Last week our Executive Director, Paul Smith, headed to Brussels at the request of the European Commission to join a brainstorming session on the role of central purchasing bodies in Europe.
In today’s blog, Paul outlines his thoughts on the topic and what he learned:
On 7 May I was invited to join an expert panel at a brainstorming session in Brussels, hosted by the European Commission (EC) within the Directorate of Internal Market, Industry, Entrepreneurship and SMEs. There were four other 'experts' on the panel from across Europe, and a number of attendees from the Commission itself.
Central purchasing bodies (CPBs) are defined in EU law, but essentially they are public organisations that acquire goods and services for other public bodies. YPO is one of the largest in the UK, and so I was invited to share insights on how we operate in practice, and provide tips for other European member states that may be looking to establish their own CPBs.
It was an interesting and thought-provoking session and I thought I would share some of the key points made. The EC have a view that there is a trend to establish CPBs in member states and this view was supported by an attendee from the Organisation for Economic Co-operation and Development who presented the results of a survey that concurred with this assessment. With this in mind, the panel were asked whether they felt that this was a good thing and if so, what the EC could do to support it.
In general, the panel agreed that CPBs play an important part in improving public sector procurement in member states. In particular, the main reason that a member state would set up a CPB was to improve pricing, and it was felt that aggregation helped achieve this aim. However, pricing is not the sole reason for setting up a CPB and there are other upsides and some downsides.
The upsides include the concentration of procurement expertise that can lead to more strategic procurement, the ability of a CPB to provide training or to play an advisory role, and the ability to rationalise systems and processes. Amongst the potential downsides identified was a concentration of power and potentially reduced competition.
My own view expressed in the meeting was that CPBs do have an important role to play but my experience tells me that there are two important factors for success:
- That there is a focus on the end user as a customer. This was endorsed by the representative from the French Health Service, who stated that he felt it was important that decision making was as close to the end user as possible. YPO have a strong focus on being customer driven, and we always try and ensure that our procurement solutions are driven directly by the needs of the end users.
- That the use is voluntary rather than mandatory. It is important that the success of the CPB is linked to how well the customer is served. If the customer is not being served well, then they are free to choose a different route. This is one of the things that keeps us on our toes and focussed on customer needs. A mandatory role can often lead to a poor level of service and dissatisfaction amongst the end-user community.
In summary, I think that the most successful and sustainable model for CPBs is one where there is a relentless focus on meeting the needs of the customer. YPO has been in existence for over 40 years and it is through a passion for customer service that we will continue to grow and thrive. This would be my advice to any country seeking to replicate our success.