26 August 2010
The New Zealand Defence Force has replaced its single supplier of industrial consumables with six category specialists in order to deliver better value for money – potentially saving nearly $1 million per year.
Each year the Defence Force spends around $12 million on “industrial consumables” – everything from automotive bulbs to welding machines, crockery to shower mats, and hand cleaner to televisions.
Until recently, one vendor provided all of these items to the Defence Force under a single contract. However, last year the Defence Force put these items out to tender and instead of selecting just one vendor to supply such a diverse range of goods, it awarded contracts to six suppliers. Each three-year contract includes two one-year “right of renewal” options.
The new suppliers are:
J A Russell Ltd;
Noel Leeming Group;
Trade Tools; and
Wesfarmer Industrial Safety (the parent company of Blackwoods Paykels).
Chief of Defence Force, Lieutenant General Jerry Mateparae, says that by splitting the contract the Defence Force is able to gain maximum value for its money. The Defence Force has already saved $210,000 this financial year across the new suppliers.
“Under this approach we have more specialised vendors who have excellent knowledge of their category and who are therefore able to deliver better value and better service,” Lt Gen Mateparae says.
He gave the example of batteries, where this year the Defence Force expects to save around $80,000 thanks to the new supplier contract. All up, the total savings on industrial consumables could add up to approximately $920,000 per year.
Lt Gen Mateparae says the contracts also contain a syndication clause that allows other government departments to sign onto the same Defence Force contract. Defence is currently in discussion with several other government agencies who may be interested in forming a purchasing syndicate involving one or more product categories.
“As with the recent rations procurement purchasing syndicate established between the Defence Force and the Department of Corrections, when sales volume increases, prices tend to decrease, so everyone saves money,” Lt Gen Mateparae.
For further information please contact Defence Force Media Manager Chris Wright on 021 487 980.
“Industrial consumables” is comprised of hundreds of products and categories including the following examples:
High visibility gear
Hoses and hose fittings
Nine volt batteries
Nuts and bolts