Care UK

Care UK

With a turnover of £700m, Care UK is a leading and fast growing venture capital-backed provider of health and social care services, employing 23,000 people in the UK. It consists of four divisions: healthcare, mental health, community, and residential care services.

Care UK’s ambitious growth has been achieved via a combination of organic and acquisition activities. This growth has presented significant savings opportunities in parallel with the additional challenge of post-acquisition supply base integration.  
 
 
The Care UK procurement team, led by Christoph Marr, Group Procurement Director, was created in 2008 and has successfully embedded a culture of integrity and delivery. This is coupled with an infrastructure and a team of procurement professionals now working closely with operational teams to manage a growing and complex spend base.  However, following the venture capitalist backed MBO in 2010, Christoph wanted to quickly give his team additional bandwidth to maximise tactical and strategic supply side opportunities. This was so the business was proactively ready to exploit supply side growth, hence the introduction in September 2011 of ‘Project Catalyst’.
 

Care UK partners with State of Flux 

In September 2011, Care UK appointed State of Flux as a supply side partner on a programme designed to deliver more OPEX-related cost savings faster, by going ‘back to basics’ across a diverse range of 26 different category areas.  
 
The additional, skilled procurement resource which State of Flux introduced, worked closely with the Care UK operational and procurement teams on a number of projects including:
 
  • A group wide qualitative and quantitative opportunity assessment for both the legacy steady state Care UK business and for the individual acquisitions
  • The delivery of aggressive savings targets by leveraging spend both from the legacy Care UK business and the acquisitions
  • Improved spend data and savings reporting functionality 
  • Supplier rationalisation across a number of strategic spend categories
  • Improved contracts design and contracts management 
The State of Flux team was considered a genuine part of the Care UK procurement function, collaborating closely with the existing procurement and operational teams across the group.  A best in class sourcing strategy was put in place and was tailored for each of the categories, ranging from focused quick win renegotiations with existing suppliers to full-scale competitive tenders, including contracts design and contracts management. 
 
A key requirement for the project was to quickly identify and deliver genuine, auditable cost savings. This required the team to engage with a large and diverse stakeholder group across different vertical business units, some with different operating cultures.  
 
Another opportunity was identifying and controlling leaked spend, made more difficult by the lack of availability of detailed spend data. Care UK and State of Flux worked together to improve the availability of management information, thus enabling decisions to be taken quickly to drive compliance to sourced agreements which reduced maverick spend. 
 

Significant cost reduction achieved

The impact of the partnership on reducing costs has been significant both in terms of delivering real, audited savings ahead of plan and by having better contracts in place.  The actual savings delivered exceeded those promised to the Care UK board by 10% and Project Catalyst final costs reflected the original business case. Together Care UK and State of Flux have ensured that savings are sustainable in the long term. 
 
The key successes of Project Catalyst were:
 
  • Savings delivered: Estimated savings doubled in the first six months of the project; moving into the second phase, savings remained ahead of an already aggressive plan. 97% of project catalyst savings were audited by Care UK’s finance directors.
  • Group-wide contracts implemented: Project Catalyst contracts have been successfully implemented across Care UK with internal end-user compliance levels ranging from 91-99%.
  • Maverick spend eliminated: To improve spend data information, State of Flux and the Care UK central business systems team developed a simple but effective method of reporting compliance. Key business units can now access quality data to highlight leaked spend and facilitate more rapid management decision making. 
  • Improved decision making efficiency: The partnership identified fewer operational people with authority to make decisions on behalf of a much larger stakeholder community. The speed at which decisions are now made is testament to what has been at times a difficult but rewarding process. 
The success of Project Catalyst has been echoed by numerous Care UK stakeholders, such as Paul Humphreys, CFO of Care UK: 
“The partnership between Care UK and State of Flux has exceeded our expectations. In a short time the team have streamlined the procurement process and succeeded in delivering against challenging cost reduction targets; such results enable us to invest further to drive incremental growth.”  
 

Collaboration is key

Project Catalyst would not have been successful without the outstanding communication, real teamwork and collaboration between Care UK and State of Flux. The team worked to a disciplined and structured programme governance framework. At no point were problems merely outsourced; rather every project involved both parties equally and the results have created genuine excitement and an increased desire from the business to engage with the procurement team.

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