Procurement Maturity Assessment Programme Outcomes and Sector Overview. Report for PUK. December 2015

Transcription

1 Procurement Maturity Assessment Programme Outcomes and Sector Overview Report for PUK December 2015

2 The report is based upon data from the English higher education institutions (HEIs) that participate in the PMA programme: Representing 75% of the English HE sector Including four English HEIs that have undertaken a Procurement Capability Assessment (PCA) through APUC There are also 4 non HEIs in the programme, but their data is not included in this report.

3 Contents 1. Approach 2. PMA Numbers 3. Key findings including demonstrable improvement 4. Attribute Details 5. Features of good procurement 6. PMA Roadmap 7. Annexes

4 Approach PMAs are a structured assessment of the effectiveness of procurement within an HEI and across the sector PMA question set based on questionnaire used in Scotland: developed following McLelland efficiency study Assessment is evidence based and categorised into 9 attributes Process is action oriented: institutions receive an assessment report, action plan and access to live benchmark data

5 Approach Participants undertake a Full PMA at least every 4 years Full PMA is followed by an interim PMA: approx 2 years later Results are collated to provide sector trends ITF funding subsidised the cost of PMAs during period ended July 2014: new clients are bearing full cost ITF clients Interim Assessments will be completed in 2015/16.

6 PMA by Numbers 99 participants in the programme Programme now covers impactable spend of approx 70% total English sector: 6.5bn compared to 4.5bn 2013 (44% increase) HEIs / / / / /15

7 Key Findings 2015

8 Stage of Maturity: By Numbers and Non-Pay Spend 71% of institutions are in the lower maturity levels - accounting for 62% of spend

9 Scores Across the Maturity Scale Two HEIs demonstrates SUPERIOR performance Many larger institutions still at lower maturity levels Red line sector average score = 39%

10 Maturity and Non-Pay Spend S L VL Average 25% Average 37% Average 50.5% S= Small HEIs < 100m income L= Large HEIs > 100m and < 400m income VL= Very Large HEIs > 400m income Smaller institutions are predictably less mature on average than larger institutions Average VL just progressed into Planned

11 Benchmark Chart 2015 Key: Sector average score 2 nd and 3 rd Quartiles

12 Features of Superior Attribute Performance Strong supplier relationship mgt, good senior mgt buy-in, strong on collaboration Clear linkage between procurement strategy, and institution s strategy, good measures with VFM link Strong influence with senior management, strong coverage across whole institution Fully implemented e- procurement Complete coverage of procurement across institution, 100% PO coverage Strong skills within the central procurement team covering all spend including estates Embedded CSR factors in the core procurement processes Strong process automation, good use of competency framework Very good strategy and measurement (plus going in right direction on category mgt)

13 Demonstrate-able Improvement

14 Progress 44 institutions have undertaken follow up PMAs Average improvement between 1st and 2nd PMA = 13 percentage points

15 Progress 5 institutions have undertaken a third PMA Average improvement from 1st to 3rd PMA = 23 percentage points See next slide for display of this progress

16 Follow Up PMAs by Attribute Demonstrable improvement across all attributes 2010/11 to 2014/15: Organisational attribute most improved Corporate Social Responsibility attribute least improved.

17 Findings Summary Institutions who have been re-assessed have made demonstrable improvements Increase in maturity 23 percentage points on average from the start of the PMA Programme Opportunity for improvement and efficiency gains 71% of institutions are in the lower half of procurement maturity Beacons of superior performance now exist for all attributes Skills, Collaboration and Organisation are the strongest areas

18 Findings Summary Systems and Sustainability are the weakest areas Category Management and Supplier Strategy and Policy seeing some good progress over the dataset as a whole Many procurement teams do not cover Estates There is a weak correlation between savings and maturity level possibly not all institutions are reporting all their savings

19 Attribute Details 2015

20 1. Governance

21 2. Reporting and KPIs

22 3. Organisation

23 4. Resources & Skills

24 5. CSR (Sustainability)

25 6. Collaboration

26 7. IS/P2P (Systems)

27 8. Supplier Strategy & Policy

28 9. Category Management

29 Features of Good Procurement Strategic Positioning Clear procurement strategy aligned to Institution s overall strategy with visible senior management support Agreed category strategies inc. market analysis, make versus buy evaluations and supplier strategy Procurement seen as strategic function and engaged early in key projects Procurement is a regular topic in senior mgt discussions with Audit Committee taking an active interest in procurement effectiveness Operational Performance Well resourced and capable procurement team Good understanding of what is being bought across institution Full coverage across all spend types including projects & estates Effective policies, processes and systems ensuring spend is controlled and directed towards the best deals available Strong collaboration with common specifications and demand pooling

30 PMA Roadmap Subject to funding being made available Expand scope to include a valuefor-money dimension (in-line with PUK request) Extend the benchmark to allow universities to benchmark against organisations in the commercial and other sectors Refresh the PMA reports to include dashboards

31 Annexes

32 ATTRIBUTES Annexe A 1. Governance 2. Reporting and KPIs 3. Organisation 4. Resources and Skills 5. Corporate and Social Responsibility 6. Collaboration 7. Information Systems and Purchase to Pay 8. Supplier Strategy and Policy 9. Category Management Based on HEFCE Good Procurement Practice Checklist

33 DEFINITION OF MATURITY LEVELS Annexe B DEVELOPING A defined procurement role exists but it is primarily operational or transactional in focus. Procurement responsibility is likely to be fragmented within the Institution and does not influence all major spend areas, or all faculties and departments. Procurement, Planning and Accounts Payable are managed as separate functions. There is some strategic procurement direction and there may be limited objectives and targets. Procurement strategy is developed independently to the Institution s strategy but a sense-check is performed at a higher level to ensure some alignment is taken place. There is no formal process for developing sourcing strategies and most negotiations are price-focused, purchasing savings delivered through negotiation and supplier rationalisation. Limited spend information exists. Procurement is using some collaborative agreements but does not seek to increase the proportion of influenceable spend channelled through its framework contracts. Suppliers are managed on a day-to-day basis and there are limited measurements of supplier performance. Purchasing transactions are largely paper-based and invoices are manually checked against purchase orders. There is limited reporting of procurement performance and benefits tracking is sporadic.

34 Definition of Maturity Levels Annexe B TACTICAL Procurement is seen as a distinct function with a Director or Head of Procurement. A documented procurement strategy exists but might not have been widely communicated or signed off. The strategy supports the Institution/Sector s strategy with the focus on maximising service and minimising total costs. Sourcing options are developed and reviewed but are variable in outlook. Major spend areas are covered by collaborative contracts and framework agreements and Procurement has explored joint working with other public sector bodies. The Institution has assessed itself against the HEFCE Flexible Framework (CSR performance). Monitoring of supplier performance is ad-hoc and limited to qualitative measurements of contract KPIs and SLAs. Supplier performance is assessed and action is taken on a reactive basis. Management information is mainly derived from the Finance System s Account Payable module. There is some automation of matching invoices and purchase orders. Procurement staffs are capable of performing several roles. A good set of procurement performance measures exists (BPI, EMM et al) with some gaps. Procurement uses these indicators to demonstrate procurement performance.

35 Definition of Maturity Levels Annexe B PLANNED Head of Procurement is either at board level or is one level below with a board member taking clear ownership for procurement and commercial matters. A strategic procurement role exists for at least 75% of influenceable spend. A fully documented procurement strategy exists and is communicated across the Institution. The strategy includes well-defined objectives which demonstrate Procurement s impact on the business. All senior managers officially commit to the targets of the Procurement Strategy and demonstrate this commitment through active support. There are regular, planned and diarised reviews of sourcing options, largely conducted internally by Procurement. Historic spend information is at category and supplier level; some data is available at line item detail. This information informs sourcing strategies. Suppliers can register their profiles on a publically accessible website and the Institution holds meet the buyer style events. Independent post-project reviews are the norm and the Institution is actively pursuing shared procurement with other public bodies. There are structured and formal reviews of contracts KPIs/SLAs where appropriate: key suppliers performance is linked to a balanced scorecard. The Institution uses an e-procurement solution (integrated or standalone) and the invoice/purchase order process is automated. Procurement staff has a strong understanding of cost management techniques. A developed set of performance measures exist, which take a whole-life perspective. Spend information includes budget and variance analysis: areas of high cost are scrutinised and reviewed on a regular basis. Institution reports demonstrate ongoing procurement performance and targets seek year-on-year improvements.

36 Definition of Maturity Levels Annexe B SUPERIOR The impact of procurement is widely visible and the role is considered part of a senior peer group with the leadership team. Highly skilled and fully trained strategic procurement professionals are in place and are fully integrated within the Institution s decision making process. The Procurement Strategy is fully documented, well communicated and defines the Institution s position with regard to CSR, Ethical Procurement, Sustainability etc. The Procurement Strategy is agreed businesswide and cascaded to all key areas; it is fully aligned with the Institution s business strategy. All areas of influenceable spend are covered by sourcing strategies, which are signed off by senior management. A total cost of ownership approach is adopted and significant benefits are consistently delivered. Detailed and accurate information exists on both current and future demand and Procurement is regarded as the key source of information for supplier spend. There is a clear and systematic process for disseminating lessons learned from post-contract reviews. Contract management information is analysed and actioned by the Institution as part of a programme of continuous improvement. A proactive supplier development programme has been implemented and there is evidence of benefits being realised. The minimum of manual processes remain and the Institution uses a variety of IT tools to actively control and manage the procurement function: an integrated P2P process is in place. Procurement staff are skilled in advanced cost management techniques and participate in improvement activities. Clear performance measures are in place, covering the full range of BPI/EMM reporting plus additional, comprehensive metrics.

37 Southern Universities Management Services 2015 Copyright in this report is held by Southern Universities Management Services. Procurement UK shall seek the consent of Southern Universities Management Services to copy or reproduce material in whole or in part, the source shall be acknowledged and the material shall not be used for commercial gain. This report has been produced for and reviewed by Procurement UK. The statements and views expressed represent the understanding of the author arising through the approach described at the time of writing.