procurementexcelenceguide

8/2/2019 ProcurementExcelenceGuide

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PROCUREMENT EXCELLENCEA

GUIDE

TO USING THE

EFQM EXCELLENCE MODEL

IN

PROCUREMENT

Issue 1


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Introduction

This document is intended as a guide to applying the EFQM Excellence Model toprocurement activities in order to identify areas of strength on which to build andthose where improvement may be appropriate.

The Guide provides procurement related comment and interpretation to each of themain criteria and criterion parts in order to give emphasis and direction whenapplying the Excellence Model.

If you are not familiar with the Excellence Model or need a simplified version for aquick and easy method of assessing the health of your Procurement Organisationyou should refer to the booklet The Procurement Excellence Pilot.


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The EFQM Excellence Model

The EFQM Excellence Model on which this Guide is based is widelyused throughout the UK and Europe

It is increasingly being used by Central and Local Government and the

Leadership Processes

KeyPerformance

Results

People

Policy &Strategy

Partnerships& Resources

SocietyResults

CustomerResults

PeopleResults

INNOVATION AND LEARNING

ENABLERS RESULTS


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About this Guide

The basic Excellence Model the Criteria, Criterion Parts and Areas toAddress are wholly applicable to Procurement Organisations and should beused as they stand.

In this Guide we have provided procurement related comment andinterpretation and some additional Areas to Address that supplement the

basic model, are particular to procurement and reflect government initiatives,current procurement thinking and best practice.

Examples of Procurement Good Practice are also provided together withPossible Evidence and Measures that Assessors may look for when carryingout assessments.

Not all of these will be applicable to every procurement organisation so you

should determine what is appropriate for your operation.

Assessments and Scoring

Assessments and the scoring system used may be pitched at the level ofsophistication and accuracy to which your Procurement Organisation aspires.


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Having identified the areas for improvement you will need to decide prioritiesand then develop real actionable plans to achieve the performance you

require.

You can measure your progress over time by reassessing against theExcellence Model.

Benchmarking

Comparison of your own operation against others who have achievedExcellence in those areas in which you wish to make improvements is a goodway of speeding up the process without reinventing the wheel.


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ENABLERS

1. LEADERSHIP

1. Leadership

How leaders develop and facilitate the achievement of the mission and vision, develop values required for long term

success and implement these via appropriate actions and behaviours, and are personally involved in ensuring that theorganisations management system is developed and implemented.

Comment

Leaders of excellent organisations usually recognise the value and role of an effective procurement operation in managing theorganisations resources when they are used to acquire goods and services, or are provided to third parties to promote theorganisations objectives.


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1. LEADERSHIP

1a. Leaders develop the mission, vision and values and are role models of a culture of Excellence.

Comment

Procurement is regarded as a strategic activity by the Board and Senior Management and is treated as such. They are rolemodels in using and supporting the Procurement Organisation.

1a. Other Areas to Address Procurement Good Practice Possible Evidence

How the Board and SeniorManagers demonstrate theimportance of procurement.

A Board Member having clearresponsibility for procurement.

The Head of Procurement (HOP) isinvolved in strategic decisionmaking.

The Board set clear strategicdirection for the procurementoperation - its mission, vision and

values. Experience in procurement is

regarded as a requirement forSenior Managers.

The Board and Senior Managerscommunicate the importance andcontribution of procurement.

The Board holds regular reviews ofprocurement performance.

There are clear objectives,operational plans and performanceindicators for the Procurement

Organisation approved by theBoard.

How the Board, SeniorManagers, including theHead of Procurementpersonally and activelypromote Excellence inprocurement.

Senior Managers are role modelsin demonstrating high customerservice standards

The HOP is actively involved inpromoting procurement both insideand outside the organisation.

HOP promotes procurementthrough marketing or educationwithin the organisation.

HOP acts as influencer/mentor.

HOP communicates regularly withcustomers, stakeholders and

suppliers. HOP accepts feedback and acts

upon it.


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How other BusinessManagers within the overallorganisation promote andunderstand procurementexcellence.

Business Managers have anunderstanding of procurementthrough training and guidance.

Awareness/training sessions heldfor Business Managers.

New appointees given appropriateprocurement orientation.

Fast Streamers are assigned to

Procurement as part of theirdevelopment programme.

How the ProcurementOrganisation is involved incross functional activitiesand collaboration.

Procurement plays an active andleading role in cross functionalteam working to promote theoverall organisations objectives.

Membership of cross functionalteams.

Minutes/action plans.


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1. LEADERSHIP

1b. Leaders are personally involved in ensuring the organisations management system is developed, implemented andcontinuously improved.

Comment

Procurement Organisation Managers take a leading role in ensuring that the procurement management systems and processesare effective and efficient. They continually seek to make improvements in order to enhance Procurements contribution to theoverall organisations strategic objectives.

1b. Other Areas to Address Procurement Good Practice Possible Evidence

How Managers encourage andpromote procurement improvementsto support and enhance the overallorganisations strategic objectives.

Procurement has a clearlydefined business direction andobjectives that are approvedby the Board.

The Board reviews objectives,operational plans andperformance indicators on aregular basis.

How Managers ensure thatprocurement improvements areproperly planned and resourced.

Procurement has a definedsystem for reviewing andupdating policies, practices,systems and processes.

Resources to effect thechanges are assessed andallocated when the objectivesare set and prioritised.

System is understood andused.

All procurement staff (andothers) are involved in theprocess.

Plans are detailed - showingresources, time scales/successcriteria.

Plans are reviewed andupdated regularly.

How Managers measure the effect ofchanges/improvements that theyintroduce.

Measurement system andsuccess criteria defined prior toimplementation of changes.

Positive trends over time withreview and corrections/actionsidentified.


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1. LEADERSHIP

1c. Leaders are involved with their customers, partners and representatives of society.

Comment

Managers of excellent procurement organisations ensure that there are well established co-operative relationships withcustomers, suppliers, other stakeholders and relevant outside bodies in order to ensure that the service provided meets their

needs and is continuously improved.

1c. Other Areas to AddressProcurement Good Practice Possible Evidence

How customers and stakeholders are

identified and their needs addressed bythe Procurement OrganisationsManagers.

Customers are segmented and

their needs and expectationsidentified and prioritised. Servicearrangements and service quality(Service Level Agreements) aregeared to these.

Stakeholders interests are

defined and mechanismsestablished to demonstrateperformance in meeting these.

Service Level Agreements or

equivalent in place andperformance against these criteriaregularly assessed and reviewedwith customers.

Performance against stakeholders

needs regularly reviewed.

Improvement plans established,

targets updated and progressassessed.

How Procurement Organisation

Managers involve suppliers in developingand improving the service they provide.

Supplier management and

development programme in place. Strategic suppliers identified.

Plans developed and

implemented for jointimprovement activities. Progressmonitored on a regular basis.

How the Procurement Organisation

Managers establish and develop linkswith OGC, other ProcurementOrganisations, CIPs, Academia andrelevant outside bodies.

Procurement Organisation keeps

abreast of latest developments,assesses and evaluates these tomake improvements to theoperation.

Establishes and develops

Procurement Managers have

active involvement in widerprocurement and externalcommunity activities andinitiatives. Active support of OGC.Staff are encouraged to do


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1c. Other Areas to AddressProcurement Good Practice Possible Evidence

strategic alliances to mutualbenefit eg OGC and otherGovernment Departments.

likewise.


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1. LEADERSHIP

1d. Leaders motivate, support and recognise the organisations people.

Comment

Managers have a pivotal role in motivating, supporting and recognising the work of procurement people.

1d. Other Areas to Address Procurement Good Practice Possible Evidence

How individuals efforts arerecognised within the ProcurementOrganisation and the overallorganisation.

Procurement Managersactively encourage innovationand initiative.

There is regular feedback fromManagers on progress madeand successes areacknowledged.

Individuals receive informaland formal feedback.

Improvement is an active partof staff meetings.

There is recognition ofprocurement work andachievement in newsletters/other publications.

Managers give presentations tothe Board (and others) on theProcurement Organisationsperformance.

How Managers representsprocurement activities to customers,stakeholders and suppliers.

Head of Procurementestablishes needs and holdsperiodic reviews ofperformance against thesewith customers, stakeholdersand suppliers.

Staff actively involved inreviews with customers

Supplier reviews carried outperiodically - successes as wellas difficulties identified. Areasof mutual benefit pursued.

How individuals are encouraged todevelop their own skills and

competencies.

Competency levels are definedfor procurement staff.

Appraisal system establishedand used.

Training plans developed forall staff.

Individuals aware ofcompetencies required for their

job and others. Appraisal records up to date.

Training effectivenessmonitored.


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Career and succession plansproduced.

Succession plans for keypositions developed by HOPand integrated into overallorganisations successionplans.

2. POLICY AND STRATEGY

2. Policy and Strategy

How the organisation implements its mission and vision via a clear stakeholder focused strategy, supported by relevantpolicies, plans, objectives, targets and processes.

Comment

Excellent organisations recognise the value of involving Procurement at an early stage in the development of policy and strategy.Equally, the Procurement Organisations own policy and strategy must support those of the overall organisation of which it is apart and recognise and support wider government procurement polices and practices.


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2a. Policy and Strategy are based on the present and future needs and expectations of stakeholders.

Comment

The Procurement Organisations policy and strategy should be fully integrated into and supportive of the overall organisation towhich they provide a service.The policy and strategy should take account of customer and stakeholder current and future needs and recognise widergovernment initiatives and strategies.


How the ProcurementOrganisations strategy is linkedto the overall organisationsstrategy.

How the Procurement Strategy

links to and reflects widergovernment procurementstrategies and initiatives.

How the ProcurementOrganisation interfaces with,supports and collaborates withthe Office of GovernmentCommerce (OGC).

The Procurement Strategy is basedon and supports the overallorganisations mission, strategyand values.

Procurement strategy recognisesand supports governmentprocurement strategies andinitiatives, and the role of the OGC.This is reflected in work plans,procedure manuals and workinstructions for the ProcurementOrganisation.

Procurement strategy isdocumented and approved by theBoard.

Plans and accountabilities aredefined to implement the initiativeswith reviews to assessprogress/compliance and follow uprequired.

Procurement staff have a clearunderstanding of procurement initiativesand strategies.

Evidence of training/seminars/discussion

groups to ensureknowledge/understanding.


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How customers andstakeholders are consulted andtheir views taken into accountduring the development ofcurrent and future procurement

strategy.

The Procurement Organisationregularly consults with customersand stakeholders during strategydevelopment and execution.

Customers and stakeholders needsare defined and documented.

Procurement Organisation providestewardship against these needs -evidence of such events plus

appropriate follow up.

How the ProcurementOrganisation keeps abreast ofnew techniques andtechnologies and comparatoractivities.

How Procurement is involved inthe development of the overallorganisations policies andstrategies.

New techniques, technologies andcomparator activities are regularlyassessed for possible application.

Procurement contributes to theoverall organisations policies andstrategies at the developmentalstage when there is the opportunityto add value/influence the courseof events.

Mechanisms in place to ensureawareness of development eg.Review of journals/contact withAcademia/other centres ofexcellence. Responsibilities forassessment defined withappropriate documentation ofrelevant decisions.

Procurement contributions aredocumented.


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2b. Policy and Strategy are based on information from performance measurement, research, learning and creativity relatedactivities.

Comment

Excellent Procurement Organisations use analysis of their own performance, market research, developmental work and lessonslearned from previous activities to guide policy and strategy development.



captures, analyses and drawsappropriate learning from itsoperations.

The Procurement Organisation has a

defined way of reviewing itsperformance on a regular basis anddraws lessons from these reviews.

Output from data analyses and

documentation of lessons.

Regular review minutes.


carries out market research and usesthis in development of policy and

strategy.

Market research programme

appropriate to needs of theorganisation developed either alone or

in collaboration with others.

Market research data.

Analyses of data/conclusions drawn.


uses the data available from OGCand other Government Departmentsin development of policy andstrategy.

Formal contact and review

arrangements established with OGC.

Benchmarking programme established

and operational.

Minutes of meetings.

Benchmarking data and analyses.


uses the talents of its people,customers and stakeholders to guide

policy and strategy development.

Defined mechanism in place for

consultation and review. Documentation of consultations and

conclusions/actions.


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developing policy and strategy. documented actions/resultsassessed.

How fundamental concepts of

quality and excellence areincluded.

Principles of Excellence Model

incorporated into Policy and Strategy. Comments in strategy documents


2d. Policy and Strategy are deployed through a framework of key processes.

Comment

Excellent Procurement Organisations clearly identify the processes that are key to delivery of their policies and strategies. Theycontinually seek ways of improving these processes in order to enhance their contribution to the overall organisations objectives.


How procurement processesare tailored to meet theneeds of customers andstakeholders.

Processes are developed inconjunction with customers andstakeholders to be user friendlyand efficient.

Evidence of consultation and jointdevelopment/approval.

How cost is removed fromprocurement processes.

E-commerce/other techniques arefully exploited.

Use of Government Procurementcard.

Availability and use of Government

Secure Intranet. Government targets for E-

commerce met.

How critical success factors Key process performance is Performance trends available plus


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for each key procurementprocess are defined andmeasured.

measured regularly and trended. improvement actions defined.


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2e. Policy and Strategy are communicated and implemented.

Comment

In Excellent organisations procurement policy and strategy are widely communicated and form the bases and guiding principles for plansand actions.

2e Other Areas to Address Procurement Good Practice Possible Evidence

How ownership and commitment toprocurement policies and strategies aredemonstrated by the Board, SeniorManagers and ProcurementOrganisation Managers.

Senior Managers communicateprocurement policy and strategy downthrough the organisation anddemonstrate commitment and ownershipthrough their actions and personalinvolvement.

Customers and shareholderscommitment to the policy and strategy is

sought.

Planned programme of dissemination personal presentations/discussions.

Managers systematically present andconsult with customers andstakeholders.

How implementation is effected andmeasured.

Implementation properly planned andresourced.

Effectiveness and progress monitored,measured and reported to theBoard/Senior Management.

Clear cascade of policies and strategiesfrom department/division/group toindividuals objectives.

Implementation plans produced andcommunicated to all concerned.

Regular reviews scheduled and actionsidentified and followed up.

Individuals objectives show linkages tooverall organisations procurementpolicies and strategies.


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3. PEOPLE

3. People

How the organisation manages, develops and releases the knowledge and full potential of its people at an individual,

team-based and organisation-wide level, and plans these activities in order to support its policy and strategy and theeffective operation of its processes.

Comment

People is defined as all the individuals employed by the organisation and others who participate in the task of serving itscustomers, directly or indirectly.

In a procurement context this refers to all the individuals employed by the Procurement Organisation and others who carry outprocurement activities.

This may include procurement staff in other parts of the Department/Agency, who, while independent of the ProcurementOrganisation in terms of line management, look to it for matters of procurement policy, strategy and training.


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3. PEOPLE

3a. People resources are planned, managed and improved.

Comment

Procurement resources need to be flexible to handle widely differing demands - from strategy development and input at Boardlevel to detailed and technical negotiation with suppliers.

Professional development should be a key consideration and an integral part of people management.


How the Procurement Organisationplans its people resources to meetthe overall organisations needs.

The procurement resourceplan reflects the Board levelstrategic input requirement aswell as more routinemanagement of standardprocurement activities.

The resource policy and plancovers recruitment andretention of the right peoplewith the right skills.

There is an approvedProcurement Organisationresource plan available.

Skill requirements identified.

Resource plan documentedand implemented.

How the Procurement Organisationtakes into account the views andfeedback of its people on human

resource policies and practices.

Regular surveys of staffviews/feedback fromassessments.

System in place for collatingand analysing feedback.


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How the Procurement Organisationimproves its ways of working.

The Procurement Organisationroutinely assesses new toolsand techniques and ensures itspeople are properly trained inthe use of any that are

adopted.

The assessment process forevaluating new tools andtechniques is well established -evidence of these assessmentsshould be available with

appropriate conclusions andactions defined.

The Procurement Organisationhas an active benchmarkingprogramme to compare itsoperation against best inclass.

There is a regularly updatedimprovement plan available.

High performance teamworking skills developed.

Training plan reflects need todevelop teamworking skills.

Examples of innovativeworking methodologies.


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3. PEOPLE

3b Peoples knowledge and competencies are identified, developed and sustained.

Comment

Procurement Organisations in government have not had a tradition of longer-term career development for their people. This hasresulted in a loss of expertise and high basic training requirements for new entrants. Excellent organisations provide career

development for procurement people that is comparable with other mainstream activities and also ensure that Senior Managersin all other areas of the overall organisation have had exposure to procurement activities and needs.

Performance, compensation and recognition of individuals and teams are linked to quality and performance objectives.

3b Other Areas to Address Procurement Good Practice Possible Evidence

How the Procurement Organisationpromotes the implementation andfurther development of the

Government Procurement Service(GPS).

How the Procurement Organisationeducates and provides guidance tonon-procurement staff - eg SeniorManagers in other parts of the

Department

GPS implementation is planned andappropriately resourced. Progress ismonitored and action taken to correct

deviation from plan. Individuals have a career plan with

appropriate work experience to equipthem for more senior/otherprocurement positions.

Non Procurement Managersare educated throughworkshops/seminars/one toone/secondments etc on good

procurement practice. Fast Streamers seconded to

the Procurement Organisationfor a period.

Implementation plans producedand disseminated.

Evidence of progress reviewsand decisions taken on anydeviations from plan.

Acquisition of appropriateprofessional qualifications.

Job rotations/secondments.

Programme of educationagreed and implemented.

Greater Procurement influence

on the overall organisationsprogrammes and decisions.


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3. PEOPLE


How the Procurement Organisationdefines primary performance

measures - job purpose/primeaccountabilities.

The ProcurementOrganisation's prime

performance measures havebeen identified and thesecascade to team and individualperformance measures.

Job purposes show linkages toprime performance measures.

Performance measuresdocumented, agreed by Senior

Management, reviewed andagreed by teams andindividuals.

Job accountabilities defined.

How the Procurement Organisationresponds to changing circumstances,needs and the operating environment.

Bases for performancemeasures are periodicallyreviewed forrelevance/applicability.

Customers' needs and theoperating environment areregularly assessed.

Staff are trained in providingcustomer service internallyand externally.

System established to checkapplicability of measures andbases for these.

Evidence of reviews/correctiveaction in response tocomments/complaints.

How the Procurement Organisationreviews its performance, learns fromand builds on its successes andmakes effective plans to correctdeficiencies.

Performance against targets isregularly reviewed. Correctiveaction taken to addressdeviations in performance.

Performance data.

Corrective action plans.


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3. PEOPLE

3c. People are involved and empowered

Comment

In Excellent Procurement Organisations teams and individuals are encouraged to be proactive in their dealings with customersand suppliers.

This means actively engaging with them - through visits, open days, seminars etc to explore and identify needs and effectiveways of working together to mutual benefit.

3c. Other Areas to Address Procurement Good Practice Possible Evidence

How individuals actively engage withcustomers and suppliers in order todevelop innovative ways of working

together.

Individuals are empowered todevelop a programme ofcustomer and supplier visits

and to develop plans toimprove methods of working.

Individuals are given activesupport by HOP.

Team working is activelyencouraged

Programme of visits for eachindividual.

Plans available for

improvement - reviewed,approved and supported byHOP.

Cross functional teams withhigh Procurement involvement.

How individuals are encouraged todevelop their own skills and expertiseand use them to the benefit of theProcurement Organisation.

Individuals are encouraged todevelop their skills andexpertise through appropriatetraining/release/continuing

professional development. Achievements are recognised

and celebrated.

Opportunities are sought to

Evidence oftraining/developmentalprogrammes.

Individuals pursuing/working

towards qualifications. Support from the organisation

in terms of funding/timeallowed.


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allow individuals to use theirrelevant skills.

Individuals able to use theirskills.

Secondments/job rotations

3. PEOPLE

3d. People and the organisation have a dialogue

Comment

For effective procurement there needs to be close liaison between the Procurement Organisation and other parts of the overallorganisation, and in many cases the creation and operation of cross functional teams.


How the Procurement Organisationmanages cross functionalcommunication and contributes to thecreation and operation of crossfunctional teams where appropriate.

The Procurement Organisationhas a planned programme ofmaking cross functionalcontacts to ensure awarenessof needs.

Is instrumental in creation andmanagement of crossfunctional teams.

Programme available, followedand updated.

Dissemination of relevantinformation arising from thesecontacts.

Updating of operational plansas appropriate in the light ofthis information.

Evidence of active involvementeg. facilitating/administration.

How the Procurement Organisationprovides specific opportunities andmechanisms for its people toexchange information/views/ideas onprocurement matters/best practice.

Arrangements in place toprovide up to date informationto its people on all aspects ofprocurement. Likely to includesome social aspects as well as

Communication meetingswithin ProcurementOrganisation, socialevents/other mechanisms forexchange of information.


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3. PEOPLE

3e. People are rewarded, recognised and cared for.

Comment

Procurement Organisation often have heavy workloads, tight deadlines and individuals working in isolation. In such circumstancesmorale and employee satisfaction can suffer. Effective Procurement Organisations address this issue through team support.

3e. Other Areas to Address Procurement Good Practice Possible Evidence

How the Procurement Organisationsupports its people, provides guidanceand assistance and manages highworkload periods.

Effective team working culture andsupport established.

Forward resource needs prediction andplanning system in place.

Employee morale and satisfactionsurveys.

Teamworking skill development activities

Forward resource plans available andacted on.


provides facilities and services for itspeople.

Working arrangements flexible to meet

both the individual and organisationalneeds.

Consultation with staff on needs.

Social and cultural programme.

Flexi-time arrangements where

appropriate. Staff input to working needs

consultative meetings.

How the Procurement Organisationrecognises its people.

Peoples achievements are recognisedand celebrated.

Active support given for selfdevelopment.

Social and cultural activities shared.

Award ceremonies.


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4. PARTNERSHIPS AND RESOURCES

4. Partnerships and Resources

How the organisation plans and manages its external partnerships and internal resources in order to support its policyand strategy and the effective operation of its processes.

Comment

In devolved government an essential aspect of an Excellent Procurement Organisation is the ability to create, maintain andeffectively use partnerships and colaborative arrangements to mutual benefit.

Procurement Organisations may not have complete control over the resources they use to carry out their activities. Anyrestrictions should be identified but the emphasis should be on effective and efficient management within those constraints.


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4a External partnerships are managed

Comment

Significant savings/improved service and supply can be achieved by government departments/agencies operating in partnership orcollaboration with each other.

The role of the Office of Government Commerce needs to be used to best effect by Procurement Organisations for the benefit of theirdepartment and government in general.

Competition remains the cornerstone of government procurement policy. This must be backed by honesty, fairness and evenhandedness in dealing with suppliers to avoid conflicts of interest. Within this framework of competition it is in departments interest towork with suppliers to secure improvements in the performance of both parties to mutual benefit.

Procurement Organisations are the driving force for effective supplier management and where appropriate the development of longerterm strategic relationships.


How the Procurement Organisationworks with the OGC to obtainmaximum benefit for the overallorganisation and governmentgenerally.

Relationships with the OGC definedand built into operational plan.

Contribution to OGC defined in termsof people/skills etc.

Documentation of relationship.

Participation in OGC activities/initiatives.

How the Procurement Organisationdevelops collaborative arrangementswith other government departments tomutual benefit.

Beneficial collaborative arrangementsidentified and then actively supportedand resourced.

Results monitored to ensure benefitachieved.

Business case for collaboration defined.

Results/benefits documented and reportedregularly.


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How the Procurement Organisationmanages relationships with regulatorybodies.

Relationship defined. Compliance withrequirements.

Programme of actions available.


handles supplier management and thedevelopment of relationships with keysuppliers.

The Procurement Organisation has

developed and implemented a suppliermanagement policy and strategy thatis integrated into the procurementstrategy to support the overallorganisations objectives.

Key suppliers are identified and thereis a specific plan for development ofthe relationship with each to theappropriate level.

Contracts with suppliers are designedwherever practical to promotecontinuous improvement and benefitsharing.

Supplier management plan developed and

communicated to staff. Responsibilityallocated.

Evidence of clear linkage between suppliermanagement plan and overall organisationsprocurement strategy.

Regular meetings/reviews with suppliers.

Plans for improvement in place and followedthrough.

Buyers able to identify contracts with built incontinuous improvement/benefit sharing

features.


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4b. Finances are managed.

Comment

Procurement Organisations are in a strong position to influence financial management and the use of financial resources inprogressing the overall organisation's objectives and programme.


How the Procurement Organisation isinvolved in capital or programmespend (in addition to normal runningcost spend).

Procurement involvement in capitaland programme spend is clearlydefined and covers such aspects as

gathering market intelligence

advice on specifications

advice on legislation, competitionrules and procurement rules

negotiations

contract formation and letting

contract management

relationship management

pricing mechanisms

legal issues

There is a defined policy for involvingProcurement in capital and programmespend.

Best practice notes/guidance availableand followed.

Programme and Capital Project

Managers are aware of the need toapply procurement practices to theirspend.

Programme and Capital ProjectManagers have receivedtraining/information on therequirements for effectiveprocurement.


assesses and manages risk.

Risk management techniques definedand used.

Risk management programme inoperation.

Individuals have received training in

risk management. Plans/actions to minimise/eliminate risk

available and implemented.


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4c. Buildings, equipment and materials are managed.

Comment

Procurement Organisations have a responsibility to effectively manage the assets that they use for their own operation. They are alsoideally placed to lead or have a major input to effective and efficient management of the buildings, equipment and other assets of theoverall organisation due to their knowledge of market conditions.

4c Other Areas to Address Procurement Good Practice Possible Evidence

How the Procurement Organisationcontributes to management of the overallorganisations assets (ie departmentalassets).

The Procurement Organisation isinstrumental in examination andoptimisation of the use of the wholeorganisations assets.

Benchmarks against similarorganisations and market conditions.

Evidence of periodic reviews ofrequirements, options, and tracking ofmarket conditions.


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4d. Technology is managed

Comment

Rapid developments in computer hardware and software have provided the opportunity for step changes in the use of electroniccommerce, with a corresponding reduction in procurement costs and the ability for end users to have direct access to supplierswhile retaining appropriate controls and achieving best value for money.

Excellent Procurement Organisations have mechanisms in place to rapidly assess and embrace such technology.


How the Procurement Organisationassesses and introduces electroniccommerce to the benefit of the wholeorganisation.

The Procurement Organisation has aclearly defined policy and strategy forthe introduction of electroniccommerce which is approved andsupported at Board level.

Implementation plans to meetgovernment targets are in place andresponsibilities assigned.

The Procurement Organisation is indiscussion with suppliers and leadingthem towards electronic commercecapability.

Cohesive and comprehensive policyand strategy approved at Board level.

Use of Government Procurement Cardor similar mechanism to take costs outof low value procurement.

Relevant staff have access toGovernment Secure Intranet and theInternet or plans to achieve this havebeen defined.

Plans and milestones established foradoption of electronic commerce forcalls for competition.


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4e. Information and knowledge are managed

Comment

Information and Knowledge Resources are defined as business, technical and other information and experience, together withthe means of making this available and accessible.

Procurement Organisations are one of the key links that an overall organisation has with the outside world. As such they are aprime conduit for information and knowledge flowing both ways and must have efficient and effective systems for collecting,collating and disseminating this to the right people.

4e. Other Areas to Address Procurement Good Practice Possible Evidence


collects, assesses, validates and usesprocurement related information,knowledge and experience to enhance itsservices.

The Procurement Organisation has a

clearly defined information and knowledgemanagement policy that covers

the type of data to be collected

how it is assessed/validated/improved how it is disseminated and used

effectively

Typical procurement related information

will include

market intelligence

procurement activities of otherGovernment Departments and

Agencies

benchmarking data

best practice

new tools and techniques Generating innovative and creative

thinking through the use of informationand knowledge resources.

Policy documented with responsibilities

defined.

Evidence of data collection, assessment,

validation and transmission to interested

parties. Evidence of such data being considered

and used in decision making ie actionsdefined.

People aware of need for information and

knowledge management and know how toaccess it.


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5. PROCESSES

5. Processes

How the organisation designs, manages and improves its processes in order to support its policy and strategy and fullysatisfy, and generate increasing value for, its customers and other stakeholders.

Comment:

A Process is defined as a sequence of steps which adds value by producing required outputs from a variety of inputs

Procurement processes affect the overall organisation and can represent a significant proportion of the total cost of a transaction.Time is often a critical element as well and procurement processes should be flexible to accommodate particular needs ofcustomers and stakeholders.


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5 PROCESSES

5a. Processes are systematically designed and managed.

Comment:

Procurement processes have to satisfy the needs of a variety of interested parties:

End users

Suppliers

Finance Division

Auditors

Procurement staff

As well as providing satisfactory control the processes need to meet wider government drives and initiatives, involvement andinterface with OGC and legal requirements.

Key procurement processes should cover not only the purchase to pay cycle but the planning and analysis processes that surroundthe core.

Procurement processes are engines for delivery of policy and programme. As such they need proper management, performancechecks against expectations and appropriate adjustments to maintain top performance.


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How the Procurement Organisationidentifies the key business needs ofthe overall organisation and theprocurement processes that supportthese.

How the Procurement Organisationsprocesses are tailored to meet theneeds of all interested parties.

The Procurement Organisation isinvolved in development of the overallorganisations strategic business planand delivery of its programmes.

Procurement processes key to thesuccess of these are identified andtheir impact evaluated.

An in depth analysis of the serviceprovided as customers experience it and the processes which deliver thatservice.

The Procurement Organisation hasidentified its key processes andindividual staff members are aware ofthese and their importance to theorganisation.

Evidence of impact evaluation

risk analysis if they fail

contingency plans developedand tested

How procurement process interfaceissues inside, the organisation andwith outside bodies, are managed.

The Procurement Organisationmaintains a dialogue with all interestedparties to establish their needs andcontinuing satisfaction of these.

Regular meetings with interestedparties actions arising processesadjusted to meet needs.

How the Procurement Organisationallocates responsibility for day to daymanagement of all its processes andensures they perform as advertised.

Each procurement process has anominated owner who monitorsperformance against agreed servicelevels and ensures compliance withthese. Owner reports performanceregularly and trouble shoots anyproblems or issues.

Ownership of processes documented.

People aware of who to contact in theevent of difficulties.

Performance reports available andacted upon


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5 PROCESSES

5b Processes are improved, as needed, using innovation in order to fully satisfy and generate increasing value for customers andother stakeholders

Comment:

Procurement Organisations generally have not had a tradition of innovation and creativity. The ones that have and are now regarded asleaders have achieved this through providing time and encouragement for their staff to develop and expand their roles and influence withtheir customers and through the adoption of the latest tools, techniques and technologies.

Changes in procurement processes will usually affect a much larger population than the Procurement Organisation itself and can havesignificant credits or debits. The impact and benefit on this wider population, End Users, Finance, Suppliers etc needs to be assessed whenany procurement process changes are considered and measurement taken after implementation to confirm this.


How the Procurement Organisationencourages its staff to innovate and

develop their roles and processes with theircustomers.

Procurement staff have specific objectivesto develop their roles and processes and

interaction with their customers. Good practice in one area is

communicated and adopted in other areas.

Procurement staff can show evidenceof their objectives and activities in

developing their roles. Mechanisms in place for spreading and

adopting good practice internally.

How the Process organisation assessesthe overall benefit (debit) of any changes itmakes to procurement processes.

The Procurement Organisation draws up abusiness case for any changes andreviews these with all interested parties toget their buy in prior to implementation.

Business cases produce and reviewedwith appropriate people.

Senior management approvalobtained.


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5 PROCESSES

5c. Products and Services are designed and developed based on customer needs and expectations

Comment

Procurement Organisations need to constantly seek ways of adding value while reducing processing costs and cycle times in order tomore effectively and efficiently meet their customers and stakeholders needs.

Excellent Procurement Organisations lead in this activity rather than responding to customers and stakeholders concerns or requests.

Within the public sector there are numerous opportunities for benchmarking against similar (and dissimilar) organisations in order toestablish new and challenging targets.



anticipates its customers and stakeholdersneeds and leads in performanceenhancement.

The Procurement Organisation is aware

of its customers and stakeholdersbusiness needs and targets anddevelops its own processes to furthertheir aims and objectives.

Customer and stakeholder needs and

targets defined.

Analyses of Procurement Organisationscontribution to each of its customers aims.

Plans to adjust Procurement processes to

enhance overall organisationaleffectiveness.

How the Procurement Organisation uses

OGC and its network of public sectorcontacts to establish benchmarking partners.

How the Procurement Organisation uses the

data available on the Government SecureIntranet to enhance its target setting.

The Procurement Organisation has

characterised its own operation andidentified potential benchmarkingpartners.

Data available from GSI is regularly

analysed for applicability and use.

Characteristics that the Procurement

Organisation wishes to benchmark aredefined and documented.

List of potential partners and plans to

establish contact with these.

Responsibilities defined output from

analyses.


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5. PROCESSES

5d Products and Services are produced, delivered and serviced

Comment

Procurement is often seen as a hurdle that customers need to clear in order to get on with their real job.

Procurement Organisations need to deliver as advertised, promote the added value that effective Procurement can give and ensureappropriate follow up to the services provided.

5d Other Areas to Address Procurement Good Practice Possible Evidence

How the Procurement Organisationmarkets its services to the overallorganisation.

Procurement marketing plan andprogramme established that involveseveryone in the ProcurementOrganisation.

Marketing plan available to staff.

Progress and effectiveness monitoring.


ensures that it performs as advertised.

Monitoring programme of procurement

performance with follow up/correction ofdeficiencies.

Regular reporting of results follow up

actions.

OC SS S


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5. PROCESSES

5e Customer relationships are managed and enhanced

Comment

There is a need for Procurement to be proactive in its dealings with customers in order to adequately influence strategy and ensureappropriate input.

This requires development of relationships, understanding customers business needs and objectives and demonstrating howProcurement can add value.

5e Other Areas to Address Procurement Good Practice Possible Evidence

How Procurement people developcustomer relationships andunderstanding of their business needs.

Procurement people have a programmeof customer visits/contacts.

Customer business needs are identifiedand the Procurement processesexamined to ensure user

friendliness/effectiveness.

Visit programme.

Documentation of customer needs.

Processes reviewed with customers.

Back up for Procurement staff if away onleave or sick.

Alternative contacts identified.


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6. CUSTOMER RESULTS

6. Customer Results

Definition

What the organisation is achieving in relation to its external customers.

Comment:

A Customer is defined as the immediate customer of the Procurement Organisation and all other customers in the complete chainof distribution of its products and services.

Customers of Procurement Organisations will judge satisfaction with the services provided in a variety of ways and against theirparticular needs. Their input is therefore essential in order to determine what constitutes satisfaction for them and the measures toassess it.

6 CUSTOMER RESULTS


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6. CUSTOMER RESULTS

6a. Perception Measures

These measures are of the customers perceptions of the organisation (obtained for example from customer surveys,focus groups, vendor ratings, compliments and complaints).

Comment

Although the Procurement Organisation needs to have its own measures of its performance in providing customer satisfactioncustomers will have their own perceptions of the quality of work produced.

The Procurement Organisation needs to have in place suitable measures of these customer perceptions.

6a. Other Areas to Address Procurement Good Practice Possible Measures

Performance of the ProcurementOrganisation against customerexpectations. This will include howthe service is provided not just the

technical excellence.

A clear understanding of whatcustomers and stakeholders expectfrom the Procurement Organisation.

Challenging performance standardsthat meet or exceed these customerexpectations.

Measurement of customer satisfaction but consider only very satisfied ordelighted as captive customers.

SERVQUAL Methodology - seeProcurement Marketing Best PracticeGuide (Surveys of customersatisfaction - be cautious of too

frequent surveys).

Amount of additional programme/policydelivery achieved due to Procurementcontribution. (Implies an annual planand tracking against this).

Demand for procurement training andawareness.

Quality of guidance/documentation.

Perception of image, accessibility,responsiveness.

6 CUSTOMER RESULTS


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6. CUSTOMER RESULTS

6b. Performance Indicators.

These measures are the internal ones used by the organisation in order to monitor, understand, predict and improve theperformance of the organisation and to predict perception of its external customers.

Comment

Direct measurement of customer satisfaction should not be carried out too often otherwise survey fatigue might be counter-productive. (Once per year would generally be appropriate for a full survey). The Procurement Organisation therefore needs tomeasure customer satisfaction, by indirect means, more regularly in order to maintain a running assessment and to correlate thiswith the full surveys.

6b. Other Areas to Address Procurement Good Practice Possible Measures

Indirect methods of assessing orinferring customer satisfaction with theProcurement Organisationsperformance.

The Procurement Organisation has arange of indirect measures targeted atthose areas that correlate withcustomer satisfaction andProcurement Organisation influence.

Percentage of non pay spendinfluenced by the ProcurementOrganisation

Percentage take up of framework

agreements percentage of spend ona particular item or service placedthrough a framework agreement.

Performance against Service LevelAgreements/other performancestandards.

Performance against specific customerrequests eg timeliness

Level of complaints/compliments andresponses/action to the former

Staff customer service training levels Level of staff suggestions made for

improvements in customer service andthose implemented.


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7. PEOPLE RESULTS

7. People Results

Definition

What the organisation is achieving in relation to its people.

Comment

Everyone who is involved in procurement those directly employed by the Procurement Organisation and those who carry outprocurement activities but employed by other parts of the organisation should be asked for their perception of what theProcurement Organisation is achieving in relation to their satisfaction.

7 PEOPLE RESULTS


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7. PEOPLE RESULTS


These measures are of the peoples perception of the organisation (obtained, for example, from surveys, focus groups,interviews, structured appraisals).

Comment

The main areas of specialist input and contribution to its people from the Procurement Organisation will be:

(i) in the provision of technical guidance, support and expertise to those people carrying out procurement.(ii) in developing their professional status in Procurement and managing their careers.


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7a. Other Areas to Address Procurement Good Practice Possible Measurers

Performance of the ProcurementOrganisation against its peoplesexpectations. This will include not onlythe physical provision of facilities,technical excellence and backup butthe culture and empathy of the

organisation.

A clear understanding of what theorganisations people expect it toprovide.

Measurement of peoples satisfactionwith

the information, training,policy guidance, procedures thatthey need to carry out their jobeffectively and efficiently

the support, guidance andassistance in progressing theircareer in public sector procurement

the culture of theProcurement Organisation

communication

leadership

recognition pay, benefits, terms andconditions

the working environment

Satisfaction surveys of the peopleinvolved in Procurement

Feedback from focus groups

positive to negativecomments

Feedback from counselling sessions strengths/weaknesses identified.

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7. PEOPLE RESULTS

7b. Performance Indicators

These measures are the internal ones used by the organisation in order to monitor, understand, produce and improve theperformance of the organisations people and to predict perceptions.

Comment

The Procurement Organisation needs to make its own assessment of employee satisfaction and to correlate this with direct surveysof people satisfaction with what it does and the way it goes about its business.


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Indirect methods of assessing orinferring employees satisfaction withthe Procurement Organisationsperformance.

The Procurement Organisation has arange of indirect measures targeted atthose areas that correlate with peoplesatisfaction.

Performance against the organisationsown targets

number achieved

percentage of peopleachieving their personal targets

Number of people lost to the privatesector.

Percentage of procurement peoplereceiving at least one counsellingsession/year.

Number of people pursuing vacanciesin the Procurement Organisation.

Number of people pursuingprofessional qualifications.

Training success rates.

Number of constructive suggestions forimprovement of customer service.

Designated posts entered into GPSregister.

Involvement in improvement activities.

Sickness and absenteeism.

Attendance at social/cultural eventsorganised by the ProcurementOrganisation.

8 SOCIETY RESULTS


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8. SOCIETY RESULTS

8 Society Results

Definition

What the organisation is achieving in relation to local, national and international society as appropriate.

Comment

Procurement Organisations are often a prime conduit for contact with the private sector, trade organisations and regulatory bodies,such as, the EC, WTO, Planning Authorities etc.

This section examineshow the Procurement Organisation is viewed by the outside world. It involves perception of theorganisations approach to quality of life, the environment, the preservation of global resources and the organisations own internalmeasures to assess this.

8. SOCIETY RESULTS


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8. SOCIETY RESULTS


These measures are of the societys perception of the organisation (obtained, for example, from surveys, reports, publicmeetings, public representatives, governmental authorities).

Comment

Society for Procurement Organisations could be interpreted as those bodies and people with which it has contact in order tocarry out its business the local community, its suppliers, partners, other Government Departments.

8a. Other Areas to Address Procurement Good Practice Possible Measures

Performance of the ProcurementOrganisation in complying with allrelevant regulations plus a proactiveconcern for society and the peoplewith whom it deals.

An awareness of how the ProcurementOrganisation is seen by the bodieswith which it deals. ie is itperceived as professional,knowledgeable, compliant withregulations and agreements and acontributor to the sensibleinterpretation and promotion of these?

Surveys of bodies with which theProcurement Organisation dealscovering such aspects as

compliance

contribution

integrity Survey could cover

regulatory bodies

collaboration partners

NGOs/Agencies

What aspects of the ProcurementOrganisations operation affect thelocality and community and how.

Knowledge of what aspects do affectthe community and locality andwhether they are positive or negative.

Reduction of adverse aspects turn/them into positive aspects

How the Procurement Organisation is

viewed by those parts of thecommunity that it does affect.

Knowledge of how the Procurement

Organisation is viewed and plans forhow this can be effectively managedand improved.

Survey results

Trends of perceptions over time Plans for improvement

8. SOCIETY RESULTS


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8. SOCIETY RESULTS

8b Performance Indicators.

These measures are the internal ones used by the organisation in order to monitor, understand, predict and improve theperformance of the organisation and to predict perceptions of society.

Comment

As a centre of excellence the Procurement Organisation is in a position to use its expertise for the benefit of the community in whichit operates.


Internal and indirect methods ofassessing or inferring the impact theProcurement Organisation has on thesociety in which it operates.

The Procurement Organisation has arange of indirect measures that allowsit to assess its effect on society and tocorrelate these with direct surveys(see 8a)

the ProcurementOrganisation is a proactive andsupportive member of the publicprocurement community

The Procurement Organisation hasdeveloped and implemented a rationalenvironmental policy which combinesreal protection for the environmentwhile delivering value for money for itscustomers.

Percentage of time given to workassociated with the wider publicprocurement community.

OGC committees andworkgroups

lectures, presentations tooutside bodies

involvement in professionalbodies developing standards/bestpractice

Health and Safety statistics

accolades/acknowledgements/awards

Percentage of suppliers working withthe Procurement Organisation on

environmental improvement for theirarea of supply.

Percentage of contracts incorporating

an environmental protection clause.


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an environmental protection clause.

9. KEY PERFORMANCE RESULTS


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9 Key Performance Results

Definition

What the organisation is achieving in relation to its planned performance.

The organisation will need to define what measures are key to their business and why.

Comment

Excellent Procurement Organisations should be able to demonstrate to their customers and other stakeholders who have aninterest in the procurement operation, how their needs and expectations are being met.

Performance will be demonstrated through the results achieved, positive trends and comparison/benchmarking with otherorganisations carrying out similar activities both in the private and public sectors.



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9a. Key Performance Outcomes.

These measures are key performance outcomes planned by the organisation.

Comment

The two main areas in which a Procurement Organisation will be expected to demonstrate its performance are

(i) the efficiency of its own operation, its running costs and ability to show year on year efficiencies.(ii) the benefit that it is bringing to the organisation as a whole by its professional activities.


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9b. Key Performance Indicators.

These measures are the operational ones used in order to monitor, understand, predict and improve the organisationslikely key performance outcome results.

Comment

Many improvement activities are undertaken by Procurement Organisations in order to contribute to the overall effectiveness andefficiency of the overall organisation. Measurement of the direct financial results of these is often difficult but measurement of theextent and progress of these improvement activities is important in order to achieve correlation with the financial results (see 9a)


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Areas of activity that directionally willimprove overall performance andfinancial results but a precisecontribution cannot be easilydetermined.

The Procurement Organisation has arange of other measures that willindicate the progress andeffectiveness of improvementactivities.

Number of collaborations with otherProcurement Organisations.

Strategic partnerships formed withsuppliers.

Benchmarking activities developed andfollowed through to action/completion.

Grants incorporating procurementconditions/guidance.

Reviews taken after major contracts tolearn lessons from successes anddifficulties.

Use of electronic commerce

percentage of procurementtransacted using electroniccommerce

Level of market research carried out.

Key processes reviewed and updated.

Procurement processes performance,development/improvement andinnovation.

Software packages implementedsuccessfully.

Information and knowledge databasesutilisation.

Glossary


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CIPS Chartered Institute of Purchasing and Supply

Customers Direct recipients of the Procurement Organisations services

EFQM The European Foundation for Quality Management

EC European Commission

OGC Office of Government Commerce

Overall Organisation The Main Department or Agency of which the Procurement Organisation isa part

Procurement Organisation Everyone who carries out Procurement even though they may not have adirect line responsibility to the Procurement Organisation Managers

Procurement Organisation Managers Managers who are directly within the Procurement Organisationsmanagement structure

Stakeholders People who have an interest in the operation of the ProcurementOrganisation

Suppliers Outside organisations providing goods, and or, services to the ProcurementOrganisation or its customers in the overall organisation

WTO World Trade Organisation

procurementexcelenceguide

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