Procurement Capability Assessment

Transcription

1 Procurement Capability Assessment

2 Procurement Capability Assessment The Scottish Government, Edinburgh 2009

3 Crown copyright 2009 ISBN: (web only) The Scottish Government St Andrew s House Edinburgh EH1 3DG Produced f the Scottish Government by RR Donnelley B /09 Published by the Scottish Government, July 2009

4 Contents Ministerial Fewd 2 Introduction 4 Method 8 Repting 12 Appendix 1 Procurement Capability Assessment naire 14 Appendix 2 Suggested Fms of Evidence 50 Acknowledgements 51

5 Procurement Capability Assessment Ministerial Fewd The Scottish economy is facing its greatest challenge in decades. In the current economic downturn public spending must help create a me successful country by providing efficient, high quality public services, suppting sustainable economic growth. The Procurement Refm Agenda was vital befe the economic downturn and is now me vital than ever - we need to renew and deepen our focus on ensuring that we get the maximum benefit from our public procurement activities. This means that public procurement must embrace a culture of strategic and continuous improvement and must be able to demonstrate efficiency and effectiveness at all levels. Over the course of the refm programme the Scottish Government has wked with cross sectal partners to develop a variety of processes, mechanisms and technologies to assist procurement teams. The refm programme has also promoted collabation in terms of best practice processes and benefits by the creation of the Centres of Expertise. I, along with my colleagues on the Public Procurement Refm Board (PPRB), expect all public bodies to be using this additional suppt and the unprecedented management infmation available to monit the way they do business at a local level, and track progress and improvements. However, as well as moniting progress throughout the year, it is imptant that each year we take the time to take stock, measure how far we ve come, share best practice and then plan specific action f the coming year to improve continuously, at a local, sectal and national level. This document sets out a mechanism f doing just that: the Procurement Capability Assessment (PCA). The PCA has my full backing. It has been developed by a wking group with representation from key parts of the public sect including Audit Scotland and will be rolled out across the public sect with the assistance of the sectal Centres of Expertise. 2

6 Procurement Capability Assessment The PCA represents a significant further step towards delivering John 's vision of advanced procurement. It will further allow procurement to be recognised as a key public sect skill, as a vital conduit between the public and private sects with a crucial role in helping to create a wealthier, fairer Scotland. It will allow procurement teams within ganisations to plan their path towards delivering efficient, effective wld class advanced procurement. In these challenging times, Scotland requires nothing less.. JOHN SWINNEY, MSP Cabinet Secretary f Finance and Sustainable Growth 3

7 Procurement Capability Assessment 1 Introduction Background The Public Procurement Refm Programme was initiated in response to a review of public procurement in Scotland carried out by John F CBE. In the review, Mr states that: Without sound business practices and processes, it is impossible to operate in a way that is internally efficient and that also delivers good value in procurement cost. Where practices are particularly weak there is also, potentially, an impact on accountability and governance needs. The Public Procurement Refm Programme is a far-reaching and ambitious undertaking that aims to improve procurement across the Scottish Public Sect. The Programme's vision is the implementation of structures, capability and processes to provide continuous improvement in procurement across the Scottish Public Sect in der to deliver Value f Money improvements and suppt increased efficiency. The objectives of the Programme are to: facilitate public bodies in improving their procurement capabilities in der to suppt delivery of better public services; increase the cost-effectiveness of procurement, thereby releasing cash f use in other priity areas; establish and embed appropriate procurement policy and best practice in der to ensure fair and efficient procurement practices and reduce commercial risk; facilitate cross sect collabation to avoid duplication of efft, maximise potential gains from collabation, enable the sharing of experience and infmation and to ensure that common suppliers and markets are managed effectively; and encourage suppliers to build effective and mutually beneficial relationships with the Scottish Public Sect. It is crucial that there is an understanding at a local, sectal and national level of procurement capability and that improvement plans are implemented to ensure the promotion of efficiency and effectiveness and continuous improvement. The Procurement Refm Delivery Group agreed in January 2009 that a single Procurement Capability Assessment (PCA) should be developed to promote the sharing of best practice and continuous improvement across the Scottish public sect. 4

8 Benefits of the Procurement Capability Assessment The objective of the PCA is to assist ganisations to improve their structure, capability, processes and ultimately perfmance, by attaining the best standards that are appropriate to the scale and complexity of their business. The PCA will assess capability in key areas against common criteria and standards which will allow public bodies, locally, at sect level and nationally, to identify where best practice already exists, where there are gaps and where continuous improvements and efficiencies can be implemented. Organisations will have the opptunity, where appropriate, to develop and implement improvement plans as a result of the PCA with assistance from their relevant Centre of Expertise. 5

9 Procurement Capability Assessment Wking Group To ensure that the PCA will be useful to all types of ganisation in different parts of the public sect, key stakeholders from across the public sect have been involved in its development. The PCA wking group was fmed in March 09, with representatives from each of the Centres of Expertise and Audit Scotland, led by the Scottish Procurement Directate. The PCA draws on the successful wk of NHS National Procurement (NP). Its capability assessment documentation and processes have been tried and tested f several years within the NHS. Audit Scotland is also developing an audit toolkit f procurement as part of its wider wk to help suppt the achievement of Best Value in public bodies (BV toolkit). Through the PCA wking group the Scottish Procurement Directate and Audit Scotland have ensured consistent questions are used in the PCA and the BV toolkit. Audit Scotland s approach to Best Value audits will be proptionate and risk-based. Any audit wk it considers on procurement will take into account the results of public bodies PCAs. This means that duplication unnecessary burden f public bodies in the respective wk programmes can be avoided. 6

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11 Procurement Capability Assessment 2 Method Assessing Procurement Capability The Centres of Expertise will wk with public bodies within their respective sects to assess procurement capability. This will done by interviews and by reviewing evidence prepared in advance by the ganisation. Timing The 2009 PCAs will take place during the second half of The Centres of Expertise will, in consultation with their sect develop an action plan, agree a timetable and address any issues that their sect may have about the process. Each PCA should take a maximum of one day, providing there has been good preparation in advance (see below). It is proposed that the PCAs will be take place annually to ensure the ongoing and continuous improvement of procurement activities right across the public sect. Assessment Levels In line with the Rept Recommendations, the PCA has clearly defined descriptions f each level of perfmance. These levels are: Level 0 Non Confmance Level 1 Confmance Level 2 Improved Perfmance Level 3 Superi Perfmance NHS NP who developed and implemented this approach successfully with the Health Boards in Scotland over the past few years have agreed to provide training to the Centres of Expertise. This will ensure that there is consistency in the approach and that the best practice developed by the Health Sect is transferred to the other sects effectively. How do I Prepare? Preparation in advance and people availability on the day are critical. The Centres of Expertise will wk with ganisations in their sect in advance, providing guidance on what infmation, tools and people will be required on the day of the PCA. This will ensure a smooth and efficient PCA process. Suggested fms of evidence have been added in Appendix 2 and Centres of Expertise will provide further advice on additional fms of evidence. The PCA does not require participating ganisations to produce anything in addition to documentation that already exists. It simply requires compilation of existing documentation and provision of infmation on existing systems. 8

12 Link between PCA and Best Practice Indicats (BPIs), Competency Framewk and Scottish Sustainable Procurement Action Plan (SSPAP) The management infmation generated from the BPIs, Competency Framewk and the Scottish Sustainable Procurement Action Plan will provide some of the evidence f the PCA. The BPIs are business as usual practices to manage perfmance throughout the year and are indicats of perfmance. The PCA will be an annual process and will provide me detailed analysis of procurement capability. The Procurement Competency Framewk can be used by individuals to assist their personal development through skills assessment, identification of training and development needs and career planning. It can also supplement the ganisation s existing staff development programmes, resource and succession planning initiatives. Through using the Procurement Competency Framewk, ganisations will be able to demonstrate their commitment to ensuring, through planned training and development, they have appropriately competent staff, which is consistent with the PCA and will provide some of the evidence required f the PCA. The SSPAP sets out how public bodies can demonstrate they are delivering sustainable procurement. It advocates a methodical approach f ganisations to assess themselves and monit their progress and development towards procuring sustainably across a range of ganisational issues. The SSPAP is complementary to, and consistent with, the PCA and consequently a successful PCA will require public bodies to be able to demonstrate that they are delivering sustainable procurement as set out in the SSPAP and vice versa. 9

13 Procurement Capability Assessment Procurement Capability Sections The PCA is used f a systematic review of purchasing strategy, operations, resources and perfmance under eight key areas, cross referenced to the attributes. STRATEGY 1. Procurement leadership and governance Is there clear direction from the top with clear suppt f getting best value in procurement? 2. Procurement strategy and objectives Is there a clear, systematic, holistic and well-researched framewk to guide the ganisation s purchasing decisions? 4. Sourcing strategies and collabative procurement Can the ganisation demonstrate a clear understanding of how it can best satisfy its ce supply needs? 3. Specification of goods and services Can the ganisation demonstrate a prudent and well-planned approach to defining its supply needs? OPERATIONS Consistency of Mar 5. Contract and supplier management Does the ganisation manage its suppliers and contracts effectively? 7. People Does the ganisation have people with sufficient capability to ensure effective perfmance? 6. Key purchasing processes and systems Does the ganisation have efficient and robust processes and systems to suppt advanced procurement activity? 8. Perfmance measurement Does the ganisation have a sound approach to assessing and demonstrating its procurement perfmance? RESOURCES DEMONSTRATING PERFORMANCE 10

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15 Procurement Capability Assessment 3 REPORTING Consistency of approach As NHS National Procurement has considerable experience in the capability assessment process they will lead the training of the other Centre of Expertise. This will ensure consistency in the approach used throughout the PCA process. IMPROVEMENT PCA results Comparing results Centres of Expertise will determine the assessment level following consultation with the individual ganisations and will rept these to the SPD f PPRB consideration in January It is recognised that all public body ganisations are not the same and cannot be compared as such. Centres of Expertise will use family groupings to compare results within each sect. The Centres of Expertise and the Scottish Procurement Directate will also review the PCA results to identify any common trends themes to help priitise the development of tools, processes and techniques to continuously improve Scottish public sect procurement. CONTINUOUS Sharing best practice The Centres of Expertise and the Scottish Procurement Directate will review the outputs to identify best practice to allow them to promote and share best practice at both sect and national level. Improvement plan Improvement plans will be jointly developed by the ganisations and their relevant Centre of Expertise. Progress on the development and implementation of the improvement plans will be repted to the Public Procurement Refm Board. 12

16 High-Level Section Headings 1. PROCUREMENT LEADERSHIP & GOVERNANCE Is there clear direction from the top with clear suppt f getting best value in procurement? (12 questions) PROCUREMENT STRATEGY AND OBJECTIVES Is there a clear, systematic, holistic and well-researched framewk to guide the ganisation s purchasing decisions? (9 questions) SPECIFICATION OF GOODS AND SERVICES Can the ganisation demonstrate a prudent and well-planned approach to defining its supply needs? (7 questions) SOURCING STRATEGIES AND COLLABORATIVE PROCUREMENT Can the ganisation demonstrate a clear understanding of how it can best satisfy its ce supply needs? (21 questions) CONTRACT AND SUPPLIER MANAGEMENT Does the ganisation manage its suppliers and contracts effectively? (19 questions) KEY PURCHASING PROCESSES AND SYSTEMS Does the ganisation have efficient and robust processes and systems to suppt advanced procurement activity? (13 questions) PEOPLE Does the ganisation have people with sufficient capability to ensure effective perfmance? (11 questions) PERFORMANCE MEASUREMENT Does the ganisation have a sound approach to assessing and demonstrating its procurement perfmance? (9 questions) 47 Rept Assessment Levels Level 0 non-confmance Level 1 confmance Level 2 improved perfmance Level 3 superi perfmance 13

17 Appendix 1 Procurement Capability Assessment naire Section 1 PROCUREMENT LEADERSHIP AND GOVERNANCE 1. Is there clear direction from the top with clear suppt f getting best value in procurement? 1.1 Does the ganisation give sufficient recognition to procurement and its contribution to best value? A. Are there clearly defined roles, responsibilities and repting lines f procurement? Organisational No defined Procurement role A defined procurement role exists but is primarily operational/transactional in focus. A defined Procurement role exists within another ganisational function ptfolio. Procurement is seen as a distinct function with a Direct head of procurement leading at seni level. There are clearly defined roles, responsibilities and repting lines f procurement The head of procurement is either at board level is one level below, with a board member taking clear ownership f procurement and commercials matters. (Note: Board can be Board/ Council/ cpate management team equivalent) The head of procurement can and does access board level meetings. Leadership of the function is an integral part of the head of procurement s roles and the impact of this is widely visible. The head of procurement - is considered part of a seni peer group with other business leaders; sits on appropriate key Steering Groups, project boards etc.; plays a full role in wider Government, professional and collabative initiatives; provides active personal leadership of wider netwks. B. How is Procurement structured? Organisational Procurement responsibility is fragmented within the ganisation. Procurement not recognised as ce to the ganisation s operation. Perceived as transactional department. Procurement recognised f delivering within a limited mandate, but perceived as adding little value to many of the ganisation s processes. Procurement ganised by categy commodity however areas of expenditure excluded with limited transactional input. Procurement ganised by categy commodity, suppted by highly skilled/trained Procurement staff. Ce competency of Procurement recognised throughout the ganisation. Organisational roles are structured nationally. Organisation designed to maximise Procurement leverage and remain focused on ganisation s needs. Percentage spend managed by effective procurement processes is high. Integration of Procurement activities f strategic purchases. 14

18 Section 1 continued 1. Is there clear direction from the top with clear suppt f getting best value in procurement? 1.2 Are there clearly defined roles, responsibilities and repting lines f procurement? A. Is there a clear role focused on strategic procurement (by sourcing group) which is embedded across the ganisation and aligned with the CoE? (Strategic procurement includes development of procurement strategy, practices, sourcing strategies etc. and Operational procurement is routine requisitioning, transacting on previously established contracts and agreements and suppt f procurement activities) Organisational No fmalised role in place f strategic procurement (by commodity) Strategic Procurement role exists f limited areas of spend, but not across all maj spend areas and geographies. Strategic and operational roles within procurement are not fully differentiated. Strategic Procurement role exists f limited areas of strategic spend, i.e. classified as high value/ high risk (up to 50%) but role not clear, staff are not fully trained and are not aware of helping to deliver the ganisation s objectives. Roles completely differentiated from operational buying activities. Strategic Procurement role exists f most areas of strategic spend (>75%) role is clear across ganisation, and staff are trained. Roles completely differentiated from operational buying activities. Highly skilled and fully trained Strategic Procurement professionals are in place and are fully integrated within ganisation s decision making process. Delivering significant incremental benefits across majity of bought-out spend. B. How effective is the ganisation at using user intelligence groups f appropriate procurement activity? Organisational Individual targets creating conflict within ganisation. Infmal team discussions dependent upon individuals involved. Regular user intelligence group meetings held however a degree of conflict still remains. User intelligence groups in place with regular meetings f some areas, appropriate to needs. Some clarity of roles, although inconsistent composition and attendance. User intelligence groups in place with clear clarity of roles, appropriate to needs, delivered consistently across the service and linked to key strategy deliverables. Customer and market facing ganisation. Dedicated user intelligence groups in place. Wking on new product development, continuous improvement and strategic sourcing. 15

19 Section 1 continued 1. Is there clear direction from the top with clear suppt f getting best value in procurement? 1.2 Are there clearly defined roles, responsibilities and repting lines f procurement? C. How well integrated are the operational procurement roles within the overall ganisation? Organisational Procurement, Planning, Accounts Payable and Receiving managed as separate functions. Little systems integration Various functions recognised by each other as essential to overall supply chain effectiveness. Internal customer/supplier relationships recognised. Some level of integration of departments under Supply Chain umbrella. Supply chain focus. Integrated with local and national service requirements. Embedded process across budget development, demand, service improvements and market developments Value chain focus. Linked to indirect Service Planning Systems f all aspects of service provision and demand requirements. Evidence of service improvements. D. How is customer relationship management incpated into everything you do? Will include BPI2 Practices and Processes No fmal mechanisms in place. Limited customer feedback obtained. Consistent approach. Documented processes and customer feedback obtained on both routine procurement and individual project basis. Consistent approach. Documented processes and two-way feedback is the nm with customer feedback being obtained during the process at post project review. Fmal customer feedback survey is completed at least once a year. Fmal action plans are in place to improve outputs of customer feedback. Consistent approach. Documented processes and two-way feedback is the nm with customer feedback being obtained during the process at post project review. Fmal customer feedback survey is completed at least once a year. Fmal action plans are in place to improve customer feedback. There is clear evidence that results from previous customer feedback surveys are actioned and show a consistent improvement in customer excellence. 16

20 Section 1 continued 1. Is there clear direction from the top with clear suppt f getting best value in procurement? 1.3 Is there a clear system of delegation and authity which is audited? A. How clear is the system of delegation and authity f procurement? Organisational There is no clear system of delegation authity f procurement. The published scheme of administration sets out high level delegations and authity levels. Each department function has a clear system of delegation f procurement (dering and budgetary). The ganisation has reviewed all procurement activity and responsibility. It has fmally designated all those with procurement responsibility as procurement officers with accountability to the Head of Procurement. This system is subject to regular internal audit. Delegated systems are embedded into IT systems to ensure compliance and appropriate authity f transactions. Separation of duties is regularly reviewed and there is accountability to the Head of Procurement. These systems are subject to regular audit. 1.4 Is there an effective and efficient quality assurance framewk f the procurement process? A. Does internal audit provide assurance that the ganisation s internal control systems f procurement are adequate and effective? Practices and Processes There is no quality assurance framewk. There is a quality assurance strategy framewk to provide assurance that basic standards of procurement practice are adequate and effective however there are gaps in assurance the strategy has not been fully implemented. The internal audit service regularly assesses procurement risks and perfmance. It repts assurance that the ganisation s basic standards of governance and financial control f procurement are adequate and effective. rept section The ganisation s audit committee has reviewed procurement risks and priities. The committee has specified the degree of assurance it requires concerning the management of procurement risk. Internal Audit plans and delivers its wk in accdance with this requirement. 17

21 Section 2 PROCUREMENT STRATEGY AND OBJECTIVES 2. Is there a clear, systematic, holistic and well-researched framewk to guide the ganisation s purchasing decisions? 2.1 Are procurement strategies, policies, objectives and targets well developed and sufficient? A. How developed is the Procurement strategy? Governance No documented strategy Some strategic direction documented, although not complete. Little visibility and only functional. Documented Procurement strategy but not communicated across all in Procurement and not signed off. Fully documented strategy communicated across the ganisation. The strategy includes well-defined objectives which demonstrates its impact on the business. The strategy includes a risk assessment and management plan. Fully documented, well communicated strategy in place and fully aligned with the sect delivery strategy, and wider Public Sect Strategy. The strategy defines the ganisation s position with regard to: Cpate Social Responsibility; Equalities; Ethical procurement; Sustainability etc.. B. How well defined are the objectives and targets f Procurement? Repting and KPI No specific Procurement objectives Objectives set but poly defined. Objectives defined and understood but staff unclear about their integration and impact to wider sect deliverables. Objectives defined, understood and documented. Staff clear as to the impact of their targets on wider ganisation s deliverables. Objectives of Procurement clearly documented, communicated across the ganisation and well understood. Consistent and non-conflicting with other departments. Procurement is involved in defining all strategic external procurement relationships. 18

22 Section 2 continued 2. Is there a clear, systematic, holistic and well-researched framewk to guide the ganisation s purchasing decisions? 2.2 Do procurement strategies and policies align with and suppt the ce business? A. How far does procurement strategy suppt and align with the overall ganisation s strategy and with wider public sect strategies? Governance There is no link between Procurement strategy and overall sect ganisation strategies Procurement strategy is developed independently to the overall sect ganisation strategy, but a sense-check is perfmed at a high level to ensure some alignment has taken place. Procurement strategy is developed in suppt of the sect ganisation strategy with the main focus on maximising service and minimising total costs. Procurement strategy is based on optimising the ability f sect to deliver and improve service delivery across the entire value chain. The Procurement strategy is co-developed with the other elements of wider service delivery and development. Procurement strategy is based on optimising the ability f sect to deliver and improve service delivery across the entire value chain. Procurement strategy is co-developed with the other elements of the business strategy, and wider public sect strategies Sourcing and supply chain improvement projects are fully aligned with Business Strategy. B. Has the ganisation a clear process f making outsourcing decisions? Governance No fmal process policy exists, at the strategic and tactical levels Limited outsourcing decisions and are perfmed reactively. High-level outsourcing criteria exist and review is part of sourcing decision f new products/services. Tactical make vs buy is conducted, based on some analysis and some policy guidelines. Periodic reviews at commodity/categy level. Guidelines f tactical outsourcing are in place but not deployed fully across the business. Coherent strategically focused outsourcing process. User intelligence group input facilitated by Procurement based on understanding cost drivers and strategic issues. Clear policy guidelines to drive tactical make vs. buy decision-making, which are followed. C. Can the ganisation demonstrate clear leadership and commitment from Seni Management towards sustainable procurement? Cpate and Social Responsibilities No evidence of management commitment. Evidence of management suppt but this is not reflected through activities, policies and strategies. Seni management leadership and commitment being evidenced in larger value projects/contracts only. Clear leadership and a genuine commitment from Seni Management resulting in sustainability objectives being incpated into ganisational activities, policies and strategies. 19

23 Section 2 continued 2. Is there a clear, systematic, holistic and well-researched framewk to guide the ganisation s purchasing decisions? 2.3 Does the Board and seni management team demonstrate understanding of the Procurement strategy? A. How well is Procurement strategy documented, communicated and understood by sect individual ganisation? Governance There is no documented strategy A Procurement strategy exists, but it is not current. Only the seni Procurement management team have visibility to the plan. A procurement strategy exists and is updated infrequently. Updates driven by the need (f example Audit requirements) to complete this. Not all seni management understand sign up to the strategy. Updated on a regular basis. Seni management understanding and agreement to strategy. Procurement personnel familiar with the implications of the strategy. A fully documented strategy has been agreed business-wide and cascaded to all key areas. Key messages, actions and measures are highlighted in an executive summary. All areas are clear about the implications of the strategy and the expected changes. B. To what extent does the overall ganisation suppt the Procurement strategy? Organisational No wider suppt f Procurement in place Officially the service suppts the Procurement strategy but very little active suppt exists amongst seni managers. All seni managers officially commit to the targets of the Procurement strategy but only some managers practically demonstrate suppt. All seni managers officially commit to the targets of the Procurement strategy and demonstrate this commitment through active suppt. Seni managers help develop and sign off Procurement objectives and targets across the ganisation, even if not directly responsible f Procurement tasks and demonstrate commitment through active suppt of Procurement tasks. Procurement is involved in the process of instigating change projects across the ganisation. 20

24 Section 3 SPECIFICATION OF GOODS AND SERVICES 3. Can the ganisation demonstrate a prudent and well-planned approach to defining its supply needs? 3.1 Is there sufficient and timely research and challenge to ensure necessary goods and services are properly specified? A. To what extent is supplier market intelligence used to procure products services? e.g. wking with suppliers to see R&D and the current standards and technology roadmaps; post contract to take cost out through value engineering changing packaging specs, etc. Supplier Strategy and Policy No agreed specification standards in place f most products. Many specifications developed without market intelligence. Organisation specification f most products Some standards in place but not revised regularly. Many specifications developed without market intelligence. Organisation specification f most products. All strategic purchases covered by specification and signed off as acceptable by supplier. Supplier has influence on specification post contract. All strategic purchases covered by specification. Supplier market intelligence used in product development at an early stage f many areas of spend. Supplier influence on specification after Invitation To Tender. Specification standards in place. Complexity reviews undertaken regularly. Suppliers make a positive contribution to the design of the product from initiation, f most spend areas. B. To what extent does new product service requirements New Product Introduction (NPI) involve procurement expertise either nationally locally? Supplier Strategy and Policy No sourcing input Minimal sourcing, input e.g. supplier capability, tenders using brand names vs. generics. When a new product service is introduced it is not used by the ganisation. Sourcing input requested on an adhoc basis. Involvement is driven by procurement. When a new product service is introduced hardly used by the ganisation. Two way process established to integrate sourcing and new product introduction. Sourcing input sought early in the new product introduction process. Sourcing involvement on ongoing basis to shape all third-party relationships. When a new product service is introduced it is frequently used by the ganisation. Dedicated sourcing resource involved. Full understanding of current and future sourcing strategies. NPI and sourcing processes fully integrated. There is full compliance with the contracts when a new product service is introduced. 21

25 Section 3 continued 3. Can the ganisation demonstrate a prudent and well-planned approach to defining its supply needs? 3.1 Is there sufficient and timely research and challenge to ensure necessary goods and services are properly specified? C. How well managed is your product catalogue? Practices and Processes Large duplicated part number catalogue. Obsolete inventy. Supercession issues. No process f part number rationalisation. Component selection process decoupled from sourcing processes Duplicated part numbers identified and rationalised to a degree, on an infrequent basis. Component selection process linked to sourcing process via broad policy guidelines (e.g. preferred suppliers) and limited measures in place. Single recd f each unique item held on catalogue with continuous, proactive management of full content in respect to quality, usability and accuracy and to safeguard against duplications. Catalogue to clearly differentiate between items subject to specific contractual terms and those traded out with fmal contracting processes. Some wk done on a regular basis to identify opptunities to rationalise catalogue content. Item selection/specification process linked directly to sourcing activity with clear policies adopted by "technicians" and with existing specifications used to infm future sourcing activities. End users have access to supplier catalogues and engage suppliers from early stage in respect to item specification. Measures to be in place to continuously monit the utilisation of catalogued items as the basis of transactions. Goods and services selection and sourcing processes fully integrated. High pick availability (>85%) f recurring item requirements. Evidenced improvement on inventy holding and stock costs. 22

26 Section 3 continued 3. Can the ganisation demonstrate a prudent and well planned approach to defining its supply needs? 3.2 Is there effective Demand Management early in the procurement process? A. How rigously are consumption and compliance procedures applied? e.g. Cheaper item but using me of them/ cheaper daily rate but me days, etc and how this links to budget? Practices and Processes There are no consumption policies in place Some application of demand analysis procedures. Primarily measurement of usage/volumes. Consumption and compliance procedures are regularly reviewed. Target cost management is applied in key areas. Consumption and compliance procedures are regularly reviewed and updated. Key measures are incpated in business. Improvements/benefits can be demonstrated. A total cost management approach is applied. Demand management fully integrated in procurement processes. Demand and consumption data available real time and linked to service improvements. B. How proactive is the ganisation s approach to value analysis of current and new specifications f Products and Services? Overall Value of Results Existing designs/ specifications not challenged. No Procurement supplier involvement Design of current products and services is reactively assessed resulting from customer/market pressure. Design of current products and services is assessed to achieve reduced cost only. Supplier involved on a reactive basis. User intelligence groups (including Procurement) in place to pro-actively challenge new and existing products and services, on an ongoing basis. Evidence of improved ROI TCO available. User intelligence groups (including Procurement) in place to pro-actively challenge new and existing products and services, on an ongoing basis. Suppliers are involved in Value Analysis as experts in their field. 23

27 Section 4 SOURCING STRATEGIES AND COLLABORATIVE PROCUREMENT 4. Can the ganisation demonstrate a clear understanding of how it can best satisfy its ce supply needs? 4.1 Is there a rigous, high quality process f developing sourcing strategies? A. How are local Sourcing Strategies developed and reviewed? Practices and Processes No fmal process f sourcing strategy development and no regular reviews of sourcing strategies Sourcing options are reviewed reactively by the procurement function, usually when problems occur within the supply base. The SPD toolkit is not used Publications/2006/11/ /0 n the Centre of Expertise branded version of the SPD toolkit. Sourcing options are developed and reviewed but are variable in depth between sourcing groups, and the transition process to new suppliers is managed carefully by the procurement team. Some elements of the SPD toolkit are used Publications/2006/11/ /0 the Centre of Expertise branded version of the SPD toolkit. There are regular, planned and diarised reviews of sourcing options within the immediate procurement team with little interaction with other departments - each review is conducted independently and methods are applied on an individual basis. The SPD toolkit is used as a matter of course Publications/2006/11/ /0 the Centre of Expertise branded version of the SPD toolkit. There are regular, planned and diarised reviews of sourcing options using a fmal methodology. Cross-functional/ geographical teams are used where appropriate, with a carefully managed transition process to new suppliers. The SPD toolkit is used as a matter of course Publications/2006/11/ /0 the Centre of Expertise branded version of the SPD toolkit. B. To what extent is sourcing strategy development a multifunctional, service-driven process? Practices and Processes Where they exist, sourcing strategies are developed in isolation and take little account of service needs Strategies are developed with some involvement on an ad-hoc basis. The strategy takes some account of the service requirements, primarily around operational facts. The strategy is developed involving key multifunctional input, and takes account of many supply chain issues relating to the sourcing group. Demand management and supply base management drivers are fully incpated and significant specialist input is provided, including key user areas. Cross-functional/ geographical teams are used on an ongoing basis, with significant input across the ganisation. The strategy takes account of significant service drivers, both internal and external. 24

28 Section 4 continued 4. Can the ganisation demonstrate a clear understanding of how it can best satisfy its ce supply needs? 4.1 Is there a rigous, high quality process f developing sourcing strategies? C. How much of the overall spend (CAT A, B and C) is covered by signed-off sourcing strategies? linked to BPI5 Practices and Processes No areas at all Some areas covered by sourcing strategies but nmally by exception. Many sourcing groups have sourcing strategies, but they are not fully signed off. Where available, Categy A and B collabative contracts are being used. Over 75% of spend covered by strategy, which is signed-off by appropriate ganisation stakeholders. Where available, Categy A and B collabative contracts are being used. The entire spend is covered by sourcing strategies which are signed-off by seni management. Where available, Categy A and B collabative contracts are being used. D. To what extent do sourcing strategies f CAT A, B, C spend exploit the full range of opptunities? Practices and Processes Mainly price-focused, purchasing savings, delivered through negotiation and supplier rationalisation Opptunities captured through supply base management and some effts in inbound supply chain management. The SPD toolkit is not used Publications/2006/11/ /0 n the Centre of Expertise branded version of the SPD toolkit. Significant impact in pricerelated supply base management and supply chain benefit areas. Many broader opptunities understood and scoped but little impact made in terms of delivering benefits. Elements of the SPD toolkit are used Publications/2006/11/ /0 the Centre of Expertise branded version of the SPD toolkit. Many opptunity areas captured, but not completely. Variety of benefits captured, but still opptunities exist where implementation has not been as successful. The relevant elements of the SPD toolkit are used as a matter of course Publications/2006/11/ /0 the Centre of Expertise branded version of the SPD toolkit. Full range of opptunities exploited, including supply base management, demand management, supply chain improvements, Total Cost Ownership considerations. Innovation and new product development fostered and ganisation and sect reputation protected and enhanced. Significant benefits delivered consistently. The relevant elements of the SPD toolkit are used as a matter of course Publications/2006/11/ /0 the Centre of Expertise branded version of the SPD toolkit. 25

29 Section 4 continued 4. Can the ganisation demonstrate a clear understanding of how it can best satisfy its ce supply needs? 4.1 Is there a rigous, high quality process f developing sourcing strategies? E. Are procurement policies integrated into ce ganisations? Practices and Processes Only ad-hoc evidence of procurement policy being integrated is available. The ganisation uses approved standard terms and conditions when awarding contracts. Only elements of the SPD Policy Handbook are being used. EU regulations and constraints are only partially understood. All areas of the SPD Policy Handbook are understood and integrated into the procurement process. EU regulations and constraints are well-understood and necessary steps taken to implement them. Legal advice is routinely obtained when required. SPD Procurement personnel are seen as policy experts in relation to the Policy Handbook and EU Regulations. F. To what extent does the ganisation take account of its sustainability in its procurement activity? Cpate and Social Responsibilities Procurement policy and processes take no account of sustainability. Sustainability is incpated into maj projects. An ganisation specific Delivery Plan, which addresses how procurement can help the ganisation deliver sustainability objectives has been produced. Sustainability is embedded into all procurement activity. G. To what extent does the ganisation monit its progress towards demonstrating sustainable procurement practices and processes? Cpate and Social Responsibilities The ganisation has not assessed itself against the Flexible Framewk selfassessment tool contained in the Scottish Sustainable Procurement Action Plan. The ganisation has assessed itself against the Flexible Framewk selfassessment tool contained in the Scottish Sustainable Procurement Action Plan, but has not yet reached level 3 in all five areas of the Framewk. The ganisation has assessed itself against the Flexible Framewk selfassessment tool contained in the Scottish Sustainable Procurement Action Plan and is assessed at level 3 in all five areas of the Framewk. The ganisation has assessed itself against the Flexible Framewk selfassessment tool contained in the Scottish Sustainable Procurement Action Plan and is assessed at level 3 in all five areas of the Framewk. H. To what extent does the ganisation take account of the current economic climate in its procurement activity? Practices and Processes Procurement policy and processes take no account of the current economic climate. Suppliers are checked f financial stability at tender stage only. Incumbent key suppliers are checked f financial stability on an ongoing basis. Incumbent key suppliers are checked f financial stability on an ongoing basis and receive alerts regarding key suppliers financial difficulties. 26

30 Section 4 continued 4. Can the ganisation demonstrate a clear understanding of how it can best satisfy its ce supply needs? 4.2 Are sourcing strategies based on robust and accurate infmation? A. To what extent are sourcing strategies f CAT A, B and C spend based on reliable/robust internal infmation? Infmation Systems No relevant internal infmation exists Infmation at supplier level exists, however the infmation is inconsistent in terms of content and depth. Little infmation exists across the Group. Detailed infmation is available, however it is not used to develop recommendations that can be incpated within the strategy. Only some spend data is available at commodity group level - by supplier (i.e. from accounts payable). Little line item (detailed commodity) level info available. Histic spend data is available, at supplier and sourcing group level. Some data is available at line item (detailed commodity) level. Some fecast data is available. Infmation infms sourcing strategy. Detailed and accurate infmation exists on both current and future demand, supplier and market changes, current process and perfmance. Infmation is easily fmatted and accessed. Procurement regarded as key source of infmation intelligence f supplier spend. B. To what extent, and how, is detailed and rigous supply market infmation/ benchmarking used to drive strategy development? Benchmarking Basic infmation exists on current suppliers. Limited/ no analysis is completed to suppt strategy development Analysis conducted on basic supply market infmation. High level benchmarking completed, based on existing supply base and limited number of other sources. Little investment in supply market research. Collabation on pricing across other public sects is not used to drive efficiencies. Supply market reviews conducted when required. Some understanding of supply markets on an ongoing basis. Benchmarking conducted periodically, across the market (including competition). The Scottish Procurement Infmation Hub (Hub) is used where feasible f benchmarking. The Hub is used f benchmarking where appropriate. Sourcing strategies f most sourcing groups based on coherent and deep understanding of supply market. Cost and service drivers fully understood and used to drive strategy decisions. Sourcing professionals demonstrate in-depth understanding of supply markets. The Hub is used f benchmarking where appropriate. 27

31 Section 4 continued 4. Can the ganisation demonstrate a clear understanding of how it can best satisfy its ce supply needs? 4.2 Are sourcing strategies based on robust and accurate infmation? C. Are mechanisms in place to encourage new suppliers and ensure clear access routes? Practices and Processes Buyer profiles are not on the Public Contracts Scotland ptal. Contracts are not advertised on the Public Contracts Scotland ptal. There are restrictive practices with no clear route f suppliers to buyers. New suppliers are not encouraged. Little variation in supply base. Potential new suppliers are referred to standard documentation infmation. Buyer Profile has been set up on Public Contracts Scotland ptal. Buyer Profile has been set up on Public Contracts Scotland ptal. Meet the Buyer events are being held. Web infmation f new suppliers with genuine positive response to queries. Suppliers are sounded out in early discussions involved in market testing. Pri Infmation Notices are used to assess market interest. Positive action compliant with procurement law is taken to increase opptunities f smaller and medium sized enterprises (SMEs) to provide diversity and responsiveness. Seeks out VFM and innovation through open supplier events and attending trade exhibitions. There is a clear process f introduction of new suppliers. Buyer Profile has been set up on Public Contracts Scotland ptal. Contract awards are on Public Contracts Scotland ptal. Trade fares are being attended by procurement staff. D. Do contracts/ engagements demonstrate strong management of cpate responsibility in the supply chain where CSR is directly related to the perfmance of the contract? Has the risk been analysed on exposure? Cpate and Social Responsibilities Cpate responsibility is not considered n risk analysed. Some awareness and basic management. Cpate responsibility clauses are in contracts. Good awareness of the reputational risk exposure from the supply chain with clauses in contracts. Demonstration of due diligence and risk management. Strong management of reputational risk exposure. CSR taken into consideration in tendering process and clauses in contracts. Positive PR achieved on CSR where possible. Key suppliers manage CSR in their own supply chain. Any gaps identified and action plans in place. 28

32 Section 4 continued 4. Can the ganisation demonstrate a clear understanding of how it can best satisfy its ce supply needs? 4.3 Are sourcing strategies being implemented successfully and in accdance with plans? A. Is a comprehensive implementation plan developed f each sourcing group and is it agreed across all impacted areas of the service? Practices and Processes A sourcing strategy exists but no implementation plan has been developed Basic implementation plans exist covering some maj aspects of implementation, but are inconsistent in content and depth. Implementation plan incpates all Procurement requirements, detailing supply base and pricing changes, together with timing implications. Additionally, the plan includes a risk assessment, benefits case, training and communication plan. The plans are developed and agreed by cross functional teams. Sourcing strategies are in place f key commodities. Implementation plans include key activities, phased timing plan and addresses all the key processes. Responsibility and programme management mechanisms are agreed. B. Is the ganisation moving towards advanced procurement perfmance in accdance with the rept aim ( rept paragraph 9.8.1)? Will include BPI1 Overall Value of Results No action plan is in place measurement conducted. Plan in place but benefits and savings achievement is well behind plan. Action plan is in place though progress may not be well measured. Benefits and savings are being achieved, a number of ongoing ganisational changes implemented although not consistently tracked with some slippage. Action plan and perfmance measurement mechanisms are in place. Benefits and savings and ganisational changes are being achieved accding to the plan. Detailed action plan and perfmance measurement mechanisms are in place tracking ganisational, benefit and savings changes. A process f handling slippage is in place. The changes are repted through-out the ganisation. Significant benefits and savings/ changes are being achieved internally and across wider public sect. C. Do post procurement reviews take place to identify lessons to be learned from the process and to determine whether planned benefits and VFM were achieved? Overall Value of Results There are no post procurement reviews. Post project reviews are conducted in only some cases, i.e. above EU threshold. There is some attempt to disseminate lessons learnt but it is not systematic. Independent post project reviews are nmally conducted. The ganisation is seeking to develop further its approach to post-project reviews. There is a clear and systematic process f disseminating lessons learnt. Procurement staff are involved in seeking to learn from earlier projects and promote better practices. 29