Procurement Strategy Alpine Shire Council Document Management Approved by: Council Date approved/adopted: 1 March 2011 Next review date: Department: Corporate Services Contact person: Dianne Mahlstedt
2 Table of Contents Introduction...3 Aim...3 Objectives...3 Goals...3 Processes...4 Mapping...4 Stakeholder Communication...5 Spend Map Analysis...5 The Department...5 The Supplier Level...6 Category Management...6 Contract Management...7 Development and Refinement of E-Procurement Platforms and Process...7 Ensuring better access to Procurement Information...6 The Continuous Improvement of the Tendering and Selection Process...7 Supporting Documents...7 2
3 Introduction Alpine Shire Council spend over the last five years is approximately 59.8 million on goods and services. Procurement is recognised by Council and the Local Government sector as a growing area of importance. The Alpine Shire Council is committed to drive efficiencies in all its procurement practices while balancing effectiveness with social, environmental and economic objectives. Council has adopted a Centre-Led Procurement model and the following document outlines how the Procurement Department will manage Councils expenditure over the next four years. This document specifies the key strategic direction of the Procurement Department and the tools and process to develop the procurement chain. Aim The strategy has three (3) overall levels. 1. Objectives and Goals - The direction of the department 2. Processes - the action needed to meet the objectives 3. Activities occurring under each process Goals The Procurement Department will achieve this by a commitment to the following goals: The search and implementation of best practice Procurement. Continuous improvement of all tools, templates, procedures and policies The reduction of time (double handling, repetition) in the procurement process Ensuring Council Procurement complies with relevant legislation and state policies and directions. Identification and implementation of cost savings Engagement with key internal stakeholders, suppliers and peers in the wider Local Government sector A commitment to strengthening, streamlining, standardising and simplifying all Procurement tools, templates, procedures and policies. Achieving environmental sustainability by:- i. Maintaining and restoring our natural assets ii. Using our resources more efficiently, and iii. Reducing our everyday environmental impact 3
4 Objectives The Procurement Departments main role is to provide leadership and management to the whole procurement process. Its priority is to assist Council in making better procurement decisions by providing best practice procurement tools, template, processes, and policies. The Department is also there to assist Council executive and Councillors in understanding the What, Why, When and How of Council Purchasing: with a special emphasis on how Council can purchase better. Processes To achieve these goals the Procurement Department has identified seven major processes for the Procurement Strategy: 1. Stakeholder Communication and Training 2. Spend Map Analysis 3. Ensuring better access to Procurement Information 4. The Continuous Improvement of the Tendering Process 5. Supplier Engagement and Training 6. Contract Management 7. Development of E-Procurement Platforms and Process Each process will be performed as part of a never ending continuous improvement loop. As one activity is completed in a process, another one will take its place, ensuring the Procurement Department continually focuses on improving and refining each process, with the continuous aim of strengthening, streamlining standardising, and simplifying, all procurement tools, templates, procedures and policies within Council. It is also noted that many activities within one process will overlap and influence other processes, with the high likelihood of one activity being shared by two or more processes. The continuous improvement loop is defined as a series of never ending questions posed for the purpose of stimulating thinking on procurement within Council and determining enhancements that can be implemented. The strategy attempts to reach best practice procurement by making small incremental changes daily and weekly over a long period of time. Mapping Mapping will be the main tool used in the continuous improvement loop. This technique involves (4) four major steps: 1 Development of new process and practices 4
5 2 Identifying Changes 3 Determining how to make changes 4 Implementing Changes, and 5 Reviewing before returning to step 1 Stakeholder Communication Stakeholder communication is one of the most significant processes in the Procurement Strategy. The majority of key procurement decisions within Council, such as annual spends, are usually made by employees outside of Procurement. Therefore significant improvement to Council s procurement process will require the active support of key stakeholders within the organisation. The success the Procurement Department relies on how it interacts with these internal stakeholders in all facets of procurement, from the placing of simple purchase orders right through to a million dollar tender. The strategy seeks to turn the Procurement Department from one that transacts with other departments to one that implements a cultural change across Council. Spend Map Analysis Spend Map Analysis is the second most important process within the Procurement Strategy and involves the Procurement Department conducting reviews and audits of how Council spends its money at three levels. 1 At the department 2 At the supplier 3 At the category The Department Spend map Analysis at the department looks at how buying is done at this level. It seeks to answer the following questions: What is the role of the department? What their goals are? What do they purchase? Who does the purchasing? How it is done? What suppliers they use? What contracts do they have If they don t purchase against a contract why not? How can waste be eliminated from the Purchasing as well as their processes and what efficiencies can be gained 5
6 The mapping will be used to determine what their current processes are, where they could improve and how they can get there. Unlike a traditional audit report, the mappings aim is not to find fault or proportion blame, but to identify areas of opportunity, then implement changes with the consent of the department. The overall aim of the procurement strategy, is not only about compliance to the Local Government Act, the strategy seeks to go beyond the government regulation compliance by focusing on best practice procurement and moving Council towards it through collaboration and cooperation. The Supplier Level Carrying on from the departmental review the major suppliers with Council will be analysed. The strategy will do a SWOT analysis of our major suppliers. The strategy seeks also to categorize Council contractors into Procurement categories. The Procurement Department s aim is to use the Procurement Categories developed for Local Government Victoria. Category Management Spend Map analysis involves an outward scan of the categories to analysis the major trends and issues. Questions to be asked will include: Who are the major suppliers are in each Category? What Contracts can Council tap into What are the major trends in the Category? What innovative products services are there? What are the threats and opportunities? The aim is to bring that information back into Council to assist departments purchasing in those categories but also to formulate better procurement decisions and process. Ensuring better access to Procurement Information The Procurement Department s aim is to ensure that all Procurement information is collated into a central point and is accessible to the relevant officers. This process involves: Collating of all Contract information Summarising Contract information for individual suppliers onto individual sheets for end users to absorb Listing all Annual Supply Contracts and agreements Council has entered into with contractors Listing all MAV and Procurement Australia registered contracts 6
7 The Continuous Improvement of the Tendering and Selection Process This will be an ongoing process looking at Policies and Procedures affecting the tendering and selection process including the documentation used. The key will be to strengthen, streamline, standardise and simplify them at every possible stage. Supplier Engagement and Training Engagement with key external stakeholders and suppliers through workshops to: Communicate Councils organisational approach to procurement Provide information on Council s annual capital expenditure Updates on tendering requirements and templates Contract Management Contract Management represents an important part of the procurement process at Alpine Shire Council. Poorly managed contracts lead to substandard quality and service, loss of money and in extreme circumstances injury and loss of life. The procurement strategy seeks to implement four important activities within this process 1. Early involvement in specification creation and review with the Procurement Department 2. The development of Council wide protocols and systems for the management of contracts and ongoing reviews to ensure compliance 3. The training and adoption by all procurement stakeholders in these protocols and systems Development of E-Procurement Platforms and Process Council will seek to streamline, standardise and simplify all Procurement tools, templates, procedures and policies through electronic platforms. Supporting Documents Alpine Shire Council Procurement Policy 7