Interview: David Noble

With a background in corporate purchasing and supply, David Noble (pictured above) sees financial matters from a business perspective – and from that standpoint, the UK government’s situation looks dire. “The government is effectively UK plc, and it’s bankrupt,” he says. “And what do you do when you’re bankrupt? You’ve got to focus in on how you work together to alleviate that situation. Departments have to work closely together on the procurement side – and far more effectively than they have been.”

Inheriting a fast-growing public debt and a massive structural deficit, Britain’s new government does indeed need to take drastic action: it is rapidly piling up loans that it currently has no way of repaying. But there is good news, says the chief executive of the Chartered Institute of Purchasing and Supply (CIPS): by changing the way it handles procurement, the government could save vast amounts of money. Noble has looked at the targets set out by efficiency guru Peter Gershon – and, he says, “those numbers are achievable. In the private sector, I would expect that kind of saving; and if I was in charge of UK plc, I would demand a bit more than that.”

During our conversation, Noble often sounds slightly appalled – horrified, even – by the purchasing practices that persist within government; practices, he believes, that render the public sector a weak buyer despite its massive market leverage. There are patches of really good practice, he says: “Where procurement is good here, it’s streets ahead of overseas governments – and I’m talking about the Americans as well as African governments.” And Noble accepts that public buyers can’t operate as freely as businesses: “There’s an advantage for the private sector, where ultimately it’s about shareholder value and making money,” he concedes. “The public sector is hamstrung – and quite rightly so – by other considerations.”

This handicap, however, cannot fully explain why public purchasers are seen as a soft touch by many private companies. “A lot of suppliers who supply both private and public [bodies] will all say that it’s a far easier time for them when they supply the public sector,” says Noble. “The public sector doesn’t come across as being as cohesive and joined-up as the private sector, and [suppliers] find it easy to negotiate the right deal. There is a tightening-up needed.”

Boiled down to a single phrase, this tightening-up means pursuing “smart, or strategic procurement”: greater coordination of buying across departments, and the rethinking of organisations’ systems and processes in order to drive out inefficiencies. “In the private sector, over the last 10 years the focus has been on getting upstream in terms of understanding the total cost base and the value chain, and in looking at outsourcing and insourcing decisions, as opposed to simply aggregated cost savings,” says Noble. In other words: don’t just try to find a cheaper supplier of paperclips; redesign your processes so you need to use fewer paperclips.

Given the importance here of organisations rethinking the entirety of their management and delivery operations, Noble is horrified at the move among some public agencies to farm out their procurement operations to private contractors. “It’s fatal: you must have strategic procurement in-house, not out-of-house,” he says. Outsourced procurement contractors “will come up with lots of short-term savings, take half of them and run, and you’re left with no capability in strategic procurement; it removes your ability to look upstream.”

In Noble’s opinion, such contractors have no interest in reducing – to continue the analogy – an organisation’s use of paperclips; instead, they’ll simply find a slightly cheaper supplier, and split the difference. This, he says, will not produce the necessary savings: “You’re throwing away the crown jewels when you do that,” he says forcefully. “I’m very concerned that we’ll see more of that short-termism, with big savings up front and no capability behind it.”

Another aspect of government procurement operations that worries Noble is what he sees as an excessive dependence on rigid processes and procedures. Introduced in an attempt to ensure best value and minimise the risk of mistakes by officials, these tendering systems may seem to cut unit costs, he says, but they mitigate against the good supplier relationships so essential to quality and flexibility. “The whole tender process is very proceduralised, which doesn’t often allow for building a good supplier relationship,” he says. “There’s an old adage that the cheapest is not necessarily the best value – but if you have to go through a strict, proceduralised re-tendering every year and the cheapest bid gets the job, you could be switching supplier every year and you’re not necessarily getting the best deal.”

The public sector, David Noble believes, must develop the skills and influence of its procurement professionals, then trust them to operate more flexibly in fast-changing markets where a rigid mode of operation will always leave a buyer one step behind. “The more rigidity you’ve got, the worse you’re going to be. It needs to be fast and flexible smart procurement, recognising the nature of changes in your supply base,” he says. “You don’t want to be hamstrung by monolithic sets of rules. What I’m saying to you in general is: the less bureaucracy the better within this function.”

Government, Noble argues, must improve its procurement operatives’ ability to “ensure there is a standardisation of quality of process”: CIPS offers a programme designed to improve process capability, he adds, and “it’s getting more and more take-up now [in the public sector] – but not as a mandated, centralised activity. It comes out through individuals saying: ‘I want to show how good I am’.” Here too, says Noble, performance is patchy across the public sector, with some departments racing ahead while others fall behind. Then the tone of horrified amazement creeps back into his voice: “The other point I’d make is that a huge proportion of government spend is not under government procurement professionals’ control,” he says. “It astonishes me. It just wouldn’t happen in a private company. You wouldn’t have non-procurement professionals handling billions of pounds’ worth of spend – but in government you do. It’s criminal.”

In fields such as social and children’s services, engineering and quantity surveying, Noble explains, officials without any serious procurement expertise spend billions of pounds. “This should not be allowed to happen,” he says passionately. “People who never intended to make a career out of procurement [but spend public money] must know the basics: they must know how to manage suppliers, they must understand value management.” The institute is working to develop training for such people, developing a “competence qualification for non-procurement professionals”.

With that in place, Noble adds, it will be down to senior civil servants to ensure that officials with buying power have the skills to match their chequebooks: “It has to be mandated by the heads of those departments that people have to demonstrate that they’ve reached this standard competency level,” he argues.

So Noble argues that a more highly skilled cadre of procurement professionals should be given more freedom from rigid procedural rules, enabling them to operate more astutely and rapidly in the market. But while he argues against the imposition of intricate rules governing the tendering process, he is also clear that departments must be forced to collaborate far more closely on the purchasing of goods and services required across government. Currently, he says, each government department operates independently as a purchaser; while in the private sector, companies’ head offices secure better prices by insisting on a standard approach that yields economies of scale.

“If you’ve got smart procurement at the centre putting together very good deals, then there has to be a degree of mandation that those deals are accepted [by departments] – and I don’t see any of that,” Noble complains. The Office of Government Commerce (OGC), he adds, may establish useful framework agreements, “but many departments choose not to take part – therefore the deal falls apart because there is no leverage, and the supplier has a field day.” Of course, says Noble, “the centre has to justify why this is a good deal – but the onus should be on [departments and agencies] to say why they will not participate, not the other way around; and I don’t get that impression at the moment.”

From the CIPS perspective, the OGC’s work to push collaborative procurement – combining departments’ shopping lists to produce economies of scale – is simple good practice. “When I was purchasing director for a big, multinational company, once the deals were done properly they were mandatory across the whole group – and if they weren’t taken up, the chief executive wanted to know why not,” Noble recalls. But within government, he fears, “it’s just not happening”.

Asked whether there’s a potential tension between encouraging greater freedom from mandatory buying procedures for departmental purchasers and backing the imposition of centralised procurement deals in some fields, Noble denies it. The enforced use of complex, rigid tendering processes weakens buyers’ hand at both central and local levels, he believes; but departments shouldn’t be free to do their own thing in areas where centralised buying could yield big savings.

“In a federal structure, you can have huge autonomy out in the regions and on local sites, but still have them joined-up on the major purchase deals,” he says. “Local entities have to recognise that the central entity has an ability to join up that they don’t; but you need good, strategic procurement in the local entities as well, because [in government] they’re still enormous spend areas. In the ideal situation, you have a small, very capable centre setting up mandatory, cross-business deals, but strong capability in the local entities to run their own show and set their own strategic agenda.”

Where individual departments have concentrated on developing strategic procurement capabilities, says Noble, the results are clear: at the Department for Work and Pensions, he says, the commercial director has a seat “right on the top table”, the procurement team is well-qualified, and “they’ve had considerable savings – up to 50 per cent in some cases”.

But such success depends on having ministers who understand the importance of procurement, plus procurement teams with the skills and influence to re-engineer departmental processes. What’s really needed, Noble believes, is a minister for procurement.

While Noble is full of praise for Nigel Smith, head of the OGC, he believes that the civil service will only make fast progress on procurement when the agenda is headed by a politician with clout across departments. Noble has discussed the idea with Smith, he says, “and I think he would be the first to say that having someone above him with that authority would make all the difference: someone with a ministerial portfolio or the authority within the cabinet to make key decisions on procurement”. Indeed, Noble argues that without such a powerful central figure, the profession will struggle to make big savings: “Some of the savings that Gershon talks about, frankly, have to have that sort of support,” he says.

So, what does Noble believe the priorities should be in government procurement? “Strong capability at the top in strategic, upstream procurement is essential; and you’ve got to have overall competence among the non-professionals,” he replies. “You need strong local procurement – so do not outsource it: that is fatal. And you need a strong mandate that central deals have to be accepted unless it can be demonstrated that they don’t work.”

The key, he concludes, is skills: “The capability in the public sector is two levels below that in the private sector, though there are pockets of good capability.” And progress here is patchy – many departments “would say: ‘we’re getting there at our own pace’. But it is not mandatory to get to that level of capability at the top, and it should be.” The slower movers, he believes, “need to consider themselves part of UK plc: they are in this with their colleagues, and they must work together to succeed. If they don’t, the ramifications are grim.”

Above all, in Noble’s opinion, what’s required is concerted, joined-up action; the kind of coordinated approach that would be expected – indeed, demanded – in a private sector organisation. “This UK plc concept has got to be applied,” he concludes. “It has to be understood that you’re all part of the same entity, and therefore forget the boundaries. You’re all part of ensuring that this entity gets out of a horrendous bankruptcy situation.”

CV highlights
1979 Moves to Philips as new products buyer 
1983 Joins NEI Projects as purchasing manager
1985 Becomes European commodity manager for Motorola 
1989 Recruited as material commercial manager by Reuters 
1990 Works as a management consultant for PMM, then moves to RS Components as strategic purchasing manager 
1998 Joins Novar plc as group procurement director 
2005 Moves to the multinational IMI plc as group supply chain director 
2009 Becomes chief executive officer at the Chartered Institute of Purchasing and Supply