BBC to focus on managing supply chain more effectively

On July 14, 2009, the BBC published its Annual Report and Accounts for 2008/2009. In it, Zarin Patel, the Chief Financial Officer, stated that in order to make the BBC as efficient as possible they were ‘focusing in particular on how we manage our supply chain more effectively”.

This was mainly in response to an independent review by the National Audit Office (NAO) on the BBC’s management of strategic contracts. The report recognized that the BBC has as above-average track record in managing major contracts, and have exceeded its own savings targets of £135 million by £22 million.

However, the BBC was a joint partner in the venture ‘2entertain’ with the Woolworths Group Plc. When it went into administration at the end of 2008, the BBC had to write-off costs and unrecoverable debt of £15 million.

In a BBC Trust press release, Tim Burr, Auditor General for the NAO said,

“The BBC has kept its spending on strategic contracts in line with its forecasts and exceeded its savings targets. It now needs to concentrate on securing the levels of service for which it has paid….”

The BBC secured contractually agreed minimum levels of service for 91% of its supplier performance indicators when the performance was linked to payment, and 82% when not linked to payment. However, the BBC has not secured expected levels of supplier innovation on some contracts, and contract management with the private sector was found to be inconsistent.

The NAO report recommendations include undertaking more robust annual contract reviews; defining core competencies and accountability for contract managers; identifying relationship management needs of contracts; identifying most important performance indicators and validating performance information provided by the supplier.

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