Engage 24 - Winter 2010-11

NEWS

The procurement roadmap

Geoff Hope-Terry, Chair, Universities UK Strategic Procurement Group for HE

Advanced Procurement is a tried and tested methodology used in leading organisations to consistently show real improvements to the bottom line. The Universities UK Strategic Procurement Group (SPG) has identified the key aspects of Advanced Procurement and produced a roadmap to help institutions on their journey towards achieving the financial benefits from this approach.

Why you should adopt Advanced Procurement

UK higher education’s resources are going be severely constrained for the foreseeable future until public finances recover. Advanced Procurement should be at the forefront of initiatives that contribute to combating the financial challenges arising out of the switch from grant to student funding. In particular, ’demand management’ can deliver significant financial benefits for reinvestment.

Advanced Procurement is the delivery of procurement through fully integrating the attributes of world-class supply chain management. This involves expert market intelligence, best practice and legally compliant tendering and negotiation, always on a whole-life cost and sustainable basis while maximising collaboration. Suppliers are classified and proactively managed, and all this is supported by lean and effective processes which are constantly monitored and improved, together with optimised use of relevant value-enhancing electronic tools.

Advanced Procurement recognises that governance and ‘buy-in’ by stakeholders is critical. This will only be achieved within the culture of higher education through influence and demonstration of value by professional delivery, not by mandate.

To successfully introduce Advanced Procurement in a higher education environment, institutions need to:

| Ensure all leaders across the institution support professionally led procurement in devolved and central activities, and understand the importance of working with procurement professionals from the start of every activity and process (ie when the need is first identified);

| Appreciate that good procurement doesn’t end when the contract is signed, and that supplier development and strategic positioning add value to the supplier base;

| Arrange for key operational people to spend time with the procurement team to ensure end-user requirements are understood, and vice versa;

| Refresh strategies, skills, processes and overall procurement capability regularly, and measure supplier performance ‘beyond price’, to benefit end user and buyer;

| Recognise that some aspects of Advanced Procurement are better done in concert with other institutions, for example supply chain management or gathering market intelligence;

| Introduce and develop IT systems and procedures that support the above, identifying and capturing efficiencies while recognising the need and importance of sustainable procurement.

The roadmap

The SPG has pulled together a number of tools and aids, designed to support HEIs.

| The first step is to gauge the current value-for-money of procurement activity, and establish a baseline using a set of six best practice indicators (three for efficiency and three for effectiveness). Institutions can measure their own trends and position relative to best practice, and performance can also be benchmarked by submitting an annual return to the Procureweb data bank.

| A competency matrix is available to measure the skills of individuals involved in procurement against the levels required to perform effectively. It is complemented by a self-assessment checklist which allows HEIs to compare their procurement processes against best practice. Obtaining the correct balance of skills and resources is a critical stage on the journey.

| The Leadership Foundation, in conjunction with SPG, are looking at training and development programmes for procurement professionals, aimed at enhancing the skills of senior staff. These will underpin the plans and activities necessary to operate under Advanced Procurement.

| The Flexible Framework tool has been adopted as the basis of a separate best practice indicator, measuring individual performance with respect to sustainability. A centre of excellence has been established to offer support and advice.

| Collaboration is a major factor in improving price performance. The higher education sector has a good record in this endeavour, but recognises that there is still room for improvement. SPG has been working with the relevant groups, and new strategies are emerging which will help increase collaborative activity. To maximise the benefits and gain the best advantage for the institution, it is imperative that senior management teams fully support this agenda.

| A library of real-world best practice examples is being built up on the SPG website to enable HEIs to learn from the experience of others.

| SPG has developed a Governors’ Toolkit which has been included in the Leadership Foundation’s 2011 programme. This provides the methodology for checking whether an HEI’s procurement governance, management and accountability match up to the best Advanced Procurement standards. Separate versions will be available for audit committees and individual governors.

Finally, a Procurement Good Practice Guide will be published by Universities UK in early 2011. The guide will support senior management teams in improving procurement performance, and help them achieve Advanced Procurement. E