accreditation process, and I am confident we will, I expect to see not only better and more collaborative relationships emerging as a result, but reduced acquisition costs of between 4-7%, that could convert across our entire outsourced portfolio into annual savings of £24m (4%) or £42m (7%) for the BBC, or 5 quality dramas (Night Manager or Poldark, Happy Valley), at a time when we are having to cut services.
But, also, I’m so pleased to have the opportunity to be a part of the Standards Advisory Group, promoting the standard and the accreditation process, to achieve it, because it would be fantastic to see it in action and help establish the obvious benefits that could be played out right across the industry for buyers and service providers alike.

I’m already supporting Kerry Hallard in discussions with the UK’s National Audit Office, to implement the standard across the public sector.  Imagine the impact of a 4-7% across the UK Government’s outsourced spend of £15b pa (£1b over in savings), plus what could be a near to equivalent saving on the supply side.  But it’s not just applicable to the big organisations doing big deals, it will give equally give buyers and suppliers of all sizes, especially smaller organisations where cost is such a huge driver, a means to create value and help sustain their business relationships more efficiently and make these organisations more competitive.  The impact globally of course could be breath-taking!  The GSA standard is a development with which the future must reckon and reckon seriously!  Why would you not take part!”

If you want to learn more about best practice in sourcing why not attend the GSA workshop Outsourcing lifecycle and best practice.

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