1. 2.1.1 Procurement whole Life cycle and the role of procurement
      2. The following schematic shows the procurement whole life cycle from identification of need through to final payment of invoice and delivery of management information. It is the role of procurement to manage this cycle in order to deliver best value across the organisation.
        1. “Working with the community to provide excellent home and housing services“

The Gateshead Housing Company

“Working with the community to provide excellent homes and housing services”.

 

Procurement Strategy

 

22nd April 2008

 

 

Copyright. The Gateshead Housing Company. 2008 All rights reserved.

No parts of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior permission of The Gateshead Housing Company.


Table of Contents

1. Introduction  3

1.1 Purpose  3

2. Procurement Strategy  3

2.1 What is Procurement?  3

2.2 What is a Procurement Strategy?  4

3. Vision, Core Values and Procurement  5

3.1 Role of Purchasing  6

3.2 Structure of Purchasing  6

3.3 Strategic Procurement  7

3.4 The Kraljic Matrix – Purchase Portfolio Analysis  7

4. Procurement Strategy and operational procedures  9

5. Strategic Goals and Deliverables of Procurement  9

6. Procurement Action Plan  12


1. Introduction

1.1 Purpose

This updated Procurement Strategy is intended to form part of an overall framework which contains policies relating to purchasing activities and sets out a framework of policies, procedures and reporting requirements within which all The Gateshead Housing Company functions are expected to operate.

2. Procurement and Procurement Strategy

2.1 What is Procurement?

Procurement is the process of acquiring goods, works and services, covering both acquisition from third parties and from in-house providers. The process spans the whole life cycle from identification of needs, through to the end of a services contract or the end of the useful life of an asset. It involves options appraisal and the critical 'make or buy' decision.'
National Procurement Strategy for Local Government, October 2003

 


2.1.1 Procurement whole Life cycle and the role of procurement


The following schematic shows the procurement whole life cycle from identification of need through to final payment of invoice and delivery of management information. It is the role of procurement to manage this cycle in order to deliver best value across the organisation.

 

 

 

 

 

 

 

 

 

 

 

 

 

2.2 What is a Procurement Strategy?

A procurement strategy is the mechanism to ensure that procurement takes place in line with the organisation’s strategic objectives. It provides the essential framework within which departments and individuals within The Gateshead Housing Company can work, and against which they can measure progress towards shared goals.

The strategy will therefore sit amongst a number of other corporate statements and relate to them in so far as procurement plays a part of their delivery arrangements. It should also be related to a number of other key regulatory vehicles such as the Financial Regulations. For example:-

 

 

 

 

 

 


3. Vision, Core Values and Procurement

The vision of The Gateshead Housing Company is:

 


“Working with the community to provide excellent home and housing services“

 

The Gateshead Housing Company has several core values and procurement will deliver against each core value as follows:-

 

Core Value

Procurement Delivery

Listening and Learning organisation

Will leverage stakeholder participation in the procurement decision-making process actively involving stakeholders and customers at key stages of each process.

Acting with honesty and integrity

Will act with professional integrity and honesty in its commercial decision-making. It will ensure favouritism is not a factor in the award of any agreement or contract.

Being Motivated, Trained and Committed across the Company

Will ensure that those engaged in procurement or participate in the process have been given adequate training to conduct the roles in a responsible and professional manner. Feedback on performance, both positive and negative, will be encouraged at each stage.

Positive and Responsive

Will take a proactive role across the organisation. Where possible anticipating and responding to needs with the appropriate level and suitably trained resources.

Customer focussed, innovative and professional – recognising that customers are at the heart of everything we do

Will welcome and leverage customer participation in procurement decision making. Recognising the diversity and breadth of experience of its customers. Procurement will create a positive environment where customers can have constructive influence on the selection of goods and services that directly affect them.

Caring and Respecting

Will care and respect diversity of opinion. Avoiding a culture of fear or cohersion with its vendor base.

Embracing Equality

Will value diversity amongst the organisation and its vendor base. Procurement will encourage vendors to adopt a proactive approach to diversity by preferring vendor partners who share common values.

Commitment to success

Will applaud and reward success both internally and externally. It will create an atmosphere where constructive criticism can be seen as an enabler to continuous improvement of process and commercial value.

 

3.1 Role of Purchasing

The function will help deliver savings and develop meaningful spend management information. A primary objective will be to complete and maintain a Kraljic matrix of suppliers, which categorises suppliers by risk and value and gives the opportunity to develop strategies for different supplier categories. This will be a significant tool in directing the strategic procurement effort and identifying savings potential with greater accuracy.

The function will also help to control the use of ‘maverick’ suppliers and develop business through authorised contractors. The aim will be to rationalise supplier numbers and to ensure that EU Procurement is complied with. The role of Purchasing will involve discussions with suppliers concerning the reduction of transaction costs, better ways of doing business and more efficient (electronic) processing of orders and invoices and thus will contribute to the savings programme both in terms of cashable and non cashable savings.

3.2 Structure of Purchasing

A major output / decision point resulting from phase one of the action plan will be to provide an options appraisal on the functional positioning of procurement with TGHC. Options might include:

  dedicated internal purchasing function

  outsourced or third party service commissioned

  greater alignment with Housing procurement clubs

 

3.3 Strategic Procurement

A strategic approach to procurement should be based around knowledge of company expenditure and supply base. A risk based assessment of the current procurement portfolio using the Kraljic Purchase Portfolio Analysis positioning techniques should be used to gain an understanding of the market drivers within which The Gateshead Housing Company is operating.

For each of the Kraljic quartiles an approach to procurement should be adopted with appropriate attention to risk, collaboration, partnering, aggregation and strategic management.

The Kraljic Matrix – Purchase Portfolio Analysis

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4. Procurement Strategy and operational procedures

The procurement strategy should cover the following and be underpinned by auditable operational procedures that ensure that the overall strategy is transparent and deliverable. The ingredients of this strategy and subsequent procedures must include:-

 

  Appropriate governance and performance reviews of procurement.

  Capacity and capability within procurement that can be developed and maintained through a competency framework with sound training and people development.

  A ‘centre of expertise’ will be resourced to manage the commercial interface, provide advice and guidance to Chief Officers and ensure proper control of the supplier portfolio.

  Compliance with corporate standards, practices and contracts including compliance with EU Procurement procedures.

  Competition, partnering, collaboration and spend aggregation.

  Processes and procedures for procurement apply that demonstrate probity, propriety, public accountability and best practice.

  Accurate management information.

  Sound project management and proper review of projects at appropriate milestones, appropriate levels of contract management and review of contractor performance.

  A strategic approach to e-Procurement in terms of electronic ordering, electronic invoicing, Purchase cards and electronic reverse auctions.

  Issues relating to equality, diversity, health and safety and matters concerning the stimulation of competition, the maintenance of fairness and the development of the local economy.

  Involvement of customers in the procurement decision-making and review process.


 

5. Strategic Goals and Deliverables of Procurement

Strategic Goal

Deliverable

Ensure Procurement Strategy supports the strategies, policies and actions in providing sustainable solutions in the efficient and effective management of the organisation and its housing stock. To review and monitor these practices in relation to specific outcomes and performance.

1)  Establishment of a VFM & Procurement Steering Group that will ensure that the procurement strategy is aligned with the policies and plans of The Gateshead Housing Company

2)  Establishment of Commodity Steering Groups for strategic components from the Portfolio Analysis including customers and key stakeholders

3)  Create an annual procurement plan to ensure contracts comply with appropriate regulations and financial standing orders. I.e. EU Procurement

4)  Set annual efficiency targets for value for money savings (cashable and non cashable) and process improvements savings through the establishment of the VFM & Procurement Steering Group

To maintain and refresh clear and robust policy and procedures for procuring goods and services to ensure quality, deliverability and to meet the aspirations and needs of our customer base.

5)   Apply the contents of the functional instruction manual across the whole organisation

6)  Ensure that the manual is refreshed as circumstances and procedures are changed or evolve over time

Create a culture of efficiency and value for money. To enable the best use of resources in delivering excellent services to our customers and to challenge the status quo.

7)  Ensure all those conducting direct procurement activity are appropriately trained and members or working towards membership of the Chartered Institute of Purchasing and Supply of Purchasing

8)  Critically review all aspects of the “purchase to pay” cycle - identifying and removing value destroyers.

9)  Ensure service plans are embedded and that teams take ownership of the “purchase to pay” cycle

10)  Identify and report cashable and non cashable savings to the VFM & Procurement Steering Group

11)  Encourage all staff to identify value destroyers and reward them for reporting them to the VFM & Procurement Steering Group

 

Ensure procurement of goods and services is transparent, fair and represents best value.

12)  Ensure compliance to the Functional Instruction manual in relation to all aspects of Procurement, standing orders and EU Procurement

13)  Ensure those engaged in Procurement are adequately trained in the application and use of the Procurement functional instruction manual

14)  Encourage those engaged in procurement to seek best practise approaches through collaborative participation with other bodies

15)  Based on the Portfolio Analysis establish KPI’s with key vendors to ensure performance and value for money is achieved.

 

Ensure Egan and Best value agendas in procuring services through a true partnering ethos.

16)  Develop a policy for procuring construction services including the appropriate use of partnering contract PPC2000 and whole life costing models

17)  Establish an approved vendor panel for areas including:-

  Architects

  Legal Services

  Advisory Consultants

 

 

 

 

      

 

Meets and   deliver obligations and commitment to equality and diversity, health and safety through the procurement strategy .

 

18)   Establish an assessment framework for raising awareness of diversity, equality and Health and Safety with vendors. This to include Pre Qualification Questionnaires and Vendor visit assessments

19)  Develop vendor KPI reporting of E&D and H&S

Create and encourage an environment for consultation with all internal stakeholders of the company to ensure that the strategy and its aims and objectives meet the needs of the company and its delivery of services to customers.

20)  Provide feedback to all parts of the organisation on the activities of the Commodity Steering and VFM & Procurement Steering Groups. Encourage indirect participation of these groups by creating an online forum where comments and questions can be raised. Ensure all stakeholders can contribute and have access to the Purchasing Functional Instruction manual.

 

 


6. Procurement Action Plan

 

Attached as Appendix 1

 

 

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