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October 2007
Best Practice Contract Management Workshop
SRM at Essex County Council
Procurement Services Working to achieve Excellent Procurement
Essex County Council
Step Change Procurement
Page 2Procurement Services
Introduction
• Consider 5 Suppliers
• Would you consider they are capable of providing the
service you require?
• Are they delivering as expected?
• Have you got Value For Money?
Essex County Council
Step Change Procurement
Page 3Procurement Services
Value Losses
Overall Performance - Across All MeasuresMeanScore
Capability, Knowledge & Experience 4.2
Dependability / Reliability 4.1
Responsiveness 4.1
Understanding Client Needs 4.1
Quality of Output 4.0
Delivery to Specification 3.9
Project Management Skills 3.9
Business Compliance 3.9
Delivery to Milestone / Deadlines 3.8
Cost Certainty / Delivery to Budget 3.8
Ability to Innovate / Add Value 3.7#
Value for Money 3.7
Overall Performance 3.9
43
40
38
31
28
22
30
23
24
19
17
14
25
41
35
37
48
48
53
40
49
41
46
40
46
50
13
20
19
17
18
21
21
23
26
28
35
34
19
3
6
6
4
5
4
8
5
9
8
8
7
6
Good Adequate Poor/V.PoorVery good
Inputs
Process
Outputs
Outcomes
Chart shows live example of contracted
supplier performance
showing value lost after
appointment of capable suppliers
Contract management alone will not secure value from contracts. It needsTo be complemented by appropriate supplier relationship management.
SRM is about sustaining and improving mutual value
Essex County Council
Step Change Procurement
Page 4Procurement Services
Look in the Mirror
• Our Key suppliers told us that
– Current contracts are tighter that the previous set but can stifle innovation
– Budget management cycle makes planning difficult
– They want to use target costing …We do not seem inclined to follow.
– We want control. Suppliers feel to be subservient and arms-length contractor rather
than partner. Win/Lose.
– We do not understand risk & reward
– They want turnover certainty and we want budget spend certainty…but we do not
appear to have goal alignment
• SRM looks to restructure those relationships in order to drive win/win situations
and to enhance bottom line results and service improvements for the benefit of
both parties
Essex County Council
Step Change Procurement
Page 5Procurement Services
Supplier Relationship Management
• A Strategic Approach
• To Achieve Maximum Value For Money
• To Ensure Efficiency and Effectiveness in Budget Spend
Essex County Council
Step Change Procurement
Page 6Procurement Services
• Ensure capability to consistently deliver against Essex County Council’s
needs
• Improve that capability to make service delivery better, faster and at
lower cost
• Develop new capability to meet emerging Essex County Council needs
• Measure and manage overall key supplier performance.
Supplier Relationship Management
Essex County Council
Step Change Procurement
Page 7Procurement Services
• A joint approach to continuous improvement
• Encourage innovation.
• Our vision is that strategic suppliers move to a position where
they can actively contribute to and deliver against the strategic
objectives of Essex County Council.
Supplier Relationship Management
Essex County Council
Step Change Procurement
Page 8Procurement Services
SRM Skills
• Commercially minded
• Knowledge & experience of process improvement activities
– Lean and Agile improvements
– Innovative and analytical thinker
• Ability to drive process change
• Delivery focussed
• Tenacious
• Driven
• Ability to influence
Supplier Relationship Management
Essex County Council
Step Change Procurement
Page 9Procurement Services
Relationship with Contract Management
CATEGORY MANAGEMENT
CONTRACT LIFECYCLE
MANAGEMENT
SUPPLIER RELATIONSHIP MANAGEMENT
Ø Demand managementØ Supply market monitoringØ Industry cost analysisØ Procurement portfolio
managementØ Aligned business
processes
MORE DAY TO DAY
Ø SpecificationsØ Contract designØ T&Cs / SLAsØ ComplianceØ Contract performanceØ Close out
MORE STRATEGIC
Ø Capability managementØ Communication
managementØ Supplier competency
assessmentØ Account planningØ Continuous improvement
Essex County Council
Step Change Procurement
Page 10Procurement Services
BASELINING ACTIVITY
CONTRACT MANAGEMENT
ACTIVITIES
SPONSORSHIP REVIEW
CONTINUOUSIMPROVEMENT
CYCLE
High Level SRM Process
Methodology based on best practice from private sector
tailored to meet public sector requirements
Essex County Council
Step Change Procurement
Page 11Procurement Services
Progress
• Achievements
– Programme now underway with 7 Strategic Suppliers
– 3 Additional Suppliers entered programme this month
– Relationships all Benchmarked
– 8 Projects already identified to deliver mutual benefit and
potential cashable savings
Essex County Council
Step Change Procurement
Page 12Procurement Services
Take Away
“SRM aims to deliver value for money over and above
traditional contract management”