Business Challenges

The DLO was set a strategic goal of reducing its operating costs by £1.2 billion. To achieve this target the organisation embarked upon a radical programme of procurement reform. Working in partnership with Atos Consulting, procurement spend was re-categorised into 28 market-facing and customer-led Category Management teams covering both direct and indirect spend across the whole of the DLO.

An integral part of the programme was a wide-ranging Learning and Development initiative designed to develop and sustain the skills, knowledge and behaviour needed to deliver and maintain the new strategy. Traditionally, the complexity of DLO procurement – responsible for everything from paper clips to through-life maintenance contracts for aircraft and ships – meant that procurement staff often had an ‘arms
length’ relationship with their suppliers.

More opportunity was needed to develop strategic relationships and investigate commercial best-practice approaches to industrial-scale procurement thereby realising the full potential of the DLO procurement organisation.

Solutions

Our solution first of all had to take on the scale of training required – over 400 Category Management and procurement professionals needed to be trained in Strategic Sourcing skills while a further 2,000 people required awareness training. At the same time, different teams would be starting from different levels of maturity and understanding. The procurement reform programme also had strict financial targets and aggressive timescales. In order to accommodate these factors we set up a Learning and Development programme based upon several practical principles:

• Team based – to efficiently deliver customised training to the whole team whenever possible including the end customer and suppliers if relevant.
• Modular and business driven – to deliver training at the point-of-need in each team’s strategy cycle rather than to a published schedule.
• Context – to tailor training that uses each team’s real life data and business situation.
• Sustainability – to develop training providers who could deliver training courses without external assistance.

Benefits

The benefits of any training programme are first of all expressed in the cost savings they achieve for the DLO. To April 2007, the Category Management teams have achieved organisation-wide savings of over £300 million.

But there are also two further benefits of training that set up the DLO and now the new Defence Equipment and Support capability as a commercially driven organisation and an innovator in the implementation of government policy.

Firstly, the understanding of Category Management and strategic supplier relationships that procurement staff now have means they can identify, create and sustain business opportunities from their own experience – they are now self-initiators and managers of change.

Secondly, they are introducing their skills and knowledge to other government departments establishing collaborative networks, based on Category Management benefits, which leverage best-price contracts for a range of common supplies.

The result is the dissemination of a learning process that can have far reaching positive effects for public services generally. Feedback from the DLO and attendees produced course satisfaction ratings of 91% for the Foundation Modules, and our programme went on to win the Management Consultants Association Gold Award in the Human Resources category.

Download the DLO Procurement Reform - Learning and Development Case Study