UNIVERSITY OF OXFORD PROCUREMENT STRATEGY

Transcription

1 UNIVERSITY OF OXFORD PROCUREMENT STRATEGY

2 1. Background and Purpose The mission of the University of Oxford is to achieve and sustain excellence in every area of its teaching and research, maintaining and developing its historical position as a world-class university and enriching the international, national, and regional communities through the fruits of its research, the skills of its alumni, and the publishing of academic and educational materials. To achieve its mission the University requires the support of a large number of external suppliers. In 2011/12 the University spent 472m (excluding VAT) on non-pay spend, this is about 47% of the University s running costs. The University s Purchasing Department (UPD) promotes purchasing professionalism to support the University in engaging with suppliers; it is responsible for establishing and managing effective commercial arrangements to deliver the University s purchasing requirements at best value for money (to time, quality and budget). Value for money also includes consideration of sustainability objectives (economic, social and environmental). This document sets out the University s procurement strategy for the next five years which is developed along six aspirational strategic aims; and is aligned to the University s objectives and values. The purpose is to set out a medium-term strategy for the delivery of procurement arrangements across the University and objectives for success. Each strategic aim includes objectives and a statement of action. 2. Mission Statement UPD promotes purchasing professionalism to support the University in delivering worldclass research and teaching activities. 3. Ownership and Approval of the Strategy This purchasing strategy is owned and maintained by the Deputy Director of Purchasing and is sponsored by the Director of Purchasing and Director of Finance. Specific yearly implementation plans will be developed against this strategy and will be delivered by UPD. Performance against these implementation plans will be monitored by the Deputy Director of Purchasing and reported to the Director of Purchasing, who will escalate matters as required to the Director of Finance.

3 4. Strategic Aims 4.1 Delivering Advanced Procurement Solutions Category management is a best practice process for establishing and delivering a sourcing, contracting and supplier management strategy within a category of spend. It is designed to take a holistic approach to buying (assessing the external market, internal environment and organisational needs) so that key areas of organisational spend are reviewed and managed in a standardised way. The process aims to ensure that savings and value improvements realised as part of the sourcing and contracting process are sustained in the long term through the management of customers and suppliers using management information. UPD is responsible for progressing category management initiatives within the University. 1. Maximise the value for money obtained in each spend category (in terms of price, quality, risk management and delivery outcome). 2. Ensure procurement savings are sustainable in the future (move away from reliance on adversarial and arms-length sourcing strategies). 3. Build innovation into our procurement approach to ensure suppliers help us benefit from the best sourcing/contracting strategies, new techniques and technological advances. 4. Ensure make or buy decisions are informed by commercial factors. We will organise UPD staff to specialise in specific categories of goods or services and develop expertise in those categories. We will use market/supplier insight, knowledge and technical expertise to inform category strategies that deliver best value solutions. Through specific Purchasing Groups and other working groups, we will work collaboratively with customers experienced in particular categories to better understand customer requirements, to analyse spend in order to identify category priorities, to develop appropriate and achievable category plans and to promote those plans. We will review how existing sourcing and contracting strategies have been performing prior to developing replacement strategies. We will actively encourage new entrant suppliers where there is potential to secure better value for money. We will improve our understanding of how contracted goods and services are used within the University, and using this knowledge we will seek to influence demand in terms of both volume and quality of specifications, so that we receive goods and services that are fit for purpose and not over-specified. We will ensure our contractual arrangements in each category provide goods and services at best value using timely and dependable processes, to meet required quality standards. This will include periodic supplier review processes. We will promote and build innovation into our category strategies to support supplier growth, improve our procurement procedures and supply chain innovation to ensure suppliers help us gain advantage from new techniques and technological advances. Innovation will be used to find better ways of working and to deliver sustainable value. We will share procurement best practice and work to embed best practice across all categories and commercial activity. Linkage to Finance Division Strategy: priorities 1, 2 and 3 (see Annex 1) Linkage to University Strategic Plan 08-13: strategies III(b), VIII(e) and (i) (see Annex 2)

4 4.2. Improving Strategic Relationships The University is a large and complex institution with responsibility for many activities devolved to departments. UPD is a central function responsible for supporting purchasing activity in all departments (including negotiating University-wide agreements and one-off purchases over 100k). The devolved nature of the University means that building constructive relationships with departments is an important enabler of effective working. The University has a diverse supply base (c. 20,000 active suppliers). About 80% of non-pay party spend is with c. 7,700 suppliers. The University is highly reliant upon its suppliers to provide services and goods that enable it to achieve its research and teaching objectives. 1. Operate as a business partner to better understand customer requirements, promote the role of the intelligent customer and improve early engagement. 2. Enhance the reputation of UPD by improving customer relationships and levels of satisfaction, balanced with improving value for money. 3. Optimise and continuously improve supplier performance and relations. 4. Improve commercial and market intelligence to understand market capability and ensure suppliers are available to meet emerging needs. 5. Successfully manage commercial and supply risks to ensure sufficiently robust and flexible arrangements are in place to support business continuity. We will act as business partners to departments to ensure customers purchasing needs are being effectively met. We will work to understand customers future requirements, priorities and issues, recognising that supported customers can better specify their requirements and can work with us to achieve better value for money. Business partners will provide first points of contact for support and advice. We will seek to engage with customers as early as possible to ensure decisions are informed by commercial expertise and to understand and influence new requirements (demand management). We will seek customer feedback and use the results to improve our performance. We will conduct supplier positioning (value and risk) to select our key suppliers. We will develop and maintain strong, positive relationships with those key suppliers through the implementation of Supplier Relationship Management (SRM) programmes. We will work with suppliers under SRM programmes to: (i) gain a shared understanding of how they can deliver increasing value to the University and how we can develop mutual cost reduction approaches (understanding cost drivers); (ii) understand and manage strategic supply risks including market dominance and conflicts of interest; (iii) manage the risk of key suppliers becoming insolvent due to challenging economic circumstances and ensure we have robust contingency arrangements; (iv) engage about future requirements and help them prepare for contracting opportunities; (v) maintain up to date commercial intelligence to ensure that the University understands risk, market and technological developments; (vi) seek continuous improvements in value for money through joint improvement plans. We will ensure that all preferred suppliers have periodic supplier reviews. Linkage to Finance Division Strategy: priorities 2 and 3 (see Annex 1) Linkage to University Strategic Plan 08-13: strategies III(b) and VIII(i) (see Annex 2)

5 4.3. Enhancing Commercial Skills UPD has 11 posts, of which nine are specialist. The post-holders are responsible for negotiating University-wide preferred supplier agreements and one-off purchases over 100k and providing purchasing advice. Additionally staff embedded in departments (outside the central function) are involved in low value/risk procurement and contract management. All staff involved in commercial activity, whether they occupy specialist or non-specialist posts will undertake appropriate training and continuous development and will be supported by a repository of user guidance and training materials. This will ensure the University is able to grow its own commercial expertise. The Diamond Report 1 confirms using appropriate procurement skills and expertise within universities can lead to significant savings. 1. Ensure sufficiently skilled, trained and capable resources are available within UPD to meet the forecast purchasing needs of the University. 2. Establish a flexible UPD workforce, with a strong cross-team working culture, that is utilised effectively to best support agreed University priorities. 3. Release individual potential of UPD staff. 4. Ensure staff with responsibility for purchasing activity outside UPD are appropriately supported (with reference to the financial/strategic impact of their purchases) in their work through easy to access information, briefing and networks with UPD. 5. Increase professionalism and provide appropriate training so that managers of key contracts and supplier relationships are equipped to deliver their roles and duties. We will encourage and support all UPD specialist staff to become members of the Chartered Institute of Purchasing and Supply (CIPS); and for all UPD staff to fulfil the CIPS recommendation of 45 hours of Continuous Professional Development (CPD) per year. CPD will be agreed with reference to the BUFDG Procurement Academy and Finance Division Competency Matrices. We will use mentoring by experienced procurement staff to support procurement staff in maximising their potential. We will maintain an organisational structure which supports the implementation of category and supplier relationship management, alongside business as usual activities (in line with spend profiles); and recruit, train and retain skilled purchasing staff. We will encourage post rotation in support of career development and to improve understanding of the University. Staff will have clear job descriptions, personal objectives and development plans. New UPD staff will be inducted consistently. We will establish a network of relationships across the University with those staff outside of UPD responsible for purchasing activities and deliver briefing, training and newsletters to equip those staff with the right skills and knowledge to deliver best value for money; and ensure they have access to professional assistance if needed. We will establish guidance to promote good contract management. For significant contracts we will ensure that contract managers are aware of their duties and responsibilities under the contract and in ensuring ongoing delivery of value for money. We will work with contract managers to drive continuous improvement and resolve performance issues and disputes. Linkage to Finance Division Strategy: priorities 3 and 4 (see Annex 1) Linkage to University Strategic Plan 08-13: strategies VIII(e) and (i) (see Annex 2) 1 Efficiency and Effectiveness in Higher Education September 2011

6 4.4. Embedding Sustainable Procurement The University s Sustainable Purchasing Policy was approved by Council in 2008 ( The University is benchmarking its progress against the Flexible Framework, a self assessment tool developed by the business-led Sustainable Procurement Task Force, which allows the University to measure and monitor its progress on sustainable procurement over time. The University is following the recommended approach to implementing the Flexible Framework by systematically working through each theme (people, policy, process, suppliers, results), continuously improving from levels one to five. UPD also work with the Sustainability Team and Estates Services to identify specific opportunities for action. 1. Enable UPD staff to develop and apply their skills, experience and knowledge to support progress towards sustainable procurement objectives. 2. Build sustainability considerations (environmental, social, economic) into our procurement processes and methodologies. 3. Ensure contractual requirements embed sustainable procurement objectives and maximise their contribution to further University policy objectives. 4. Develop supplier awareness of sustainable procurement objectives, encourage them to continuously increase their contribution to these objectives and report progress. We will deliver training and guidance to equip UPD staff with the right skills, knowledge and tools to achieve sustainable procurement objectives. We will promote and build sustainability into our procurement practices (category management, contract and supplier relationship management, tendering) using a risk assessment tool covering social, economic and environmental factors. Working with Estates Services we will raise the awareness of sustainable procurement with customers and influence the development of specifications and procurement options as early as possible to ensure they contribute to sustainable objectives. We will work with suppliers under SRM programmes to ensure that sustainable procurement considerations become business as usual and are embedded into commercial activities directly and down the supply chain. We will work with suppliers to address sustainability by building relevant key performance indicators and contract terms into contract. We will ensure that sustainability is a standing agenda item in all supplier reviews. We will highlight to customers those preferred suppliers who have the best sustainability credentials, and where practical establish agreements that offer environmentally preferable products. We will report on the indirect carbon emission arising from purchasing as part of HEFCE s requirement for all institutions to measure and report on carbon emissions produced through the procurement of goods and services. We will reach level three on the Flexible Framework by December 2013 and establish stretch targets beyond that date. Linkage to Finance Division Strategy: priorities 3 and 4 (see Annex 2) Linkage to University Strategic Plan 08-13: strategies III(b) and VII(g) (see Annex 3)

7 4.5 Driving Collaboration The Diamond Report calls for the higher education sector to increase collaborative purchasing efforts to realise long-term savings. The report suggests that institutions should aim to direct 30% of non-pay spend through collaborative procurement arrangements as a long-term stretch target. A best practice indicator has been proposed by the UUK Strategic Procurement Group of 25%. The University collaborates through Uni-Proc (a collaborative initiative between Imperial, Cambridge University, University College London and Manchester University), the Southern Universities Purchasing Consortium (SUPC) and certain central government deals which have extended their access to higher education establishments. 1. Foster strategic alliances with similar institutions within the higher education sector and relevant consortia to share best practice. 2. Maximise opportunities to direct spend through collaborative working, where this provides demonstrable value to the University. We will review how we procure goods and services against approaches taken by other institutions to ensure we select the best value option. We will collaborate with other bodies in the higher education sector, relevant consortia and government organisations to maximise market leverage and gain better value for money through cross-sector category strategies for common goods and services. We will promote transition of University spend for common goods and services to existing collaborative deals where these provide best value for money, and contribute to the management and development of those deals. We will focus our expertise on procurement that contributes most to the University s objectives and categories that are unique to the University, focusing transition to collaborative deals on commoditised spend areas. We will support representation on national and regional committees and working parties where the benefit to the University of fostering effective strategic alliances with other institutions is worthwhile. At working level we will promote the sharing of experience between buyers of successful and less successful initiatives to ensure lessons are learnt for future initiatives. We will provide procurement data to HEFCE in support of its joint initiatives. We will work with the BUFDG PPG and the Chartered Institute of Purchasing and Supply (CIPS) to develop and promote best purchasing practices across the higher education sector. We will seek to channel 25% of our available third party spend through collaborative deals and establish further stretch targets. Linkage to Finance Division Strategy: priorities 2 and 3 (see Annex 2) Linkage to University Strategic Plan 08-13: strategies VIII(e) and (i) (see Annex 3)

8 4.6. Improving Purchasing Process & Systems The University has a non-pay spend of 472m, and raises 217,000 purchase orders per year. UPD is responsible for providing guidance regarding purchasing process and procedures and delivering supporting purchasing systems. 1. Implement lean purchasing practices and processes, minimising the complexity, cost and time to complete. 2. Maximise use of appropriate e-procurement solutions. 3. Ensure tendering and contracting templates are comprehensive and simple to use, in support of department-led procurement activity. 4. Ensure purchasing policy is maintained and communicated (in compliance to the University s Financial Regulations). 5. Deliver a suite of management information based on accurate third party spend data. 6. To consistently use the measurement and monitoring of key performance indicators to continuously improve functional performance. We will maintain purchasing processes that are effective, easily accessible, which promote best value and manage compliance to Financial Regulations. We will seek to expand lighttouch tendering, with improvements based on customer feedback. Acquisition costs will be assessed (through category and supplier relationship management programmes) for our main spend areas, and steps taken to streamline and take cost and time out of the processes. This may include introducing efficient electronic solutions which eliminate waste, improve reporting and enhance compliance (including e-purchase orders). We will maintain an effective e-tendering solution (In-Tend) to maximise tendering efficiency and our ability to produce and analyse tendering management information. We will seek to expand use of In-Tend beyond UPD where it is cost effective. We will use other e- purchasing tools such as e-auctions where this delivers best value. We will maximise use of e-catalogues across the University to ensure easy access to preferred supplier agreements, and use this technology to display options to purchasers to help them make informed decisions about best value. We will work with Legal Services to ensure tendering and contracting templates are legally and commercially robust, and include simple guidance for customers. We will maintain and disseminate purchasing policy advice and practical guidance to University staff involved in commercial activity through a high quality intranet presence. We will design and deliver a suite of management information (strategic, category management focussed, customer focused, supplier focussed) to inform commercial decision making by UPD and departments; based on spend data categorised to level 4 of UNSPSC. We will measure, monitor and report functional key performance indicators using automated systems to improve efficiency and effectiveness. We will benchmark against other higher education and public sector organisations. Linkage to Finance Division Strategy: priorities 1 and 2 (see Annex 2) Linkage to University Strategic Plan 08-13: strategies VIII(e) and (i) (see Annex 3)

9 Annex 1 Finance Division Strategy Our Mission To provide sound financial advice and timely information to academics, researchers, administrators and other stakeholders Finance Division Priorities High quality management information Efficient & effectively controlled processes Strong stewardship and to achieve this we must develop a team with the right attitude, capability and motivation 4

10 Annex 2 University s Strategic Plan The University has six over-arching objectives expressed in its Strategic Plan to : (i) (ii) (iii) (iv) (v) (vi) Lead the international research agenda across the University s disciplinary spectrum and through interdisciplinary initiatives. Provide an exceptional education for both undergraduates and graduates, characterised by the close contact of students with distinguished scholars in supportive collegiate and departmental communities. Attract, develop and retain academic staff of the highest international calibre and make the University of Oxford and its colleges employers of choice for all staff in the international, national and local environments. Recruit the very best students nationally and internationally through an equitable process based on achievement and potential. Make further significant contributions to society, regionally, nationally and internationally, through the fruits of its research and the skills of its alumni, its academic and educational publishing activities, its entrepreneurial and cultural activities and policy leadership, and its work in continuing education. Deliver outstanding facilities and services and manage them effectively and responsively for the benefit of staff and students. The plan highlights that one of the most critical issues to be addressed in delivering these objectives is that of funding, and includes an additional finance objective (objective eight) stating that the University will improve its financial sustainability through increased income generation, recovery of the full economic costs of research and teaching, and improved efficiency in planning, joint systems and administration. Good procurement practice is a key part of ensuring efficient use of resources. Specific strategies from the plan are also supported by good procurement practice: III(b) VII(g) VIII(e) VIII(i) Promote interactions between the University and industry Take steps to further reduce the University s carbon footprint and reduce the environmental impact of all the University s activities Achieve significant annual cost savings through improvements to core administrative processes and by utilising the benefits of scale Continue to improve financial systems and strengthen the internal control environment in order to underpin good governance and support better decision-making Note: The University s current strategic plan runs until July A new plan is in draft for the period 2013/14 to 2017/18. This strategy will be updated to ensure alignment during August 2013.