Union, principally financed by the EU
A joint initiative of the OECD and the European
Seminar jointly arranged by the Ministry of Finance of Turkey and OECD/Sigma
The New Public Pocurement Procedures and Instruments
The Danish system on framework agreements, centralised
and coordinated purchasing
Presentation by Mr. Søren Jakobsen, CEO, SKI A/S
Ankara, Turkey, 5-6 February 2008
How to get more
money for those it’s
really all about?
© OECD
Union, principally financed by the EU
A joint initiative of the OECD and the European
The Danish system on framework agreements,
centralised and coordinated purchasing
Agenda
A
few facts about the company SKI
 The company’s new strategy
 The future strategy of SKI
• SKI – the interactive company …
• Our vision for a “Centre for Public Procurement”
• Thoughts on competence development
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A few facts about the
company SKI
Limited company established in 1994
Business model
A percentage (typically 1%) of
turnover on contracts from vendors
Field of activity
Contributing to greater efficiency in
the area of public purchasing by
establishing and maintaining attractive
framework agreements
Number of employees: app. 60
Number of framework agreements:
app. 50
Owners
• Ministry of Finance (55%)
• KL, the National Association
of Local Authorities (45%)
The company is situated at the
harbour front in Copenhagen
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Union, principally financed by the EU
A joint initiative of the OECD and the European
A few facts about the company SKI
Present activities







Framework contracts (on large ’standardized’ procurement
areas)
Advise on public procurement (tools for estimating
procurement volume, data collection and handling, choice of
supplier and solutions, procurement policy and strategy,
green procurement, etc.)
Building of qualifications (user and networking groups,
courses, seminars and conferences, training programs for
vendors sales staff)
Publications and communication (guides, best practices,
articles, PR, advice and aid regarding internal
communication)
Tools (electronic tendering system, mini-tenders, e-auctions)
E-commerce initiatives (customer-related price lists, advice
on implementation of e-commerce)
Assistance from external consultants (advise on what and
how to buy, spend analysis, etc.)
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A few facts about the company.
SKI’s turnover broken down by
customer segments.
+20%
9.400 m.DKK
(mill. DKK.)
(=1.250 m.Euro)
+18%
MA
+26%
50%
+17% 28%
+19% 11%
-9% 11%
Central
government
Municipalities
Semi-public
companies
Regions
© OECD
Union, principally financed by the EU
A joint initiative of the OECD and the European
A few facts about the company.
SKI’s turnover broken down
by main product categories
IT
Energy
Tele & data communication
Travel
Food
Furniture
Office stationary and books
Vehicles
Equip. for research & science
Misc. electronics & hand tools
Kitchen equipment
Misc.
© OECD
132 billion DKK
Building and
construction
Level of Standardization
Low
High
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A few facts about the company
SKI’s focus on products and services
Roadwork
Medicine
Cleaning
Special
software
Clothing
Hospital equipment
Temporary workers
Craftsman services
Window-cleaning
Special
hardware
Eldercare
Engineering services
Hospital articles
IT- and management
consultancy services
Open Source
Handicap aid
Scanning of
construction
drawings
Mail and
parcels
Gas
Electricity
Food
Travel services
Ambulance-service &
patient transport
Lawyer- and
accountantservice
IT-outsourcing:
-Mainframe & Midrange
IT-outsourcing -Distributed environment
& application handling
Business process
services
Advertising
Cleaning articles
Catering services
Printed matters
4 billion DKK
Tele and data communication Office stationary
IT-standard
Furniture
IT-standard hardware software
Vehicles
Fuel
Office machines
Newspapers/
magazines
Financial services
Hearing aid
8 billion DKK
IT for education
Courses & conferences
Guard services
White goods
Large Potential turnover Small
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A joint initiative of the OECD and the European
SKI’s new strategy
Background




The goals of the current strategy from 2002 are
accomplished.
The Danish State has established their own
procurement programme.
A major restructuring of the Danish public sector –
fewer but larger local governments – took effect on
January 1, 2007
Local procurement networks have been
established.
© OECD
Union, principally financed by the EU
A joint initiative of the OECD and the European
SKI’s new strategy
Overview
What is new in SKI’s strategy?
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Creating a foundation for further gains from procurement by pooling and
co-ordinating procurement volume and a closer involvement in the
customer's procurement.
Strengthened focus on local government.
Improved documentation of savings both by product group and by
customer.
More dynamic financing of SKI’s activities
Partnerships with the leading and interested customers
Easier use of SKI’s framework contracts through further development of
the contracts’ content, connection and accessibility.
Strengthened activation of suppliers. Local as well as international.
”Packaging” of framework contracts, services and communication so that
SKI is able to offer coherent solutions and meet the customers’ political
agenda, and thereby secure managerial impact and support.
Securing a more qualified procurement debate through documentation and
presentation of facts.
Investment in renewal.
© OECD
Union, principally financed by the EU
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SKI’s new strategy
Mission
SKI creates documented increased returns of scale in
public procurement by pooling volume, qualifications and
system development for the benefit of SKI’s customers.
Through close cooperation with customers and suppliers
SKI secures attractive framework contracts.
SKI’s framework contracts make it easy for the public
sector to purchase the needed solutions, products and
services in the cheapest possible way while showing
environmental, energy and social responsibility.
SKI’s earnings must make investments in new
procurement initiatives possible. Initiatives that must be
prioritised in a commercial way.
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SKI’s new strategy
Vision
SKI strives to be a central player, that makes public
procurement more effective and develops it.
SKI strives to inspire and support public organizations
and their purchasing agents in achieving gains through
efficient procurement and help promote an effective
public administration.
Based on openness, equality and qualifications SKI
strives to be the natural and inspiring focus point for all
players involved in public procurement.
SKI must therefore be an innovative, effective and
challenging workplace, that is able to attract and
develop the best employees.
© OECD
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A joint initiative of the OECD and the European
SKI’s new strategy
Goals
 Growth
• SKI’s turnover must increase to 13 billion DKK by 2012
• The turnover from the municipalities must increase to 50% by 2012.
• Growth and new initiatives must be self financed. The average return
before tax in the years 2008 to 2012 must be 1 million DKK per year.
 Trust
• For each tender the coordinated turnover must be at least 25%.
• For each tender a documentation of savings that is accepted by
customers must be made.
• During 2008 a minimum of 5 partnerships between customers and SKI
must be established, and the number must grow by 2 each of the
following years.
 Qualifications
• There must exist a plan for competence development for each
employee.
• Change of staff (employee initiated) must not exceed 10% per year.
© OECD
Why?
Priority
Union, principally financed by the EU
A joint initiative of the OECD and the European
SKI’s new strategy.
Relationship between vision, substrategies and specific actionplans
How?
- SKI strives to be a central
player, that makes public
procurement more effective
and develops it.
- SKI strives to inspire and
support public organizations
and their purchasing agents in
achieving gains through
efficient procurement and help
promote an effective public
administration.
- Based on openness, equality
and qualifications SKI strives
to be the natural and inspiring
focus point for all players
involved in public
procurement.
- SKI must therefore be an
innovative, effective and
challenging workplace, that is
able to attract and develop the
best employees.
1. Attractive
framework agreements
• Product and market insight
• Coordinated volume
• Intensification of competition
between suppliers, including
foreign
• Improved documentation of prices
and savings
2. A new order of priority
between customers
3. Cooperation
•
•
•
•
Customer groups
Experience groups
Centre for public procurement
Owners and political support
4. A new order of priority
between contract areas
5. An attractive and
professional workplace
• Attracting and developing the
employees
• Internal knowledge sharing and
exchange of qualifications
• Tight project planning
• Strengthened financial control
8. Main issues
• Prioritising contracts
• Focus on most saleable contracts
• Focus on use of existing contracts
instead of establishing new contracts
• The health area
• Further development of models for
tendering
• Standardisation like The Danish Ministry
of Finance
• Regional sub-contracts
• Helping with customers’ individual and
sector specific tenders
• Involvement of the suppliers’ sales
organizations
• Supplier follow-up
6. A synergy with the
suppliers
7. Electronic purchasing
• Prioritized and organised sales force
• A concept for partnerships with key
customers and local procurement
networks
• Development of SKI’s financial model
• Coherent IT strategy
• E-catalogues
• E-auctions, mini tenders and
dynamic purchasing systems
• Easy access to relevant information
• CRM-service
•
•
•
•
Environment
Energy
Social clauses
SMEs
© OECD
All initiatives must be evaluated on the following scales:
Union, principally financed by the EU
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SKI’s new strategy
The 8 dimensions of priority
Isolated solutions
Monologue
Coherent solutions
Dialogue
Do it yourself
Easy does it
One to one
One to many
Feelings and beliefs
I
”Window-dressing”
Launching of new initiatives
Knowledge and documentation
We
Business
Increased use of existing
initiatives
© OECD
II. Coordinated volume
 The customers commit themselves
to buy a specific amount from a
specific supplier on the framework
contract. The supplier gives an
extra discount.
III. Lowest daily price
 A customer obtains the price for the
day from a specific supplier on the
framework contract for a specific
product.
 SKI obtains support from other
customers.
Tendering
The customer chooses one of the suppliers on the
framework contract
Before the tender
I. Commitment to using the contract
 Customers, typically from the
customer group, commit themselves
to use one of the suppliers on the
framework contract for all procurement within the contract’s coverage.
0,10%
II. Commitment to using a standard
assortment from one supplier
 Customers commit themselves to
use a pre-defined assortment of
products/services from only one
specific supplier. The supplier is
chosen by the customer group,
+0,15%
III. Coordinated volume
 The customers commit themselves
to buy a specific amount from a
specific supplier on the framework
contract. The supplier gives an
extra discount.
+0,05%
IV. Lowest daily price
 A customer obtains the price for
the day from a specific supplier on
the framework contract for a
specific product.
 SKI obtains support from other
customers.
IV. E-auction / Mini-tender
 The customers obtain a price for a
specific product/service with a
specific volume and period of time.
(Until now only used in connection to
the Danish state’s procurement
programme and SKI’s contract in
regard to canteen service)
Buying
The customer offers full supplier independence
amongst the suppliers on the framework contract
Time
I. Commitment to using the
contract
 Customers, typically from the
customer group, commit
themselves to use one of the
suppliers on the framework
contract when it is established.
This is noted in the material
presented in the tender process.
Union, principally financed by the EU
future
In the
and the European
initiative of the OECDToday
A joint
Sub-strategies and specific actionplans
Attractive framework contracts
Committed and coordinated volume
V. E-auction / Mini-tender
 The customers obtain a price for a
specific product/service with a
specific volume and period of time.
 SKI coordinates and obtains
support from other customers.
 If the mini-tenders are complex
external consultant services can be
involved.
Yearly bonus to the customers
when the agreed volume has
been reached
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Union, principally financed by the EU
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The future strategy of SKI
Primary focus points
1st wave
3rd wave
2nd wave
2005
•Market
orientation
•Revitalisation
of the
organisation
2007
•Processes and
systems
•Building
up of
competences
•A deepening and
broadening of
partnerships
•Knowledge
sharing & valuebased leadership
© OECD
Union, principally financed by the EU
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The future strategy of SKI
SKI – the interactive company.
• Attractive
work-place
Talented
• Competence
colleagues
-building
• Recruiting
• Job
appraisal
interviews
• Curiosity
• Social
competence
SKI
the interactive
company
Externally
Internally
• Growth
• Simplification
• Prioritising
• Management
training
Good
management
• Partnerships
• Structural frame
Unique
• Building
organisation
• Culture
• Values
• Knowledgesharing
Value-adding
Productivity
• CRM
Supporting • ETHICS
technologies • ERP
• Electronic
archives
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Union, principally financed by the EU
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The future strategy of SKI
SKI’s vision: ”Centre for
Public Procurement”
Aims:
• Openness
• Cooperation –internally and externally
• Flexibility
• Proximity to customers, suppliers and
cooperating partners
Vision: SKI wants to be the natural and inspiring
focus point for all persons and organisations
involved in public procurement – in an attractive
building.
The elements of the concept
• Other organisations are invited to become
tenants
• Project facilities
• Seminar and conference facilities
• Showroom facilities
• Service for visitors
© OECD
Why is competence development so important to SKI?
Union, principally financed by the EU
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Sub-strategies and specific action-plans
An attractive and professional workplace






Customers’ expectations
Customers' professionalization
Customers ”deposit” their success at SKI
Own ambitions regarding market orientation,
dialogue with top management and sale of
solutions (instead of products/services)
Rising demands on competencies as a result of
diminishing savings from procurement
The right customer-solutions can only be found
through close collaboration between
organisations

Start of
previous
strategy in
2002


Demands on
competencies
Competence
development
SKI has been through a fantastic turn-around…
The competencies of management and
employees are fully utilized
More and more new projects and activities
reveals the need for competence development
Time
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Thank you for your attention!
Comments and questions …
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