091126 UUJ MSc Bus Imp.ppt

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Core presentation for MSC Business Improvement: Improving strategic
procurement & SCM risk management. 26 November 2009

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  • http://www.timesonline.co.uk/article/0,,8122-2318417.html
  • http://www.timesonline.co.uk/article/0,,8122-2318417.html
  • These links will be necessary for the first part of the session – the debate   http://www.timesonline.co.uk/article/0,,8159-2301972.html http://www.timesonline.co.uk/article/0,,8159-2302003.html http://www.timesonline.co.uk/article/0,,8159-2301752.html http://www.guardian.co.uk/society/2008/mar/19/socialexclusion.welfare http://www.guardian.co.uk/society/2008/mar/19/regeneration.scotland/print http://www.timesonline.co.uk/tol/sport/olympics/london_2012/article5380418.ece http://www.timesonline.co.uk/tol/news/politics/article6894618.ece    
  • Murray, J.G. (2001) ‘Local government and private sector purchasing: A comparative study’, European Journal of Purchasing and Supply Management 7 (2) pp91-100. Murray, J.G. (2009) ‘Improving the validity of public procurement research’, International Journal of Public Sector Management, 22 (2) pp91-103. Murray, J.G. (1999) ‘Local government demands more from Purchasing’, European Journal of Purchasing and Supply Management, 5 (1) pp33-42. Murray, J.G. (2001) ‘Improving Purchasing’s Strategic Contribution’, International Journal of Public Sector Management 14 (5) pp391-410. Erridge, A..E and Murray, J.G. (1998) ‘The Application of Lean Supply in Local Government’ (1998), European Journal of Purchasing and Supply Management, 4 (4) pp207-221. Erridge, A..E and Murray, J.G. (1998) ‘Lean Supply: A strategy for Best Value in Local Government’ (1998),Public Policy and Administration, 13 (4) pp70-85.
  • Murray, J.G. (2009) ‘Public procurement strategy for accelerating the economic recovery’, Supply Chain Management: An International Journal, 14 (6) pp.429-434.
  • Murray, J.G. (2009) ‘Towards a common understanding of the differences between purchasing, procurement and commissioning in the UK public sector’, Journal of Purchasing and Supply Management, 15 (3) pp.198-202.
  • Murray, J.G. (2007) ‘Strategic procurement in UK local government: The role of elected members’, Journal of Public Procurement 7 (2) pp194-212 .
  • Kraljic, P. (1983) ‘Purchasing must become supply management’, Harvard Business Review, 61, Sept/Oct
  • 091126 UUJ MSc Bus Imp.ppt

    1. 1. Improving strategic procurement & SCM risk management Dr Gordon Murray 26 November 2009
    2. 2. Working assumptions <ul><li>You are not generally public sector </li></ul><ul><li>You are not generally procurement/SCM specialists </li></ul><ul><li>As a provider, you want an understanding of public sector approach to procurement/SCM </li></ul><ul><li>You want tools to help deliver improvement </li></ul>
    3. 3. For discussion <ul><li>Public procurement & SCM </li></ul><ul><li>The political procurement dilemma </li></ul><ul><ul><li>Strategic alignment </li></ul></ul><ul><ul><li>Cost reduction/CSR </li></ul></ul><ul><ul><li>Impact on SCM </li></ul></ul><ul><li>Purchasing, procurement & commissioning </li></ul><ul><ul><li>Impact on SCM </li></ul></ul><ul><ul><li>Strategic commissioning to improve public services delivery </li></ul></ul><ul><li>Portfolio management/relationship management </li></ul><ul><li>Lessons from procurement disasters </li></ul><ul><ul><li>Managing risk </li></ul></ul><ul><ul><li>Procurement cycle </li></ul></ul><ul><ul><li>Gateways </li></ul></ul>
    4. 4. Public procurement & SCM
    5. 5. Public procurement & SCM
    6. 6. Public procurement & SCM
    7. 7. Public procurement & SCM
    8. 8. Public procurement & SCM
    9. 9. Public procurement & SCM
    10. 10. Public procurement & SCM
    11. 11. Public procurement & SCM
    12. 12. Public procurement & SCM
    13. 13. Public procurement & SCM
    14. 14. Public procurement should focus on cost reduction and leave social issues to the politicians Are we for or against?
    15. 15. What’s the difference between private sector and public procurement? What’s the purpose of the public sector?
    16. 16. Given the worst recession on record … what are the SCM risks & what should be done to mitigate them?
    17. 17. Strategic procurement options appraisal Pay faster than suppliers pay 2 nd tier suppliers Pay slower than you receive payments e-procurement to improve supplier Cash flow e-procurement for cost reduction Outcome specification focus Social clauses Functional specification focus Local purchasing Consortium purchasing Multi-sourcing Single-sourcing Short-term contracts Long-term contracts
    18. 18. Purchasing, procurement & commissioning
    19. 19. Commissioning <ul><li>“ Commissioning is the cycle of assessing the needs of the people in an area, designing and then securing the appropriate service” </li></ul><ul><li>(Cabinet Office, 2006, p. 4) </li></ul>
    20. 20. The commissioning cycle Strategic needs assessment Decide priorities and outcomes Plan and design services Optional appraisal Sourcing Delivery Monitor and review The commissioning cycle
    21. 21. The purchasing cycle Determine the need Supplier selection Contracting Ordering Expediting Follow-up/ evaluation The purchasing cycle (derived from van Weele, 2005)
    22. 22. The commissioning and purchasing cycles Strategic needs assessment Decide priorities and outcomes Plan and design services Optional appraisal Sourcing Delivery Monitor and review The commissioning cycle Determine the need Supplier selection Contracting Ordering Expediting Follow-up/ evaluation The purchasing cycle
    23. 23. The commissioning and purchasing cycles, and procurement Strategic needs assessment Decide priorities and outcomes Plan and design services Optional appraisal Sourcing Delivery Monitor and review The commissioning cycle Determine the need Supplier selection Contracting Ordering Expediting Follow-up/ evaluation The purchasing cycle procurement
    24. 24. How can strategic commissioning improve public services and reduce risk?
    25. 25. The commissioning cycle & risk management <ul><li>Agreeing priorities, non-priorities & outcomes </li></ul><ul><li>Designing & shaping the service </li></ul><ul><li>Testing the business case </li></ul><ul><li>Robust options appraisal </li></ul><ul><li>Shaping the procurement approach </li></ul><ul><li>Reviewing the lessons learnt </li></ul>
    26. 26. Eight principles of good commissioning <ul><li>Understand the needs of users etc., by engaging with TSOs as advocates to access their specialist knowledge </li></ul><ul><li>Consult provider organisations when setting priorities </li></ul><ul><li>Put outcomes for users are the heart of the process </li></ul><ul><li>Map the fullest practical range of providers </li></ul><ul><li>Consider investing in the provider base </li></ul><ul><li>Ensure contract processes are transparent and fair </li></ul><ul><li>Ensure long-term contracts and risk-sharing </li></ul><ul><li>Seek feedback to review effectiveness of the commissioning process </li></ul>
    27. 27. How can we manage strategic procurement risk?
    28. 28. Kraljic’s Positioning Model Bottleneck Strategic Routine Leverage Supply Market Complexity/ Risk Expenditure
    29. 29. Procurement Cycle 8. Closure / Review Need 1. Identify Need 2. Develop Business Case 3. Define Procurement Approach 4. Supplier Appraisal 5. Tender Evaluation 6. Award Contract 7. Manage Implementation of Contract
    30. 30. Gateway Stages 4. Supplier Appraisal 5. Tender Evaluation Challenge Challenge Challenge Challenge Challenge Challenge 8. Closure / Review Need 1. Identify Need 2. Develop Business Case 3. Define Procurement Approach 6. Award Contract 7. Manage Implementation of Contract
    31. 31. Procurement Disasters of our time <ul><li>For each case study </li></ul><ul><li>Analyse the news article and summarise </li></ul><ul><li>Identify the main issues and what went wrong </li></ul><ul><li>Identify the stages in the procurement cycle when effective scrutiny could have been used to reduce the risk </li></ul><ul><li>Identify which questions you would have asked at that stage/s </li></ul><ul><li>Prepare to feedback </li></ul>
    32. 32. Key lessons <ul><li>Cross-functional team with appropriate skills & roles </li></ul><ul><li>Understand the trade-offs </li></ul><ul><li>The right brief </li></ul><ul><li>Robust business case </li></ul><ul><li>WLC </li></ul><ul><li>Tight project management </li></ul><ul><li>Proactive SCM throughout the procurement cycle </li></ul><ul><li>Challenge through the procurement process </li></ul>
    33. 33. Spend analysis: Telgen’s Box
    34. 34. Improving strategic procurement & SCM risk management www.slideshare.net/DrGordonMurray [email_address] www.twitter.com/DrGordie

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