Procurement Optimisation Services
Procurement optimisation is the process of reviewing how an organisation buys, manages contracts and works with suppliers, then making targeted improvements to reduce cost, improve performance, strengthen compliance and make procurement more efficient.
For public and third sector organisations, that can mean much more than negotiating lower prices.
It could mean identifying fragmented spend across departments, improving an underperforming contract, simplifying an unnecessarily complicated procurement process, challenging an outdated specification or finding a better route to market before a major contract is renewed.
Thornton & Lowe helps organisations understand where those opportunities sit and, importantly, turn them into action.
We can focus on one problem contract or category, or take a wider view across your procurement spend, suppliers, processes and contract portfolio.
Need to understand where the biggest opportunities are? Request a free initial procurement review with our team.
Is procurement optimisation right for your organisation?
You do not need a failing procurement function to benefit from optimisation.
In fact, many of the organisations we support already have established procurement processes. The problem is that contracts, supplier arrangements and internal ways of working naturally change over time.
A procurement optimisation review can be particularly useful when:
- spend is spread across different teams, suppliers or systems and you do not have a clear organisation-wide picture;
- budget pressure is increasing and you need credible savings or value-for-money opportunities rather than an arbitrary percentage target;
- a significant contract is approaching renewal and you want to challenge the existing model before simply retendering it;
- supplier performance is inconsistent or operational teams are frustrated with delivery;
- your procurement team is spending too much time on transactional work and not enough on strategic activity;
- contracts, frameworks or historic purchasing arrangements have grown over time without a wider commercial review;
- off-contract or unmanaged spend is becoming difficult to control; or
- you have already had a procurement review but the recommendations were never implemented.
Sometimes the starting point is obvious. Sometimes the first job is finding out where the problem actually sits.
Procurement optimisation versus procurement transformation
The terms are often used interchangeably, but there is an important difference.
| Procurement optimisation | Procurement transformation |
|---|---|
| Improves what is already in place | Fundamentally redesigns the procurement function |
| Usually targets specific commercial or operational issues | Often changes operating models, systems, structures and responsibilities |
| Can focus on a category, contract, process or supplier group | Usually organisation-wide |
| Looks for practical improvements that can be implemented relatively quickly | Typically involves a longer programme of organisational change |
| May avoid the need for wholesale system or structural change | May require new systems, roles or governance structures |
For many organisations, a full procurement transformation is unnecessary.
The better question is often: what is currently stopping us getting the best value from our spend, suppliers and procurement resource?
That is where procurement optimisation starts.
Diagnose before changing anything
A good procurement review should not begin with a predetermined answer.
We start by understanding how procurement actually operates in practice.
Policies, contract registers and procedures are important, but they do not always show how services are really commissioned, how departments buy, where suppliers are struggling or why a process repeatedly becomes delayed.
Depending on the scope, we may review spend data, contracts, specifications, supplier information, frameworks, procurement pipelines, performance reports and internal procedures. We also speak to the people involved in commissioning, buying and managing the services.
That combination matters.
A contract may appear competitive when looking only at the original tender, but actual spend may have moved away from the original pricing model. A procurement process may appear efficient on paper but require service managers to complete the same information several times. A supplier may technically meet its KPIs while operational teams deal with recurring problems that the measures do not capture.
Procurement optimisation is about getting underneath those issues rather than treating the symptom.
Procurement spend analysis: understanding where the money is really going
Spend analysis is often one of the most valuable starting points.
The purpose is not simply to produce another spreadsheet showing your twenty largest suppliers.
We want to understand what is being bought, by whom, through which contract or procurement route and whether there are patterns that deserve closer attention.
That might reveal several teams buying very similar services independently. It may show suppliers being used outside contracted arrangements, substantial tail spend across hundreds of low-value transactions or a category where volumes are large but purchasing remains decentralised.
We can also compare spend against contracts, pricing structures and procurement plans to identify where commercial leakage may be occurring.
This can then feed directly into category management, contract reviews, market testing and future procurement planning.
Where a detailed independent assessment is needed, this can link into our Value for Money Reviews and Procurement Benchmarking service.
Finding the opportunities that are actually worth pursuing
Not every apparent saving is a real saving.
Reducing the number of suppliers may create better purchasing leverage, but it could also increase dependency. A cheaper framework may look attractive until implementation costs are considered. A specification could be stripped back to reduce cost but create an unacceptable service impact elsewhere.
We therefore look at the wider commercial position.
Typical areas include supplier duplication, fragmented spend, pricing differences, specification design, contract leakage, purchasing outside agreed routes, demand management, procurement workflows, supplier performance, renewal planning and the use of existing frameworks or Dynamic Markets.
We then consider the likely financial benefit alongside implementation effort, operational impact, procurement risk and timescale.
The output should be a prioritised plan, not a long list of theoretically possible savings.
Procurement process optimisation
Procurement processes have a habit of becoming more complicated over time.
An additional approval is introduced following one problem. A spreadsheet is created because two systems do not speak to each other. Different departments interpret the same procedure differently. Routine procurement becomes dependent on particular individuals who understand how to navigate the process.
None of those issues necessarily require a major transformation programme.
We map the way procurement activity currently moves through the organisation and identify where unnecessary steps, duplication, unclear ownership or poor information are creating delay.
The objective is not to remove appropriate governance.
For public sector organisations, the compliant route should also be the practical route. If following the correct process is significantly harder than bypassing it, off-contract and maverick spend become much harder to control.
Improvements might include clearer approval thresholds, simpler workflows, more consistent documentation, better forward planning, clearer roles or appropriate automation.
Technology can be part of that solution, but technology should support a good procurement process rather than automate a bad one.
Category management and strategic sourcing
Some procurement opportunities become visible only when individual purchases are viewed as part of a wider category.
Rather than repeatedly buying similar requirements separately, category management looks at the total requirement, the supplier market, internal demand, historic expenditure and future pipeline.
That can create opportunities to aggregate spend, improve specifications, reshape lots, increase competition or adopt a more appropriate sourcing strategy.
We can also assess the available route to market.
That could include an existing public sector framework, a Dynamic Market, an open procedure, a competitive flexible procedure or another compliant approach appropriate to the requirement.
The aim is not to select a framework simply because it is quick, or run a full competition simply because that is what happened last time.
The route should reflect the market, value, complexity, risk and outcomes the organisation needs.
Where a significant procurement decision needs to be tested formally, our Options Appraisal service provides a structured assessment of the available routes.
Supplier and contract optimisation
A substantial amount of procurement value is won or lost after contract award.
An organisation can run an excellent competition and still receive poor value if supplier performance, variations, pricing, KPIs and contractual commitments are not actively managed afterwards.
For existing contracts we can look at what was originally agreed and compare that with what is now happening in practice.
That may include pricing and indexation, contracted versus actual spend, variations, service levels, KPIs, management information, social value commitments, sustainability requirements, complaints, change control and supplier meetings.
Sometimes the answer is stronger contract management.
Sometimes there is a commercial conversation to be had with the supplier. In other cases the evidence may support a more fundamental change at renewal.
Supplier optimisation also does not automatically mean reducing supplier numbers.
Consolidation can create buying leverage and clearer accountability. Too much consolidation can create dependency and resilience risk. The right supplier strategy depends on the category and the market.
Our Contract Management and Supplier Engagement and Performance Management services can provide ongoing support where the issue extends beyond the initial review.
Procurement optimisation under the Procurement Act 2023
For contracting authorities, procurement optimisation also needs to reflect the current public procurement regime.
The Procurement Act 2023 affects how new public procurements are planned, competed, documented and managed. Optimisation therefore cannot be considered separately from transparency, value for money, market access, supplier performance and appropriate procurement routes.
But compliance on its own is not optimisation.
A process can be compliant and still take too long, generate weak competition, use a poor specification or create a contract that is difficult to manage.
Our approach considers both.
We look at whether the procurement is defensible and transparent, but also whether it is likely to result in an effective contract.
That includes considering preliminary market engagement, frameworks and Dynamic Markets, competitive procedures, evaluation methodology, contract performance and social value where these are relevant to the requirement.
If compliance is the primary concern, our Procurement Compliance and Governance service provides a more detailed review.
Procurement optimisation across the public and third sector
The underlying principles are similar, but the pressures are different across sectors.
Local authorities may have significant decentralised spend across service areas, legacy contracts, pressure on resources and a need to demonstrate clear value to members and residents.
Housing associations and registered providers often need to balance commercial value with resident outcomes across repairs, maintenance, facilities management and other high-spend operational services.
NHS and healthcare organisations need procurement arrangements that support service quality, resilience and governance while operating across complex internal stakeholder groups.
Schools, colleges and multi-academy trusts may have fragmented purchasing across multiple sites and opportunities to aggregate requirements without reducing local flexibility.
Charities and third sector organisations frequently need strong procurement controls and demonstrable value for money without the procurement headcount available to a large contracting authority.
We can work as an independent adviser, alongside an existing procurement team or as additional outsourced procurement capacity.
Procurement expertise grounded in delivery
Thornton & Lowe supports organisations across housing, local government, health, education, charities and the wider public sector.
Our procurement clients include housing providers, NHS organisations, councils, colleges, universities and charities.
For example, we have supported Longhurst Group on a maintenance procurement project. Their Head of Procurement described our consultant as “highly experienced and knowledgeable” and highlighted the commercial and project input provided to the team.
Our wider client experience includes organisations such as Rochdale Boroughwide Housing, Mersey Care NHS Foundation Trust, Bury Council, the British Red Cross and a range of housing associations, NHS trusts, councils and education providers.
That practical experience matters because procurement optimisation rarely happens in isolation. Recommendations need to work within real teams, real contracts and real operational pressures.
Procurement optimisation across the public and third sector
The underlying principles are similar, but the pressures are different across sectors.
Local authorities may have significant decentralised spend across service areas, legacy contracts, pressure on resources and a need to demonstrate clear value to members and residents.
Housing associations and registered providers often need to balance commercial value with resident outcomes across repairs, maintenance, facilities management and other high-spend operational services.
NHS and healthcare organisations need procurement arrangements that support service quality, resilience and governance while operating across complex internal stakeholder groups.
Schools, colleges and multi-academy trusts may have fragmented purchasing across multiple sites and opportunities to aggregate requirements without reducing local flexibility.
Charities and third sector organisations frequently need strong procurement controls and demonstrable value for money without the procurement headcount available to a large contracting authority.
We can work as an independent adviser, alongside an existing procurement team or as additional outsourced procurement capacity.
How we approach a procurement optimisation review
1. Diagnose
We establish what you are trying to improve and build a picture of the current position.
That may involve spend data, contracts, supplier information, stakeholder discussions and existing procurement processes.
We do not need perfect data before starting. Poor or fragmented procurement information can itself be one of the findings.
2. Analyse and challenge
We identify where value may be leaking or processes are underperforming.
This can include spend analysis, benchmarking, supplier review, contract analysis, process mapping, market research and testing current routes to market.
The important part is challenging the reason something is done in a particular way rather than assuming historic practice remains the best option.
3. Prioritise
We assess potential improvements according to commercial benefit, operational impact, risk, complexity and deliverability.
That creates a realistic action plan.
Some opportunities may be immediate. Others belong in the procurement pipeline for future renewal.
4. Implement
If you want us to, we can move directly from the review into delivery.
That may involve supplier negotiation, market engagement, specification development, options appraisal, framework assessment, procurement documentation, tendering, evaluation, mobilisation or improved contract management.
5. Measure
We agree what success looks like and track whether the changes have actually produced it.
This prevents procurement optimisation becoming a one-off report that is filed and forgotten.
How do you measure whether procurement has improved?
Savings are important, but they are only part of the picture.
The measures we use depend on what the review is trying to achieve.
| Area | Possible measure |
|---|---|
| Spend | Cost reduction, cost avoidance, spend under management |
| Compliance | Contracted spend, off-contract spend, procurement compliance |
| Process | Procurement cycle time, approval time, workload and duplication |
| Suppliers | KPI achievement, quality, complaints, responsiveness |
| Contracts | Performance against specification, variation control, utilisation |
| Market | Competition, supplier participation, SME access |
| Delivery | Implementation of agreed optimisation actions |
| Wider value | Social value, sustainability and service outcomes where relevant |
The measures should tell you whether the organisation is genuinely receiving better value.
Reducing the purchase price while increasing supplier failure, complaints or internal workload is not procurement optimisation.
What will you receive?
The exact output depends on the scope of the work.
A focused contract review will naturally look different from an organisation-wide optimisation programme.
Typically, however, we provide a clear assessment of the current position, the evidence behind our findings, prioritised improvement opportunities and practical recommendations for implementation.
Where useful, this can include spend and supplier analysis, commercial benchmarking, risk and opportunity mapping, category recommendations, process changes, route-to-market recommendations and an implementation plan.
We deliberately avoid producing lengthy reports for the sake of it.
The work needs to be usable by the procurement team, service leads and senior decision-makers who will actually have to implement the changes.
Frequently asked questions
What if our procurement data is poor?
That is common.
You do not need a perfect spend cube, contract register and supplier database before starting.
We work with the information available, identify gaps and establish what can be concluded with confidence.
In some cases, improving procurement data and management information becomes one of the first optimisation priorities.
What if we are already mid-contract?
Procurement optimisation is not limited to future tenders.
Existing contracts can often be improved through stronger supplier management, benchmarking, demand management, better use of contractual mechanisms, improved KPIs or clearer commercial controls.
If the best opportunity sits at renewal, we can use the current contract period to build the evidence and procurement strategy needed for the next competition.
What if we have a small procurement team?
That is often where optimisation can create the greatest benefit.
A small team can easily become consumed by urgent operational activity.
We can provide independent analysis, specialist category support or additional procurement capacity so your team can focus on the areas where internal knowledge is most valuable.
What if we have already had a procurement review?
The useful question is what changed afterwards.
If previous recommendations were never implemented, we can review what remains relevant, challenge the assumptions where circumstances have changed and convert the work into a smaller number of deliverable priorities.
A procurement review only creates value when something happens as a result.
What is procurement optimisation?
Procurement optimisation is the structured improvement of how an organisation buys goods and services, manages suppliers and controls procurement spend. It can include spend analysis, process improvement, strategic sourcing, category management, contract management and supplier performance, with the aim of improving value, efficiency and outcomes.
What is the difference between procurement optimisation and procurement transformation?
Procurement optimisation improves specific elements of the existing procurement operation. Procurement transformation usually involves more fundamental change to systems, structures, responsibilities or the overall operating model.
An organisation can therefore optimise procurement without undertaking a full transformation programme.
Does the Procurement Act 2023 affect procurement optimisation?
Yes, for contracting authorities operating under the Act.
Procurement optimisation needs to consider the current rules alongside commercial outcomes. That can affect routes to market, transparency, competition, supplier performance and how procurement decisions are recorded.
Compliance is important, but optimisation goes further by asking whether the procurement approach is also efficient and likely to deliver good value.