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Step 3 - Putting Structures in Place

last updated: 21st December 2015 5 stars

Backed by the right people and the necessary information, a procurement strategy can be formulated to ensure compliance and mitigate risk.

Simultaneously, the college procurement champion can establish a procurement network which allows for a two-way flow of information between the board and the departmental lead buyers.

 

Create a vision

Before setting the strategy, establish the procurement vision. Is the college’s aim solely to achieve value for money? Or are there broader objectives such as supporting the local economy, developing partnerships with the local business community and contributing to the sustainability agenda?

Set a strategy

The procurement champion is responsible for the strategy. He or she should consult with as many procurement stakeholders as possible and may want to take soundings from other procurement champions in colleges you collaborate with to gain an idea of the issues they face, good practice and to identify further procurement opportunities. A number of elements are involved in setting a strategy:

  • Drawing on the information provided by the spend analysis and determining how each category is best purchased. l Establishing policies (see below).
  • Establishing the procedures and processes for managing procurement activity, including implementing thresholds that trigger the use of a particular procedure or process such as a competitive tender or GPCs. These must also ensure that a college complies with UK and EU procurement legislation.
  • Ensuring finance regulations are up to date and support modern procurement methods, and that the college’s spend thresholds and procurement processes are fit for purpose. For example: are spend thresholds achieving what is necessary? is the approval of the procurement board required above certain thresholds? which purchases and values of spend should be made through a GPC? at what thresholds of spend are a full tender or a mini competition required? when and for which products and services should consortia and contracting bodies be used? 
     

Setting targets for improving procurement efficiencies

  • Developing a method for measuring value for money and efficiencies against targets. Creating a sustainable and effective management information system to support procedures and check compliance. Including large scale activities that involve procurement – such as construction, refurbishment, IT replacement.
  • Using the contracts register to plan procurement activity.
  • Ensuring the procurement board agrees the strategy.
     

Establish policies

Procurement management in every college is driven by a single overarching policy: to achieve the best value for money while minimising risk. The following normally need to be clarified by a policy which should always be signed off by the procurement board:

  • Areas of responsibility for governors, the principal, the procurement champion, director of finance, procurement liaison officer, budget holders and general staff.
  • Value for money, quality and service agreements, risk management.
  • Ethical standards such as how to deal with gifts from suppliers, taking into account the CIPS code of conduct.
  • Sustainability – for example, stationery and energy efficiencies.
  • How and when to use small businesses and local suppliers to support the local economy.
  • Use and management of approved suppliers – keep your supplier base small and ensure new additions are carefully controlled.
  • Collaboration – the who, how and when of working with colleges and other organisations.
  • Supplier relationships – covering, for example, payment terms and training and apprenticeship arrangements.
  • Equal opportunities – ensuring all employees are treated equally and fairly.
  • Use of terms and conditions. 
     

Reduce risk

Terms and conditions 

The supply of any goods or services should always be based on the college’s terms and conditions, rather than those of the supplier. If you buy through a consortium or a framework agreement, the terms and conditions will already have been agreed.

Compliance 

Public sector and EU procurement regulations are strict and the consequences for not adhering to them can be severe.  If you are buying goods and services that cannot be bought through a consortium and whose value exceeds a certain threshold, appropriate suppliers must be invited to tender for the supply. From 1 January 2016 to 31 December 2017 the threshold levels prescribed by the European Union Commission are £164,176 for supplies and services and £4,104,394 for works. These totals refer to the total value of a contract, so if the contract lasts three years and is worth £164,176 over the course of those three years the EU public sector tendering rules would have to be complied with. 

Procurement legislation must be complied with in addition to other legal requirements relevant to contracting such as The Public Services Social Value Act, Transfer of Undertaking Employment Protection Act, Bribery Act and Equality Act.

Create a procurement network 

A procurement network is one of the most successful ways of managing procurement. It allows purchasing at a decentralised level where each department has its own budget and a ‘lead buyer’ who is the departmental head of the network buying team and knowledgeable about the products and services being bought. Processes governing accountability, policy and practice are agreed by the procurement board and the procurement liaison officer can provide support and guidance about the right procurement approach from the centre.

Some colleges use a decentralised model when each department manages its own budget; however, local interests can be put before those of the college, spend is uncoordinated and too many untrained people can get involved in procurement. In the centralised model heads of department have to request procurement from a central point; this can be bureaucratic and result in long waits, bottlenecks and maverick buying.

The procurement network offers the best of both worlds – the departments deliver results while the procurement champion and PLO provide support – ensuring procurement is efficiently managed at every level.

The procurement network – benefits 

  • Demonstrates a clear commitment to procurement.
  • Helps to ensure that a consistent procurement message is delivered.
  • Sends the correct messages to staff and external colleagues.
  • Uses specialist product/service/market knowledge to best effect.
  • Up-skills key buyers. l Secures ‘buy-in’ from those who purchase.
  • Avoids fragmentation and creates leverage for best value.
  • Releases resources.
  • Delivers procurement management efficiencies.
  • Minimises risk. 
     

The procurement network – who does what 

The procurement champion and procurement liaison officer work together to:

  • Co-ordinate the network – convening meetings, agendas, actions, contracts etc.
  • Provide leadership, focus and coaching through training and workshops.
  • Provide all terms and conditions, templates and tools.
  • Maintain the procurement section of the intranet and communicate with network members.
  • Assist with all major purchases.
  • Disseminate management information.
     

And, depending on requirements, they:

  • Forecast demand and whether suppliers and sometimes markets, such as the construction industry, are able to meet it.
  • Develop the network to keep it relevant.
  • Run a risk management programme.
  • Represent the college externally. 
     

The network buyers are departmental staff with authority to place orders and contracts. A lead buyer will execute the college’s procurement strategy with regards to a specific category, and will draw on the supplier and product knowledge of other buyers. He or she is also responsible for:

  • Promoting good deals to the staff who place the orders.
  • Facilitating training – e.g.‘how to…’,‘why we…’, or ‘get the most from…’.
  • Making sure the college gets the ‘best deal’.
  • Managing relationships with suppliers.
  • Providing feedback on supplier performance.
  • Working with buyers in other teams. 
     

Other ways to organise a procurement network include:

  • By college department rather than spend category.
  • Through creating a hybrid model that combines departmental structures
  • Category management techniques for significant cross-cutting categories such as ICT, catering and books. 
     

What matters is that a network of leads is established to gather and disseminate information throughout the college, working with the PLO to actively manage and co-ordinate procurement activity. 
 

 
Step 3 Action points 

  • Establish the college’s procurement vision and key objectives.
     
  • Create a procurement strategy that will achieve the vision and objectives which best suit the college. Set targets for improving procurement efficiencies. 
     
  • Report progress at procurement board meetings.
      
  • Set up a procurement network.
      
  • Establish the college’s position on key issues around procurement and create policies to support them. These should be signed off by the board. 
     
  • Ensure all staff with authority to procure goods and services are aware of the college’s procedures and processes, and that they comply with legal requirements. 
     
  • Set up and maintain a procurement site on the college’s intranet. 
     

 

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