0 «Commodity» Proposed Commodity Strategy «Date» Version 0.0 PLEASE NOTE: This document has been...

1

«Commodity»

Proposed Commodity Strategy

«Date»

Version 0.0

PLEASE NOTE: This document has been included as an example. The format & contents of your final commodity strategy may vary as per the internal governance, processes and procedures within your organisation.

2

Version control

Version # Updated By Date Updated Change Details

3

Page/Slide Number

Foreword

Executive Summary

Stakeholder Engagement

Commodity Charter

Current Situation:

- Commodity Profile

- Supply Market Analysis

Proposed Strategy:

- Strategic Objectives

- Sustainability

- Supplier and Contract Management

- Principal Options

- Proposed Approach

- Selection Criteria

- Award Criteria

- Deployment

- Risk analysis

- Communication Plan

- Implementation Plan

Appendices

Contents

Key Contacts:

«Name»

«Title»

Tel:

Email: __________________

«Name»

«Title»

Tel:

Email: __________________«Name»

«Title»

Tel:

Email:

4

ForewordPurpose

This document describes the commodity strategy for procuring «Commodity» .

The information within this document will be shared and developed with key stakeholders. It contains certain sensitive commercial information and should not be shared beyond this environment. In particular this document should not be shared with suppliers as it discussed several sourcing strategy options and makes recommendations for implementation.

Approval

Approval of this document will come through the established governance route.

Notes

The data contained in this document is based on data provided from several sources. These include:

«i.e. data extracted from the Scottish Procurement Information Hub (formally known as Spikes Cavell Observatory) »;

«i.e. market information provided by «source»»; and

«i.e. product and spend data provided by several of the major incumbent «commodity» providers»

The document takes into account information gathered during «timeframe», including that obtained from participants in the cross-sector User Intelligence Group held during this time.

5

Executive SummaryKey Findings

• Total spend is over £«value»:«i.e. breakdown of spend by organisation»

• Products purchased make up «No.» key sub-categories:«i.e. breakdown of spend by sub-categories»;

• More than x-number of suppliers are currently used to provide these products:«i.e. breakdown by supplier»;

Benchmarking and Opportunities, Options Considered

• Scope and Dependencies«i.e. Department (s), Organisation (s) or sector( s) interested in proposed outcomes;

• Options XXXXXXXXXXXXXXXXXXXXXXX;

«i.e. xxxxxxxxxxxxxxxx;

Recommendations and Key Actions

• After comprehensive consultation with stakeholders:«i.e. To go to market on a national, cross-sector basis breakdown by supplier»;

-«i.e. Award new contract/s by «date», with a phased implementation effective from «date»;

Benefits, Justification and projected savings«i.e. cashable/non-cashable savings»;«i.e. return on investment»;

Key Risks and Resource Implications«i.e. Insufficient access to accurate and current spend data and current contract data»;«i.e. Insufficient stakeholder engagement and demonstrable commitment to required resource».

The initial insights, options considered and recommended outcomes are based on careful consideration of the total addressable spend, cashable and non-cashable benefits.

6

Project Timeline per initiative

Source: Spikes Cavell

«Commodity» Aug- Oct 2007

Nov-Jan 2007/2008

Feb-Apr 2008 May-Jul 2008 Aug- Oct 2008

Sourcing consolidated contracts

Data Gathering & Strategy

Product level data gathering & analysis

Development of lotting and contract strategy

Stakeholder workshops/presentations

Confirmation of strategy & approach

Formal customer sign-up

Development of specification & SLA

Development & refinement of core list

Sourcing consolidated contracts

OJEU Notice Issued

Pre-qualification of suppliers

Tender preparation & management

eAuction

Final selection & validation

Formal contract award

Implementation & Mobilisation

Mobilisation

First customers go live

Mobilisation of additional customers

Supplier & contract management Estimated contract awards: May 08.

Key: In process Planned Not agreed

E x a

m p

l e

E x a

m p

l e

An estimated project plan for the implementation of each feasible option should be included.

7

UIG Membership

Name Location Dept. Role Tel.

Add Commodity Name hereCapture details of UIG members.

8

Stakeholder EngagementEarly engagement of key stakeholders will help to ensure the following benefits:

The closer alignment of strategy and specification with requirements of users; The identification of leading practices already implemented at local level; The ability to demonstrate increased buy-in to strategy, enhancing leverage in the supply market; and The improved take up of contracts once awarded.

A number of stakeholder workshops are planned for «time frame» : Focus on procurement managers within end user organisations Sector based approach, reflecting different operating environments and status of current arrangements

Other stakeholders (see below) to be targeted later in the year, this will include developing: a standard information pack for users; and a standard information pack/messages for suppliers

Tender &

Contract Award

It is essential that key

stakeholders, across

the organisation

and/or Public Sector,

are consulted in the

refinement and

validation of a number

of aspects of this

commodity sourcing

strategy.

Imp

act

on

su

cces

s

High

LowAdvocacy and

OwnershipSupport and

Buy-inAwareness Commitment and ActionUnderstandingUnaware

Med

Level of Engagement

9

Current Status of Commodity/Contracts

Commodity Name

Definition Source

1 - Commodity Definition

Provide details of

commodities covered

by the strategy.

10

Current Status of Commodity/Contracts

Contract Detail

Contract Scope

Expiry Date Current Pricing

2 – Current Contracts

Provide details of

existing contracts.

11

Policy detail

Reason of impact Source

3 – Relevant Policies/ Processes

Current Status of Commodity/ContractsIt is essential that key

stakeholders, across

the organisation

and/or Public Sector,

are consulted in the

refinement and

validation of a number

of aspects of this

commodity sourcing

strategy.

12

Current Situation

13

Create your Spend Analysis and add it here. This is an example of one format

Spend Analysis

Annual Spend

£0.00

£100,000.00

£200,000.00

£300,000.00

£400,000.00

£500,000.00

£600,000.00

£700,000.00

£800,000.00

£900,000.00

Organisations

Va

lue

Monmouth

Keymed

Diagmed

Cook

Conmed

Boston

14

Sustainability

The Sustainability Test

will help identify and

prioritise the

sustainable aspects

and impacts of your

requirement and

procurement .

Consideration and

actions identified

during strategy

development should

be reviewed and

monitored throughout

the life of the contract

or framework

agreement.

Area Aspects/Considerations Proposed Actions and Potential Impact

Social

Economic

Environment

15

Commodity ProfileProduct Profile

«product profile details including any relevant graphs/tables »

Commodity Tree

Commodity Characteristics Template

Examples of Templates available – See Slide Notes for

details of templates and guidance

Commodity

Sub Com 1 Sub Com 2 Sub Com 3 Sub Com 4 Sub Com 5 Sub Com 6 Sub Com 7 Sub Com 8 Sub Com 9 Sub Com 11

Segment

Segment

Segment

Segment

Segment

Segment

Segment

Segment

Segment

Segment

Segment

Training

Segment

Segment

Segment

Segment

Segment

Segment

Segment

Segment

Segment

Segment

Segment

Segment

Segment

Segment

Segment

Segment

Segment

Segment

Segment

Segment

Functionality

End User Requirement

s

Organisation Requiremen

ts

Future Trend

s

Constraints

Summarise key

findings.

16

Market Summary TemplateFactor Findings from research

Market definition

Market Overview

Trade Associations

Key Suppliers

Market growth

Trends and developments

Supply market trends

Summarise key

findings.

17

Supply Market AnalysisInclude any relevant graphs/tables i.e. Public sector spend £ by supplier size (%), Total Scottish market (£) by supplier size «year» (%), total employment in Scotland by supplier size «year» (%), and a synopsis of the SME market analysis”

The format of this slide is an example only. You may choose

to present different analysis tools depending on your

requirement.

SWOT Analysis

Use the Market Summary Template to populate the following:Market definition«definition»

Market size«size»

Structure«structure»

Current supply«supply»

Challenges«challenges»

Competition«competition»

Strengths Weaknesses

Opportunities Threats

Text

Text

Text

Text

Text

Text

Text

Text

Text

Text

Text

Text

POLITICAL

TECHNOLOGICAL

ECONOMIC

SOCIAL-DEMOGRAPHIC

LEGAL

ETHICAL

ENVIRONMENTAL

PEST LEEPEST LEEAnalysisAnalysis

PEST LEEPEST LEEAnalysisAnalysis

18

Supply Market AnalysisOrganisation spend as percentage of supplier turnover in ScotlandThe table below shows the annual turnover in Scotland for the top 10 suppliers in the UK and the Public Sector spend with them.The total Scottish Public Sector spend on «Commodity» is greater than any one of the suppliers’ current turnover in Scotland.

Supplier Name

Annual Turnover in

Scotland £000

Annual Turnover in UK

£000

Current Expenditure

£000

Percentage of turnover Scotland

Percentage of turnover

UK

x xx,xxx xxx,xxx xx,xxx «00»% «0.0»%

x xx,xxx xxx,xxx x,xxx «00»% «0.0»%

x xx,xxx xxx,xxx xxx «00»% «0.0»%

x xx,xxx x,xxx,xxx xxx «00»% «00»%

x xx,xxx xxx,xxx x «00»% «00»%

x xx,xxx xxx,xxx x «00»% «00»%

x xx,xxx xx,xxx x «00»% «00»%

x x,xxx xxx,xxx x,xxx «00»% «00»%

x x,xxx xxx,xxx x,xxx «00»% «00»%

x x,xxx xxx,xxx xxx «00»% «00»%

Sub-total Spend with Top 10 Suppliers xxx,xxx xx,xxx «00»%

Summarise findings and conclusions e.g. 80% of the market is with 20% of the suppliers.

19

Supplier Profile Analysis

Organization and HistoryOrganization and History Strategy and Key Market Segments Strategy and Key Market Segments

Products, Service Range and Operations Products, Service Range and Operations Key Financials and Other DevelopmentsKey Financials and Other Developments

X Supplier is the global leader in the provision of Y solutions

Insert commodity specific Supplier Data. Use 1 slide for each of the top 5 suppliers.You should base the top 5 on whether you think the market is global, European, or UK only

20

Supplier Cost Drivers

Cost Element

(e.g. Material, Labour, Sub-contract, Transport, Overheads…)

% of Overall Price

(Use estimates, market, supplier and existing analysis)

Source of Data Data Confidence (Low, Medium, High)

21

Total Cost of Ownership: Considerations

Acquisition

•

•

•

•

•

•

•

•

•

•

Operation

•

•

•

•

•

•

•

•

•

•

Ownership

•

•

•

•

•

•

•

•

•

•

Disposal

•

•

•

•

•

•

•

•

•

•

22

Risk AnalysisProvide details of risks identified and assessed. Mitigation strategies should be developed where possible/appropriate

ID

Risk

Owner

Description of Risk

Probability/ Impact Result

Date of Assessment

Mitigating Actions

Next review date

1 AN OtherLack of

Stakeholder Buy-in

M/H 01/01/2010Ensure clear comms and engagement

TBC

2 AN OtherSupplier

performance failure

L/H 01/01/2010Contract Mgmt &

monitoring01/02/2010

Risk Identification & Assessment

• The following risks/issues have been identified.

• The following mitigation strategies have been developed & deployed

• xxxxxxxxx

• xxxxxxxxx

• xxxxxxxxx

23

Best Value/Opportunity Analysis

Best value analysis

Area Examples of leading practice Potential/Proposed/Approach to implementation

• Reduce consumption

• Eliminate need

• Find alternative ways of meeting needs

• Policy changes

• Benchmarking usage and consumption across comparable organisations

• «approach»

• Consolidate spend

• Common specification

• Collaboration with other public sector bodies

• A key component of this strategy is to consolidate spend across the Public Sector in Scotland.

• Improve specification

• Detailed specifications

• Lower cost specification (own brand?)

• Optimal service level

• Quantify spend volumes

• Value for Money – cost vs benefits

• «approach»

• «approach»

• Re-structure relationships

• Develop strong relationships with key suppliers

• Introduce supplier development programmes

• Review / establish service level agreements

• Introduce routine supplier monitoring and reporting

• Establish incentivised contracts

• «approach»

• «approach»

• Increase competition

• Price / performance benchmarking

• E- Auction

• Cost driver analysis

• Price harmonisation

• «approach»

• «approach»

Highlight your priorities e.g. which proposals will deliver the most significant gains.

Optimise Total Supply Chain Costs

Reduce / EliminateTransactions

Total Cost Management

Reduce Total Life cycle / Ownership Costs

CostCash

QualityService

InnovationSustainability





CostCash

QualityService


24

Best Value Analysis (Cont’d.)Best value analysis

Area Example of leading practice Potential/Proposed/Approach taken in this strategy

• Re-structure supply base

• Tender requirements for all spend

• Supplier consolidation

• «approach»

• «approach»

• Reduce / eliminate transactions

• Rationalise suppliers

• Rationalise requirements

• Low value ordering systems (e.g. GPC)

• e-Procurement Scotland / other systems

• Consolidate invoices

• «approach»

• «approach»

• «approach»

• «approach»

• Reduce total life cost / cost of ownership

• Re-engineer processes

• Outsourcing

• Reduce inspection/checking

• Reduce stock holding

• Reduce/consolidate deliveries

• Reduce maverick spend

• «approach»

• «approach»

• Optimise Total Supply Chain Costs

• Design / development

• Integrate logistics

• Frameworks to reduce for lengthy tender processes

• «approach»

• Corporate Social Responsibility

• Focus on demonstrably sustainable (or reduced impact) products, services and solutions

• «approach»





CostCash

QualityService






CostCash

QualityService


25

Proposed Strategy

26

Strategic ObjectivesObjectives

Implementation of this category strategy is intended to address «No.» key objectives:

• «i.e. To leverage the £«00»+ million, spent annually, to realise improvements in the value for money obtained in the sourcing of «Commodity» including reductions in product prices, enhancements to product quality and improvements in service levels, where appropriate»;

• «i.e. To increase the take up of leading processes and practices across the sector, including increases in the efficiency of key transactional processes including order, delivery and payment»;

• «i.e. To release valuable ‘local’ and sector procurement resources to enable them to allow them address other areas of spend, increasing the range and depth of third-party expenditure influenced by procurement across the public sector»; and

• «i.e. To reduce the negative environmental and social impact of the use of «Commodity».

In striving to achieve these objectives, the strategy will also seek to consider its impact on:

•«i.e. Incumbent and potential SME suppliers»;

•«i.e. The long term competition in the provision of «Commodity» to the public sector in Scotland»;

•«i.e. The need for continuity of service provision between current and proposed contracts»; and

•«i.e. The need for choice and flexibility to be retained in order to address certain, specific needs of individual end user organisations».

Each of the options considered have been tested against its impact on these objectives and considerations.

The strategy, and the key options considered, have been tested against the aims of the strategy and a number of other important considerations.

Whilst the proposed approach represents the preferred option for realising these aims a number of options were given careful consideration.

27

Principal Options Appraisal

The Authority is

committed to

managing, monitoring

and developing

supplier performance

and understanding

whether our contracts

are delivering and

meeting the needs of

our customers.

Option 1 Option 2 Option 3 Option 4Recommendation

& Justification

1

Procurement Route

Not applicable

Do nothing Use existing framework

Develop bespoke contract

Benefits & Concerns

2

OJEU Procedure

Open Restricted Competitive Dialogue

Other

Benefits & Concerns

28

Principal Options AppraisalThe Authority is

committed to


and developing


and understanding


are delivering and


our customers.

Option 1 Option 2 Option 3 Option 4Recommendation &

Justification

3

Lots Not applicable

1 Lot Geographical Product / Service

Benefits & Concerns

4

Suppliers Per Lot

Not applicable

1 Supplier 3 – 5 Suppliers

5 + Suppliers

Benefits & Concerns

29

Proposed InitiativesKey Principles

The proposed approach to the supply market includes:

•«i.e. A single, national and cross-sector sourcing exercise to commence in «Month/year»»;•«i.e. Contract(s) to be awarded by «Date» with a phased implementation and first orders being placed from «Date»;

•«i.e. Contract(s) to cover an initial term of «Years» years with options to extend by a further «Year/s» year/s»; and

•«i.e. Public sector organisations will be expected to confirm their commitment to using the/these contract(s) during «Month/year» (regardless of their anticipated migration date)».

More detail on the specific requirements to be addressed with this/these contracts is provided in the Proposed Statement of Requirements document (which is available separate to this strategy document).

Key Advantages

•«xxxx»;•«xxxx»;

•«xxxx»;•«xxxx».

It is anticipated to deliver savings of up to £«0.0» million per annum for the public sector in Scotland

Potential Issues and Risks

•«i.e. Participation by regional SME suppliers may be limited»;•«i.e. Strategy and sourcing process will need to be carefully explained to stakeholders and suppliers».

The proposed approach is based on «xxxx».

30

Appendices

31

Supplier Selection CriteriaAreas to be included in Supplier Evaluation

Attributes Means of appraisal Minimum Expectations

Financial Status «xxxx» «i.e. “Secure” or better»

Conviction of Criminal Offences

«xxxx» No conflictions

Business Probity «xxxx» No occurrences

Technical and Professional Ability

«xxxx» Meets minimum standards

Health and Safety «xxxx» Must be related to the requirements of the contract

Quality Assurance «xxxx» «i.e. ISO 14001 or equivalent»

Corporate Social Responsibility

«xxxx» Must be related to the requirements of the contract

Insurance «xxxx» Availability of required policies

Transactional Efficiency «xxxx» «i.e. Use of ePS and P-Card»

Potential suppliers will be evaluated against a broad range of criteria.

The criteria listed here are to be reviewed further and provide only an indication of the range of attributes to be considered during the supplier selection process.

32

Supplier Award Criteria

Source: Spikes Cavell

Areas to be included in Supplier Evaluation

Attributes Means of appraisal Minimum Expectations

Price «xxxx»

«xxxx»

Quality «xxxx» meets required quality

Technical Merit «xxxx» meets specification

Delivery «xxxx» « i.e. Delivery date, period or period of completion »

After-Sales Service

Technical Assistance «xxxx» Can provide required service

Running Costs and effectiveness

«xxxx»

Implementation Capability «xxxx»

«xxxx»

Account Management / MI «xxxx»

Product Range «xxxx»

«xxxx»

Transactional Efficiency «xxxx» «i.e. Use of ePS and P-Card»

Environmental Characteristics

«xxxx» Must be linked to the subject matter of the contract

Potential suppliers will be evaluated against a broad range of criteria.

The criteria listed here are to be reviewed further and provide only an indication of the range of attributes to be considered during the supplier selection process.

33

Communication PlanIn addition to the work carried out by the UIG outline how the category strategy and final outcomes will be communicated to individual organisations

- << i.e. road shows>>

- << workshops>>

- << website>>

- <<XXXXX>>

Do CoEs or individual organisations need to provide information or commitment and at what stage of the strategy development or implementation?

- << i.e. intention to participate – before we go out to tender>>

- << sign an Agency Agreement – before the Framework is established>>

- << sign a Participation Agreement – after the Framework is established and prior to the first order being placed>>

- <<XXXXX>>

Timescales for critical activities

- << outline key dates>>

- <<XXXXX>>

- <<XXXXX>>

Comments….

34

Implementation PlanKey steps and requirements

• <<Outline requirements>>

• <<XXXXXXXXXXXX>>


Content Management requirements


•<<XXXXXXXXXXXX>>

Resources and structure

• <<outline>>



Timescales

• <<outline>>



Evaluation and Control

•<<outline>>



Comments….

35

Contract and Supplier ManagementOverview

Strategic Objectives

This approach to Contract & Supplier Management has been developed to;

•Drive continual improvement and benefits from existing and future contractual relationships

•Ensure that all parties to contracts were meeting their obligations

•Measure performance against KPI’s & SLA’s

•Measure behaviours such as communication, responsiveness and innovation

•Provide end users with an opportunity to provide feedback on supplier & contract performance

•Be consistently applied across all categories

Scope

The term ‘contract & supplier management’ can be broken down into the following key component parts:

•Contract Implementation and Management

•Supplier Management and Development

•Operational Management

•Contract Administration

•Supply Chain Innovation & Development

The Authority is

committed to


and developing


and understanding


are delivering and


our customers.

36

Contract and Supplier Management

Approach

A balanced scorecard approach has been developed to manage, monitor and develop supplier performance. The scorecard has 4 core indicators and suggested sub-criteria as follows:

At this stage buyers should be aware of the requirement to consider CSM. Further development is required at the ITT stage when Management Information needs will be defined and when KPIs will be identified. The scorecard will be finalised at the contract award stage.

The Authority is

committed to


and developing


and understanding


are delivering and


our customers.

Balanced Scorecard

Quality Service

Fit for Purpose Responsiveness

Returns Complaints

CSR Management Information

Continual Improvement/Innovation Education/Training

Delivery Cost

Lead time/delivery time Pricing stability

On time delivery against objectives Invoice accuracy

Accuracy Cost reduction initiatives

Communication

0 «Commodity» Proposed Commodity Strategy «Date» Version 0.0 PLEASE NOTE: This document has been...

Documents

Transcript of 0 «Commodity» Proposed Commodity Strategy «Date» Version 0.0 PLEASE NOTE: This document has been...