Procurement Strategy West Berkshire Council - Procurement Strategy 2020 2022
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West Berkshire Council Procurement Strategy 2020 – 2022
Contents
1. Executive summary 3
Purpose of the strategy 3
2. Introduction 4
What is procurement 4
3. Background 5
Category Management 5
Getting this done 6
Partnerships 6
Contract types 6
Value for money 7
Governance 7
Conflicts of interest 8
E-procurement 8
Sustainability 8
4. Contact details 9
5. Procurement Maturity Assessment 10
6. Procurement Key Performance Indicators 52
Appendices 55
2
1 Executive Summary
Purpose of the strategy
The West Berkshire Council Procurement Strategy
explains how we will continue to embed and
develop effective procurement practices within
the council, whilst delivering effective services on a
value for money basis.
The strategy is for those interested in how
the council spends public money, offering a
comprehensive view of the mechanisms used by
officers and elected members to ensure public
funds are spent wisely.
The Councils aspiration is to help support a wide
range of businesses that can thrive and support its
delivery requirements, ensuring that all suppliers “The Commissioning
get the opportunity to bid for council business.
The Commissioning Service and other dedicated Team within West
officers within West Berkshire Council manage the
interaction with business and ensure a fair and
Berkshire Council manage
equitable level of opportunity for all businesses the interaction with
wishing to work with the council.
business and ensure a
Webpage fair and equitable level
The West Berkshire Council Procurement webpage of opportunity for all
sets out some basic information, and is available at
the following URL:
businesses wishing to
https://info.westberks.gov.uk/procurement work with the council. ”
3
2 Introduction Public sector procurement can be viewed as
following three phases:
Why now
The Council is operating in an increasingly
challenging financial climate and over the last
Plan 1
nine years we have had to make savings of £60
million as a result of reduced funding from central
government. This has only been possible by
increasing the efficiency of our services (delivering
Award 2
38% of total savings), reducing some of our
administrative functions and transforming how we
deliver services (20%), and increasing income (12%)
whilst protecting, as far as possible, the services Excecution 3
(particularly the statutory services) provided to
local residents.
Procurement within the council has operated in a 1) Planning generally refers to the decision around
devolved model, and to date has been a workable what needs to be bought. Sometimes this is
model that has delivered results. To drive future referred to as commissioning, which is a process
developments and ensure the council continues typically associated with securing the supply of
to deliver its strategy, the requirement for more ‘people’ based frontline services – see below. The
effective and efficient procurement have become planning phase entails a significant amount of time
foremost. and resource to understand what the organisation
needs to spend its budget on. This phase requires
Good procurement is therefore increasingly significant commercial planning to ensure that
important to ensure all opportunities are identified public funds are spent effectively, delivering the
to add value in this spend and make it stretch as far requirements to end users.
as possible.
2) The award phase involves the placing of a
This strategy sets out the ambition for procurement contract to acquire the goods/services/works.
to meet the needs of an evolving council. This is a regulated environment with the Council
aligning its work in this segment to the legal
What is procurement requirements laid out in The Public Contracts
Regulations 2015 (PCR).
With a significant percentage of Council funding
is spent through outsourced contractors, the 3) The execution phase refers to the administration
role of procurement is important to ensure the of contracts, where the council ensures that work
efficient delivery of public sector requirements is delivered in accordance with the previous two
across multiple layers of spend. Procurement is the stages. There is a legal obligation for providers to
interface between providers and Council Services, deliver what they have been contracted to, in line
with the basic aim of achieving the outcomes of: with the requirements and terms of contract.
l Right price Commissioning as a concept has grown up around
l Right quality the provision of care and support services in
l Right place sectors such as health, education, social care and
l Right time housing. As a broad definition, commissioning is
l Right quantity the strategic activity of identifying requirements,
designing and planning services to meet those
requirements, securing what is required and
monitoring and evaluating them. Commissioning
is not to be confused with procurement –
4 simplistically put, commissioning is the context in
which procurement takes place.
3 Background a more streamlined procurement process the
following actions will be taken over the next 2
The council has three directorates - Resources, years. A more detailed action plan can be found in
Place and People and spends approximately 66% of appendices.
its total budget each year externally commissioning
Year 1 – 2020/2021
and procuring goods and services from third
parties. The People Directorate is the largest l All public procurements will be tendered
spending part of the Council accounting for two in line with the council constitution through
thirds of the total third party spend. the adopted e-procurement system,
with oversight from the councils
A Commissioning Service was established centrally
constituted Procurement Board – see
in 2017 to drive forward the Council’s ambitions
Governance Section.
for a council wide category management approach.
This Service operates across all three directorates, l All tendered contracts to be moved to the
with the most significant amount of resource Council’s e-procurement system (excluding
spent on social care service requirements (People spot purchases).
Directorate) and corporate spend for generic areas
such as agency/temporary workers and energy. l Category Management Plans will be
in place that review an area of spend,
For other spend there is a devolved model of looking at trends, supplier positions,
procurement, with some service areas managing historical spend, amongst other constraints
significant portions of spend for service specific and opportunities. The category plan will
requirement which are most typically for capital then drive the overall trajectory of spend
programmes of work in areas such as highways. within each category, which will be intrinsic
to the delivery of the Council Strategy.
Category Management
l A Procurement Strategy will be developed
In 2017 the Council agreed an ambition to for each specific tender within an
move forward and implement a full Category overarching category, and is the mechanism
Management approach. Good progress has been for seeking approval to tender (gateway 1).
made in some of the high spending corporate areas
but there is more to do. The structure for this l The Category Plan and Procurement
is still evolving and is most likely the council will Strategy documents will outline the
mirror the governments common areas of spend commercial nature of each tender and
(available at www.gov.uk; also see appendices). the position taken by officers to ensure the
most efficient and effective use of
To move the implementation of a full category public money.
management approach forward and to achieve
Year 2 – 2021/2022
l Category Strategy plans in place for all
areas of spend (covering forthcoming
5 years).
l Category Managers allocated to all
categories of spend.
l Category initiatives implemented across all
areas of spend, driving savings
l Procurement to drive all procurement
strategies over £100k, securing gateway
achievement, commercial initiatives
and probity.
5
Getting this done Partnerships
Procurement professionals are crucial to deliver an Connectivity with partners is a key strand of
effective procurement service, and these staff need effective public sector procurement, and the
to have the appropriate skills and experience. The council is working closely with colleagues in the
council supports the training and development of NHS to ensure social care is effectively procured
procurement staff which includes informal coaching and that any delays to service provision are limited.
and training, and more formal training and
professional qualification through the Chartered The Council is jointly commissioning a range of
Institute of Procurement and Supply (CIPS). services, across social care and public health using
This professional development has focused for the a variety of methods all geared to getting the
last three years on the Commissioning Service. maximum benefit from the spend.
The benefit of this is that it has created a body of
expertise that is now ready to move the Council’s Contract types
procurement forward and the expectation is that it
is this service area that will drive forward and own The Council makes use of a variety of approaches
the two year implementation plan. to market including:
By adopting this approach across the Council there
will be clear accountabilities and therefore roles l Low value goods and services (these may
and responsibilities which will underpin successful not be awarded through
working between the Commissioning Service and e-procurement route).
individual directorates.
l Competitive tender is used for a wide range
of goods/services/works.
l Frameworks are often used to encourage a
wide range of suppliers, used frequently for
adult social care and transport services.
Value for money
Council procurement delivers value for money
and efficiency by ensuring the goods, works or
services acquired are suitable; concluding with
an arrangement to secure what is needed on the
best possible terms and ensuring the contracting
partner is able to provide the goods, works or
“Procurement services on the agreed terms. In accordance with
professionals are crucial the PCR, the Council uses a principle called ‘most
economically advantageous tender’ to determine
to deliver an effective which bid wins, with a split between quality and
price within most tenders. Each invitation to tender
procurement service, and will detail how this is applied.
these staff need to have
the appropriate skills
and experience.”
6 POSITION STATEMENT
Governance All council spend is to be managed through the
adopted e-procurement system. This system is
The two core procurement controls are governance the mechanism through which all contracts are
and e-procurement. All contractual spend is ‘let’, with all tendering activity reported monthly
reported through governance boards, in line with to Procurement Board for an overview. The
the Council’s Constitution. The first gateway is e-procurement software provides a mechanism for
Procurement Board, where procurement strategies reporting and highlighting which tenders will be
are considered by a multi-disciplinary group of expiring. E-procurement is managed and monitored
officers and Elected Members of the Executive. by the Commissioning Service.
This group considers all aspects of contractual Procurement Board comprises of four key
spend within the Council, including capital and contributing elements of the council operation:
revenue above £100k and exception levels above
£50k. All projects are considered for legal risks,
commercial application and probity in line with the
Council’s Constitution.
Procurement
The second gateway (proceeding procurement
process and prior to award) ensures the Board is
appraised of how the procurement strategy has
delivered.
Legal
l Capital Strategy board
Procurement
l
l
Corporate board
Executive (public meeting)
Board
Finance
l Constitution Governance
l Capital and Revenue
Elected
Members
l In-Tend (significant proportion not
being managed through this currently)
l Contracts reporting
l Corporate programme of tenders
E-
l Accurate coding of spend data
procurement l Procurement: who advise on commercial,
practical and regulatory aspects of
procurement activity.
l Legal: who ensure value for money
compliance, and advise on the regulatory
procurement framework and constitution.
l Finance: who approve budgets and link any
financial risk into budget management
operations.
l Elected Members: ensure the Council
Strategy is achieved, and key decisions are
in line with political requirements.
7
Conflicts of interest Sustainability
Employees ensure that their interests outside the West Berkshire Council has declared a ‘climate
Council do not conflict with their responsibilities emergency’, and will ensure that sustainability is
at work. They also ensure that these interests integral to the delivery of services for residents.
could not be reasonably considered as conflicting
with their responsibilities at work. Where such Before starting any procurement procedure, when
an actual or apparent conflict of interest occurs, procuring certain services, the Council is legally
or is about to occur, the employee will take all required by the Public Services (Social Value) Act
reasonable steps to prevent that conflict from 2012 to consider how the services they propose to
arising or continuing. The Commissioning Service procure “might improve the economic, social and
will adhere to West Berkshire Council policies and environmental well-being” of the area in which the
CIPS professional standards. services are to be provided.
E-procurement Sustainability is based on the principle that
successful, thriving communities are created by
Regulatory requirement for E-procurement is balancing the three key pillars of social, economic
currently managed through In-Tend for the Council. and environmental needs. Successful organisations
The system allows for all procurement activity to also understand that these pillars are interlinked
be managed through a single source, which records and equal in importance, and by applying this
key information used to monitor and manage each principle they achieve both profitable growth and
exercise and its expiry date. positive social impact. West Berkshire Council will
In-Tend can be access via the following URL integrate sustainability, environmental and social
https://in-tendhost.co.uk/westberks/aspx/Home issues into our procurement process. The action
plan outlines the approach that will be taken in
Registering your organisation is free and takes order to ensure that natural resources are used
a few minutes. Once registered you will be able prudently, that there is effective protection of the
to express interest in any open opportunities environment whilst ensuring the efficient use of
when they are made available. We’ll also be resources and delivery of value for money.
able to access your details whenever we have a
requirement and you may be invited to tender or Specifically, this will mean that procurements have
quote for work. a scoring matrix which includes the delivery of
sustainability objectives including but not limited
If you encounter any difficulties whilst using the to: reduction of carbon footprint; improving local
portal, please contact the In-tend Support Team by delivery and use of apprenticeships.
phoning 0844 272 8810 or by emailing
support@in-tend.co.uk. What follows in the appendices is a procurement
maturity assessment – which details the current
position of procurement within the council, and
indicates the aspiration to be achieved over the
coming two years. In summary, there are some
pockets of good practice in procurement, but the
council will benefit from a strengthened and unified
category management approach.
At the end of this document is an action plan
which sets out the requirements to deliver the
procurement strategy. The actions detailed will
act as milestones for the implementation of an
effective category management solution for the
council.
8
4 Contact details
Procurement@westberks.gov.uk
01635 551111
https://info.westberks.gov.uk/procurement
9
10
5 Procurement Maturity Assessment
5. Procurement Maturity Assessment
Legend Current Within 2 years
Ref Question Title Question 1 2 3 4 5
Q1 Procurement
Strategy &
Governance
How is > Perceived as > Procurement's remit > Recognised by > Recognised as a > Recognised
Procurement purely transactional is perceived as limited functions where strategic partner by across the organisation
viewed across the and focused on the to price negotiation, Procurement has senior management as a strategic partner
organisation? purchase to pay contracts and handling successfully engaged. across the organisation to the business in
process (e.g. raising disputes but In other areas of the but there is still managing costs and as
purchase orders, Procurement are taking business Procurement resistance to a provider of innovative
Procurement expediting, query steps to address this. still regarded as consulting sourcing solutions and
Q1.01
Positioning management). Some successes in bureaucratic and Procurement from commercial expertise
specific functions and/or adding little value. middle managers and
categories of spend. staff in some areas
What role does > Procurement have > Some limited > Supports > Involved in helping Integral member of
Procurement play no involvement in involvement in providing Leadership Teams in other functions develop the executive
in corporate business planning. cost data to some business functions/units plans & budgets as a management team,
Procurement strategic and business functions. No by providing costs provider of cost data. actively involved in
Q1.02
Positioning operational involvement in analysis. Not involved Consulted on supplier strategic and
planning? decision'-making. in formal decision and service issues. operational planning.
making forumsHow well is > No company'-wide > Localised > Enterprise'-wide > Enterprise'-wide > Enterprise'-wide
Procurement Procurement strategy Procurement strategies Procurement strategy Procurement strategy Procurement strategy
strategy integrated exists. Local developed by developed by developed by developed with
with corporate Procurement teams do Procurement teams but Procurement. Strategy Procurement with participation of key
strategy? not produce no enterprise'-wide goes beyond pure cost reference to wider business stakeholders.
procurement procurement strategy. reduction but is not fully corporate strategy and Strategy formally
strategies. No clear links to integrated with key competitive integrated with
Procurement corporate strategy. corporate strategy. strengths but with corporate strategy and
Q1.03
Strategy Developed by limited cross'-functional agreed at C Suite
Procurement without input and no C'-level level.
collaboration of other sign'-off.
functions and signed off
within the Procurement
function.
How effectively is > No documented Procurement strategy Procurement staff are Strategy is frequently There is clear
strategy being procurement strategy. is poorly understood aware of Procurement referenced by evidence that strategy
actioned? No monitoring of even within strategy but there is Procurement but has is being used to guide
performance against Procurement and is not little evidence that it is a limited weight in decision'-making in
improvement goals. a factor in decision'- factor in day'-to'-day decision'-making Procurement and in
making. There is no decision'-making. KPI's outside the procurement activity
regular tracking of regularly reported to the Procurement function. across the business. A
progress against CPO are primarily A balanced set of KPI's balanced set of KPI's
Procurement strategy. focused on cost is used to track is used to regularly
Q1.04
Strategy reduction and do not progress against monitor performance
cover broader strategic strategic goals. against strategic goals.
goals. Progress reported to Performance against
CPO and Procurement strategy is regularly
management only. reported to C'-Suite.
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To what extent > Procurement does > Procurement does > Procurement > Procurement > Procurement is
does Procurement not articulate its not regularly measure regularly reports on reports a trend of able to demonstrate a
foster and promote contribution or report its financial savings delivered but continuing trend of continuing
a culture of convincingly either in contribution to the struggles to improvements in improvements in
continuous quantitative or business. The value demonstrate the efficiency and enterprise efficiency
improvement? qualitative terms. delivered by financial contribution it operating / capital cost and operating / capital
'- No evidence of a Procurement is often has made. Savings reduction but evidence cost reduction
focus on excellence or questioned by claims are widely is not always backed supported by Finance
continuous stakeholders. disputed. up by good data and and widely accepted
improvement. '- Procurement '- There is a history of there is some dispute across the business.
'- No plans in place to struggles to gain projects and within the business '- Procurement can
deliver new investment funds and investments to improve over the true impact also demonstrate
procurement there is limited history of Procurement efficiency delivered. improvements in
Continuous capabilities. projects to improve for which benefits '- Procurement is able internal productivity as
Q1.05 Procurement capability. realised have been to point to investments a result of process
Improvement
'- No promotion of the questionable. & improvements in its improvements or
Procurement function to '- Procurement does not internal capability but technology or skills
the wider business. actively promote its benefits have not been investments.
contribution to the rigorously measured. '- Procurement
business. Resources are often Leadership actively
diverted away from promotes its
these projects. contribution to the
'- Procurement business and conducts
promotion is ad hoc internal marketing
rather than planned. campaigns to raise its
profile.
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Version 1.0 Procurement Strategy Dated: 2019/20To what extent > No vision or plans > No reference to > Sustainable > Developing a > A clear vision and
has a strategy been in place for CSR or CSR or sustainable procurement & CSR vision and level of level of ambition for
defined for CSR & sustainable procurement in local referenced in ambition for CSR & CSR & sustainable
sustainability in procurement. procurement strategies. Procurement Strategy sustainable procurement has been
Procurement? '- No attempt has been but with few tangible procurement and articulated and priority
made to engage goals and lack of clarity starting to identify areas identified based
business stakeholders as to how ambitions will priority areas and on a clear
on sustainable be achieved through strategic options. understanding of what
procurement. procurement '- Variable stakeholder will drive value for the
processes. buy'-in to the concepts business and support
CSR & '- Limited stakeholder and value of the overall
Q1.06 Sustainability understanding of the sustainable procurement strategy.
Strategy concepts and value of procurement. '- Strong stakeholder
CSR & sustainable buy'-in to the strategy
procurement. from across the
Inconsistent approach business.
across the business
and within
Procurement.
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To what extent > No clear > Plans to put in > No formal > Basic governance > Governance
has governance governance place a Governance governance established framework established clearly established for
been defined in the established for the framework for the P2P for the P2P process. for the P2P process. the P2P process with a
P2P process? P2P process. Finance process exist. Some confusion over Some 'grey areas' in Business Process
operate the process Responsibilities responsibilities. terms of ownership and Owner and clear
and do not engage between Procurement Procurement and responsibilities but responsibilities
with Procurement. and Finance are not Finance do not Procurement and between Procurement
'- Procurement defined currently. There collaborate closely and Finance work closely and Finance.
processes are not is little evidence of there is a certain together to manage '- Procurement
audited by an internal effective collaboration amount of tension over issues within the P2P processes are
or external audit between the two who is responsible for process. regularly audited by an
function. There are no parties. issues in the process. '- Changes to internal or external
documented '- Procurement '- Procurement Procurement audit function.
purchasing processes were audited processes were audited processes are Comprehensive,
procedures. by an internal or by an internal or approved by an documented, well
'- Procurement do not external audit function external audit function internal or external understood procedures
actively monitor or as part of as part of audit function. are implemented
Q1.07 P2P Governance manage the Procure to implementation but no implementation but no Documented and consistently throughout
Pay process or seek to regular audit scrutiny regular audit scrutiny understood procedures the organisation.
drive efficiencies. applied since. There are applied since. exist and are '- Procurement
limited documented Procedures have been implemented across regularly work with
purchasing procedures documented but there the organisation. Accounts Payable to
and inconsistent is little evidence of Compliance is variable seek to reduce order
practices within the these being followed with some persistent and invoice volumes
organisation. consistently throughout non compliance in
'- Procurement do not the organisation. some business areas.
actively monitor or '- No evidence of '- Procurement
manage the Procure to Procurement periodically engage
Pay process or seek to collaborating with with Accounts Payable
drive efficiencies. Accounts Payable to to seek to reduce order
reduce order and and invoice volumes
invoice volumes.
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Version 1.0 Procurement Strategy Dated: 2019/20How effective is > No Central > Central - Procurement have > Procurement > Procurement
stakeholder Procurement. Local Procurement do not identified key maintains a dialogue maintains a dialogue
engagement by teams respond to have a clear view of stakeholders by with some key with all key category
Procurement? requests for support who the stakeholders category. Little category and BU and business unit
from within their are by category. evidence of systematic stakeholders to stakeholders to
Business Unit/Division. Engagement is ad hoc approach to establish and establish and
No recognition of need based on where work is engagement as yet. challenge their needs challenge their needs
Cross- to proactively engage taking place. and support and take the lead on
Q1.08 Functional stakeholders. performance strategy development
Working management. In other and performance
areas engagement is management.
limited. '- Category teams
actively manage all key
stakeholders to build
relationships.
To what extent > General > Procurement > Policies & > Policies & > Policies &
do policies & procurement policies policies, guidelines and guidelines documented guidelines documented guidelines in place and
procedures exist or guidelines have not procedures only for indirect and direct for indirect, operating widely communicated
covering been defined. Informal partially in place. procurement, covering and capital across indirect,
Procurement rules are driven by Procurement purpose, procurement, covering operating and capital
activity? Business Unit roles and Procurement purpose, procurement, covering
management locally. responsibilities, roles and Procurement purpose,
governance, processes, responsibilities, roles and
authorisation levels and governance, responsibilities,
compliance. processes, governance,
'- Policies and authorisation levels processes,
Policies & procedures are and compliance authorisation levels
Q1.09
Procedures infrequently revisited. '- Policies and and compliance.
procedures are '- Policies and
infrequently revisited. procedures are
continually reviewed
and examined to
ensure best practices
are employed and
available.
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How is Procurement is not Procurement viewed Procurement Procurement viewed Procurement viewed
procurement considered by senior by senior management considered by senior by certain senior by senior management
positioned in terms management to be a as being relevant to management to be stakeholders as being and the board as a
of the corporate key function in managing supply chain important in terms of critical to driving the strategic function,
sustainability delivering the sustainability risks and driving operational company's critical to delivering the
strategy? corporate level protecting the efficiency through sustainability sustainability
Procurement & CSR/sustainability company's reputation. sustainability initatives programme,'- in programme and
Q1.10 Sustainability programme or and managing addition to risk and helping to create value
Positioning managing sustainability risk in the operational efficiency, for the business.
CSR/sustainability supply chain. key to helping to
risks. innovate and identify
market opportunities.
Q2 Planning
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Version 1.0 Procurement Strategy Dated: 2019/20Is there a No formal activity No formal process for >Formal process >Standard process >Standard process
process in place to plan portfolio or developing and definition for the for the development of for the development of
develop and pipeline management managing the development of the the annual the annual
maintain a forward- across the Procurement activity annual procurement procurement activity procurement activity
looking Procurement function plan occurs throughout activity plan , but does plan has been defined, plan is implemented
portfolio/pipeline of the year. Some limited not cover all activities but is not consistently and consistently used
value delivery and informal (e.g. may not include all implemented (e.g. all to align functional
projects (e.g. development of a categories or all sites in the enterprise) value delivery against
sourcing, supplier sourcing plan may enabling projects) or is not well'- functional strategy
management, and occur on an ad'-hoc '-Annual plan is not integrated cross'- objectives. The
demand basis to support the used by the functionally. process includes
management) and upcoming year's value organization as a tool to '-Annual plan is not cross'-functional (and
enabling projects delivery target. manage resource consistently used by enterprise)
(e.g. process or However, this is activities and the Procurement teams engagement and
technology inconsistently applied performance to manage resource approval.
improvement)? across the organization '-Limited effort is made activities throughout '-Annual plan is
and incomplete in to proactively identify the year, or is not well'- actively used to
Portfolio nature (e.g. plan is potential projects for the integrated into manage resource
Q2.01
Planning comprised only of the upcoming year's plan performance objectives activities throughout
expiring contracts that and the performance the year, with well'-
need to be sourced). Procurement is still management process defined KPI(s) and
largely seen as being '-An ongoing planning accountabilities
Procurement's activity more reactive than process is defined, but integrated with
set is seen as reactive proactive in regard to not consistently used performance
and unplanned. planning and managing to capture potential management process
its activity set. projects for upcoming '-Ongoing planning
years or is not cross'- process to capture
functionally integrated. potential projects for
Procurement has upcoming years,
proactive approach to including cross'-
managing its activity functional (and
set, with inconsistent enterprise)
implementation. engagement and
approval, is
implemented and
consistently used
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To what extent is > Procurement has > A traditional project > A traditional project > Master > A programme view
capital procurement no or limited based approach to based approach to procurement plans are is taken, master
co-ordinated and involvement in capital procurement with procurement is taken in place across some procurement plans
managed across projects, being inconsistent with limited parts of the business to being used to
the organisation? generally consulted on involvement of opportunities for long aggregate demand aggregate demand
price related issues or Procurement, providing term planning and across projects and across projects and
when contractual no opportunities for long aggregation of demand. identify opportunities to identify opportunities to
issues arise. term planning and Procurement is bundle contracts. bundle contracts.
aggregation of demand. consistently involved in Planning in Planning is routinely
project definition. collaboration with done in collaboration
Capital Limited collaboration internal stakeholder with all internal
Q2.02 across the supply groups and supply stakeholder groups
Procurement
chain. chain members is and supply chain
evident, giving a members and is
degree of visibility of aligned with the up'-
long term demand. front planning for
capital investment,
giving visibility of long
term demand.
Strategic
Q3 Sourcing
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Version 1.0 Procurement Strategy Dated: 2019/20To what extent > The organisation > There is no > Category sourcing > Category sourcing > Advanced and
are comprehensive does not have a evidence of strategies strategies are in place strategies are in place differentiated category
category strategies consistent view of its being developed at a only for a small minority for most areas of major sourcing strategies are
in place for major spend categories. spend categrory level. of direct and indirect direct spend. This is in place for all major
spend categories? '- No sourcing '- Local procurement categories. less well developed in categories of indirect,
strategies are in place. activity is reactive to '- Procurement category areas of major indirect direct and capital
Procurement have no individual Business teams tend to develop and capex spend. spend, based on
involvement in Unit/functional need sourcing strategies as Some portfolio analysis comprehensive
sourcing decision'- rather than planned or part of the strategic considered. portfolio analysis.
making beyond co'-ordinated across sourcing process being '- Strategies show '- Portfolio is regularly
administration of the enterprise. Central applied at sub'-category evidence of reviewed with supplier
formal RFP. Procurement have had level but there is little consideration of a wide and industry input and
some success in co'- evidence of alignment range of sourcing all sourcing levers are
ordinating activity for with an over'-arching levers. Limited considered. Category
some enterprise'-wide category strategy. consideration of the strategies address
indirect requirements. '- Limited or wider supply chain opportunities across
'- Sourcing decision'- inconsistent opportunities. the broader supply
Category making still handled by consideration of a wide '- Category strategies chain.
Q3.01
Strategy the business '- in most range of sourcing tend to be owned by '- Alternative supply
cases with no levers. Limited and understood in sources are developed
Procurement consideration of the Procurement but in conjunction with
involvement. Sourcing wider supply chain understanding of current suppliers for
strategies are not opportunities. stakeholders outside key purchases.
formally documented. '- Category strategies Procurement is '- Category strategies
Procurement owned by Procurement inconsistent. are communicated
involvement is typically are infrequently within Procurement
limited to tender and revisited and there is and to all key
negotiation strategy. limited evidence that stakeholders for
they are shaping the important categories.
way Procurement
manages its day'-to'-
day activity
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How effective are > No use of > Consolidated > Consolidated > Consolidated > Consolidated
efforts to leverage consolidated purchasing at a purchasing across the purchasing across the purchasing conducted
spend for major purchasing at any BU/Division level only key procurement key procurement across all procurement
spend categories? level. Fragmented '- No evidence of entities for some major entities for most entities for all
purchasing across attempts to bundle categories of spend. significant areas of significant and
departments with a services with existing '- Limited evidence that spend. appropriate areas of
silo culture. suppliers. existing suppliers are '- Existing suppliers are spend. Opportunities
'- Sourcing occurs only '- No evidence of considered for sometimes considered for further
at business attempts to develop extended or bundled for extended or consolidation reviewed
unit/divisional level. suppliers to take on services. bundled services. regularly
Procurement additional supply '- No evidence of '- No evidence of '- Existing suppliers are
Q3.02 responsibilities. attempts to develop attempts to develop routinely considered
Leverage
suppliers to take on suppliers to take on for extended or
additional supply additional supply bundled services.
responsibilities. responsibilities. '- Key suppliers are
developed to take on
additional supply
responsibility.
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Version 1.0 Procurement Strategy Dated: 2019/20What level of > Procurement is > Rarely involved in > Some involvement > Procurement is > Procurement is
involvement does never involved service new service/product in new service often but not always consistently involved at
Procurement development or design development and developments and involved at the earliest the earliest stage of
typically achieve discussions. design and then only to design although the stage of product/service
across the '- Procurement's remit assist with calculating level of involvement product/service development and
organisation? is seen to be limited to costs. There is no varies considerably development and design, having the
processing orders and opportunity for across categories, design, having the opportunity to
administering Procurement to actively projects and business opportunity to influence influence specification
contracts. influence design based areas. The opportunity specification design design and drive
on acquisition or for Procurement to and drive standardisation and
ownership costs. actively influence is standardisation and advise on sourcing
'- Across the limited. advise on sourcing strategy and
organisation '- Procurement can strategy and contracting approach .
Procurement's role is point to examples contracting approach. '- Across the
Sourcing seen to be limited to where they have '- Some areas of the organisation
Q3.03
Processes running tenders, successfully business recognise Procurement's role is
negotiations and demonstrated an ability Procurement's role and seen to encompass all
contracting. No to apply wider value remit with the full range value levers: demand
recognition of a broader levers beyond of value levers but in management, design &
remit with other value competitive tender but other areas specification, make vs.
levers (demand these have been rare opportunities are buy, transportation &
management, and most business constrained. supplier performance
challenging takeholders see management
specification, make vs Procurement's role as
buy). limited.
How much of the > No areas at all. > Some areas > Many sourcing > Over 75% of > The entire spend
spend is covered covered by sourcing groups have sourcing spend covered by is covered by sourcing
Sourcing by signed-off strategies but normally strategies, but they are strategy, which is strategies which are
Q3.04
Processes sourcing by exception. not fully signed off. signed'-off by signed'-off by senior
strategies? appropriate business management.
stakeholders.
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How advanced Specifications are Specifications are Comparison of The process is well Key specifications
are the processes not maintained. reviewed reactively, due supplier performance to documented. are reviewed on a
for maintaining to cost pressures or defined standards. Responsibility agreed regular basis. Cross
specifications? quality issues. Review Feedback to suppliers for specification functional input is
conducted by company on a regular basis. maintenance. gained. Technological
A resource only. Feedback from around Communication solutions are utilized.
Specification user community and process in place. Some The process is
Q3.05 across company A. challenge and input common through'-out
Rationalisation
Formalized process for from cross functional the company (i.e.
key suppliers, with clear teams. Active supplier cross'-Group). Supplier
internal accountabilities. involvement in involvement fully
Analytically based process. leveraged.
How rigorously There are no Some application of Consumption and Consumption and A total cost
are consumption consumption policies demand management compliance procedures compliance procedures management approach
and compliance in place. procedures. Primarily are regularly reviewed. are regularly reviewed is applied. Design for
procedures measurement of usage / Target cost and updated. Key manufacture and
applied? volumes. management is applied measures are assembly principles
Demand in key areas. incorporated in are used. Demand
Q3.06 business. management fully
Management
Improvements / integrated in NPD and
benefits can be procurement
demonstrated. processes.
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Version 1.0 Procurement Strategy Dated: 2019/20To what extent > Little or no supply > Procurement has > Infrequent supply > Periodic supply > Sourcing
does Procurement market knowledge. No limited understanding of market research market research strategies for most
research the supply supply market the competitive supply conducted for key conducted for key sourcing groups based
market? research conducted. market or critical factors categories and categories and on coherent and deep
'- Basic informaiton impacting commercial commodities. Supply commodities. understanding of
availablein current or operational knowledge tends to be '- Detailed cost and supply market. Cost
suppliers performance. Research stronger amongst performance drivers fully understood
not integrated into customers than in information, supply and used to drive
overall sourcing process Procurement. Some market dynamics, strategy decisions.
and tends to be analysis of the supply market trend and '- A market intelligence
conducted on ad hoc market is built into the competitor activity programme is in place,
basis. sourcing process. information available web'-enabled
'- Analysis conducted on '- Procurement will only across some sourcing technology being
basic supply market rarely attempt to groups. applied to provide
information. High level analyse suppliers' cost '- Strong regional regular updates for
benchmarking base as part of sourcing supply knowledge important supply
completed, based on engagements or among cross functional market factors such as
Q3.07 Market Research existing supply base compare performance team but limited global commodity prices, fuel
and limited number of against other similar industry knowledge. / energy costs,
other sources companies. '- Procurement will currency exchange
'- Procurement do not sometimes attempt to rates and supply
attempt to analyse analyse suppliers' cost benchmarks.
suppliers' costs as part base as part of major '- Procurement
of sourcing sourcing engagements routinely looks into
engagements. but this is not routine. suppliers’ processes
and raw material costs
to understand quality
and cost drivers, and
compares their
performance against
other similar
companies
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Is a quality > A sourcing > Basic > Implementation > Additionally, the > Sourcing
implementation strategy exists but no implementation plans plan incorporates all plan includes a risk strategies are in place
plan developed for implementation plan exist covering some Procurement assessment, business for all key
each sourcing has been developed. major aspects of requirements, detailing case, timing plan. The commodities.
group and is it implementation, but are supply base and pricing plans are developed Implementation plans
agreed across the inconsistent in content changes, together with and agreed by cross include key activities,
Q3.08 Implementation business? and depth. timing implications. functional teams. phased timing plan
and addresses all the
key processes.
Responsibility and
program management
mechanisms are
agreed.
To what extent > No sourcing > Supply chain > Sustainability risks > Sustainability risks > Sustainability risks
do strategies for strategies are in place sustainability risks and and opportunities and opportunities and opportunities
major spend for specific categories. opportunities have been identified for some but identified for all major identified for all major
categories consider '- Supply chain considered, but not at not all spend spend categories but spend categories and
specific sustainability risks and the category level. categories, but are not not integrated into are integrated into
Sustainable sustainability risks opportunities have not integrated into procurement decision procurement decision
Q3.09 Category and opportunities? been considered. procurement decision making. making '- from
Strategy making. specification, through
to evaluation and
contract management).
Contract
Q4 Management
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Version 1.0 Procurement Strategy Dated: 2019/20To what extent is > No formal contract > Contract > Basic contract > Formal contract > Formal contract
contract management management happens management processes management management
management framework or process on an adhoc basis and documented and in framework integrated framework integrated
formalised within in place. to inconsistent place supported by a with the sourcing with the SRM and
the organisation? standards. Limited formal contract strategy. Clearly sourcing strategy.
development of management structure defined contract Clearly defined
contracting strategies. and contracting models. management roles and contract management
'- Procurement has no Not fully integrated with responsibilities. One roles and
involvement in ongoing the SRM and/or size fits all approach responsibilities,
contract management. sourcing strategy. with limited guidance contracting models,
'- Contract management on different contract processes and
is performed by models and differentiated contract
business managers differentiated levels of outputs (obligations)
with very limited contract management. based on contract /
Contract Procurement '- Contract service relationship type.
Q4.01
Management involvement. delivery and '- Contract service
administration for some delivery, relationship,
major contracts administration and risk
managed by for key suppliers
professional contract managed on a routine
managers. Contract basis by professional
management tends to contract managers in
operate independent of Procurement or with
Procurement or with Procurement support.
limited Procurement
support.
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How > No involvement in > Procurement have > Procurement have > In most cases, the > The most
sophisticated is or knowledge of the some knowledge of the some knowledge of the appropriate contract appropriate contract
Procurement range of contracting range of contracting range of contracting delivery model is delivery model is
understanding of models available for models available for models available for selected based on the always selected based
capital contract capital projects or how capital projects but capital projects and strategic objectives on the strategic
delivery needs and these models relate to Procurement are rarely how these models and scoping of the objectives and scoping
options? the objectives and consulted in the relate to the objectives capital project. of the capital project.
scope of a project. selection of the contract and scope of a project '- The range of '- The range of
Procurement have delivery model. and the asset contracting models is contracting models is
limited or no management strategy reasonably well well understood by
involvement in the deployed. understood by procurement (eg.
contract delivery '- Procurement are procurement (eg. Alliance Agreements,
model selection consulted in the Alliance Agreements, Design & Construct
process selection of the contract Design & Construct and Engineering
delivery model. and Engineering Procurement &
Procurement & construction) and they
Capital construction) and they play a key role in the
Q4.02 Procurement & are consulted in the selection process.
Contracts selection process. '- Procurement
'- Procurement knowledge is fully
knowledge is only leveraged to provide
partially leveraged to insights into potential
provide insights into risks to help select the
potential risks to help right contract delivery
select the right contract model that supports
delivery model that the project’s needs
supports the project’s and the organisation’s
needs and the asset management
organisation’s asset strategy.
management strategy.
Supplier
Q5 Management
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Version 1.0 Procurement Strategy Dated: 2019/20To what extent > No evidence that > Procurement > Procurement aware > Supplier > Supplier
do Procurement Procurement is aware recognise that supplier of need to rationalise rationalisation rationalisation
actively manage of need for supplier numbers are too high suppliers. Some initiatives have made initiatives have
supplier numbers? rationalisation despite but there is no evidence evidence of efforts to some progress in succeeded in reducing
very high numbers of of Procurement reduce supplier reducing numbers of numbers of active
suppliers. attempting supplier numbers in last 3 years active suppliers but suppliers to a point
'- Supply base is rationalisation in last 3 but no current activity in Procurement believe where Procurement
growing aggressively years. progress. Supplier there is more work to believe they have the
year on year with new '- Supply base is numbers widely do. optimal number of
suppliers added growing strongly year recognised as too high. '- Procurement have suppliers.
constantly. on year. '- Supply base is still performed reviews of '- Procurement perform
Supply Base growing strongly year transaction volumes to an annual review of
Q5.01 on year. identify opportunities to transaction volumes to
Management
reduce the supplier tail identify opportunities to
but this is not regularly reduce the supplier tail.
repeated. '- Few new suppliers
'- Supply base is still required. Existing
growing year on year relationships cover
but net increase is almost all
small. requirements.
How is supplier > Procurement is > Procurement do not > Procurement do not > Collection of > Supplier councils
feedback captured not seeking supplier seek or collect supplier seek supplier feedback supplier feedback is ad used to gather
? feedback. feedback. in a consistent or hoc through contract feedback from
structured fashion. No review meetings. Some suppliers, identify
evidence of limited evidence of improvement
Supplier Procurement acting on Procurement opportunities and
Q5.02 Performance feedback. management reviewing provide improved
Management feedback to identify communication.
recurrent themes.
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To what extent is > Very little > Performance > Focus is on > Continuous > Continuous
continuous evidence of management effort is supplier performance improvement is improvement is
improvement built Procurement reactive and focused and contractual typically discussed as routinely built in at the
into supplier involvement in supplier exclusively on problem performance rather part of supplier tendering and design
contracts? performance suppliers. No focus on than continuous negotiations and stage and considers
management of any continuous improvement. Some features in contracts cost, service and
kind except for improvement. limited evidence of but there is little process improvements.
disputes. continuous tracking of progress Continuous
performance being against goals. improvement plans are
introduced into '- Metrics that can be put in place and
contrcats but little used to measure regularly reviewed
ongoing management progress towards based on the project
of this. improvement goals and relationship type,
agreed with the supplier strategy and
Supplier supplier are typically agreed KPIs / targets.
Q5.03 Performance not well defined and Incentivisation
Management obtaining reliable data frameworks are
is an issue. negotiated such as
rebate /gain share
arrangements.
'- Comprehensive
metrics used to
measure progress
towards improvement
goals agreed with the
supplier.
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Version 1.0 Procurement Strategy Dated: 2019/20To what extent > All suppliers are > There is no formal > SRM strategy > SRM strategy > SRM strategy
does the treated the same '- the SRM strategy which includes a view of includes clearly defined includes clearly
organisation have a supply base is differentiates supplier different relationship relationship types defined relationship
defined strategy managed on a purely management based on types but processes, linked to differentiated types linked to
and approach for transactional basis supplier strategic objectives, governance objectives, governance differentiated
managing strategic with no partnerships or importance. arrangements, KPIs arrangements, KPIs objectives, governance
suppliers? alliances in place. Management of supplier and continuous and continuous arrangements, KPIs
relationship is down to development development plans. and continuous
business stakeholders requirements are only Governance operates development plans.
and is not consistent. partially defined. across the organisation Governance operates
The organisation does Governance currently for strategic suppliers. across the organisation
not have a single view only operates within '- Executive for strategic suppliers.
of its strategic suppliers. Procurement. sponsorship of '- Senior executive
'- Procurement's focus '- Procurement have individual strategic sponsorship of
is on supplier identified Procurement relationships through a individual strategic
performance relationship leads but designated owner relationships through a
Strategic management. Standard business stakeholder within each designated owner
Q5.04 Relationship approaches are applied involvement has not organisation. within each
Management across teh supply base been formalised. '- SRM processes have organisation.
with effort invested '- Some initial efforts been defined but '- Defined SRM
driven by the business have been made to application is processes operational
stakeholder define SRM processes inconsistent and and consistently
requirements and but these are not commitment of applied with all
spend. operating in practice. resources is an issue. strategic suppliers.
'- There is no '- Procurement is taking '- Procurement seen to '- Procurement seen to
documented SRM the lead on developing be owner of process be owner of process
process. a process but there is and is involved in the and facilitator. Fully
very limited business majority of key involved in all key
recognition of the relationships. relationships.
strategy, process or
Procurement's
responsibilities in this
area.
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Version 1.0 Procurement Strategy Dated: 2019/20
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