A council with a procurement finding from its auditors · Procurement Spend Analysis
Finding $610,000 a year in supplier spend
The audit letter noted that too much spending sat outside contracts. The contract register listed 140 arrangements, but three years of accounts payable showed 1,900 suppliers.
Four categories (plant hire, cleaning, traffic control and IT peripherals) were split across dozens of suppliers at different prices. Consolidating them is worth about $610,000 a year.
Insight
Of $38m in supplier spend over three years, 23% was with suppliers who had no contract, and four categories (plant hire, cleaning, traffic control and IT peripherals) were split across dozens of suppliers buying the same thing at different prices.
Advice
Put the four fragmented categories to market as panels, tighten purchase-order controls for spend above the quotation threshold, and report off-contract spend to the audit committee quarterly.
Opportunity
An estimated $610,000 a year from consolidating the four categories, plus a clear answer to the audit finding.
Results
Two of the four panels were in place within six months, and off-contract spend fell from 23% to 14% in the first year of reporting.