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WM Bargain Hunt – Energy. 4 th July 2008 – Susie Owen. Energy: Challenges for the public sector. Minimise energy costs and manage risks in a volatile energy market Reduce energy use and carbon emissions Leverage our volumes and access different levels in the supply chain

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wm bargain hunt energy

WM Bargain Hunt – Energy

4th July 2008 – Susie Owen

energy challenges for the public sector
Energy: Challenges for the public sector
  • Minimise energy costs and manage risks in a volatile energy
  • market
  • Reduce energy use and carbon emissions
  • Leverage our volumes and access different levels in the supply chain
  • Access new sources of renewable generation
  • Assist new sources of generation
energy markets
Energy Markets
  • Market is affected by global fundamentals
  • Risen and fallen by 100% up and down in 2 years
  • Daily prices by up to 20%
  • Short term and longer term markets disconnected
  • Gas and Electricity market most volatile in the world
  • Requires expertise and volume leverage to manage price risk
how does the public sector buy energy now
How does the public sector buy energy now?

7% of total UK consumption

8 times bigger than TESCO

£3.25billion p.a

how can we influence energy prices
How can we influence energy prices?

Byaggregating volumes into approved contracts

Reducing supplier margins and tendering costs

Demand management

All costs reduced with reduction in energy use

Margin

Cost

of proc.

Using approved contracts to access wholesale markets & risk management strategies

Reducing price risk

Increasing Volume and opportunities

Wholesale Energy Price

Using approved contracts with access to advanced purchasing from generators

Reducing long term price risk & increasing security of supply including new renewables

Regulated charges

pan government energy project
Pan Government Energy Project
  • MOD lead the Energy Strategy and Collaborative Category Board
  • 7 implementation workstreams
  • Buying and Risk Management
  • Supply chain redevelopment
  • Standardisation of terms and conditions
  • Sustainability
  • Aggregation
  • Communications
  • Emissions Trading
first step understand your requirements
First Step – Understand your requirements
  • Local Government Energy Procurement Action Plan
    • Developed in 2007 by London Centre of Excellence
    • Designed to help authorities identify and manage the key areas that enable effective and efficient energy procurement
  • Section B – Actions and self assessment
    • Data Quality
    • Procurement
    • Financial Management
    • Monitoring & Targeting
    • Performance Indicators

Can be downloaded at www.lcpe.gov.uk/energy

second step review recommended contracts
Second step - Review recommended contracts
  • Review contracts 9 months prior to start date
  • OGC Contracts Database lists all enabled contracts

www.ogc.gov.uk/contractsdatabase

  • The following organisation offer collaborative contracts
        • LASER – offering approved solution
        • OGCbuying.solutions
        • NHS PASA
        • ESPO
        • YPO
        • NEPO
        • The Energy Consortium (TEC)
        • MOD
        • West Mercia

Have all committed to going though approval process

third step energy management
Third Step – Energy Management
  • Reduce Waste
    • Turn off
    • Turn down
    • Repair leaks damages
    • Heating/Lighting controls
    • Voltage optimisation
  • Investment measures, e.g.
    • Insulation
    • High efficiency lighting
    • Sensors
    • Building Management System
    • Power Factor
    • CHP
    • On site renewables
      • Microgeneration

Free surveys (Carbon trust)

Guidance documents

FM contractors/outsource

35% of savings

Salix finance

OGC Contracts database

46% of savings

Partnerships for renewables

Supply frameworks

18% of savings

carbon trust
Carbon Trust
  • Richard Rugg - 020 7170 7051
  • Best practice tool kits
  • Carbon Management programmes – 22% savings!
funding opportunities
Funding Opportunities
  • Salix – match funding www.salixfinance.co.uk
  • Low carbon building programme
  • Partnerships for renewables
  • See http://www.ogc.gov.uk/commodities_procurement_energy_7109.asp
slide13

IT Power Management Framework

  • Why is it useful?
  • PCs are only used for 1/3 of the day
    • why have them always on
  • Power management states
    • Standby
    • Hibernate
    • Off

8:00

2:00

14:00

20:00

Heavy Use

Moderate Use

No Use

slide14

IT Power Management

Simple Savings Possible

Across an

organisation with

10,000 PCs

Across

UK Office PCs

Across UK

Public Sector

1.5 billion kWh

0.38 billion kWh

0.8 million kWh

700,000 tonnes

175,000 tonnes

500 tonnes

£115 million

£29 million

£87,000

1e public sector portal
1E Public Sector Portal

IT Power management guidance on OGC Contracts Database

for more information
For more information…
  • www.ogc.gov.uk/commodities_procurement_energy.asp
  • OGC Service Desk:
    • 0845 000 4999
    • ServiceDesk@ogc.gsi.gov.uk
  • Susie Owen
    • susie.owen@ogc.gsi.gov.uk
    • 020 7271 2626
thank you

Thank you

4th July 2008 – Susie Owen

what i ll cover
What I’ll cover ….
  • ‘Our’ objectives
  • Achievements so far
  • Our strategy – projects and enablers
  • What's in it for you
  • What I’d like from today ..
  • Information
our objectives
Our objectives
  • Improved public sector procurement - working together – do things better
  • Maximise our potential – integrated strategy
  • Align policy with commercial delivery
  • Be more strategic with supplier base
  • Help deliver CSR07 objectives – national and local
achievements so far
Achievements so far
  • Excellent start (CSR04) – pan government contracts available: vehicle purchase / lease (joined up), tyres, glass – enabled deals
  • £750m throughput
  • Process and contract efficiencies – savings!
  • Grey Fleet policy development
  • Category board and strategy team established
  • Data collection / market mapping >
  • More pan enabled contracts – on the money - ww.rce.gov.uk
strategy development
Strategy Development
  • Three core elements
  • Securing compliance: aggregate in scope fleet expenditure onto best-in-class pan-government frameworks.
  • Influencing policy: i) position the collaborative category as a key delivery arm for core policy drivers (e.g. reducing CO2 emissions); ii) use commercial profile to influence transport policy effectively.
  • Leverage Scale: deploy improved control and influence to re-engineer public sector fleet supply chain through strategic key supplier management.
seven key projects

Securing compliance – gaining control of spend and data

Integrating policy and commercial aims

Supply chain management

Seven key projects…
  • Uptake >
  • commercial vehicles
  • fuel cards
  • spot hire
  • grey fleet
  • standardisation
  • fleet management
project support functions enablers
Project Support Functions (“Enablers”)
  • Enabling support functions will:
  • Assist delivery of agreed projects and benefits
  • Identify new project opportunities
  • The enabling functions have been identified as:
  • Project Management Office (PMO)
  • Marketing & Communications
  • Market Intelligence
  • Supplier Engagement
  • Policy
  • Strategy Development
  • Relationship with other Collaborative Categories
what s in it for you
What’s in it for you?
  • Best in class frameworks (now? In the future) / contracting solutions
  • Fleet ‘forum’ – knowledge sharing , peer support, policy review, shared initiatives
  • Standardisation – best in class specification / learning process
  • Policy / best practice support – Grey Fleet – www.pasa.nhs.uk
your first step
Your first step…..
  • Complete a data form – builds understanding and helps begin shared thinking.
  • Identifies quick wins – both ways!
  • Provides focus and feeds strategy / new [potential] projects

Are people willing to complete the form?

what i d like from today
What I’d like from today
  • Communicate what ‘we’ are up to and understand what you are up to in fleet
  • Join both together – understand and feed strategy
  • Communicate how to join contracts
  • Introduce the uptake team
  • Begin to work together
information
Information
  • TGP generally / collaboration (pilots) – OGC Website www.ogc.gov.uk
  • Fleet frameworks - OGC Helpdesk - ServiceDesk@ogc.gsi.gov.uk
  • Uptake –
    • peter.norman@pasa.nhs.uk (North, WM, SW)
    • DavidOlima@ogc.gsi.gov.uk (South)
    • Barnaby.Wiles@ogc.gsi.gov.uk
thank you29

Thank you

Peter Norman

NHS Purchasing and Supply Agency

80 Lightfoot Street

Chester

CH2 3AD

(T) 0151 427 4653

(M) 07768 357876

(e) peter.norman@pasa.nhs.uk

bargain hunt ii 4th july 2008

West Midlands Regional Improvement & Efficiency Partnership

BARGAINHUNT II4th July 2008

West Midlands Regional Improvement

And Efficiency Partnership (WM RIEP)

BPI / LEAN SYSTEMS THINKING

FRAMEWORK AGREEMENT

Ged Bowles

Jane Daly

WM RIEP

purpose of session
Purpose of Session
  • To provide:
    • An overview of the WM RIEP approach to supporting business transformation
    • A model for delivering BPI/ Lean Systems Thinking as an integral part of the wider Improvement and Efficiency agenda
    • A summary of the WM RIEP Framework Agreement for BPI / Lean Systems Thinking
    • Some examples of activity to date
csr07 efficiency challenge
CSR07 Efficiency Challenge
  • The 3% Cashable Efficiency Target for West Midlands Region over the next three years equates to:-
    • £514m

on top of ‘balancing the books’!

  • CLG believe that this figure is likely to be made up from:
    • Procurement 54%
    • Process Improvement 37%
    • Asset Management 6%
    • Other activity 3%
efficiencies are derived from
Efficiencies are derived from:
  • Economies of Scale
    • Traditional procurement practices
    • Bulk purchasing
    • Shared services
efficiencies are derived from34
Efficiencies are derived from:
  • Economies of Flow
    • Streamlining the processes
    • Getting things done right first time
    • Removing waste and blockages
  • Economies of Scale
    • Traditional procurement practices
    • Bulk purchasing
    • Shared services
wm riep programmes
WM~RIEPProgrammes

Core Change Support Capacity

Supporting Transformational Change in Work Programmes

bpi didn t work for us
‘BPI didn’t work for us’
  • Has BPI been successful in your organisation?
bpi didn t work for us37
‘BPI didn’t work for us’
  • Has BPI been successful in your organisation?
    • ‘to an extent’.
bpi didn t work for us38
‘BPI didn’t work for us’
  • Has BPI been successful in your organisation?
    • ‘to an extent’.
  • Why didn’t it work?
bpi didn t work for us39
‘BPI didn’t work for us’
  • Has BPI been successful in your organisation?
    • ‘to an extent’.
  • Why didn’t it work?

‘Not enough buy-in’

bpi didn t work for us40
‘BPI didn’t work for us’
  • Has BPI been successful in your organisation?
    • ‘to an extent’.
  • Why didn’t it work?

‘Not enough buy-in’

‘Not enough investment’

bpi didn t work for us41
‘BPI didn’t work for us’
  • Has BPI been successful in your organisation?
    • ‘to an extent’.
  • Why didn’t it work?

‘Not enough buy-in’

‘Not enough investment’

‘Too expensive and didn’t deliver a lot’

bpi didn t work for us42
‘BPI didn’t work for us’
  • Has BPI been successful in your organisation?
    • ‘to an extent’.
  • Why didn’t it work?

‘Not enough buy-in’

‘Not enough investment’

‘It wasn’t sustainable’

‘Too expensive and didn’t deliver a lot’

bpi didn t work for us43
‘BPI didn’t work for us’
  • Has BPI been successful in your organisation?
    • ‘to an extent’.
  • Why didn’t it work?

‘Not enough buy-in’

‘Not enough investment’

‘It wasn’t sustainable’

‘It was done to us and we weren’t really involved’

‘Too expensive and didn’t deliver a lot’

bpi didn t work for us44
‘BPI didn’t work for us’
  • Has BPI been successful in your organisation?
    • ‘to an extent’.
  • Why didn’t it work?

‘Not enough buy-in’

‘People were worried about their jobs’

‘Not enough investment’

‘It wasn’t sustainable’

‘It was done to us and we weren’t really involved’

‘Too expensive and didn’t deliver a lot’

bpi didn t work for us45
‘BPI didn’t work for us’
  • Has BPI been successful in your organisation?
    • ‘to an extent’.
  • Why didn’t it work?

‘Not enough buy-in’

‘People were worried about their jobs’

‘It worked in one area but hasn’t caught on elsewhere’

‘Not enough investment’

‘It wasn’t sustainable’

‘It was done to us and we weren’t really involved’

‘Too expensive and didn’t deliver a lot’

bpi didn t work for us46
‘BPI didn’t work for us’
  • Has BPI been successful in your organisation?
    • ‘to an extent’.
  • Why didn’t it work?

‘It worked for a while but we’ve gone back to our old ways’

‘Not enough buy-in’

‘People were worried about their jobs’

‘It worked in one area but hasn’t caught on elsewhere’

‘Not enough investment’

‘It wasn’t sustainable’

‘It was done to us and we weren’t really involved’

‘Too expensive and didn’t deliver a lot’

bpi didn t work for us47
‘BPI didn’t work for us’
  • Has BPI been successful in your organisation?
    • ‘to an extent’.
  • Why didn’t it work?

‘It worked for a while but we’ve gone back to our old ways’

‘Not enough buy-in’

‘People were worried about their jobs’

‘It worked in one area but hasn’t caught on elsewhere’

‘Not enough investment’

‘It wasn’t sustainable’

‘It was done to us and we weren’t really involved’

Etc.

‘Too expensive and didn’t deliver a lot’

what needs to change
What needs to change?
  • In order to make it work we must:
    • Carry out the process improvement work,
    • but recognise that BPI is just a tool.
what needs to change49
What needs to change?
  • In order to make it work we must:
    • Carry out the process improvement work,
    • but recognise that BPI is just a tool.
  • Most importantly, we must:
what needs to change50
What needs to change?
  • In order to make it work we must:
    • Carry out the process improvement work,
    • but recognise that BPI is just a tool.
  • Most importantly, we must:
    • Change the way we think!
the wm riep approach
The WM RIEP Approach
  • BPI / Lean Systems Thinking
the wm riep approach52
The WM RIEP Approach
  • BPI / Lean Systems Thinking
    • Clarity of purpose
the wm riep approach53
The WM RIEP Approach
  • BPI / Lean Systems Thinking
    • Clarity of purpose
    • Design processes from customer perspective
the wm riep approach54
The WM RIEP Approach
  • BPI / Lean Systems Thinking
    • Clarity of purpose
    • Design processes from customer perspective
    • Respond to demand and work to understand and eliminate failure demand
the wm riep approach55
The WM RIEP Approach
  • BPI / Lean Systems Thinking
    • Clarity of purpose
    • Design processes from customer perspective
    • Respond to demand and work to understand and eliminate failure demand
    • Adopt a whole system / end to end approach
the wm riep approach56
The WM RIEP Approach
  • BPI / Lean Systems Thinking
    • Clarity of purpose
    • Design processes from customer perspective
    • Respond to demand and work to understand and eliminate failure demand
    • Adopt a whole system / end to end approach
    • Only do the value work
the wm riep approach57
The WM RIEP Approach
  • BPI / Lean Systems Thinking
    • Clarity of purpose
    • Design processes from customer perspective
    • Respond to demand and work to understand and eliminate failure demand
    • Adopt a whole system / end to end approach
    • Only do the value work
    • Engage staff at all levels and get ‘involved in the work’
the wm riep approach58
The WM RIEP Approach
  • BPI / Lean Systems Thinking
    • Relate activity to Purpose
    • Design processes from the customer’s perspective
    • Respond to demand and work to understand and eliminate failure demand
    • Adopt a whole system / end to end approach
    • Only do the value work
    • Engage staff at all levels and get ‘involved in the work’
    • Managers act as leaders
the wm riep approach59
The WM RIEP Approach
  • BPI / Lean Systems Thinking Principles:
    • Clarity of purpose
    • Design processes from customer perspective
    • Respond to demand and work to understand and eliminate failure demand
    • Adopt a whole system / end to end approach
    • Only do the value work
    • Engage staff at all levels and get ‘involved in the work’
    • Managers act as leaders
    • Focus on service improvement
wm riep lean systems thinking model
WM RIEP Lean Systems Thinking Model

WM RIEP as a Systems Model

  • Demand
  • Generation

Learn And

Modify

Customers

Set Up

Improvement

Activity

Do Activity

Outcomes and Learning

RESULTS IN:

Improved Performance

And leads to:

Efficiency Gains

Develop

Expertise

wm riep bpi lean systems thinking team and offer
WM RIEP BPI/Lean Systems Thinking Team and Offer
  • Promotion of BPI / Lean Systems Thinking as a means of achieving improvements and efficiencies (of flow)
  • Hands on support to develop and implement activity in authorities
  • Provide ‘training’ to create appetite and highlight opportunities
  • Build sustainable capacity through experiential learning and skills transfer
  • Share knowledge and learning: Knowledge Portal/Resource Pool
  • Help to embed BPI and Lean Systems Thinking in authorities
  • Targeted funding to assist transformational activity
wm riep bpi lean systems thinking framework agreement
WM RIEP BPI/Lean Systems Thinking Framework Agreement
  • Nationally available to all regional and local public sector bodies in the UK – access via www.wmcoe
  • Range of suppliers in BPI/Lean Systems Thinking and Leadership/Change and Project/Programme Management
  • Supports WM RIEP objective of building capacity through skills transfer into public sector
  • Range of methodologies available to suit differing approaches, cultures, etc.
wm riep activity
WM~RIEP Activity
  • EMERGING ACTIVITY
  • A range of proposals are emerging from across the West Midlands region covering:
    • Fire Services
    • Corporate Shared Services
    • Legal, HR, ICT
    • Adult and Children’s Services
    • Highways
    • LAAs
  • CURRENT ACTIVITY
  • Staffordshire Connects Street-scene Shared Service
  • Staffordshire County Adult Social Care and HR Shared Service
  • Walsall MBC Business Improvement Techniques (BIT) NVQ2
wm riep example
WM RIEP Example
  • Staffordshire Connects Street-scene Shared Service
    • Involvement of 10 local authorities across Staffordshire including the county council, Stoke on Trent City Council unitary and 8 district councils
    • To identify the scope/opportunities to improve the Street-scene system and to do so along with partner organisations
  • DEMAND
  • Value & Failure (average): 55% Value 45% Failure
  • Most frequently demanded services:
    • District/Borough (Amenity)County (Functionality)
    • - Fly Tipping - Potholes
    • - Litter - Emptying drains
    • - Dog Fouling - Street Lighting
wm riep example65
WM~RIEP Example

“The two-tier (county-district) arrangements in England remain open to the criticisms that they are confusing for citizens and represent a potential duplication of resources – however effective their individual services may be”

Delivering Public Service Transformation 2008 (p.26)

  • Staffordshire Connects Street-scene Shared Service
wm riep examples
WM~RIEP Examples
  • Levers for Change
    • To develop constancy of purpose which is agreed by all Partners across Staffordshire to improve customer experience
    • To reduce/remove failure demand
    • To provide measures relating to work (leading and lagging) to drive learning and service improvement
    • To reduce/eliminate waste steps, e.g. duplication, rework, multiple hand-offs
    • To collectively work to remove the system conditions that sub-optimise performance across the two-tier and other agencies in the street-scene system
    • To take the opportunity to embed systems thinking as a way to manage street scene services (and roll out to other areas)
  • Staffordshire Connects Street-scene Shared Service
wm riep examples67
WM~RIEP Examples
  • Walsall MBC Business Improvement Techniques NVQ2
    • LSC funded via FE Colleges and NA-consultants
    • 12 week work based course requiring 7 days ‘release’ time leading to NVQ2
    • Underpins Walsall’s transformation programme
    • 20 service teams planned to undertake training, 4 completed to date (200 individuals across the region have gained BIT NVQ2)
wm riep examples68
WM~RIEP Examples
  • Walsall MBC Business Improvement Techniques NVQ2
    • What’s involved?
      • Service based teams apply lean principles to analyse processes in the workplace and identify opportunities for improvement
      • Develop solutions, apply change and create sustainable improvement
      • Encourage a climate of challenge where staff feel empowered to introduce change
      • Embed a culture of continuous change
learning so far 1
Learning So Far (1)
  • Adopt whole systems ‘end to end’ approach - very different results compared to only looking at part of a process
  • Gain senior leader commitment - critical to the success of this type of activity, but also involve people at all levels of the organisation
  • Get the change team right - and ensure they are freed from the day job
  • Expect tensions with the wider organisation – be sensitive to where the organisation currently is and aware of what else is going on/planned
  • Implement parallel OD programme – roles and structures will inevitably change as a result of activity; don’t leave it until the end
learning so far 2
Learning So Far (2)
  • Accept that all processes have waste and failure demand in them – typically half the demands into a service are ‘failure’ and most processes include significant ‘waste’
  • When staff are empowered performance increases – the freedom to act on the system leads to increased motivation and productivity
  • Lean Systems Thinking is not a one off exercise - it is a different way of thinking and a journey of continuous improvement
  • Lean Systems Thinking is about culture change – an improved process/financial savings are the short term gains, changing the way an organisation thinks and operates is the ultimate goal
bargain hunt ii 4th july 200871

BARGAINHUNT II4th July 2008

West Midlands Regional Improvement

And Efficiency Partnership

BPI / LEAN SYSTEMS THINKING

FRAMEWORK AGREEMENT

Thank you

Ged Bowles email: gbowles@wmcoe.gov.uk

Assistant Director website: www.wmcoe.gov.uk

WM RIEP Tel.: 0121 245 0220

our starting point

High

CAPABILITY

Low

High

TACTICAL

STRATEGIC

Price drift

Price down

Cost down

Cost out

BUSINESS TRANSFORMATION

“No market”

Risk high

Investment high

Reward only “potentially” high

Price to ECC

Suppliercosts

REWARD

SELL

REDUCE

REVENUE GAIN

Market solution

SAVE

Low

High

Low

RISK

Current pace

Responsive

PROCESS

Slow

SPEED

Fast

Our Starting Point
slide74

Transformation

Alliances and joint ventures

Turbo charged commercial transformation

Linked Culture Change

Effective Procurement

Outsourcing and Insourcing

Continuous improvement

Sourcing strategies

Scale of Change

Negotiations / tendering

Supplier reduction

Consolidated spend

Efficient Procurement

Tactical

Cost Impact

Low

High

74

summary of our involvement
Summary of our involvement

A summary of Procurement Services’ involvement in key areas based on individual responses for all open projects in June

Maintenance and support activities

Value creation activities

Advice and support

5

4

Relationship management

Contracting/tendering

3

2

1

Full involvement

0

Actual

Supply chain re-engineering

Admin

Market / supplier development

Savings / value add

1 = no involvement at all

2 = this happens but I have no direct involvement

3 = this happens and I am consulted by the person who does it

4 = this happens and I am involved in some way but others lead

5 = this happens and I lead on the task

75

what is category management
What is Category Management?
  • Category management is a process that focuses on the performance optimisation of a group of related products or services.
  • It raises the performance of a category by tuning into the needs of the customer and reduces inefficiencies / waste in the value chain.
  • Its components are:-
    • Price and cost management
    • Supply market monitoring
    • Continuous improvement
    • Supplier performance management

76

how it all fits together
How it all fits together …
  • Demand management
  • Supply market monitoring
  • Industry cost analysis
  • Procurement portfolio management
  • Aligned business processes

CATEGORY MANAGEMENT

  • Capability management
  • Communication management
  • Supplier competency assessment
  • Account planning
  • Continuous improvement

SUPPLIER RELATIONSHIP MANAGEMENT

CONTRACT LIFECYCLE MANAGEMENT

  • Specifications
  • Contract design
  • T&Cs / SLAs
  • Compliance
  • Contract performance
  • Close out

77

how category account contract managers interact
HOW CATEGORY / ACCOUNT / CONTRACT MANAGERS INTERACT

AccountManager

Supplier B

Supplier A

Category X

Category Y

Category Manager

Category Z

Contract 3

Contract 1

Contract 2

Contract Manager

  • Category Managers are responsible for collating the view of demand by Category – actual and forecast
  • Account Managers work with Category Managers and Suppliers on the account plan i.e. the share of the total demand for a category each supplier can expect
  • Category Managers are responsible for call-off so that each supplier receives work that supports the agreed account plan
  • Contract Managers are responsible for the delivery of individual contracts

78

slide79

2. Long Term Strategy

Does this strategy mesh in with broader purchasing and business strategy objectives?

3. Business Requirements

Are they clearly stated and is there evidence of cross-functional collaboration to secure agreement on these requirements?

4. Sourcing History

Does the summary of past sourcing history indicate its rationale and principal features?

7. Supply Analysis

Has an analysis been done of current and potential supplier performance and capability?

8. Technical Developments

Is there any analysis of likely technical innovations, developments and trends affecting supply?

5. Price And Cost History

Are past pricing trends fully analysed in terms of the underlying cost drivers?

6. Market Analysis

Is there a clear and perceptive review of likely business developments within the supply market place?

9. Portfolio Analysis

Is there an explanation of current and preferred positioning of the commodity, item or service in Portfolio Analysis terms?

Category Strategy Roadmap

A sourcing strategy must have enough information for the reader to understand what strategy has been chosen, why it has been chosen and how it will be implemented. As a guide, 10 to 15 pages tend to provide the right level of detail. If the following questions are satisfied, your strategy is complete:

  • Strategy Summary
  • Is there a crisp, persuasive and comprehensive summary of the future sourcing strategy?

10. Vulnerability Analysis

Is there evidence of an analysis of potential vulnerability, together with plans to minimise risk to acceptable levels?

12. Linkage

Does the sourcing strategy flow from the systematic review of 2-11 above?

11. Sourcing Objectives

Are sourcing objectives in both cost and value terms, detailed in a comprehensive and balanced manner?

13. Cost Reduction Programme

Are the opportunities for improvement quantified in cost reduction and cost containment terms?

15. Competitive Advantage

What competitive advantage will the implementation of this plan bring to the organisation?

IMPLEMENT

14. Implementation Plan

Are accountabilities, responsibilities, tasks and milestone dates fully detailed?

slide81

Inputs

Process

Outputs

Outcomes

Chart shows live example of contracted supplier performance showing value lost after appointment of capable suppliers

Improving CapabilitySupplier Relationship Management

ARE WE CAPABLE OF GOOD PERFORMANCE?

  • Are our strategic suppliers capable and do they deliver value for money?
  • Do we currently experience losses in value through the supply chain?
  • How do we know?

ARE WE DELIVERING GOOD PERFORMANCE?

HOW CAN WE IMPROVE OUR CAPABILITY?

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Are we still collaborating with the right partners?

Annual Review

WHO

WHY

HOW

Are our joint goals still the same?

What improvements should we make next?

Baseline assessment

What resources do we need to make it happen?

Continuous filling of improvement pipeline and delivery

WITH WHAT AND

WHEN

STABILISE

On-going assessment

IMPROVE

INNOVATE

KEEPING ON TRACK

Linking objectives, goals, processes, improvements and people together to give a comprehensive performance management tool

Our Process for SRM

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SRM Toolkit

Start Up Annual On-Going

GO

G4

G3

G2

G1

Implement

Measure

Analyse

Control

Define

PRE-WORK

WORKSHOP#1

WORKSHOP#2

PROJECTS

GOVERNANCE

EFQM analysis

Set objectives

Prioritise outline Mandates

Projects close-out

Buyer’s View

Set targets

Supplier’s View

Mandates approval Board

Reporting

TfL goals

Performance metrics

Category Portfolio

PID finalisation

Account Plans

Identify process improvements -stabilise/improve

Supplier goals

Communications plan

Marketing Collateral

- Brief Sponsors

- Brief Suppliers

Deliver Projects

Quarterly Sponsor reviews

Inventive thinking – process innovation / non-process goals

Goal alignment

Links with CM/PM to collect issues

Stakeholder map

Risks / issues management

Outline business case

Mission statement

Outline Mandates

Benefits tracking

PRE-WORK Toolbox

WORKSHOP #1 Toolbox

WORKSHOP #1 Toolbox

PROJECTS Toolbox

Governance Toolbox

Read this first

Overview & background of SRM process

self service procurement
Self-Service Procurement

Basic Approach - for requirements under £50,000 for the life of the contract

Minor Approach - for requirements between £50,000 and the EU service threshold (currently £139,893)

Medium Approach - for requirements between the EU service threshold (currently £139,893) and £500,000

Major Approach - for requirements above £500,000

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technology to underpin the strategy
Technology To Underpin The Strategy

To support the Procurement Strategy and its operation, Procurement needs to invest in enabling technologies. The diagram represents the tools for inclusion and deployment.

*

*

*

*

Key:

Orange = deployment of tools within 12 months (high priorities)

Yellow = deployment of tools within 24 months

* = tools already operational but opportunities exist to support in their development

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the issues and benefits
The issues and benefits
  • Contracts are tighter that the previous set but can stifleinnovation
  • Budget management cycle makes planningdifficult
  • Suppliers want to use targetcostingandECI …we do not seem inclined to follow.
  • We want control. Suppliers feel to be subservient and arms-length contractor rather than partner. Win/Lose.
  • We do not understand risk
  • Lack of forward programme is a bottleneck.
  • Suppliers want turnover certainty and we want budget spend certainty…but we do not appear to have goal alignment

…unstructured relationship management driving win/lose relationships

TARGET IS 15% TO 20% CASH SAVINGS IN CATEGORIES IN SCOPE OVER THE NEXT 3 YEARS = £40M

IDENTIFIED SO FAR, £10M ON £70M SPEND

critical first steps
Critical first steps

Begin to share the Vision and Strategy with key members in each Directorate to get their buy-in

Start the process of briefing suppliers on the requirements of Category Management and SRM

Start collecting market intelligence on major markets and key suppliers

Draft Category Sourcing Strategies and develop options for delivering more value

Source and implement enabling technology such as e-tendering to free up more time to devote to Category Management and SRM

Implement a short term method of handling Tactical Acquisition items and activities until a longer term solution is developed again to free up time

Develop and deliver a communication strategy and plan for engaging with key stakeholders.

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Crest Business Services Ltd

1711 High Street

Knowle

Solihull

West Midlands

B93 0LN

Telephone 07974 830057

E-mail steve.carter@crestbsl.com

Website www.crestbsl.com

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