County procurement operates a 5-year rolling procurement strategy which is updated each year to ensure the relevance of the key objectives for the coming year.
This process also ensures alignment with paragraph 2.6.3 of Appendix 8(b) - standing orders relating to contracts of the council’s constitution. These state:
"The Chief Financial Officer is responsible for annually producing and updating the procurement strategy for approval by Cabinet."
Each annual revision of the procurement strategy will be supported with an annual strategy delivery plan, which includes those elements of the strategy that are deemed relevant or in need of action in the following twelve months.
An end of each year procurement strategy delivery highlight report will record progress against the annual strategy delivery plan as set out in the previous iteration of the strategy.
This 2021 to 2026 procurement strategy has been structured around the CIPS best practice procurement model, with the 2021 to 2022 annual strategy delivery plan also being structured to support this model.
Strategic aims
- Configure county procurement, to effectively meet our strategic and operational objectives as directed by the constitution and other applicable strategies.
- Align the development of the county procurement function to industry best practice as defined by CIPS and other relevant bodies to transform county procurement and create a commercial capability.
- Implementation of the legislative changes to the public procurement procedures as set out in the procurement bill which was due to be introduced to Parliament from September 2021 aiming to simplify procurement in the public sector.
- Prioritise and deliver new and emerging requirements as identified through day-to-day experience.
- Implementation of sustainable procurement ensuring social, economic and environmental value is delivered through procurement activities.
- Creation of contract management and compliance team within county procurement to ensure contract management professional standards are implemented across our organisation.
- Ensure compliance with the National Procurement Policy Statement (Cabinet action note PPN 05/21).
Procurement value drivers
Here are the 3 value drivers which underpin the transformation and ongoing operational activities of county procurement. These value drivers shape the direction of this procurement strategy and associated delivery plans
Effectiveness
Reducing the total cost of ownership of external spend using procurement techniques (such as category management, strategic sourcing, and supplier relationship management).
Efficiency
Reducing costs from within the procurement function and procurement processes (for example, through process re-engineering, deploying technology and automation).
Customer service
Providing best value materials and services to internal customers on time, to specification, above expectation and with maximum monitory and social value.
CIPS best practice - building block model
Overview
The procurement value drivers can often compete with each other and, therefore, need to be carefully managed and balanced to optimise procurement value. The CIPS best practice model identifies 6 key building blocks, which focus on extracting and balancing effectiveness, efficiency, and customer service for an organisation. This methodology has been adopted to transform our procurement capability and to increase procurement value within the organisation.
These 6 key building blocks are
- strategy
- governance
- organisational Interface
- people
- processes
- IT
These are organised into 3 distinct tiers.
1. Strategy
This includes associated plans and performance measurement methods that need to be built to drive the procurement function.
2. Governance and organisational interface
This enables a direct link to the wider organisation through a procurement governance framework and the management of the organisational interface, particularly with internal customers, executives, and suppliers.
3. People, processes, and IT
This is the foundation level and is built upon the organisation's core values and guiding principles such as the Council Plan.
The following section gives a brief description of what is expected within each ‘building block’; and the 2021 to 2022 annual strategy delivery plan then details specific activities identified from either existing work underway or new work that will deliver the 2021 to 2022 strategic aims and our ‘enterprising procurement’ function.
Strategy
The procurement strategy is concerned with identifying, selecting, and implementing the procurement structures, systems, skills, processes, programmes, shared values, initiatives, and objectives for us that add significantly to our goals and financial sustainability. The procurement strategy drives and gives form to the other 5 building blocks for procurement capability. Once the procurement strategy has been developed, it will translate into an annual strategy delivery plan. To ensure delivery, a linked business planning and performance measurement process will be assembled as part of the 'strategy' building block.
Governance
Procurement governance encompasses control and direction for the organisation’s procurement function by a framework of formal structures, mandates, policies, operating procedures, delegations and other decision rights. Procurement governance is essential in building procurement capability and ensuring the benefits from strategic procurement activities are maximised corporately, as well as meeting corporate audit and other requirements.
Organisational interface
To optimise value, procurement professionals need to augment procurement governance with managing the organisational interface. Whilst governance provides procurement with legitimate authority and decision rights around some organisational elements, procurement delivery is delivered through managing the organisational interface both through internal (customers) and external (supplier) stakeholders.
Managing the organisation’s "internal" interface is about getting buy-in from key stakeholders regarding procurement strategies, activities, and goals. It encompasses leadership, communication, the ability to form relationships, build credibility and influence internal customers and senior executives, to assist in getting the best out of suppliers. It is the interface where procurement professional’s exercise influence to gain and maintain maximum value for internal customers.
In the 'external' organisational interface, contracts with suppliers should be managed via structured contract performance management activities, but to maximise the value from the market as a whole, procurement professionals also need to manage the supplier relationship as a component of managing the external organisational interface.
People
The degree to which county procurement can achieve its mission, strategy and objectives is dependent on the mix and calibre of its personnel and the environment in which it operates. The ability to attract and retain the right mix of people with regard to education, experience, expertise and skills is vital. Consequently, establishing the right environment in terms of roles, tasks performed, motivation, training, career development, reward and recognition is critical to the provision of an effective, efficient and customer focused county procurement function.
Processes
Like any other corporate function or business activity, processes are a foundation building block for procurement. There are a wide range of procurement processes available, however the objective is to keep things simple particularly with internal stakeholders who are supported by county procurement.
At a strategic level, the source to contract lifecycle includes an annual category planning exercise, developing the appropriate sourcing strategies, going to market, establishing and managing the contract and supplier relationship; all with organisational engagement and participation.
The ‘procure to pay’ process is a transactional process which typically commences with a requisition for the creation of a purchase order and ends with the fulfilment of the goods or services and payment to the supplier. The ‘procure to pay’ process often facilitates purchases from council wide contracts established via the source to contract process. This is not directly the responsibility of county procurement, however, ’category management’ should identify areas of spend which can be consolidated into frameworks, dynamic purchasing systems (DPS) and other procurement methods so that they can be implemented as catalogues within the SAP Order Point System, which can be self-served by the relevant organisational roles.
Work will be undertaken to review, standardise and simplify all procurement processes and to automate these where possible. The objective will be to create a clear and easy to use set of processes which enable the user to navigate the process unassisted, unless a particular process warrants assistance or when assistance is requested.
Information technology (IT)
Information technology (IT) is a critical enabler for procurement capability to derive value. IT can speed up and simplify routine procurement transactions and lower the cost of information acquisition, analysis, and dissemination of information.
Procurement of IT ranges from market intelligence tools and eAuctions for strategic sourcing through to an electronic transactional platform for the creation and transmission of 'procure to pay' documents, integrations with SAP, Procurement Portal and ProContract. The future procurement strategy will be to integrate, where possible, the organisation’s source to contract process through an end-to-end system and utilising the SAP system to integrate and automate the ‘procure to pay’ process by Order Point.
Procurement strategy delivery plan 2021 to 2022
The procurement strategy and annual strategy delivery plan is structured around the CIPS best practice procurement model, which identifies 6 key building blocks which focus on extracting and balancing the vital procurement value drivers of effectiveness, efficiency, and customer service.
Each of the 6 building blocks contain detailed ‘best practice characteristics’ which are required to be present and effective for an organisation to deliver an excellent and high performing procurement function.
The annual strategy delivery plan details those best practice characteristics, the methods / actions to achieve them and a RAG status to indicate current delivery status.
A large proportion of the strategic aims for 2021 to 2022 can be achieved by the adoption of 'best practice characteristic' detailed within the CIPS model. The annual strategy delivery plan details the best practice characteristics and principles, target actions / methods and a RAG indicator to inform the status of each action.
It is expected that over time there will be less work to do on achieving best practice, with each successive year moving towards a steady state with activities undertaken to implement improvement or to deal with fundamental changes arising.
Specific planned strategic projects are detailed separately within the delivery plan but linked to each building block.