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The procurement challenge continues

The Department for Communities and Local Government’s report Household Waste Collection: Procurement Savings Opportunities sets out recommendations for ways in which local authorities can make savings from joining up their procurement processes where waste management goods are concerned.

This includes “appropriate harmonisation of waste collection goods with a view to reducing product variations and aiding high-volume procurement”.

The report estimates that savings of up to 35% could be realised on wheeled bin purchasing, along with a further 10% in relation to refuse collection vehicles (RCVs), adding up to a reduction of around £70m a year.

At face value, joining forces to procure larger volumes as part of framework agreements seems to make sense, particularly when the public sector has seen a 40% reduction in funding since 2010 and is likely to see similar reductions during the next five years. But how practical and achievable is it in reality?

Historically, there have always been regional variations in waste collection methods, and this is still the case today. There are a number of reasons why, including local waste disposal methods, public demand in relation to collection frequency, preferences from individual councils in relation to branding and the nature of the environment in which RCVs are operating.

This variation poses challenges for manufacturers in that there is no such thing as a ‘standard’ RCV and, although the bespoke, specialist nature of operations such as Dennis Eagle means we are well-equipped to meet individual customer demands, this can result in a significant difference in unit costs.

As a supplier, we recognise the need variationsto work in close partnership with the public sector to help deliver savings in the face of budget cuts. However, achieving standardisation nationally is simply not practical and, even at a regional level, seems unfeasible in the short- to medium-term in many cases.

Despite this, there are some examples of successful synergies between regional authorities – Cornwall and Nottinghamshire, for instance – where greater efficiency is being delivered through the formation of strong partnership arrangements with suppliers.

The security offered by high-volume procurement and significant long-term maintenance contracts places successful bidders in a strong position in the short- to medium-term. However, it could equally lead to an even more fragmented and competitive market, meaning that suppliers will be under pressure to raise their game to deliver the best value and service proposition when it comes to household waste collection.

If tangible savings are to be realised, there is certainly a requirement for authorities to work together more closely, but there is a clear need for greater transparency across the UK.

As the DCLG report highlights, authorities do not necessarily need to be physical neighbours to benefit from joint procurement. This is particularly relevant in cases where the nature of the environment in which the vehicles operate dictates the need for specific configurations.

For example, narrow rear steer vehicles may be required to negotiate streets in built-up urban areas with parked cars and high volumes of traffic. But if the rest of the county is largely rural, different vehicle specifications may be required to ensure maximum efficiency throughout the region.

Although it is clear that councils need to make savings, it is also important to ensure that cost is not taken at face value. The average life span of an RCV is seven to 10 years, so operational costs must be taken into consideration.

Dennis Eagle

The same is true of social value, particularly with the Public Services (Social Value) Act 2012 now requiring all public bodies in England and Wales to consider how the services they commission or procure can be used to improve the economic, social and environmental wellbeing of an area.

In short, framework agreements and the standardisation of vehicle specifications can work. In many cases where authorities have joined forces to procure in larger volumes, the outcome has been successful, resulting in stronger partnerships with companies throughout the supply chain.

But for this model to work in the long-term there needs to be more transparency, greater collaboration and a willingness to look beyond geographical boundaries. Change will not happen overnight. There needs to be a trade-off between providing manufacturing and cost efficiencies and delivering the right solutions to the market to enable the sector as a whole to operate as effectively as possible.

Richard Taylor is sales and marketing director at Dennis Eagle

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