Procurement Capability Assessment 2010

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Section 2

PROCUREMENT STRATEGY AND OBJECTIVES

2. Is there a clear, systematic, holistic and well-researched framework to guide the organisation's purchasing decisions?

2.1 Are procurement strategies, policies, objectives and targets well-developed and sufficient?

Question

McClelland Attribute

7 Cs

Level 0

Level 1

Level 2

Level 3

A. How developed is the organisation's procurement strategy?

Governance

Capability

No documented procurement strategy for the organisation or some strategic direction documented, although not complete.

Little visibility and only tactical procedures.

Documented procurement strategy which is communicated to the Procurement team and all those with delegated authority.

The strategy is signed off by the Board.

Fully documented strategy communicated across the organisation which is updated on a regular basis.

The strategy includes basic objectives and key performance indicators which demonstrates its impact on the organisation's business strategy and objectives.

The strategy includes an appropriate risk assessment and action plan.

Fully documented, well communicated strategy in place and fully aligned with the sector delivery strategy, and updated with the wider Public Sector policies.

The strategy defines the organisation's position with regard to social considerations e.g. Corporate Social Responsibility (sustainability); Equalities; Ethical procurement; etc.

B. How well defined are the objectives and targets for procurement?

Reporting and KPI

Capability

No specific procurement objectives

or

procurement objectives are set but not understood or reported.

Procurement objectives defined and understood. Staff understand how procurement contributes to overall organisational goals.

Ad hoc reporting of performance against objectives and targets reviewed by senior management.

Procurement objectives defined, understood and performance against them reported to senior management.

Team objectives reflect the Procurement objectives.

Basic procurement KPIs produced.

Procurement objectives and targets and performance against them discussed regularly at Board level which helps to inform the future procurement activity (Quarterly).

Individual staff objectives reflect the Procurement objectives.

2.2 Do procurement strategies and policies align with and support the core business?

Question

McClelland Attribute

7 Cs

Level 0

Level 1

Level 2

Level 3

A. Does the organisation's procurement strategy support the organisation's strategic plan and the core business and service objectives and align with the Procurement Reform Programme?

Governance

Capability

There is no link between the organisation's procurement strategy and the organisation's strategic plan and core business and service objectives and the Procurement Reform Programme.

The organisation's procurement strategy is aligned to the organisation's strategic plan and core business and service objectives and to the Procurement Reform Programme.

An action plan has been developed from the organisation's procurement strategy and is focusing on improving the procurement activity throughout the organisation and delivering against targets and within forecast timescales.

The organisation's procurement strategy is also based on optimising the ability for the organisation to continually improve its procurement activities, action plan, collaboration and supplier management in support of organisation's objectives and core business and services strategies and the wider Procurement Reform Programme.

B. Is there a clear process for procurement involvement in the consideration of outsourcing (make or buy) decisions?

Governance

Capability

No formal process or policy exists and procurement is not involved in the outsourcing decision making process.

High level outsourcing process has been developed or business case is produced for outsourcing of goods or services. Procurement is involved on a reactive basis.

Guidelines for outsourcing are in place and procurement is involved at an early stage.

Proactive reviews are held and supported by procurement to identify areas for opportunities for outsourcing. Clear policy guidelines exist.

C. Can the organisation demonstrate clear leadership and commitment from senior management towards sustainable procurement.

Corporate and Social Responsibilities

CSR

No evidence of management commitment.

Evidence of management support but this is not reflected through activities, policies and strategies.

Senior management leadership and commitment being evidenced in larger value projects/contracts only.

Clear leadership and a genuine commitment from Senior Management resulting in sustainability objectives being incorporated into organisational activities, policies and strategies.

2.2 Do procurement strategies and policies align with and support the core business?

Question

McClelland Attribute

7 Cs

Level 0

Level 1

Level 2

Level 3

D. Are procurement policies related to sourcing and supplier management integrated into core organisation's governance process?

Practices & Processes

Capability

Only ad-hoc evidence of procurement policy being integrated is available.

Suppliers terms and conditions are being used on a regular basis.

Organisation's policies are fully integrated with procurement policies. The organisation uses approved standard terms and conditions when awarding contracts and purchase orders.

Only elements of the SPD Policy Handbook are being used.

EU regulations and constraints are only partially understood across the organisation.

All areas of the SPD Policy Handbook are understood and integrated into the procurement process.

EU regulations and constraints are well-understood and necessary steps taken to implement them.

Legal advice is routinely obtained when required.

The organisation's procurement policies are fully compliant with SPD policy and EU regulations.

2.3 Does the Board and senior management team demonstrate understanding of the procurement strategy?

Question

McClelland Attribute

7 Cs

Level 0

Level 1

Level 2

Level 3

A. How well is procurement strategy supported by senior management within the organisation?

Governance

Capability

Not all senior management understand, support or sign up to the strategy.

All senior management understand and sign up to the strategy.

All senior managers commit to the targets of the procurement strategy but only some managers practically demonstrate support.

Key risks and KPIs are highlighted to senior management.

All senior managers commit to the targets of the Procurement strategy and demonstrate this commitment through active support.

Procurement key risks, KPIs, successes and improvements are discussed at Board level as a matter of course.

B. Has the organisation developed an action plan from the Procurement Capability Assessment in previous year(s)?

Organisational

Capability

No action plan in place

or

plan in place but benefits and savings achievement is well behind plan.

An action plan has been developed, appropriate improvement opportunities identified and actioned.

Benefits and savings are being achieved, a number of ongoing organisational changes implemented although not consistently tracked with some slippage.

Action plan agreed and signed off by senior management.

Organisation is actively working with other organisations on procurement best practice initiatives. Benefits and savings and organisational changes are being achieved according to the plan.

Action plan agreed and signed off by the Board.

Organisation is leading other organisations on procurement best practice initiatives as and when appropriate.

Performance measurement mechanisms are in place tracking any changes to organisations benefits and savings. A process for handling 'slippage' is in place.

The changes are reported throughout the organisation. Significant benefits and savings/changes are being achieved internally and across wider public sector.