Managing procurement to improve front line services

Leading learning and skills

Managing procurement
to improve front-line
services
This guide senior college managers
A guide foris aimed at senior college managers

June 2008

Step 3 Putting structures in place – managing procurement

l Establish the college’s procurement vision and key objectives.
l Create a procurement strategy that will achieve the vision and
objectives, which best suit the college.
l Set targets for improving procurement efficiencies. Report progress
at procurement board meetings.
l Set up a procurement network.
l Establish the college’s position on key issues around procurement
and create policies to support them. These should be signed off
by the board.

3
l Ensure all staff with authority to procure goods and services are
aware of the college’s procedures and processes, and that they
comply with legal requirements.
l Set up and maintain a procurement site on the college’s intranet.

Step 2 Getting a clear picture – information gathering

l

l
Audit and review existing procurement processes and procedures.
Conduct a spend analysis, using an external specialist if necessary,
and transform data into management information.
2
l Identify the key risks to which the college is exposed.
l Examine supplier relationships and ensure the college’s terms
and conditions have been adopted.
l Explore any other procurement weaknesses.
l Prioritise procurement actions with ‘quick wins’ and medium
and longer term plans.

1
Step 1 A strong lead – getting the right people on board

l Make procurement a priority. Governors and senior managers
need to actively engage and push it up the college agenda.
l Identify a procurement champion.
l Appoint a procurement liaison officer. Ensure he or she has support
from senior management and gains the appropriate training and skills.
l Establish a procurement board comprising the procurement champion
and the owners of significant budgets.
l Connect with the LSC FE Procurement Development Team.
Visit www.felp.ac.uk or email fecollegeprocurement@lsc.gov.uk
for help and advice on a wide range of procurement and
procurement-related issues.

Step 4 Into action – taking steps to improve efficiencies

l Decide which categories and sub-categories would be suitable
for procurement through consortia or another contracting body.
l Research the different consortia and contracting bodies and
decide which would fit the college’s requirements and offer
the best value for money.
l Ascertain which goods/services you could buy in collaboration
with other colleges and public sector organisations based on
either geographical – local, regional or national – needs or areas
of specialisation.
l Investigate suitable procurement ‘partners’ or framework
agreements.
l Draw up a collaboration agreement and set out the terms
and conditions with your collaboration partner.
l Decide which procurement methods will maximise efficiency
and value for money for particular categories. Consider

4
e-procurement and GPCs, tenders and mini tenders.
l Communicate procurement processes and methods
to budget holders.

Step 5 Measuring, reviewing, improving

l Have the necessary competencies for procurement staff
been identified?
l Are procurement staff aware that NVQs and other training

5
are available?
l Find out what your regional procurement network offers
in terms of training and knowledge sharing.
l Measure the overall value for money the college is achieving
from procurement. Record improvements and report them
internally and externally.
l Gather data on supplier performance.
l Compare supplier performance using data from internal audits
and benchmarking information from other colleges and organisations
of a similar size.
l Communicate with colleagues in your college, in institutions
with which you collaborate, suppliers, consortia and the LSC FE
Procurement Development Team.

routemap

Contents

Part 1
Procurement management: the time is right 1
Using this guide 3

Part 2
Moving procurement up the agenda 4
Step 1 A strong lead – getting the right people on board 5
Find a procurement champion 7
Appoint a procurement liaison officer 7
Establish a procurement board 7
Seek external help 8
Step 2 Getting a clear picture – information gathering 9
Audit and review existing practices 11
Conduct a spend analysis 11
Review or establish a contracts register 12
Conduct a risk analysis 12
Step 3 Putting structures in place – managing procurement 13
Create a vision 15
Set a strategy 15
Establish policies 15
Reduce risk 16
Create a procurement network 17
Step 4 Into action – taking steps to improve efficiencies 21
Buy through consortia and contracting bodies 23
Use framework agreements 23
Join forces with others 24
Make good use of benchmarking 24
Procuring one-off, high value items 24
HR, ICT, catering and facilities management 26
Total cost of ownership 26
Put procurement processes in place 26
Agree procurement methods 27
Step 5 Measuring, reviewing, improving 29
Build knowledge and develop skills 31
Monitor and evaluate progress 31
Review efficiencies and value for money 31
Manage suppliers 32

Part 3
More information 34
Consortia and contracting bodies 35
Glossary of terms 36

Part 1
Procurement management: the time is right
In 2004 the Gershon Efficiency Review proposed that colleges which manage
their procurement more effectively could each save tens, scores or even hundreds
of thousands of pounds every year.

Indeed, the more prepared a college is to introduce procurement good practice
the more it stands to save – releasing funds that could make a significant difference
to front-line services.

What then, in real terms, could better-managed procurement mean for your college?

l It will deliver better value for money, which releases funds to invest in new facilities,
attracting more learners and employers, and improving staff morale and retention.
l It will reduce exposure to risk.

l It will help to improve supplier performance.

l It will reduce the costs (time and effort) of doing paperwork and administration.

l It will help colleges to make a greater contribution towards achieving the

government’s goals of upskilling the nation, as set out in the Leitch Review,
and Raising Expectations: Staying in Education and Training post -16.

A world leader in skills
The Leitch Review World Class Skills, published in 2006, sets challenging targets for
2011 and explains the crucial role colleges are playing in the drive to make the UK
a world leader in skills by 2020, while Raising Expectations: Staying in Education and
Training post -16 exhorts the education sector to keep all young people engaged with
education until at least the age of 18. Improving procurement efficiencies can play
a major part in achieving the reforms needed to reach these goals: better front-line
services lead to more motivated and skilled learners, a more competitive workforce
and increasingly satisfied employers.

Finding new and innovative ways of operating and managing business will be essential
if the further education system is to play its part in meeting the ambitious goals set
out in World Class Skills. As we move towards a more specialised and demand-led
system it will be more important than ever for further education colleges and providers
to maximise the resources available to them and to ensure all learners and employers
have access to relevant, high quality provision that meets their needs.

1 Managing procurement to improve front-line services

Part 1

“The task facing colleges requires a clever balancing act between the need to think
commercially when managing and developing resources, while retaining the public
service ethos that has served them so well. Good procurement is not only about
effectively managing resources; other considerations include sustainability, the
local economy, ethical working practices and meeting legal obligations. By giving
procurement the attention it deserves, colleges will be better able to fulfil their
vision and meet the needs of their community.”
Mark Haysom Chief Executive Officer
Learning and Skills Council

“In the last few years the LSC has worked very closely with the Department to establish
a small dedicated team to help colleges engage with procurement and find strategic
solutions to commercial imperatives. This has helped to ensure that colleges make the
most of procurement-related work to achieve best value for money and channel funds
into improving front-line services. Our commitment to supporting this important work
remains very strong.”
David Russell Director of Finance and Resources
Learning and Skills Council

“Good procurement helps colleges make the most of their budgets by enabling them
to focus on the effective and efficient management of all their resources, not just
money. It contributes to achieving strategic objectives such as supporting the local
economy, sustainability and corporate social responsibility. It is a way of thinking and
working that helps colleges to respond to increasing demands on finite resources.
It may not be a cure for all ills but it could make the difference between success
and failure.”
Ian Taylor Commercial Director
Department of Children Schools and Families, Past President of CIPS

Managing procurement to improve front-line services 2

Using this guide
This guide is intended to help colleges set up an easy to maintain approach to
procurement that will enable them to procure more effectively and achieve better
value for money. It does not include a detailed explanation of procurement practices.1

Depending on how advanced your college’s procurement management is and whether
you want to take small steps over time or to implement a more significant change,
this booklet can be used as a routemap for making major improvements or for
guidance on specific aspects of procurement management. Details of good practice,
case studies and where more information can be found are included. The FELP –
Further Education Library of Procurement – website is particularly useful and can
be found at www.felp.ac.uk.

This document draws on the work of the Learning and Skills Council (LSC) FE
Procurement Development Team and the recommendations outlined in the National
Audit Office2 and Public Accounts Committee3 reports that were published in 2006
and 2007 respectively to help the FE sector strengthen and develop its management
of procurement.

Below is the outline ‘routemap’ diagram showing the various stages of procurement
management, see inside the front cover for the complete version.

3
4
2

5
1

1 To find out about procurement processes, procedures and policies, go to www.felp.ac.uk
2 mproving procurement in further education colleges in England, Report by the comptroller
I
and auditor general, HC1632 Session 2005–2006, 25 October 2006, National Audit Office.
3 ouse of Commons, Committee of Public Accounts, Improving procurement in further education
H
colleges in England, Forty-first Report of Session 2006–2007, 4 October 2007.


Part 2

Part 2
Moving procurement up the agenda
Every college needs to source and purchase a common range of goods and services such
as maintenance services, utilities, IT, stationery and catering supplies. And all are faced with
making commercial decisions around which services should be delivered using college staff
and which should be contracted out.

Each college has its own way of managing procurement – some are already using best
practice methods such as consortia and e-procurement, while others are still relying on
more traditional methods.

While establishing a procurement management structure can require an initial investment
of time and money, it can be a relatively straightforward process that builds in complexity
over time. Small changes, such as directing some procurement through a consortium, can
quickly deliver major benefits and cost savings.

The ultimate procurement goal is to help students achieve more as
they benefit from enhanced quality, services and facilities as a direct
result of colleges actively managing their spending and reducing their
exposure to risk.

Improving procurement in Further Education Colleges in England identifies five key steps
for improving procurement efficiencies:
1 A clear lead from governors and senior managers.
2 Information that will inform decisions on appropriate procurement methods.
3 Making the most of opportunities for collaboration.
4 Robust processes and good supplier management.
5 Review of the value for money of procurement.


Getting the right people behind procurement management
is crucial. Bringing together a group of senior individuals
who will provide a strong lead in procurement will help
to ensure success.
Governors can also play an important role by drawing
on their business experience and challenging managers
on their spending and planning.


Step 1
A strong lead
getting the right people on board

Find a procurement champion
Appoint a procurement liaison officer
Establish a procurement board
Seek external help

Find a procurement champion
Need more information? Identify a member of the senior management team such as the finance director, the
To find out more about PLO job director of estates or director of resources to be the college’s procurement champion.
descriptions and the NVQ in This senior manager needs to commit to taking responsibility for procurement
procurement and supply chain by supporting and driving through new initiatives, as well as working closely with
management visit www.felp.ac.uk employees involved in the procurement process. He or she may well represent the
college externally by, for example, attending procurement network meetings.

Appoint a procurement liaison officer
In practice Colleges that do not have a specialist procurement member of staff will need a
When David Grocock, Vice procurement liaison officer (PLO). This individual needs to be formally appointed to the
Principal Finance and Business role and to be given the time to support the procurement champion, even if it is only
Operations, joined Leicester one of their responsibilities. In addition to being interested in procurement and having
College, one of his first moves was good influencing skills, the PLO will require the backing and support of the procurement
to establish a ‘value-for-money’ champion and the senior management team. His or her duties will include:
group, which he chairs. The group l Providing support to the champion.

comprises the college’s major l Co-ordinating the management of procurement across the college; collecting

budget holders and is responsible and organising information as necessary.
for overseeing the implementation l Drawing on expert advice from in-house or external specialists.

of the procurement strategy, l Developing their procurement skills and knowledge through training, NVQ

which means ensuring the college accreditation and CPD.
achieves value for money for every l Acting as the link between college budget holders and purchasers and the LSC

pound spent. to ensure advice and guidance are correctly disseminated and that good ‘deals’
are passed on to the right people.

Establish a procurement board
Many colleges have a procurement board4, which can be an informal forum.
The point is to establish a group of senior people who are committed to improving
procurement and play a key role in developing the procurement strategy, policies,
procedures and processes.

The board should comprise the procurement champion, and faculty heads and senior
individuals who hold substantial budgets and are responsible for areas of spend such
as IT, catering and estate management. Some colleges invite representatives from
colleges they collaborate with to board meetings or sub-groups.

The decisions made by the board are disseminated throughout the college via
a procurement network (see pages 19–20) which facilitates the free flow of information
to aid future decision-making at all levels.

4 Also known as efficiency boards or value-for-money boards.


1 A strong lead

Seek external support
The LSC has a small team of procurement professionals who work directly with colleges
providing advice on how to make savings and improve efficiencies.

In addition to this specific support for colleges there is a whole range of support
available from bodies such as the OGC and OGCbuying.solutions, to the Chartered
Institute of Purchasing and Supply (CIPS).

Step 1 Action points

l Make procurement a priority. Governors and senior managers
need to actively engage and push it up the college agenda.
l Identify a procurement champion.
l Appoint a procurement liaison officer. Ensure he or she has support
from senior management and gains the appropriate training and skills.
l Establish a procurement board comprising the procurement champion
and the owners of significant budgets.
l Connect with the LSC FE Procurement Development Team.
Visit www.felp.ac.uk or email fecollegeprocurement@lsc.gov.uk
for help and advice on a wide range of procurement and
procurement-related issues.


To finalise the procurement governance structure and
strategy it is necessary to know exactly how procurement
is currently being conducted and what opportunities for
improvement exist.
This will involve an information-gathering process that will
inform future procurement decisions. It will also help you to
decide what information will be needed for the procurement
board to monitor procurement activity effectively.


Step 2
Getting a clear picture
information gathering

Audit and review existing practices
Conduct a spend analysis
Review or establish a contracts register
Conduct a risk analysis

Audit and review existing practices
Need more information? Auditing and reviewing existing financial regulations and procedures and processes
The LSC FE Procurement related to expenditure is critical. The procurement board needs to address the following
Development team published questions (FELP has more information):
the Management Guide – How l Are the college’s rules governing procurement expenditure ‘fit for purpose’?

to manage influenceable spend l Do existing processes and procedures encourage and support good procurement

within FE colleges in 2006 to practice, such as using consortia and government procurement cards? (GPCs)
help colleges conduct a spend l Do the existing processes encourage procurement staff to monitor and review what

analysis. The guide can be found is being bought, spotting trends and anomalies to identify opportunities and manage
at www.felp.ac.uk risks better?

Conduct a spend analysis
A spend analysis enables colleges to ascertain what they are buying, how much
In practice they are spending with suppliers and the number of transactions being processed.
“In 2006 I helped Hartpury This delivers a number of benefits:
College to do a spend analysis. l It improves management information.

The results motivated them to l It allows the identification of expenditure patterns as well as suppliers and prices

take on a full-time procurement for basic high-volume, low-cost items such as fuel, catering and stationery.
officer, especially when they l It helps colleges prioritise procurement tasks to maximise opportunities for savings

realised the significance of the and efficiencies.
aggregated amounts of particular
commodities.” The spend analysis can be analysed in terms of ‘categories’ – a collection of related
Helen Baker Head of Procurement, goods and services such as IT – and sub-categories which, in this case, would include
University of West England laptops, scanners, consumables and printers.

“I analysed all spending over a A spend analysis helps identify the top suppliers together with
12-month period. Then, working areas of procurement that are weak, inefficient, costly and which
with the Crescent Purchasing do not conform to the agreed use of contracts.
Consortium supplier list, I got
quotes from three new suppliers A spend analysis involves looking at:
plus the existing suppliers for the l The number and range of suppliers used.

top thirty items in each budget l The number of transactions the college conducts.

area. What surprised me was l Spends for individual categories and sub-categories.

the extent to which some of our l Procurement methods.

existing suppliers reduced their
prices simply as a result of being Once the spend analysis is complete a plan for each category of spend can be
placed in a genuinely competitive developed before selecting the appropriate sourcing and procurement model, such
environment. It really shocked as a consortium. Analysing expenditure by type, value and procurement method
them out of their complacency.” leads to a clearer understanding of how to reduce prices and transaction costs
Elizabeth Smith Procurement most effectively.
Liaison Officer, Leeds College
of Building This information can be refined and developed on an ongoing basis to obtain the best
possible quality management information. A spend analysis becomes a useful tool
for managing suppliers through reviewing their performance against data provided
in-house or by consortia or external benchmarks.


2 Getting a clear picture

If you do not feel you have the right expertise in-house, ask an external specialist
to conduct the initial spend analysis for you. A number of companies offer this service, Need more information?
which involves taking data from a college finance system and re-presenting it in A full list of spend categories and
a format that allows it to be manipulated and analysed. For further information sub-categories can be found in
on suppliers contact the LSC FE Procurement Development Team. Improving Procurement in Further
Education Colleges in England,
Review or establish a contracts register Appendix Five, page 36.
A contracts register provides easy access to relevant contract information and
can help you plan procurement activity by, for example, putting in place a new Go to www.nao.org.
contract (if necessary) before the current one finishes. A contracts register includes uk/publications/nao_
the following information: reports/05-06/05061632.pdf
l What the contract is for.

l Contract manager’s name.

l Supplier name.

l Start and finish dates of the contract.

l At what intervals the contract is to be reviewed.

l Value of the contract (sometimes known, sometimes an estimate).

Conduct a risk analysis
A key priority for every college is to ensure it is exposed to as little risk as possible.
A clear view of the risks and any potential consequences that could arise from
procurement malpractice is essential. Financial and legal risks will almost certainly
be high if:
l Large numbers of untrained staff are authorised to make purchases and negotiate

contracts.
l Procurement processes are not compliant with EU public procurement regulations.

l The college does not have an established process for dealing with contracts if,

for example:
procurement contracts are verbal;
it does not operate an electronic purchasing order system; and
supplier relationships are based on their terms and conditions rather than
those of the college.


l Audit and review existing procurement processes and procedures.
l Conduct a spend analysis, using an external specialist if necessary,
and transform data into management information.
l Identify the key risks to which the college is exposed.
l Examine supplier relationships and ensure the college’s terms
and conditions have been adopted.
l Explore any other procurement weaknesses.
l Prioritise procurement actions with ‘quick wins’ and medium
and longer term plans.


Backed by the right people and the necessary information,
a procurement strategy can be formulated to ensure
compliance and mitigate risk.
Simultaneously, the college procurement champion
can establish a procurement network which allows for
a two-way flow of information between the board and
the departmental lead buyers.


Step 3
Putting structures in place
managing procurement

Create a vision
Set a strategy
Establish policies
Reduce risk
Create a procurement network

Create a vision
Need more information? Before setting the strategy, establish the procurement vision. Is the college’s aim
A template for a procurement solely to achieve value for money? Or are there broader objectives such as supporting
strategy and guidance can be the local economy, developing partnerships with the local business community
found at www.felp.ac.uk and contributing to the sustainability agenda?

Set a strategy
The procurement champion is responsible for the strategy. He or she should consult
In practice with as many procurement stakeholders as possible and may want to take soundings
“A review of the strategic options from other procurement champions in colleges you collaborate with to gain an idea
for procurement was undertaken of the issues they face, good practice and to identify further procurement opportunities.
between 2003 and 2004. This A number of elements are involved in setting a strategy:
considered purchasing cards, l Drawing on the information provided by the spend analysis and determining how

e-procurement, partnership with each category is best purchased.
De Montfort University, consortia l Establishing policies (see below).

arrangements and the use of l Establishing the procedures and processes for managing procurement activity,

consultants. The review resulted including implementing thresholds that trigger the use of a particular procedure
in a programme to introduce or process such as a competitive tender or GPCs (see page 27). These must
purchasing cards and sanctioning also ensure that a college complies with UK and EU procurement legislation.
the use of consortia.” l Ensuring finance regulations are up to date and support modern procurement

David Grocock Vice Principal Finance
methods, and that the college’s spend thresholds and procurement processes
and Business Operations, Leicester are fit for purpose. For example:
College are spend thresholds achieving what is necessary?
the approval of the procurement board required above certain thresholds?
is
which purchases and values of spend should be made through a GPC?
what thresholds of spend are a full tender or a mini competition required?
at
Need more information? when and for which products and services should consortia and contracting
Go to www.felp.ac.uk for more bodies be used?
information about the following: l Setting targets for improving procurement efficiencies.

l Developing a method for measuring value for money and efficiencies against targets

l olicy information and
P (see page 31 for more about the EMM).
templates l Creating a sustainable and effective management information system to support

l Sustainability policy guidance procedures and check compliance.
l nformation on using local
I l Including large scale activities that involve procurement – such as construction,

suppliers refurbishment, IT replacement.
l Using the contracts register to plan procurement activity.

Guidance on ethical business l Ensuring the procurement board agrees the strategy.

practice can be found at:
www.cips.org/documents/ Establish policies
Ethical_Business_Practices.pdf Procurement management in every college is driven by a single overarching policy:
to achieve the best value for money while minimising risk. The following normally need
to be clarified by a policy which should always be signed off by the procurement board:
l Areas of responsibility for governors, the principal, the procurement champion,

director of finance, procurement liaison officer, budget holders and general staff.


3 Putting structures in place

l Value for money, quality and service agreements, risk management.
l Ethical standards such as how to deal with gifts from suppliers, taking In practice
into account the CIPS code of conduct. To embed sound ethical,
l Sustainability – for example, stationery and energy efficiencies. social and environmental
l How and when to use small businesses and local suppliers to support policies within its procurement
the local economy. function, Leicester College’s
l Use and management of approved suppliers – keep your supplier base value-for-money group
small and ensure new additions are carefully controlled. maintains links with the college’s
l Collaboration – the who, how and when of working with colleges and sustainability group. For example,
other organisations. by involving the sustainability
l Supplier relationships – covering, for example, payment terms and training group in a re-tender for waste
and apprenticeship arrangements. management services, Leicester
l Equal opportunities – ensuring all employees are treated equally and fairly. ensured the new deal would be
l Use of terms and conditions. environmentally sustainable as
well as financially beneficial.
Reduce risk
Terms and conditions
The supply of any goods or services should always be based on the college’s terms
and conditions, rather than those of the supplier. If you buy through a consortium Need more information?
or a framework agreement, the terms and conditions will already have been agreed. You can find templates of terms and
conditions at www.felp.ac.uk in the
Compliance Sample Documentation section.
Public sector and EU requirements are strict and the consequences for not adhering
to them can be severe.

If you are buying goods and services that cannot be bought through a consortium Need more information?
and whose value exceeds a certain threshold, appropriate suppliers must be invited To find out more about EU and
to tender for the supply. From 1 January 2008, the threshold levels prescribed by the other financial regulations, go
European Union Commission are £139,893 for supplies and services and £3,497,313 to the Good Practice section at
for works. These totals refer to the total value of a contract, so if the contract lasts three www.felp.ac.uk
years and is worth £139,893 over the course of those three years the EU public sector
tendering rules would have to be complied with. More helpful reading can be
found at:
Procurement legislation must be complied with in addition to other legal requirements. www.equalityhumanrights
If college suppliers are in breach of legal requirements, for example relating to age .com/en/forbusinessesand
or race discrimination, the college would be found guilty as well. organisation/pages/default.aspx

www.ogc.gov.uk/documents/
Social_Issues_in_Purchasing.pdf


Create a procurement network
In practice A procurement network is one of the most successful ways of managing procurement.
South Nottingham College has It allows purchasing at a decentralised level where each department has its own
been operating a procurement budget and a ‘lead buyer’ who is the departmental head of the network buying
network for about three years. team and knowledgeable about the products and services being bought. Processes
governing accountability, policy and practice are agreed by the procurement board
Keith Gregory, financial and the procurement liaison officer can provide support and guidance about the right
controller, identified the need procurement approach from the centre.
to centralise and standardise the
purchase of a range of categories Some colleges use a decentralised model when each department manages its own
of spend which had previously budget; however, local interests can be put before those of the college, spend is
been devolved to individual uncoordinated and too many untrained people can get involved in procurement.
departments and curriculum In the centralised model heads of department have to request procurement from
areas. These included: stationery, a central point; this can be bureaucratic and result in long waits, bottlenecks and
IT, audio visual materials, books maverick buying.
and paper.
The procurement network offers the best of both worlds – the departments deliver
In the area of IT, for example, results while the procurement champion and PLO provide support – ensuring
the college benefits from having procurement is efficiently managed at every level.
a standardised kit in every
department. Savings are achieved The procurement network – benefits
through economies of scale l Demonstrates a clear commitment to procurement.

and a maintenance contract l Helps to ensure that a consistent procurement message is delivered.

is negotiated through a single l Sends the correct messages to staff and external colleagues.

supplier. l Uses specialist product/service/market knowledge to best effect.

l Up-skills key buyers.

The network of buyers meets l Secures ‘buy-in’ from those who purchase.

every four months to share best l Avoids fragmentation and creates leverage for best value.

practice and discuss a range of l Releases resources.

procurement issues. l Delivers procurement management efficiencies.

l Minimises risk.

The procurement network – who does what
The procurement champion and procurement liaison officer work together to:
l Co-ordinate the network – convening meetings, agendas, actions, contracts etc.

l Provide leadership, focus and coaching through training and workshops.

l Provide all terms and conditions, templates and tools.

l Maintain the procurement section of the intranet and communicate with

network members.
l Assist with all major purchases.

l Disseminate management information.



And, depending on requirements, they:
l Forecast demand and whether suppliers and sometimes markets, such

as the construction industry, are able to meet it.
l Develop the network to keep it relevant.

l Run a risk management programme.

l Represent the college externally.

The network buyers are departmental staff with authority to place orders and
contracts. A lead buyer will execute the college’s procurement strategy with regards
to a specific category, and will draw on the supplier and product knowledge of other
buyers. He or she is also responsible for:
l Promoting good deals to the staff who place the orders.

l Facilitating training – e.g. ‘how to…’, ‘why we…’, or ‘get the most from…’.

l Making sure the college gets the ‘best deal’.

l Managing relationships with suppliers.

l Providing feedback on supplier performance.

l Working with buyers in other teams.

Other ways to organise a procurement network include:
l By college department rather than spend category.

l Through creating a hybrid model that combines departmental structures

and category management techniques for significant cross-cutting categories
such as ICT, catering and books.

What matters is that a network of leads is established to gather and disseminate
information throughout the college, working with the PLO to actively manage
and co-ordinate procurement activity.


l Establish the college’s procurement vision and key objectives.
l Create a procurement strategy that will achieve the vision and
objectives which best suit the college.
l Set targets for improving procurement efficiencies. Report progress
at procurement board meetings.
l Set up a procurement network.
l Establish the college’s position on key issues around procurement
and create policies to support them. These should be signed off
by the board.
l Ensure all staff with authority to procure goods and services are
aware of the college’s procedures and processes, and that they
comply with legal requirements.
l Set up and maintain a procurement site on the college’s intranet.


A typical procurement network

Procurement board
Champion, Director of Estates, Director of IT,
other senior, major budget holders

Feedback

Procedures, strategy, policies

Procurement liaison officer

Catering category IT category
Lead buyer Lead Buyer

Fresh food Laptops
Sub-category Sub-category

Kitchen equipment PCs

Dried food IT consumables

Frozen food IT perishables



Office category Janitorial supplies category
Lead buyer Lead Buyer

Office equipment Cleaning products

Stationery Sanitary ware

Office furniture Cleaning equipment


The best way to achieve savings and to reduce the
college’s administration is to buy through consortia
or other bodies that set up contracts with suppliers.
If the right contract or framework is not in place, you
can join forces with other organisations including
colleges, schools and universities.


Step 4
Into action
taking steps to improve efficiencies

Buy through consortia and contracting bodies
Use framework agreements
Join forces with others
Make good use of benchmarking
Procuring one-off, high value items
HR, ICT, catering and facilities management
Total cost of ownership
Put procurement processes in place
Agree procurement methods

Buy through consortia and contracting bodies
In practice Procurement consortia and other contracting bodies carry out collective purchasing
“One of the main attractions on behalf of a number of different organisations. By leveraging their buying power
of using the insurance framework they are able to deliver value for money, professional and cost-effective purchasing,
set up by the Crescent Purchasing and support services.
Consortium is that it offers
automatic compliance with EU Many colleges buy from contracts that have been negotiated and are managed
tendering regulations. The result of by consortia. The products and services are delivered to the college, which pays
our mini competition was that we the suppliers directly.
stayed with our existing supplier
but managed to save 13 per cent.” By using a consortium or contracting body colleges stand to benefit from:
Andrew Lefley Director of Facilities, l Better prices and quality.

Peterborough Regional College. l Reduced duplication of time and effort.

l Reduced transaction, administration and sourcing costs.

l Access to procurement expertise.

l Compliance with legislation and regulations.

Need more information? l Good management information.

To find out more about l Pre-agreed service and delivery conditions.

procurement consortia, visit
www.felp.ac.uk Using a consortium or a contracting body
In terms of volume, colleges should be able to buy most of their commonly
and frequently bought items through consortia. These include routine categories
of spend such as IT equipment, stationery and energy, together with many less
Need more information? frequently bought items, which involve significant spend exceeding EU public
To find out more about existing procurement thresholds.
framework agreements contact
your local consortium, contracting As with any other supply source, you will need to review the consortia you use on
body or OGCbuying.solutions, an a regular basis to ensure they continue to deliver value for money; the benchmarking
executive agency of the Office exercises that the LSC team run will help you do this. A list of consortia and contracting
of Government Commerce. bodies can be found on page 35.

Use framework agreements
Many consortia and contracting bodies such as OGCbuying.solutions negotiate and
operate framework agreements which allow colleges to buy routine items and create
contracts with suppliers within the terms of the agreement. These agreements can be
used to ‘call off’ goods and services on a regular basis or as and when they are needed.
The benefit is that the contract has been negotiated and pre-agreed by professionals,
ready for college use. Other benefits include:
l Better prices.

l Flexibility – colleges are not committed to buy.

l Reduced administrative costs.

l Fosters long-term relationships with suppliers, leading to better service and value

for money.
l Legal compliance assured.


4 Into action

If you cannot find a framework agreement that meets the college’s requirements,
collaborate with other colleges or public sector organisations to create one. Some Need more information?
framework agreements use rankings that allow the top ranked supplier to be selected To find out about regional
directly without a mini competition. All suppliers have to be included in the mini and national networks, email
competition if the framework being used was put in place after 1 January 2006. fecollegeprocurement@lsc.gov.uk
More guidance can be found on FELP.

Join forces with others
If a consortium is not available for specific items, find out if other colleges, schools, In practice
universities or local authority offices in your area have a similar need. Collaborating Having run a waste, refuse and
with other institutions can deliver major benefits: recycling tender, Mike Pearce,
l Lower unit prices through ‘bulk buying’. Procurement Contracts Officer
l Lower transaction costs from sharing tasks such as ordering, negotiation and from the University of Exeter, set
design of specifications. up a contract that would allow
l Improved quality as a result of better procurement expertise and processes. other universities and colleges
l Sharing expertise and market intelligence. to participate. The result of this
collaboration has been a combined
Your region will have its own LSC FE team facilitated procurement network which saving for all participating
allows local colleges to share information, source items jointly and establish price institutions of £1.9m over the
and service benchmarks. lifetime of the two agreements.

Make good use of benchmarking “The new waste management
By benchmarking high value contracts against those of consortia, colleges can contract has reduced our general
gauge whether they are receiving value for money and switch to the best contract spend by over 20 per cent.”
if necessary. If a consortium does not offer better value, provide them with feedback John Ward Procurement Officer,
so they can improve their offering. Cornwall College

The LSC FE Procurement Development Team conducts a national benchmarking
exercise on some of the main commodity areas of college spend. Colleges can
complete templates for certain commodities and the team benchmarks this data Good practice tip
against nationally recognised best value framework agreements. The results are Avoid setting up contracts and
fed back to the college. competing with consortia. If
you feel you can improve on
Procuring one-off, high value items a consortium deal, let the LSC
Colleges also procure one-off, high risk, high value items such as a new building team know so they can gain
or a strategic project. This would be handled by the head of the department the benefits for all.
concerned, with support from the procurement liaison officer to ensure both
internal and external compliance.

If your college is embarking on such a project, talk to the LSC FE Procurement Team or Need more information?
raise it at the local regional procurement network meeting. It may be worth consulting To find out about the National
other related establishments about either joining forces to achieve economies of scale Benchmarking exercise go to:
or for advice on best practice. www.felp.ac.uk


Advantages and potential sources of collaboration
Source National Audit Office

Guidance and advice Sustainability Economics of scale

Operational expertise Market intelligence

College

Professional bodies Learning and Skills Council Schools

Chartered Institute of Office of Government
Purchasing and Supply Commerce

Other colleges Universities

Department for Children, Department of Innovation,
Schools and Families Universities and Skills


4 Into action

HR, ICT, catering, facilities management
Procurement is not just about how colleges manage buying commonly and In practice
frequently required goods and services, it is relevant to all commercial decisions. “We were already using localised
The decision whether to deliver a service such as HR, ICT support, catering and facilities consortia for some categories of
management in-house using college staff or to contract it out is a procurement goods and were not expecting to
decision that involves a procurement ‘strategic options appraisal’. see much variance between what
we were paying and the CPC and
A strategic options appraisal involves identifying and evaluating options that will OGC deals. To my surprise we
deliver and meet the agreed specification. Once an option has been identified discovered we could make savings
it may be necessary to run a tender. in six out of the eight categories
we benchmarked. On our
Total cost of ownership stationery contract for example
The total cost of any goods or service is rarely the ‘label price’. The components we’ve managed to save 30 per
of the ‘total’ cost are: cent by switching from our Local
l Environmental cost. Authority deal to Lyreco.
l Specification cost.

l Installation cost. “Over and above the savings
l Running cost (consumables, energy and maintenance). we’ve accrued we’ve also
l Disposal cost. experienced less tangible
benefits. The exercise has
For a surprising number of purchases the ‘running costs’ can exceed all the other costs helped to raise the profile
combined. Good procurement practice will help to ensure that the college takes into of procurement in the college
account the total cost. Go to www.felp.ac.uk for more information. and given the finance team
the confidence to challenge
Put procurement processes in place departmental budget holders.
Even if you are doing most procurement through consortia, you will still make some Where authorising purchase
purchases direct with suppliers and need to have robust processes in place. In addition order requisitions was largely
to being aware of the various regulatory requirements, including EU public sector a bureaucratic exercise, we
tendering rules (see page 16), you also need to ensure college policies are followed. now have the confidence, and
These will probably include: evidence, to challenge the choice
l A competitive process that involves seeking three quotes and a full tender of supplier.”
for all orders over a certain amount. Frank Adams Dudley College
l Reviewing contracts on a regular basis.

l Ensuring budget holders only purchase within the limits of their authority.

l A list of approved suppliers (see Manage suppliers, page 32).

Also available to colleges are online systems for managing the tendering process;
more information can be found on FELP.


Agree procurement methods
In practice There are a number of different procurement methods. Each needs to be suited
“We didn’t have the time or to the type, value and inherent risk of the products or services you are purchasing.
the money to develop our All staff members involved in procurement should stay up to date with the uses,
own e-procurement system limitations, risks and techniques of these methods.
so we adopted the EGS Unity
system for higher education. e-procurement
The advantages are time savings, If you are currently using a system that is mainly paper-based, opting for
reduced administration, no need e-procurement requires a wholesale change. This procurement method involves
to re-key data and management embedding an electronic system into every stage of the purchasing process across
of supplier payments. What’s a wide range of contracts.
more, Unity interfaces directly
with our core financial system Installing an e-procurement system does require upfront investment. However,
from Symmetry. We estimate it can gradually be phased in and applied to different parts of the procurement
that this system is saving us cycle such as transactional or payment processes.
10 to 15 minutes for each
transaction.” e-procurement – the benefits
l Improves efficiency and financial rigour – spend limits are imposed consistently
Julie Grace Team leader of
e-procurement, St Helen’s College. at departmental level.
l Saves time – eliminates paper-based requisitions and duplicating data handling.

“The hardest part [of l Faster order-to-delivery times – users know exactly where their request is in

implementing an e-procurement the process.
system] was getting the system l Purchasers are automatically directed to approved suppliers, improving compliance

up and running, deciding on the and reducing time sourcing items.
parameters, writing the manual, l Greater price leverage.

liaising with department heads l Reduced costs of stationery, postage, copying and associated administration.

and training designated purchase l A more environmentally friendly way to procure.

order placers and authorisers – l High quality, detailed management information.

but it was thoroughly worthwhile.
We now have a much slicker Government procurement cards (GPCs)
method of managing purchase GPCs are charge cards that authorised staff can use to make college purchases direct
orders, authorisation and receipts with a supplier. They are a relatively simple and cost-effective method of procurement
across the organisation. Also, we that work best for purchasing low value items, such as books or small items of
have practically eliminated the equipment, where the cost of processing the transaction is disproportionate to the
time spent in finance contacting cost of the item itself.
staff to clear invoices or order
queries, and in dealing with GPCs work much like a credit card, although the outstanding balance has to be paid
supplier phone calls and issues.” in full each month. Each card has an individual transaction limit and a monthly
Angie Pilgrim Purchasing, Contracts
expenditure limit, and it can only be used to purchase certain categories of goods
and Compliance Manager, West and services.
Nottingham College
GPCs – the benefits
l Budget holders can order directly with suppliers, without having to raise and

get approval of purchase orders.
Need more information? l Strengthen expenditure controls and reduce the risk of improper purchasing

To find out more about and fraud.
e-procurement and introducing l Better access to online goods and services, resulting in better prices and deals.

GPCs into college, go to: www. l Simplify the purchasing process and significantly reduce the number of low value,

felp.ac.uk; www.purchasingcard. paper-based transactions, and the associated time and costs processing them,
info/esolutions.php; resulting in better use of resources and reduced staff costs.
www.barclaycardbusiness.co.uk


4 Into action

l Savings from reduced cheque payments and associated postage:
prompt payment of suppliers, improving relationships; In practice
monthly statements and better management information that can “For me, GPCs made sense.
be linked to college systems, especially when supplier codes are used; Analysis of our expenditure
less need for petty cash; and showed a high percentage of high
provides a clear audit trail with open and transparent procedures. volume, low value transactions
of the type appropriate for card
Once GPCs have been rolled out it may be possible to redefine payment. There was a growing
some staff roles and responsibilities as tedious, time-consuming tasks will have demand for buying over the
been reduced or even eliminated. internet and I could see that
GPCs were a quick win in terms
National Audit Office reports have estimated that an average of reducing workload, meeting
saving of £28 per transaction has been made by some central colleagues’ needs and at the
government departments that switched from paper-based same time responding to the
NAO report and the obligations
purchasing to GPCs. 5 it was placing on the sector…
Feedback has been positive with
the the team reporting no operating
Step 4 Action points issues and a definite time saving.”
Pat Eagle Stafford College
l Decide which categories and sub-categories would be suitable
for procurement through consortia or another contracting body. “A quick analysis of the college’s
expenditure revealed that 80
l Research the different consortia and contracting bodies and
per cent of the invoices we were
decide which would fit the college’s requirements and offer
receiving were for less than £250.
the best value for money.
Hours of staff time were being
l Ascertain which goods/services you could buy in collaboration wasted chasing paper around the
with other colleges and public sector organisations based on organisation. It was immediately
either geographical – local, regional or national – needs or areas apparent that there was a
of specialisation. tremendous merit in adopting
the cards. We brought Barclays
l Investigate suitable procurement ‘partners’ or framework
in to talk to the appropriate
agreements.
staff, established some internal
l Draw up a collaboration agreement and set out the terms controls and then issued 15 cards
and conditions with your collaboration partner. to the principal buyers across the
organisation. The ease of using
l Decide which procurement methods will maximise efficiency
the card, particularly purchasing
and value for money for particular categories. Consider
over the phone and via the web,
e-procurement and GPCs, tenders and mini tenders.
is encouraging everyone to seek
l Communicate procurement processes and methods out the best deals.”
to budget holders. Keith Gregory Financial controller,
South Nottingham College

Good practice tip
Establish a policy that ensures
the procurement champion or
a procurement liaison officer
is always present at a supplier
meeting when contracts are
5 Improving procurement in further education colleges in England, 25 October 2006,
being discussed.
National Audit Office, p. 18


Once a robust procurement strategy and processes are
in place, ensuring they continue to meet your ongoing
objectives is crucial. In addition to keeping staff up to date
with new developments through training and developing
their knowledge, the delivery of the strategy needs to
be monitored and evaluated to ensure that it is being
successfully implemented, and that its objectives including
delivering value for money are achieved.


Step 5
Measuring, reviewing,
improving

Build knowledge and develop skills
Monitor and evaluate progress
Review efficiencies and value for money
Manage suppliers

Build knowledge and develop skills
Need more information? Effective procurement management requires constant knowledge development
Assistance is available on the through training and learning best practice in areas such as negotiation, legal aspects
FELP and CIPS websites. Regional of purchasing, ethics, e-sourcing, project purchasing, tools and techniques.
network groups also provide
colleges with an excellent This makes the procurement process sustainable and continuous, enabling colleges
opportunity to learn from to constantly make greater efficiencies and savings that benefit all parties over the
each other. long term.

To apply for the NVQ in Supply In addition, LSC funding may be available for NVQs in Supply Chain Management
Chain Management, email at a level appropriate to the applicant’s job role. This is a work-based qualification
fecollegeprocurement@lsc.gov. that focuses on procurement competence, ability, knowledge and understanding.
uk with the college name and Having achieved Supply Chain Management NVQ Level 4, employees can apply
the candidate’s name, job title, for membership of the Chartered Institute of Purchasing Supply.
telephone number and email
address. Monitor and evaluate progress
Implementing a new procurement infrastructure is likely to be challenging.
Progress and targets should be monitored, with the college frequently asking:
l How extensively are GPCs being used?

Need more information? l Are consortia contracts being used when they should be, for example for library

The LSC is there to help books, insurance, and hair and beauty products?
colleges apply the EMM to l Are the college’s preferred suppliers being used extensively?

their procurement programme. l Is significant expenditure being committed without the procurement board’s

To find out more about EMM, knowledge and support?
visit www.felp.ac.uk
Review efficiencies and value for money
In order to increase negotiating leverage, transaction costs and value for money need
to be measured and monitored on a regular basis.
In practice
“The electronic system works, in part, A new version of the Efficiency Measurement Model (EMM2-FE) is available from
because we keep tight control over the LSC FE Procurement Development Team and can be downloaded from FELP.
suppliers. We conduct regular review A Microsoft Access database, the EMM2-FE has been developed to help public sector
meetings and produce reports to organisations to understand, quantify, record and report efficiency savings. Included
monitor performance against KPIs with the software is guidance on how to measure efficiencies, which are classified
and SLAs. These have proved very into five types:
successful in both management l Price reduction.

and development of the account l Added value.

and bringing about continuous l Risk reduction.

improvement. And [since we l Process re-engineering.

implemented e-procurement] l Sustainability.

we can now access management
information from the system.
Drawing on the Efficiency
Measurement Model (EMM),
we have produced the college’s first
Procurement Cost and Efficiency
Savings Report.”
Angie Pilgrim Purchasing, Contracts
and Compliance Manager, West
Nottingham College


5 Measuring, reviewing, improving

Colleges should also monitor Key Performance Indicators (KPIs), for example:
l On-time delivery. Need more information?
l Invoice accuracy. See the CIPS ‘How to’ series
l Percentage spend via consortia. at www.cips.org
l Percentage spend covered by contracts.

The EMM software records efficiency gains and generates reports which provide useful
indicators of progress for the senior management team and the procurement board. Good practice tip
Ask suppliers to provide
Colleges must include information about procurement efficiency management information data
in their annual college return and financial plans. For more as part of the contract.
information and details see Efficiency Measurement Model,
Users’ Guide, at www.felp.ac.uk
In practice
Manage suppliers A number of colleges were surveyed
To help manage supplier performance, reduce costs and improve efficiency you should by the LSC and asked to provide
work towards developing approved supplier lists. Approved supplier lists are a more details of the prices they were paying
formal way of working with suppliers where they are assessed using a pre-qualification against 12 categories of goods and
questionnaire (PQQ). This is typically a standard form completed by the supplier to services. The data was analysed
ensure fair, open treatment and aid consistent evaluation. Information included in a and compared with the prices
PQQ are company details, insurance cover, policy and procedures, summary of goods quoted in CPC and OGCbuying.
and/or services and pricing. solutions framework deals. The
results demonstrated the potential to
The period of time you work with a particular supplier will depend on the outcomes make massive savings by switching
from your information gathering and spend review; normally it is between one and locally negotiated contracts to
three years. It is critical to manage the suppliers over this period to ensure you are consortia framework agreements.
taking advantage of their specialist knowledge and market developments, as well Approximately 85 per cent of
as working together to minimise costs and improve service. benchmarked, locally negotiated
prices were bettered by consortia
Compare supplier performances using internal data and benchmarking information and, on average, across all regions;
from other colleges and organisations, and use this information to inform further the categories of goods and services
procurement and collaboration opportunities. surveyed were shown to be 18.67 per
cent cheaper when sourced through
Suppliers include consortia and organisations with framework agreements. They should consortia rather than individually.
be tested every now and again to ensure they continue to deliver value for money. Of the 12 categories, only two failed
to show a potential saving, and the
consortia used this information
to re-tender the contracts for the
categories concerned. At the time
of publication this work had already
resulted in a new contract that beat
the benchmark.

More information can be found
at www.felp.ac.uk



l Have the necessary competencies for procurement staff
been identified?
l Are procurement staff aware that NVQs and other training
are available?
l Find out what your regional procurement network offers
in terms of training and knowledge sharing.
l Measure the overall value for money the college is achieving
from procurement. Record improvements and report them
internally and externally.
l Gather data on supplier performance.
l Compare supplier performance using data from internal audits
and benchmarking information from other colleges and organisations
of a similar size.
l Communicate with colleagues in your college, in institutions
with which you collaborate, suppliers, consortia and the LSC FE
Procurement Development Team.


Part 3

Part three
More information
There is plenty of information available to help push procurement up the agenda.
Check out the following:
l Further Education Library of Procurement (FELP) – www.felp.ac.uk
l LSC Procurement Development team. Email: fecollegeprocurement@lsc.gov.uk
l Association of Colleges (AoC) – www.aoc.co.uk

l CIPS (Chartered Institute for Purchasing and Supply) – www.cips.org
l Office of Government Commerce (www.ogc.gov.uk) for general, high-level
guidance on matters such as efficiency, supplier relations, sustainability and
e-procurement.
l www.OGCbuyingsolutions.gov.uk for a variety of framework agreements
as well as information on purchasing cards and e-procurement
l The British Institute of Facilities Management has a database of facilities
management contracts – www.bifm.org.uk
l Environmental Association of Universities and Colleges –
www.eauc.org.uk/home
l Forum for the future – www.forumforthefuture.org.uk
l Improvement and Development Agency (IDeA) – www.idea.gov.uk
l LSC sustainability resource – www.lsc.gov.uk/whatwedo/sustainable-
development.htm
l Sustainable Procurement Information Network (Spin) – the Regional
Improvement and Efficiency Partnerships’ (RIEPs) sustainability resource –
www.s-p-i-n.co.uk/index.asp
l National Audit Office (NAO) report – www.nao.org.uk/publications/nao_
reports/05-06/05061632es.pdf
l Public Accounts Committee (PAC) report – www.publications.parliament.uk/pa/
cm200607/cmselect/cmpubacc/477/477.pdf

Using FELP
To use FELP you first need to register. This is a quick and easy process: simply go to
www.felp.ac.uk and click on the link to register. Remember to tick the box marked
FELP, which is one of the options available after you have filled in your name etc.

Within a week you will receive a user name and password. If it does not arrive please
email fecollegeprocurement@lsc.gov.uk

Once you are inside FELP you will quickly notice that all content is organised into a
number of books (upper left corner of the page) which you can browse for content.
Alternatively you can use the search facility; when doing so we recommend that you
tick the option ‘Include Document Content’ so as to get as full a response to the search
as possible.


Consortia and contracting bodies
l Becta (the British Educational Communications and Technology Agency) –
www.becta.org.uk
l Black Country Consortium – www.blackcountryconsortium.co.uk

l Central Buying Consortium – www.cbconline.org.uk

l Crescent Purchasing Consortium – www.cpc.salford.ac.uk

l Eduserv Chest (e-resource licences) – www.eduserv.org.uk/chest

l Eastern Shires Purchasing Organisation – www.espo.org

l London Universities Purchasing Consortium – www.lupc.procureweb.ac.uk

l North Eastern Universities Purchasing Group – www.neupg.procureweb.ac.uk

l North East Purchasing Organisation – www.qtegov.com
l North Western Universities Purchasing Consortium – www.nwupc.man.ac.uk

l OGCbuying.solutions – online.ogcbuyingsolutions.gov.uk/

l Southern Universities Purchasing Consortium – supc.procureweb.ac.uk/home.jsp
l The Energy Consortium – www.energyconsortium.org.uk/

l West Mercia Supplies – www.westmerciasupplies.co.uk/

l Yorkshire Purchasing Consortia – www.ypo.co.uk


Managing procurement to improve front line services

Managing procurement to improve front line services

Recommended

Recommended

More Related Content

What's hot

What's hot (13)

Viewers also liked

Viewers also liked (20)

Similar to Managing procurement to improve front line services

Similar to Managing procurement to improve front line services (20)

More from Association of Colleges

More from Association of Colleges (20)

Recently uploaded

Recently uploaded (20)

Managing procurement to improve front line services