The Marr Procurement team specialise in reducing operating costs for care providers without impacting on care or quality. Over the last eleven years we have worked with sixty-eight care groups, helping our clients to deliver savings in all spend categories. The Marr Procurement team are entirely impartial and have no preferred relationships with any supply partner; this impartiality is critical to ensuring the best possible outcome for our clients.
The Iran conflict is creating cost increases which in some cases, like energy, food and consumables costs, are material. We are also now seeing a considerable knock-on effect onto the price of consumables like disposable and industrial gloves, polythene products and disposable garments. Food costs have been predicted to rise by 10%.
Distribution costs are also increasing. Some clients have reported their care workers can’t afford to travel to their place of work so are seeking work from temporary labour agencies in a bid to earn more. We are also seeing an increasing number of suppliers invoking Force Majeure clauses, paving the way to passing on inflationary pressures to care providers.
These new cost pressures have come at a time when social care providers are already under considerable cost pressures.
These cost pressures can be addressed by introducing a Procurement programme to compete your material areas of spend. There are some spend categories where the market is soft. Take Insurance for example; given the soft market, we are seeing material savings of between 25 and 37%.
So Where To Start?
Key now is to identify which spend categories to compete so that the resultant savings mitigate the Iran conflict inflationary pressures. Even if a spend category is impacted by the Iran conflict, now is the right time to introduce a professional, competitive process. Start by identifying the highest spend categories and then assess the supply contract constraints as some supply agreements might be fixed etc.
Then it’s crucial to involve the right stakeholders in your organisation from the outset; giving real and early consideration to hearts and minds is crucial. Once the requirements have been documented and formalized via a tender pack/bid documents, it’s about choosing capable supply partners to involve in the tender evaluation.
There should be a number of key steps in that evaluation process including stakeholders signing off the requirement, finance signing off the baseline so savings can be audited, involving the right suppliers, running a professional and rigorous tender programme, evaluating the bids objectively and in an auditable manner, then negotiating and implementing the final supply agreement.
Then post go live, it’s crucial to ensure the benefits are locked in via automation, (via our own marrgo.com buying website), and via professional supplier and contract management. That way we maximise savings from a competitive evaluation and then ensure such benefits remain on the P&L and are not eroded over time.
If you would like to discuss how to mitigate the Iran conflict cost pressures, please get in touch by contacting [email protected]