IBIS recommends you make an assessment of the level of professional procurement influence exerted over your institution's suppliers. This will provide a framework within which each supplier is assessed in terms of how they are selected i.e. through competition etc and whether their selection is influenced by the central professional Procurement Office function. The model is used to allocate an influence level to each supplier. Five influence levels have been defined:
- Controlled [Level 1] - the central professional procurement staff are actively involved in the selection and use of the supplier.
- Directed [Level 2] - the central professional procurement staff direct departmental buyers to existing contracts that have been prepared within the institution, by a regional consortia or another appropriate external body such as Crescent Purchasing Consortium.
- Delegated [Level 3] - authority to source suppliers is delegated to departments, this includes the use of quotation and tender procedures (within defined values) without a mandatory need to refer to the central Procurement Office.
- No Added Value [Level 4] - where the central professional procurement staff are involved in routine purchasing activity that adds little or no value to the process. This could include, for example, a need for the central Procurement Office to authorise lower value orders prior to issue to suppliers.
- Other [Level 5] - where the central professional procurement staff have no involvement or knowledge of the supplier.
In general, an institution should be working to increase its Level 1, 2 and 3 [i.e. controlled, directed and delegated] influences and minimising its Levels 4 and 5 [no added value and other categories]. The relative proportions of the influence levels will be determined the institution's culture, its centralised/ de-centralised procurement structure and the number of professional procurement staff.
The model should be used at the beginning of each financial year to assess, using the previous year's total payment data to its suppliers, the influence exerted over the suppliers. Using this data, the model will generate an influence profile and also show the trend over the preceding four years. This analysis will provide evidence of how the procurement function is developing. It will help support an assessment of improvements made against, for example, a Procurement Strategy objective in respect of increasing the level of professional procurement involvement in the institution's non-pay expenditure.
The model also has a facility to categorise each supplier into a generic commodity group. This enables assessments to be made of how the particular areas of expenditure are being influenced and managed. This analysis is useful in determining areas to be investigated in the forthcoming year. It can also highlight, for example, where a contracted supplier(s) under a framework arrangement is not being used and could lead to complaint, from the supplier(s), about a lack of business.