Plans to centralise some of the £2.5 billion of public spending on food and drink each year in schools, hospitals and care homes has been described as “flawed” by wholesalers.
The Cabinet Office wants to save money by offering a centralised listing of suppliers, managed by a single fulfilment group or consortium, as an alternative to the current maze of regional and local buying and distribution agreements.
Industry observers expect the tender for the £100 million two-year contract for this will attract the likes of Bidfood, Brakes and the Tesco-owned Booker, as well as IT consultancies that could build the platform and then outsource the logistics.
While the Cabinet Office wants to use small producers, under draft plans their products will need to be consolidated at large, regional distribution centres, which many are not set up to supply. The “Buying Better Food” contract tender is expected this summer, with the new platform going live in the spring of next year.
James Bielby, chief executive of the Federation of Wholesale Distributors, said the majority of his 600 members could lose business if the move went ahead. “It centralises food and drink and puts it in the hands of fewer players, which is contradictory to the idea of supplier diversity,” he said. “At the moment you have thousands of unique, local SMEs working in tandem and wholesalers of all sizes, both regional and national”.
He gave the example of a farmer selling products to a nearby care home. “The food miles are short,” he said. “If those products need to be transported to a central distribution hub and then back to those public sector services close to where they were originally grown, it is inefficient.”
It would lead to suppliers “chasing price all the time rather than quality,” he added. “There may well be some efficiencies but it will mean small producers and growers will be excluded from the marketplace, as well as wholesalers.”
Tom Mathew, commercial director at the family-owned Dunsters Farm, based near Bury, Lancashire, said he had a “jaw hitting the floor” moment when he first heard of the move, as more than half of his company’s turnover is with the public sector, largely schools from Newcastle down to Birmingham.
“It is deeply concerning that they think this is a good idea,” he said. Based on the proposals he does not see how suppliers can provide competitive bids using a centralised system.
“Commercially it has flaws. It is very, very unlikely to secure [public sector buyers] an advantageous price,” he said, adding that the idea of “bigger is better in wholesale” was “too simplistic”, as much of the cost of getting a product, such as a can of soft drink, into a school was determined by the size of the order, the frequency of delivery and the location of the customer.
Officials from the Crown Commercial Service (CCS), part of the Cabinet Office, have said the initiative is primarily to secure “value for money”, as well as secondary objectives such as attracting “more SMEs into the supply chain” and reducing “adverse environmental impacts” from food production, packaging and delivery.
A Cabinet Office spokesman added: “Local food producers will be available through an easy-to-use online portal, allowing the customer to source food produce at the right price.” He said the contract would also make it easier for public sector buyers to find suppliers “more quickly and easily”, adding: “This will also save taxpayer money, with savings passed on to public sector customers.”
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Source: The Times
Date: 20 February