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2012

STRATEGY FOR PROCUREMENT

2015


TABLE OF CONTENTS ABOUT US .........................................................................................................................................2 MISSION, VISIONS, VALUES ...............................................................................................................2 CORPORATE IMPROVEMENT THEMES .................................................................................................3 PURPOSE OF THE STRATEGY FOR PROCUREMENT .............................................................................4 PROCUREMENT VISION ......................................................................................................................6 PROCUREMENT GOVERNANCE ...........................................................................................................6 HOW PROCUREMENT WILL INFLUENCE AND SUPPORT KEY STRATEGIES............................................7 KEY PROCUREMENT INITIATIVES AND ACTIVITIES...............................................................................9 SUSTAINABLE PROCUREMENT ........................................................................................................ 9 PROCUREMENT AND CUSTOMER F OCUSSED SERVICES ........................................................... 10 PARTNERSHIPS AND COLLABORATION ......................................................................................... 10 STRATEGIC SOURCING ................................................................................................................... 11 PROCUREMENT AND CONTINUOUS I MPROVEMENT .................................................................... 11 EQUALITY AND DIVERSITY ............................................................................................................. 11 SOCIAL INVESTMENT ...................................................................................................................... 11 E- PROCUREMENT ............................................................................................................................ 13

BUDGET ............................................................................................................................................ 14 SUPPLY CHAIN MANAGEMENT....................................................................................................... 14 “MAKE V BUY” .................................................................................................................................. 15 GATEWAY REVIEW OF PROCUREMENT PROJECTS ..................................................................... 15 RISK MANAGEMENT ........................................................................................................................ 16

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ABOUT US livin was established as Sedgefield Borough Homes on 30 March 2009 following stock transfer from Sedgefield Borough Council. We are a homes and communities organisation that primarily operates in the south of County Durham, between the City of Durham and Darlington in the North East of England. livin operates in a range of communities from rural villages to ex-coalmining settlements, from the new town of Newton Aycliffe to traditional industrial service centres such as Spennymoor. Poor health, an ageing population, low levels of educational attainment, high unemployment, a low skilled workforce and community isolation are all issues facing livin tenants and communities. Our structured use of business intelligence means that we are accurately informed on what and where the issues are in specific communities. Registered Providers’ operation in County Durham are guided by the vision and priorities of the Strategic Housing Authority (SHA) in their strategic decision making, and at livin we ensure that our corporate planning framework links with their objectives and priorities.

MISSION, VISIONS, VALUES Recent public sector cuts, reform of social housing delivery and other external drivers for change mean that as a Registered Provider, we are now facing new priorities as we look towards a local response to the national agenda, and our focus moves to a more community wide approach. This has necessitated a refresh of our mission and visions to something which still underpins our strategic framework, but also reflects a new direction for our organisation over the next three years. Our Missions:

Working with the community at heart

Our Vision:

Sustaining and growing safe, cohesive and vibrant communities through excellent customer service.

Our Values:

Fairness Openness Respect Enterprise Value Excellence Reliability

Our Personality:

Caring, supportive, helpful and community orientated 2


CORPORATE IMPROVEMENT THEMES livin’s corporate strategy is articulated through the Corporate Plan and driven through our performance management framework, it has four perspectives that drive continuous improvement and which have been used as the basis for our five Corporate Improvement Themes: Theme 1:

Customer Focussed Services

Theme 2:

Efficient Assets

Theme 3:

Effective People

Theme 4:

Continuous Improvement

Theme 5:

Well Governed and Viable

Each Corporate Improvement Theme has a number of strategic objectives aligned to it and the framework is such, that the priority of these objectives may alter as influencing factors such as key strategic risks, the changing Government agenda, socio-economic factors and customer needs and aspirations change. The following diagram (fig 1) shows how each of the Corporate Themes both influences and is supported by a number of key ‘cross cutting’ corporate strategies.

Fig 1

Corporate Improvement Themes

Procurement & VFM Strategies

Performance Management

Asset Management and Development Strategies

Sustainable Communities

ICT Strategy

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PURPOSE OF THE STRATEGY FOR PROCUREMENT As a Registered Provider, livin’s procurement activity is governed by European Procurement Rules and Regulations as well as its own Financial Regulations and Contract Procedure Rules. It is against this background of governance and regulation that this, our second Strategy for Procurement, is written. This Strategy is focused on how Procurement will support the aims and objectives of the Corporate Plan, how we will support the development of continuous improvement and will lead in the delivery of the Reinvestment programme. At the same time we will ensure that the principles of good procurement apply throughout. The Strategy is a ‘live document’ and, will be reviewed and updated to reflect and adopt new innovations and initiatives. In supporting the Corporate Plan and notwithstanding the issues surrounding VFM, social responsibility etc. the challenge for Procurement in the next three years is to build year on year on the progress made to date, to consistently refresh our key procurement objectives, to explore how Procurement can contribute to the civil society and how best we can work with our partners to ensure the most effective use of resources and return on investment. In considering the corporate context, the following diagram (fig 2) shows how the Corporate Plan influences and is supported by key strategies across the organisation, the inter-dependence of each of the strategies on each other and how savings/efficiencies will be ‘re-invested’ in existing and emerging initiatives:

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Fig 2

Corporate Plan 2012-15

VFM Strategy

Economic Sustainability Strategy

Financial Inclusion

Re-investment

Social Cohesion

Re-investment

Third Sector

Environmental Sustainability Strategy

Employability

Savings

Savings

Social Sustainability Strategy

Performance Management Strategy

Procurement Strategy

Re-investment

Business Intelligence

Re-Investment Programme 5


PROCUREMENT VISION Underpinning the above, the overall vision for Procurement is: “to ensure that all procurement decisions made by livin help to deliver the overall organisational objectives by demonstrating value for money and the effective use of resources, as well as ensuring that the procurement ‘spend’ is used strategically to achieve sustainable community benefits and continuous improvement in service delivery”

PROCUREMENT GOVERNANCE Definition of Procurement; “Procurement is the process of acquiring goods, works and services, covering both acquisitions from third parties and from in-house providers. The process spans the whole cycle from identification of needs through to the end of a services contract or the end of the useful life of an asset. Procurement requires that, in the exercising of its functions, an organisation will ensure sustainability and will secure continuous improvement in the economy, efficiency and effectiveness which in turn will demonstrate Value for Money”.

Procurement activity in any organisation follows the tried and tested cycle of activities as shown in fig 3 below:

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Fig 3

Identify Need Closure/

Develop Business Case

Review Lessons Learned

Contract Manageme nt

Define Procurem ent Strategy/ Approach

Procurement Cycle

Supplier Appraisal

Contract Award & Implementat ion

& Invite Bids Evaluate & Clarify

Procurement will, through corporate support and guidance, the implementation of the procurement toolkit and effective and targeted staff training, embed this process in all service areas.

HOW PROCUREMENT WILL INFLUENCE AND SUPPORT KEY STRATEGIES In developing this Strategy for Procurement it is necessary to consider how the strategies shown in the previous diagrams interact, we must ensure a consistency of message and, where appropriate, how they support and influence each other. Procurement will support cross cutting corporate strategies, those which are more focused on operational delivery and emerging strategies by ensuring that the key themes of each are consistent with, and support, those objectives set out in this Strategy for Procurement and we will work with colleagues to ensure that where appropriate the values and key procurement principles of this Strategy for Procurement are similarly reflected in each interdependent strategy.

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Interdependent Strategies include: •

Value for Money (VFM)

Social Sustainability

Asset Management

Economic Sustainability

Development

Environmental Sustainability

Business Intelligence

ICT Strategy

Performance Management

Figure 4 below shows specifically how procurement and some other key strategies are interlinked and also the additional political, environmental, social, technological, economic and legal influences on procurement activity:

Contract Procedure Rules

Figure 4 Corporate Plan

EU Regulations

Asset Management Strategy

Financial Regulations

Equality and Diversity Strategy

Corporate Themes

VFM Strategy

Strategy for Procurement

Government Policy and Legislation

ICT Strategy Development Strategy Performance Management Strategy

Re-Investment Programme Homes and Communities Agency 8


It is recognised that all of livin’s strategies will be influenced by differing internal and external sources but it is important that all strategies are consistent in their approach.

KEY PROCUREMENT INITIATIVES AND ACTIVITIES To enable livin to generate well-formed outcomes for all stakeholders, and to drive business improvement and value for money, a number of key procurement initiatives and activities have been identified that will inform the procurement work programme in the coming three year period. These activities are set out below:

INITIATIVES SUSTAINABLE PROCUREMENT livin recognises that it and its partners have a vital role to play in furthering sustainable development through its procurement and management of assets.

Procurement decisions can have a significant socio – economic and environmental impact and livin therefore has a duty to ensure that all procurement undertaken by either livin or its partners is economically, environmentally and socially responsible and that these factors are taken into account, as appropriate, to the goods, works and services being procured.

livin will work together with all stakeholders and partners to ensure procurement decisions consider the wider ‘sustainability’ perspective.

Definition of Sustainable Procurement; ‘Sustainable Procurement is a process whereby organisations meet their needs for goods, services, works and utilities in a way that achieves value for money on a whole life basis in terms of generating benefits not only to the operation, but also to society and the economy, while minimising damage to the environment’

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PROCUREMENT AND CUSTOMER FOCUSSED SERVICES Procurement will, where appropriate, consult early with all key stakeholders on high risk procurement activities. This will ensure transparency of approach, completeness of specification and will, when supported by predetermined evaluation criteria, be most likely to meet the specific needs of our communities. In support of this approach we will ensure that the principle of ‘whole life costing’ is used in the evaluation of all relevant procurement activity. We will, through well-constructed contracts, influence and support objectives such as the creation of employment, the involvement of the civil society and other aspects of social responsibility as may be identified.

PARTNERSHIPS AND COLLABORATION livin are committed

to the delivery of key services through the use of strategic

partners, repairs and maintenance and grounds maintenance being two examples, and we will continue to work closely with our partners to explore, develop and maintain effective procurement collaboration (including benchmarking activity) with national and regional partners, and when appropriate purchasing consortia. In doing so we will take advantage of and enter into ‘Framework’ agreements & contracts which drive innovation, diversification and transfer of knowledge to ensure that the principles, objectives and outcomes of the livin Corporate Plan are effectively and efficiently delivered.

Future options on partnering arrangements will, to a great extent, require partner organisations to demonstrate the sustainability of the progress already made in terms of delivering efficiencies through partnering and the opportunities for additional benefits in the future and in particular to demonstrate how effective partnerships can support and enhance the objectives of livin’s existing and emerging strategic requirements as set out in the Corporate Plan.

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STRATEGIC SOURCING The principles of strategic sourcing, which explore the opportunities of different, more effective and efficient ways to procure goods, works and services, are fully supported by livin and it is an approach which we encourage our strategic partners to take. We will determine via the forward plan when and where these principles may be utilised to best advantage

PROCUREMENT AND CONTINUOUS IMPROVEMENT livin is committed to the principle that all services delivered either in house or via our strategic partners are subject to the principles of continuous improvement. To ensure that this can be achieved, organisations bidding for the delivery of services will be required to include with their bids, proposals for continuous improvement in the context of the bid, how will it be delivered and how will it be measured. This approach will enable livin to achieve the objectives of continually improving services delivered by committed strategic partners providing value for money.

EQUALITY AND DIVERSITY livin is committed to achieving equality of opportunity, respecting diversity and eliminating discrimination in all of its areas of operation in accordance with the Equality Act 2010. Procurement will ensure that all strategic partners work in accordance with livin’s Equality and Diversity policy.

SOCIAL INVESTMENT The livin vision is “sustaining and growing safe, cohesive and vibrant communities through excellent customer services” and livin prides itself on being at the heart of the community. We are committed to promoting employment and enterprise opportunities locally and using local companies wherever possible to drive forward investment into the local economy. It is important that we are able to maximise, via in house or outsourced services the opportunity to deliver:11


social gain and community sustainability,

job creation,

locally sourced and produced products,

development of specific ‘ local offers’

apprenticeships

the inclusion in the supply chain of ‘civil society’ providers which may include such organisations as third sector partners/not for profit/co-ops as well as SME’s.

Procurement will ensure that the principles and visions set out above are included, where appropriate, in all future tenders and contracts and along with our strategic partners will develop a methodology for identifying, monitoring and reviewing the success of these initiatives.

ACTIVITIES PROCUREMENT TOOLKIT Procurement is an area of business which is rightly subject to rigorous control and governance and it is essential that these governance arrangements are adhered to. Procurement is a key tool in supporting the value for money aims of the organisation. Procurement within livin is decentralised; the activity is carried out by a devolved procurement team made up of staff from within each Service that carries out procurements at operational level guided and supported by a Procurement CoOrdinator who oversees the development and implementation from a strategic viewpoint To embed an agreed and consistent approach to procurement governance, decision making, methodology and process a ‘procurement toolkit’ has been developed. This online toolkit is a series of strategies, policies, processes, flow charts, web links, templates and guidance documents which will when taken together, provide all staff with a clear and easy to follow guide to how all types of procurement activity will be carried out and governed.

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Implementation of the toolkit will create the platform for a standard way of working across all service areas which in turn will lead to reduced transaction costs, more efficient processes and more effective use of resources.

In addition, the toolkit will give greater visibility of spend which in turn will enable the Organisation to develop appropriate and innovative procurement, VFM and strategic sourcing strategies. E-PROCUREMENT

livin is committed, where a business case exists, to the implementation of electronic procurement tools to provide improved management information, greater compliance and control, and more efficient and effective working. The nature of such tools will be determined on a case by case basis. The procurement toolkit described above is the first step in making the procurement process easier to understand and subsequently to operate effectively. livin has in place a financial management system which allows for some parts of the process to be carried out electronically and Procurement will continue to research and develop the actions required to make the complete procure to pay process electronic.

livin will work with and seek the support of the supply base in the introduction and implementation of any future e-procurement tools.

CONTRACTS REGISTER AND SPEND ANALYSIS As part of the process of making informed procurement decisions the development of an up to date contracts register is essential. This register will not only allow the organisation to understand its contractual obligations but will allow it to assess the amount of spend under contract which in turn will help to establish the forward work programme for procurement. The contracts register is also essential for the development of the spend analysis. A key component of being able to achieve greater VFM and local influence is to produce the spend analysis in such a way so as to show where our money currently goes, who we spend it with and what we spend it on. 13


The spend analysis is then used to support strategic procurement decision making in support of the objectives set out in the livin Corporate Plan.

Using this information, together with the contract register detail, allows us to develop the 12/36 month procurement work plan which will set out in detail our strategic objectives, the required actions, desired outcomes and measures of success.

BUDGET It is a principle within livin that no procurement activity will be carried out unless there is a clearly defined and agreed budget allocation. A robust governance arrangement, purchase order process and detailed Business Cases in addition to strategic planning of procurement needs will ensure that budget allocation is sufficient.

SUPPLY CHAIN MANAGEMENT We accept that there are many approaches that might be included under the broad banner of supply chain management. We are looking to our partners to identify an approach, in conjunction with their supply chain members, which delivers tangible benefits for all based upon measurable efficiency gains.

We will actively retain and pursue new and existing opportunities within the market to promote and develop effective supply chain partnerships by encouraging innovative research and development activity to drive efficiency and value for money.

The Supply Chain will be positively encouraged to do business with livin, both across the private and public sectors, with and through the Voluntary and Community Sector, Social Enterprises, minority owned businesses and the Small and Medium Enterprise (SME) community (civil society).

livin believe that we have a responsibility to encourage and contribute to the development and growth of a sustainable local supply base which will in turn support the achievement of the Organisations aims and objectives by contributing to either direct or indirect supply of goods, works and services. 14


“MAKE V BUY” Other than for those services considered to be strategically important and therefore delivered in house, livin is committed to challenging the delivery model of each and every service, whether currently delivered in house or outsourced. The purpose is to determine at each stage of procurement whether there is a better, more cost effective method of achieving the service delivery intention.

We will therefore continually seek to demonstrate value for money in all that we do, across the supply chain, in house and through all of our key stakeholders and partners.

When considering whether to provide a service internally or externally we will make our decision based upon the strategic requirement of the organisation and a strategically focused market analysis. We will take account of capacity, skill, requirements, and market readiness, social, economic and environmental factors, together with new and emerging technologies, which prove to be in alignment with the Organisations strategic aims and objectives.

Make v Buy ‘opportunities’ will be identified through analysis of the contracts register and spend analysis as set out earlier in this Strategy for Procurement and will form part of the forward plan for procurement.

GATEWAY REVIEW OF PROCUREMENT PROJECTS In order to ensure that all major/strategically important procurement projects are delivered in accordance with the approved business case, the OGC Gateway Review process may be used as a suitable methodology. The OGC Gateway Review process is a methodology for monitoring and assessing project progress implemented and managed by Local Partnerships.

The principles of Gateway are supported by livin and consideration will be given to implementing the review process for all future strategically important procurement projects, where this applies the requirement for review will form part of the 15


procurement forward plan and will be set out in the project Outline Business Case (OBC).

The gateway review process can be delivered in a number of ways, including internal review, review by peers or review by Local partnerships. Each project will be assessed and a ‘level’ of review determined at the time of OBC

RISK MANAGEMENT Procurement recognizes that risk management is an essential part of the procurement process and is committed to supporting the analysis, identification and management of not only procurement risks but also service delivery risk. The development of a goods/works or service specification will include risk as a specific item and bidders will be required to include this in any tenders submitted. This approach will continue through to the contract and risk will be included in all performance and project management reviews.

End of Strategy

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Strategy for Procurement  

As a Registered Provider, livin’s procurement activity is governed by European Procurement Rules and Regulations as well as its own Financia...

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