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Procurement Implementation OUTSOURCING SERVICES TO SPECIALIST PROVIDERS SHOULD RESULT
IN BETTER QUALITY OF SERVICE AND VALUE FOR MONEY
Outsourcing services to specialist providers should
result in better quality of service and value for money.
Clear objectives and well-defined requirements will
help your suppliers understand your needs and meet
them: ensuring more efficient and expert support;
improved supplies or services; and compliance with
industry standards – all at a lower overall cost.
But it doesn’t always work out that way. Typical
reasons for the weak performance of outsourcing
contracts include:
• Unclear objectives – what do you actually want
from your suppliers?
• Lack of buy-in from key stakeholders in your
organisation
• Poor requirement specifications
• Failure to attract innovative suppliers
• Outsourcing a poorly performing area without
attempting to improve it first
• Weak and badly written contracts
• Poorly handled workforce issues
• High bidding costs
• Inappropriate allocation of risk and reward.
So, how can you minimise these risks? Understanding
and managing the procurement cycle is key.
The Chartered Institute of Purchasing and Supply®
has defined thirteen steps in the ‘Procurement Cycle’,
which can help you think through your approach to
the acquisition goods or services.
THE PROCUREMENT CYCLE
1 Understand the need and develop a high-level
specification
2 Assess the market / commodity options (including
make or buy)
3 Develop your strategy and plan
4 Pre-procurement: market test and market
engagement
5 Develop documentation: PPQ (pre-procurement
questionnaire) / detailed specification
6 Supplier evaluation: select suppliers to participate in
ITT / RFQ or negotiation
7 Issue ITT / RFQ
8 Bid / tender evaluation and validation
9 Contract award and evaluation
10 Delivery of service / solutions (receipt of goods /
warehousing & logistics)
11 Contract performance review /
continuous improvement
12 Supplier relationship management / supply chain
management and development
13 Asset management / end of life / lessons learnt
Implementation overview
So, if you’ve completed steps 1-3, you are ready to evaluate
potential suppliers and shortlist those who are most likely to
meet your requirements – then invite yourchosen shortlist to
submit quotations.
(Of course, if you haven’t quite got this far, see our Procurement
Strategy document to find out more!)
Running a tender processA strategic, well-managed tender process is a guaranteed route to securing signifi cant cost savings and achieving tangible effi ciencies.
Step 4-6: Supplier evaluationThis is the process of evaluating and approving
existing and potential suppliers by qualitative
assessment against specific business criteria. It will
take you initial market engagement to issuing a
pre-procurement questionnaire (PPQ – also known
as a pre-qualification questionnaire or PQQ) to the
short listing of several suppliers for inclusion on the
tender list. It is a key step in the process: the stage
where you are able to fully assess the suppliers’
respective offerings and capabilities.
It can be carried out in a number of ways. With new
suppliers a preliminary evaluation prior to a tender
is most usual (or it can be done as part of the tender
evaluation stage if wished ). Alternatively, when
dealing with current suppliers, evaluation will be
derived from measurement and monitoring of their
performance, to provide impartial management
information. This can be used to drive cost
reductions, mitigate supply chain risk
and deliver continuous improvement activities.
eXceeding has considerable experience in carrying
out such evaluations and will happily advise you on
what will work best for you.
Step 7: The ITTAs well as simply issuing an invitation to prospective
tenderers to submit a proposal, this is the stage at
which you need to set out the contract award
criteria and scoring method. The ITT must clearly
prescribe how a bidder should submit a tender – it
must prescribe the method, language, due date
and contain all the information needed; such as the
procedures to follow, the evaluation method, the
documents they need to provide, contract terms and
conditions and circumstances in which any tender
may be declared non-compliant.
Whilst the tender documentation for each event
type and spend category is diff erent, our clients
benefit
from a model tender process built around a
structured ITT, accompanied by clear evaluation
criteria and robust draft agreements focused on
driving supplier performance and best value.
Step 8: Bid / tender evaluationThis is the stage at which you can make an informed
judgement on the responses you receive – and
award the contract to the supplier that best meets
the criteria you have determined. At a simple level,
these come down to the generic headings of price
and quality, but at a more complex level they may
include many more specific criteria, such as (but not
limited to) the following:
• Technical merit
• Functional characteristics
• Environmental characteristics
• Running costs
• Total life cycle costs
• After-sales service and technical assistance
• Delivery date / period or period of completion
• Security of supply
• Interoperability and operational
characteristics.
Once tenders are submitted, eXceeding will work
with you to benchmark and evaluate them in order
to select the most appropriate partner to meet your
requirements.
Our non-emotional and auditable processes mean
that tender evaluation is carried out in a structured,
disciplined and transparent manner that will be able
to withstand any level of scrutiny.
From contract award to post-contract
Following on from the selection of a preferred
supplier, it is essential that both parties fully
understand their obligations and success criteria
as part of the agreement. Laying the foundations
to manage the contract and subsequent supplier
relationship effectively is key. If you need support
in this, we can work with you to develop a contract
focused on driving supplier performance and best
value. We will advise on performance analysis and
management, setting key performance indicators,
cost reduction, terms and conditions, contract
management, intellectual property and how to
manage conflict resolution.
Next stepsThere is no mystique in the stages described here, but
they do need careful management – and that may not
be something you have the time or the expertise to
If you need help with any of your procurement
requirements, we would be happy to talk them
through with you.
Why eXceeding?eXceeding’s tender management expertise spans the
range from individual SME requirements to large scale
procurement engagements, providing organisations in
both the private and public sectors with the necessary
business intelligence to apply knowledge-based
decision making to the purchasing process.
We have assisted both first time ‘tenderers’ and
experienced organisations looking to improve the
efficiency and effectiveness of their procurement
activity. As our customer testimonials demonstrate,
we have consistently achieved our aim: to ensure that
ourclients are able to select the right supplier and
the right solution at the right price, ensuring a better
outcome for their businesses.
How can we help you?To request your free no obligation consultation, please
call or email us to discuss your requirements.
03333 555 111 [email protected] www.exceeding.co.uk
Free Consultation & Advice To confidentially discuss your organisations’ needs with one of our independent experts
and to request your free no-obligation consultation, please contact us today.
Step 9+: Contract award / post-contract