Procurement Capability Assessment 2010

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Section 5

CONTRACT AND SUPPLIER MANAGEMENT

5. Does the organisation manage its suppliers and contracts effectively?

5.1 Are there clear roles and accountabilities for contract and supplier management across the organisation, with standardised practices?

Question

McClelland Attribute

7 Cs

Level 0

Level 1

Level 2

Level 3

A. Are contracts publicised internally to ensure that all relevant stakeholders are aware of contractual content and pricing?

Practices and Processes

Capability

Contracts are not publicised.

Key collaborative contracts are publicised showing content and pricing.

The majority of contracts are publicised showing content and pricing.

All contracts are publicised showing content and pricing (or catalogues are publicised).

B. Are contracts publicised externally to ensure openness and transparency?

Practices and Processes

Capability

Contracts are not publicised nor are contract award notices published on Public Contracts Scotland portal.

Some contract award notices are published on Public Contracts Scotland portal.

The majority of contract award notices are published on Public Contracts Scotland portal.

All contract award notices are published on Public Contracts Scotland portal.

(ie Above £50k contract value).

C. How are key contracts and suppliers managed across the organisation?

Supplier Strategy & Policy

Capability

Key contracts and suppliers are managed on a reactive basis by the user.

No defined performance monitoring system in place. Informal ad hoc gathering of performance data

or

Regular tracking of quality and delivery performance for key "problem" suppliers. Occasional meetings with key suppliers. Limited co-ordination across organisation.

The organisation is using the contract and supplier management approach in line with the Procurement Journey for the majority of key suppliers and there is evidence of the intention to adopt the Procurement Journey by 31 December 2011.

Comparison of supplier performance to defined standards. Feedback to suppliers on a regular basis. Feedback from around user community and across organisation. Formalised process for key suppliers, with clear internal accountabilities.

The organisation is using elements of the contract and supplier management approach in the Procurement Journey for all key suppliers and there is evidence of the intention to adopt other elements of the Procurement Journey by 31 December 2011.

Comprehensive performance data captured for key suppliers. Feedback to suppliers on a regular basis. Selected feedback to supplier community at large. Formal, well-structured process for key supplier management.

The organisation is using the contract and supplier management approach detailed in the Procurement Journey for all key suppliers or all aspects of the Procurement Journey in relation to contract and supplier management are demonstrated to at least an equivalent standard of the Journey, with evidence of intention to adopt the Journey by 31 December 2011.

Joint definition of performance measures against external (public and private sector) standards in terms of quality, delivery, commercial, technical support and supplier management. Reviewed and agreed on a regular basis. Formal measurement systems used to track and improve performance.

5.2 Are key suppliers fully integrated into the organisation's business processes?

Question

McClelland Attribute

7 Cs

Level 0

Level 1

Level 2

Level 3

A. How close is the organisation to its key suppliers? i.e. How are relationships built with your key suppliers?

Supplier Strategy & Policy

Capability

All suppliers are treated the same - the supply base is managed on a purely transactional basis with no partnerships or alliances in place

or

supplier management is undertaken on a reactive basis - where problem suppliers are managed more closely than others.

The SPD Supplier Charter is not in place.

Suppliers have been segmented to identify key suppliers and to allow for tailored supplier management process in line with the Procurement Journey.

Cross-organisation meetings, workshops & feedback sessions are held with few key suppliers.

The SPD Supplier Charter is in place.

Cross-organisation meetings, workshops & feedback sessions are held with all key suppliers.

The organisation actively develops & supports joint value added programmes with key suppliers.

e.g. joint training initiatives, innovation mind mapping sessions to redevelop service, using lean techniques to improve efficiency etc.

B. Are performance improvement strategies developed in tandem with suppliers or independently?

Supplier Strategy & Policy

Capability

No joint strategy planning or some specific initiatives exist to support low level performance improvement objectives.

Some specific initiatives exist to support low level performance improvement objectives.

(For example improved, benefits or cost)

Key suppliers have informal (limited blind) input into elements of business strategy planning process.

Key suppliers have input into elements of business strategy planning but are not part of decision making process.

Key suppliers are fully integrated with business strategy planning with appropriate risk and reward sharing mechanisms employed.

Looking at supplier development initiatives.

C. To what extent are planning schedules/forecasts developed with suppliers?

Supplier Strategy & Policy

Capability

Suppliers receive schedules infrequently and there is a low level of accuracy. Schedules may be out of date

or

longer term forecasts given but subject to change. No consideration of supplier's capacity or contingency for non delivery.

Suppliers receive schedules subject to amendment. Not always on a timely basis. Suppliers acknowledgments checked.

Contingency plans established for key high risk contracts.

Suppliers receive mostly accurate schedules with few amendments.

Contingency plans established.

Suppliers receive accurate & topical schedules. Long term capacity planning conducted with suppliers.

D. Do suppliers have an opportunity to provide structured feedback to the organisation?

Supplier Strategy & Policy

Capability

No two way feedback process or suppliers have opportunity to feedback on the organisation's supplier management processes but data not collated or acted on consistently.

Suppliers have opportunity to feedback on the organisation's supplier management processes as part of formal review process.

Information gathered is collated and acted upon as key objective. However feedback may be patchy.

Formal feedback process on the organisation's procurement processes.

A review is also conducted of supplier capabilities & core competencies which are utilised where feasible.

Feedback information has reasonable coverage of main spending.

The organisation utilises supplier expertise in re-engineering of procurement processes as well as product or service development.

Joint knowledge sharing objectives are in place with key suppliers.

Feedback information is highly systematic with good coverage of spend.

5.3 Does the organisation manage relationships with suppliers well, to support best value?

Question

McClelland Attribute

7 Cs

Level 0

Level 1

Level 2

Level 3

A. Are there effective contract management processes in place?

Supplier Strategy & Policy

Capability

There are no structured contract management processes in place.

Issues dealt with on a reactive basis.

There is ad hoc, mainly qualitative measurement of contract KPIs and SLAs and mainly conducted by the business (contract users).

There is a structured and formal review of contracts and their KPIs, and SLAs where appropriate. Contracts and their KPIs/ SLAs are quantitative and regularly measured with supplier data and own data with action planning implemented.

Contract management information is obtained, analysed and actioned by the organisation as part of continuous improvement.

Mechanisms are in place to motivate suppliers to perform, whilst continually improving service delivery.

Risk and change management are undertaken systematically and exit strategies are in place which can be implemented.

B. To what extent has the organisation implemented a supplier development program?

Supplier Strategy & Policy

Capability

No defined supplier development/ improvement program. Suppliers receive little briefing or feedback. Little information sharing

or

Service issues raised on an ad hoc basis when considered significant. Areas for improvement identified by buyer, little progress in completion.

Regular review meetings between suppliers & Procurement to identify improvement opportunities. Often reactive to specific issues.

Limited access to the organisation resource assistance.

User intelligence groups meet to discuss issues & opportunities with suppliers on a regular basis. Specific targets/time scales set & monitored. Regular exchange of information.

Regular supplier seminars held. The organisation facilitates supplier process improvement.

Pro-active supplier development programme implemented. Evidence of benefits realised. Supplier is proactive in seeking out improvement opportunities.

Suppliers receive regular feedback & communication (e.g. through conferences, seminars & newsletters). Local and National economic development considerations linked to programme.