RoS Procurement Strategy 2012

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1 1 Executive Summary RoS Procurement Strategy 2012 The procurement strategy builds on and updates previous strategy documents. A strong strategic procurement function is now recognised by high quality, high performing organisations as a major and key contributor to business capability, service performance and bottom-line impact. Successful procurement operations have developed a high internal profile with board-level sponsorship, established strong relationships with internal customer and stakeholder groups, utilise cross-functional sourcing strategies, and have developed a vision and targets which clearly feed into, and support the goals and objectives of the organisation as a whole. The procurement function at RoS has made significant progress over the past 6 years and is now delivering the business benefits of which it is capable. In particular, the team has strengthened its continuity of leadership, focus and direction. This document is designed to provide a platform, a focus and direction for future strategic procurement development and activity, and an understanding for both the function and the organisation of the activities required to optimise and maintain the significant business benefit a professional and valued procurement operation is capable of providing. A supporting Business Plan will elaborate on the key issues and the tools, activities, practises and processes, we will employ. The ultimate goal is the ongoing development of a high quality strategic procurement function that adds significant, sustained, measurable benefits to RoS and to the internal customer and in addition plays a significant role in supporting Scottish Government s Public Procurement Reform Programme. In the development and delivery of our goals and objectives we will demonstrate how the procurement function will make a significant contribution to delivering RoS strategic objectives set out in the Corporate Plan. 2 Introduction & Background 2.1 Introduction Procurement means the whole process of acquisition from third parties (including logistical aspects) and covers goods, services and construction projects. This process spans the whole life cycle from initial concept and definition of business needs through to the end of the useful life of an asset or end of a services contract. This definition is consistent with modern supply chain management practices. A key theme of this strategy will be to improve upon the contribution procurement can make in both RoS and the wider public sector procurement community and continue to position the procurement process higher up the value chain. The earlier the procurement department is involved in acquiring goods and services the more value it will achieve. Instead of procurement being invited to write contracts with a supplier after a deal is made, or worse raise paperwork to get a supplier paid, Procurement needs to be involved, in a collaborative style, at the earliest stage of the sourcing process, from Day One e.g. when the demander is considering sourcing options, specification etc. Much has been written in recent years advocating the elevation of the purchasing function to a strategic role within the organisation. The basis of such an argument has been the continued focus by organisations on core competencies and recognition of the opportunities and threats that exist within the organisations supply

2 markets. As organisations increasingly look towards their own resources and skills as the source of sustainable advantage, they must continue to seek new ways to combine these assets in order to achieve higher performance capabilities. The purchasing function will not attain the strategic alignment it desires, merely by the pursuit of functional excellence. The purchasing function will be capable of making a more effective contribution to the organisational goals, if it recognises that the best way to proceed is through its integration across the organisation. Purchasing must be capable of relating its own activities to the capabilities that the organisation sees as critical to its success. 2.2 Background In 2005, at the request of the Minister of Finance and Public Sector Reform, John McClelland commenced his detailed review of Public Sector Procurement in Scotland. The review covered the following areas: Current structure and organisation; Current skills and capability; Current practices and procedures; Performance indicators and targets; Opportunity for improvements and new techniques. McClelland reported that weaknesses exist and there is room for improvement in the way in which the public sector in Scotland undertakes procurement. His review sets out recommendations as to how this can be taken forward. RoS Procurement strategy is built on the findings of that report. 2.3 The Present The existing strategy was regularly updated over the past 6 years now presents an opportunity to build on this strategy, setting the direction for the future and forming the foundation for the ongoing delivery of advanced procurement. The strategy covers the next 3 years and this will be aligned with RoS Corporate Plan and updated and re-enforced through the annual team Operating/Section plans which have a 12 month time horizon and linked to the annual Year 1 revisions to the Corporate Plan. The procurement function retains enormous potential in terms of the base processes in place, and in the development potential of its people. The team has made major progress in its ability to make the impact it feels it could. Moving forward, there has to be clarity in ownership of key activities, particularly in respect of managing supplier relationships, contract management, and supplier performance management. Significant progress has been made in integrating different functions in the organisation in order to take joint responsibility for managing such relationships. However further clarity and clear lines of ownership will reduce both internal and external confusion, and drive cost out and value in.

3 The full implementation of e-procurement in March 2007 significantly reduced the percentage time spent on administrative duties and manual processes. This was followed by the introduction other e-processes such as Quick Quote. We will continue to implement further e-processes e.g. e-tendering as and when functionally mature systems become available. These systems are modern and easy to use allowing us to remove the majority of manual supporting processes and to focus on delivering value. RoS organisational approach to buying has dramatically improved from the reactive, tactical and administrative and lacking strategic focus to a much more proactive integrated cross functional approach. The procurement function has evolved into what is predominantly a semi-strategic, functional process that is now able to add the value of which it is capable. The use of sourcing strategies and the Scottish Government Procurement Journey, means it is now involved early in the procurement cycle. However there is the recognition that the processes for understanding who our customer are, what their needs are, and how they are best delivered, must be further developed. 2.4 The Future The procurement function is focusing on a transformation strategy, an evolution that will enable it to become recognised as a high value, high impact area of the business, building on, and introducing a greater level of rigour to, its existing core procurement processes, developing strategic tools, systems and its people, to deliver a level of service and performance that is recognised and valued by all internal and external stakeholders. The key enabler is involvement at the appropriate level and at the appropriate point in the procurement process to optimise the value contribution made by the function. Key, to this is continued progress in delivering our vision, objectives and measurable targets which overtly contribute to the key goals and targets of the organisation as a whole, and makes a significant contribution in support of the Public Procurement Reform Programme in Scotland all of which will require the support and sponsorship for our plans at board level. The function has and will continue to analyse and transform its processes, and if pertinent, its systems, to enable a strategic, as opposed to transactional focus. The function will embrace the Public Procurement Reform Group s Delivery Plan based on the 7Cs Capability, Competitiveness, Capturing savings and benefits, Coverage, Collaboration, Corporate Social Responsibility and Communication and continue to develop a more proactive and collaborative approach to procurement, identifying customer needs through the development of strong internal relationships, understanding commodity market dynamics, delivering against key corporate and public sector wide targets. Individuals will take ownership of the development of commodity sourcing projects and plans, with responsibility to identify and engage the internal customer, and the development of collaborative cross-functional team-working, which ensure all stakeholders are satisfied, and buy-in is achieved through their direct involvement. Plans, activity, results and successes will be communicated via specific marketing and communications plans aimed at keeping key stakeholders informed. Performance will be measured and reported internally and externally using Best Practice Indicators (BPIs) developed by Scottish Government which ensure that customer satisfaction is achieved and that the customer and the organisation understands, recognises and values the benefits being delivered. The function will ultimately be judged on its contribution to corporate objectives, the extent of its capability using the SG Procurement Capability Assessment tool, the pertinence of

4 sourcing strategies in place and how they meet the requirements of internal stakeholders, the quality of relationships with, and the performance of, key partner suppliers. Job satisfaction, and the morale and motivation of the team, is a key focus area. Skills review and effective personal development planning will remain an integral and permanent part of the function s development process. Without it, success is not likely. The Team recognises that in order to develop procurement into a strategic business function, there must be a significant investment both on the part of themselves and of RoS, in skills development. The process will be developed continuously, and apart from developing and motivating people, and supporting the achievement of individual goals and objectives, can be used to support and contribute to the process of effective succession planning, career planning and development. If RoS identifies capable and ambitious people, it must invest in them. Those people must feel that their personal market capital is being raised, and as a result of that investment, they will be retained, at least in the medium term. 3 Vision RoS published Vision, Values and Strategic Objectives are intended as a driver for the way in which we strive to conduct our business. Our vision is, To be expert registrars serving our customers, to underpin the Scottish economy and to enhance its efficiency and effectiveness. The values that we expect our people to display in realising our Vision are: Impartial We act without bias, keeping information secure and presenting it accurately. Professional We recognise that customers need us to be efficient and effective in a way and work with pace pride and passion in a way that they would expect. Forward thinking We must always add value for the public of Scotland finding better ways to deliver what they and the Scottish economy need. Customer-focused The way we deliver our services is focused on our customers needs not our own. We will strive to understand what our customers need and why they need it so we can design our processes and services for them. 3.1 Procurement Vision Our aim is to transform our team into a high quality strategic procurement operation, which can be seen as a centre of excellence throughout the Scottish Public Sector. By this we mean one that provides a value added service, and measurable, sustained benefits through proactive management of external resources and internal strategic skills, a function that can deliver significant benefits to the organisation and the people of Scotland through sustainable economic development.

5 We would seek to share our skills, knowledge and experience and support our colleagues in other public sector organisations in improving procurement across the public sector. RoS values focus heavily on continuous improvement and meeting customer expectations, efficiency (prudence) and the satisfaction of all business stakeholders. In developing its Vision, and subsequent objectives and targets the procurement team has attempted to capture those values within a short, easy to understand statement with which our key internal stakeholders can identify: Develop a high quality, strategic procurement function, dedicated to the delivery of its Customers' needs and of measurable sustained value in support of Organisational goals and objectives. The vision, developed and agreed within the function, must be communicated and widely accepted and be felt by the team as a driver for our transformation both at a strategic level, and in the way, we do business on a day to day basis. The challenge for procurement is to build relationships with our internal customer, our suppliers and our collaborative partners that deliver financial value AND innovative/creative solutions to business problems. Critical Success Factors are the elements that we MUST have in place, if we do not have them we will run a very high risk of the strategy failing. This strategy sets out our high level aims. The challenges, critical success factors and our target outputs are discussed in greater detail in individual action plans that form part of our Strategic Business Plan. The Procurement Team August 2012

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