091126 uuj msc bus imp.ppt
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Core presentation for MSC Business Improvement: Improving strategicprocurement & SCM risk management. 26 November 2009This e-mail may include confidential information and is solely for the use by the intended recipient(s). If you have received this e-mail in error please notify the sender immediately. You must not disclose, copy, distribute or retain any part of the email message or attachments. Views and opinions expressed by the author are not necessarily those of the organisation.This email has been checked for known viruses and is believed to be virus free.TRANSCRIPT
UU MSc Business Improvement 26 November 2009
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Improving strategic procurement & SCM risk management
Dr Gordon Murray
26 November 2009
UU MSc Business Improvement 26 November 2009
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Working assumptions
1. You are not generally public sector2. You are not generally procurement/SCM specialists3. As a provider, you want an understanding of public
sector approach to procurement/SCM4. You want tools to help deliver improvement
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For discussion
Public procurement & SCM The political procurement dilemma
Strategic alignment Cost reduction/CSR Impact on SCM
Purchasing, procurement & commissioning Impact on SCM Strategic commissioning to improve public services delivery
Portfolio management/relationship management Lessons from procurement disasters
Managing risk Procurement cycle Gateways
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Public procurement & SCM
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Public procurement & SCM
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Public procurement & SCM
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Public procurement & SCM
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Public procurement & SCM
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Public procurement & SCM
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Public procurement & SCM
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Public procurement & SCM
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Public procurement & SCM
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Public procurement & SCM
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Public procurement should focus on cost reduction and leave social issues to the politicians
Are we for or against?
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What’s the difference between private sector and public procurement?
What’s the purpose of the public sector?
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Given the worst recession on record …
what are the SCM risks & what should be done to mitigate them?
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Strategic procurement options appraisal
Long-term contracts Short-term contracts
Single-sourcing Multi-sourcing
Consortium purchasing Local purchasing
Functional specification focus Outcome specification focus Social clauses
e-procurement for cost reduction e-procurement to improve supplier Cash flow
Pay slower than you receive payments
Pay faster than suppliers pay 2nd tier suppliers
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Purchasing, procurement & commissioning
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Commissioning
“Commissioning is the cycle of assessing the needs of the people in an area, designing and then securing
the appropriate service”(Cabinet Office, 2006, p. 4)
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Strategic needs assessment
Decide priorities and outcomes
Plan and design services
Optional appraisal
Sourcing
Delivery
Monitor and review
The commissioning
cycle
The commissioning cycle
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The purchasing cycle
Determine the need
Supplier selection
Contracting
Ordering
Expediting
Follow-up/evaluation
The purchasing
cycle
(derived from van Weele, 2005)
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Strategic needs assessment
Decide priorities and outcomes
Plan and design services
Optional appraisalSourcing
Delivery
Monitor and review The
commissioning cycle
The commissioning and purchasing cycles
Determine the need
Supplier selection
Contracting
Ordering
Expediting
Follow-up/evaluation
The purchasing
cycle
UU MSc Business Improvement 26 November 2009
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Strategic needs assessment
Decide priorities and outcomes
Plan and design services
Optional appraisalSourcing
Delivery
Monitor and review
The commissioning
cycle
The commissioning and purchasing cycles, and procurement
Determine the need
Supplier selection
Contracting
Ordering
Expediting
Follow-up/evaluation
The purchasing
cycle
procurement
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How can strategic commissioning
improve public services and reduce risk?
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The commissioning cycle & risk management
Agreeing priorities, non-priorities & outcomes
Designing & shaping the serviceTesting the business caseRobust options appraisalShaping the procurement approachReviewing the lessons learnt
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Eight principles of good commissioning
1. Understand the needs of users etc., by engaging with TSOs as advocates to access their specialist knowledge
2. Consult provider organisations when setting priorities
3. Put outcomes for users are the heart of the process
4. Map the fullest practical range of providers5. Consider investing in the provider base6. Ensure contract processes are transparent and
fair7. Ensure long-term contracts and risk-sharing8. Seek feedback to review effectiveness of the
commissioning process
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How can we manage strategic procurement risk?
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Kraljic’s Positioning Model
Bottleneck Strategic
Routine Leverage
Supply Market
Complexity/Risk
Expenditure
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Procurement Cycle
8. Closure / Review Need
1. Identify Need
2. Develop Business Case
3. Define Procurement Approach
4. Supplier Appraisal5. Tender Evaluation
6. Award Contract
7. ManageImplementation
of Contract
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8. Closure / Review Need
1. Identify Need
2. Develop Business Case
3. Define Procurement Approach
4. Supplier Appraisal5. Tender Evaluation
6. Award Contract
7. ManageImplementation
of Contract
Gateway Stages
Challenge
Challenge
Challenge
Challenge
Challenge
Challenge
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Procurement Disasters of our time
For each case study
1. Analyse the news article and summarise
2. Identify the main issues and what went wrong
3. Identify the stages in the procurement cycle when effective scrutiny could have been used to reduce the risk
4. Identify which questions you would have asked at that stage/s
5. Prepare to feedback
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Key lessons
Cross-functional team with appropriate skills & roles
Understand the trade-offs The right brief Robust business case WLC Tight project management Proactive SCM throughout the procurement
cycle Challenge through the procurement process
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Improving strategic procurement & SCM risk management
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