RBT Procurement Sustainability and Procurement Brian Leigh RBT - - PowerPoint PPT Presentation

RBT Procurement

Sustainability and Procurement

Brian Leigh – RBT Head of Procurement 10 November 2004

Procurement In Rotherham Council

• PPP/PFI
• Construction
• RBT

– BPP Team – Best Practice (Category Management)

• 9.5 FTEs looking after an £85M portfolio in 10 groups of

categories e.g. Highways Materials; Water Energy and Telecomms; Office Equipment and Related Services etc.

• Focus: Procurement Savings from a whole life cost (total cost
• f acquisition) perspective

– P2P Team – Council systems (POPS/ ROCC etc.)

• 42 FTEs looking after 40K orders and 150K invoices per

annum

• Focus: Efficient processing leading to customer satisfaction

Category Management Approach

Risk Spend Low High High Low Leverage Strategic Acquisition Critical Reactive processes used to meet day to day Council needs via Purchase To Pay (P2P) Category Management processes used to move commodities around by aggregating

• r

disaggregating

Definition: a category is a collection

• f commodities that can be satisfied

by a single supply market

Category Management Approach Supply Market Influence

Risk Spend Low High High Low

• One-off contracts
• Tight fixed price contracts
• Main focus on continuity of

supply to RMBC

• Order/ Invoice only
• Spot market buying
• 23 minutes long
• No guarantee of turnover
• Medium-term (6 months to

3 years) framework agreements depending upon market conditions

• Supplier chasing repeat

business

• Strong supplier relationships

based on shared goals

• Long-term (up to 4 years)

contracts

• Focus on stakeholder value

Category Management Approach Category Strategy

• RMBC Sponsor
• RMBC/ RBT cross-functional team
• Agreement of category plans
• Identification of cost-saving opportunities:

– Quick wins – More complex requirements – Obstacles

• Current contracts, Audit recommendations, Risks
• Agreed set of savings initiatives for next year’s

Annual Plan

Category Management Approach Risk

• Business Risk

– Is need core to the Council’s business? – Are rework costs high? – Does the Council get good/bad PR?

• Environmental risk

– Is there a high energy consumption? – Are sustainable materials used by supplier?

• Social risk

– What are the local/ global supply chain issues? – Are there local sources of supply?

• Balanced view of above enables top targets to be

identified

Category Management Approach Top Targets

• Aggregates
• Energy
• Vehicles/ Plant
• Waste Management

This list needs to be extended/ developed

• Street lighting?

Category Management Approach Savings Initiative Implementations

• Initiative Plan
• RMBC/ RBT cross-functional team
• Identification of Regulation/ Legislation/

Standing Orders and Financial Regulations

• Market Enquiries

– Informal – Formal

• Supplier Selection
• Mobilisation

Category Management Approach Supplier Selection

• Pre-tender Questionnaire (RBT BPP)

– Financial stability – Technical capability – Business Excellence including Quality Assurance standards, Environmental standards, Equality standards etc.

• Specifications (RMBC Officers)

– Raw Materials – Processes used

• Can any current processes at the Council/ Supplier be eliminated?
• Waste produced

– Disposal issues

• Tender evaluations (Joint RBT/RMBC))

– Standard ITTs/ RFPs – Balanced scorecard with price and quality in equity – Deeper evaluation especially on top risk targets – Supplier innovation captured

Category Management Approach Supplier Management

• Supplier Reviews

– Not widely used in RMBC previously – Monthly/ Quarterly – Key Measures and Improvement Targets – Management Information – Value Engineering

• Waste elimination
• Shortening supply chains
• Built into new supplier selections from savings

initiatives but we’re also trying to retrofit into existing agreements

Progress to date

• Segmented 3rd party spend (complete)
• Risk analysis (on-going)
• Top sustainability targets identified (part-

complete)

• Supplier pre-tender questionnaire (complete)
• Appropriate tender evaluation (on-going)
• Supplier management (on-going)
• Revised procurement strategy (in progress)
• Balanced scorecard of KPIs including

sustainability matters e.g. % business placed with suppliers having had sustainability audit (in progress)

Beyond This Year

• Building blocks in place

– New Category Management processes – New systems, especially eProcurement – New holistic measures – BPP and P2P Teams in place

• Biggest challenges

– Batter balance of forces affecting procurement

• Buy Local vs. EU Legislation vs. Procurement Savings
• Environmentally friendly products vs. Buy Local vs. Procurement

Savings etc.

– RBT BPP Team skills – RBT P2P Team skills – Commitment from RMBC members of cross-functional teams – RMBC specifier skills