Category Sourcing Strategy

Click to edit Master title style,Click to edit Master text styles,Second level,Third level,Fourth level,Fifth level,*,Commodity,Proposed Commodity Strategy,Date,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.,0,Version,control,Version #,Updated By,Date Updated,Change Details,1,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:,2,Foreword,Purpose,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.,3,Executive Summary,Key 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.,4,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,An estimated project plan for the implementation of each feasible option should be included.,5,UIG Membership,Name,Location,Dept.,Role,Tel.,Add Commodity Name here,Capture details of UIG members.,6,Stakeholder Engagement,Early 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.,Impact on success,High,Low,Advocacy and Ownership,Support and Buy-in,Awareness,Commitment and Action,Understanding,Unaware,Med,Level of Engagement,7,Current Status of Commodity/Contracts,Commodity Name,Definition,Source,1 - Commodity Definition,Provide details of commodities covered by the strategy.,8,Current Status of Commodity/Contracts,Contract Detail,Contract Scope,Expiry Date,Current Pricing,2 Current Contracts,Provide details of existing contracts.,9,Policy detail,Reason of impact,Source,3 Relevant Policies/ Processes,Current Status of Commodity/Contracts,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.,10,Current Situation,11,Create your Spend Analysis and add it here. This is an example of one format,Spend Analysis,12,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,13,Commodity Profile,Product 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,Requirements,Organisation Requirements,Future Trends,Constraints,Summarise key findings.,14,Market Summary Template,Factor,Findings from research,Market definition,Market Overview,Trade Associations,Key Suppliers,Market growth,Trends and developments,Supply market trends,Summarise key findings.,15,Supply Market Analysis,Include 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 LEE,Analysis,16,Supply Market Analysis,Organisation spend as percentage of supplier turnover in Scotland,The 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.,17,Supplier Profile Analysis,Organization and History,Strategy and Key Market Segments,Products, Service Range and Operations,Key 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,18,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),19,Total Cost of Ownership: Considerations,Acquisition,Operation,Ownership,Disposal,20,Risk Analysis,Provide 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 Other,Lack of Stakeholder Buy-in,M/H,01/01/2010,Ensure clear comms and engagement,TBC,2,AN Other,Supplier performance failure,L/H,01/01/2010,Contract Mgmt & monitoring,01/02/2010,Risk Identification & Assessment,The following risks/issues have been identified.,The following mitigation strategies have been developed & deployed,xxxxxxxxx,xxxxxxxxx,xxxxxxxxx,21,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.,22,Best Value Analysis (Contd.),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,23,Proposed Strategy,24,Strategic Objectives,Objectives,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.,25,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 4,Recommendation & 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,26,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 4,Recommendation & 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,27,Proposed Initiatives,Key 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.,28,Appendices,29,Supplier Selection Criteria,Areas 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.,30,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.,31,Communication Plan,In addition to the work carried out by the UIG outline how the category strategy and final outcomes will be communicated to individual organisations,- ,- ,- ,- ,Do CoEs or individual organisations need to provide information or commitment and at what stage of the strategy development or implementation?,- ,- ,- ,- ,Timescales for critical activities,- ,- ,- ,Comments.,32,Implementation Plan,Key steps and requirements,Content Management requirements,Resources and structure,Timescales,Evaluation