M&S Environmental Programme Makes £70million Savings

Marks and Spencer’s “Plan A” corporate social responsibility strategy has led to efficiency savings of over £70 million last year.
The company has been working to reduce the environmental impact of its business by implementing a raft of efficiency measures in its stores and supply chain.

It’s latest “How We Do Business Report” shows that the measures have reduced carbon emissions by 13 per cent, saving £13.5 million, reduced waste by 34 per cent and saved £2 million by increasing fuel efficiency. Overall the company has achieved 95 of the 180 commitments it made when it launched Plan A in 2007, with a further 77 on target, 7 behind schedule and 1 on hold.

Marks and Spencer is now working to further reduce carbon emissions and improve efficiency elsewhere in its supply chain.

This report shows that corporate social responsibility can have real benefits to companies’ bottom line. A lot of the time, environmental efficiency measures also deliver financial benefits to businesses, making supply chain efficiency a win-win situation.

As well as saving money, companies could find that making improvements to their supply chain operations delivers additional benefits. Companies with a better environmental record increasingly find that this impacts on their reputation and helps to win them more business, and as larger companies focus on corporate social responsibility it’s important that smaller businesses keep up.

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Public sector’s procurement potential “neglected” by government

The UK government is neglecting the potential of the public sector by relying on the private sector to deliver innovations in procurement, a think tank has said.

A recent report by the Work Foundation has said that the coalition is failing to deliver the innovation needed by the public sector to boost value for money amid widespread cuts. Instead of ‘outsourcing innovation’ to the private sector, the public sector should learn from and emulate the procurement procedures of private sector organisations to deliver the savings they need.

Lead author Charles Levy said: “Public sector innovation has the potential to radically improve value for money at a time of growing demand. In spite of this, there has been very little research into how public services invest in and support innovation. Putting services out to tender avoids the issue, and with rapid, swingeing cuts now being made across the board, there is a real danger that innovation will be cut along with spending. This would be counterproductive for both public services and the wider UK economy.

“If the Coalition is not to throw the baby out with the bathwater, it must look to the private sector as an example rather than a substitute for public sector innovation.”

The report singled out international education and healthcare as areas which were not achieving their full potential.

 

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Public Sector Procurement Encourages ‘Suicide Bids’

Public sector procurement encourages ‘suicidal bidding’ for building projects, an industry body has claimed.

The Civil Engineering Contractors Association has criticised government purchasing processes, which it says still award contracts to the lowest bidder rather than the company offering the best value for money. CECA says that this can encourage companies to make ‘suicide’ bids, offering prices which are lower than they can afford.

CECA has published an action plan – Ten Steps to Smarter Procurement – as part of its campaign to improve public procurement. The calls come as the government prepares to reform construction procurement in June.

“This has obvious detrimental effects for all parts of the industry,” the organisation said. “Clients may find themselves with a contractor resorting to claims or corner-cutting in order to make a margin on the project, or even an insolvent contractor if the ‘suicidal’ bidding acts as its name suggests. The consequences of this could be particularly wide-ranging as employees and suppliers will also go unpaid. Additionally, reputable companies may find themselves forced out of the market.”

Alasdair Reisner, CECA director of external affairs, said: “Clearly there will be options for better management of procurement, starting with more capable and better-trained procurement officers.

“That is not to say they are all bad, some are very good quality, but if you look across the board, there are people procuring in ways that could be done better.”

CECA’s Ten Steps to Smarter Procurement are:

1. Blocking ‘suicidal bidding’ through move from price-based contracting

CECA recommends that the government mandates a more integrated approach, where delivery teams are chosen on the basis of quality, while being incentivised to make savings over the course of the contract.

2. Halting stop-start procurement

Clients often instigate competition for projects, only to subsequently put the process on hold, or even start afresh, with no recognition of the costs this has already imposed. CECA recommends that the government puts in place a reporting mechanism to identify all cases where procurement is significantly delayed or cancelled.

3. Visibility of workload

CECA has welcomed the government’s promise to improve the visibility of public sector construction opportunities.

4. Standardise pre-qualification

Contractors are continually asked to submit pre-qualification questionnaires, a process that adds cost without adding value to the construction process – the costs are estimated to be £250 million to £1 billion each year. In 2010 the government worked with industry to produce PAS 91, a single standard pre-qualification questionnaire. CECA welcomes the support given to PAS 91 by central government.

5. Standardise references

Currently clients request that suppliers provide past project references in order to build up an understanding of their experience when delivering specific types of work. CECA would like to see the government work with industry to develop a standard reference form that could be prepared following a project completion.

6. A new deal for frameworks

Over many years the construction industry has seen frameworks develop as a tool aimed at streamlining the delivery of a series of projects for a client. Such frameworks offer benefits in terms of reduced procurement costs, but SME and regional contractors have often reported being left out in the cold by frameworks, with work awarded to a major supplier or suppliers. CECA seeks a new deal for frameworks, where the benefits of a streamlined framework are combined with a more flexible approach that allows SMEs and regional contractors to compete on a level playing field.

7. Early contractor involvement

Over the last decade, the concept of Early Contractor Involvement has gained increasing support from across the construction industry. By bringing contractors on board early in the life of projects, clients can work with them to identify issues that may improve the delivery of the project once on site.

8. Limit tender list sizes

The number of contractors admitted onto tender lists has grown, the idea being that more competition leads to lower prices. However, these large tender lists mean that more contractors are having to spend money on their bids, with a reduced chance of winning the resulting tender. This leads to reduced investment in individual bids, poorer quality solutions, and increasing costs for contactors, which can only lead to greater costs for clients in the long term.

9. Improved quality of tender documentation

Contractors are often expected to provide bids on the basis of inaccurate or incomplete tender documents, putting them in a position where they have to manage the risk associated with any areas lacking information, leading to rising costs. CECA would like to see a commitment from government that it will expect public clients not to put work out for competition until there is sufficient information to form the basis of a valid tender.

10. Inflation risk management

Contractors on long-term contracts are often left shouldering the costs of inflation, and have tended to build a margin into their bids to mitigate the risk of product inflation during construction. In order to tackle this problem, the public sector must work with the industry, using appropriate indices to capture the risks of inflation within the bid process, to ensure a fair and consistent approach going forward.

 

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