Chris Newman - ArcBlue Consulting; Social Procurement Australasia - Driving Change: Successful...

The Global Procurement Network

National Hospital Procurement Conference:

‘Driving Change: Successful Strategies to Build Influence and Lead Organisational Change in Procurement Capability and Performance’

Chris Newman Director ArcBlue Consulting [email protected] www.arcblue.com.au 0412 318 384


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ArcBlue Government Procurement Development Activity

across Australia/NZ

VIC State Government

• CIPSA Certification

• Training and

Development Programs

VIC Local Government

• Procurement Roadmap

development

• Contract Management

Guidelines and Training

State Government

Local Government

SA Local Government

• Roadmap Program

• Regional Opportunity

Analysis

Procurement Capability

Assessment / Development

Federal Government

• Contract Management

Development

• Regional Procurement

Development Programs

Federal Government

Gold Coast Council –

Capability Development and

Contract Management

WA Local Government

• Procurement Training

Program

NZ Government

• Departmental reviews

QLD State Government

• Contract Management Capability

Assessment & Development Program

NSW State Government

• Accreditation Program – preparation

and assessment

• Sourcing Project Delivery

NSW Local Government

• Roadmap Program with LGP

• Procurement Leadership Program

• Social Procurement Development

• Sydney Metro Councils Joint

Procurement Development Program

The Global Procurement Network © PMMS Consulting Group

ArcBlue Services


Presentation

• Driving Change: Successful Strategies to Build Influence and

Lead Organisational Change in Procurement Capability and

Performance – Why Change?

– Designing effective change programs

– Features of successful integrated teams;

– Influencing stakeholders

» Stakeholder management

» Category management

» Social procurement


Why Change?


What is Changing?

• Pressure on Government to do more with less, to collaborate, and to innovate

• Strategic objectives increasingly being reflected in procurement practice

• Growing understanding of the role and power of Strategic Procurement

• Developing personal, organisational, and sector procurement capability

• Structured Programs to drive change • Case Studies, evidence and guidance – a growing body of

knowledge


o Reduce costs – drive savings

o Internal productivity - streamlining

o Reduce risk

o Build confidence

o Demonstrate professionalism

o Political Objectives

o Project Delivery

o Reputation

o TBL Objectives

o Capital works and budget planning

o Project management and delivery

o Collaboration – organisational/ sector

An increasing focus on procurement The benefits


Challenges

• Increasing pressure on procurement teams • Resources not matching growing expectations • Lack of influence at senior organizational levels • Poor planning creating pressure on Procurement Teams • Reliance on Government decision making process that can be

slow/ inconsistent/ contradictory • Balancing working ‘on’ and ‘in’ the business • Conflicting priorities

– ‘Get it done’ vs. Probity – Savings vs. Quality – Aggregated vs. local/ SMEs

• Lack of influence of the whole procurement lifecycle


Becoming Strategic in Approach

• Moving from: Reactive...through....Proactive….to....Deterministic

• Key Features: – Cross business team-based collaborative approach – Explicit Department involvement; commitment by all stakeholders – Inclusive workshop approach that encourages ownership, commitment and

knowledge transfer – Deep understanding of the category, supply market, suppliers, and business

needs – Using market knowledge and innovation as a source of leverage – Striving to have a deterministic influence on the supply markets – Measurement of short, medium and long term goals


Designing Effective Change Programs


Procurement Reform Programs

• Local Government Procurement Roadmap Program – Partnership with Local Government Peak Bodies and State Governments – 175 Councils across 3 States have participated in the last 4 years

• New Zealand MBIE Procurement Review Program – Procurement Effectiveness Review Major Agencies – Procurement Health Check Minor Agencies – Online Procurement Capability Review Smaller Public bodies

• NSW Government Procurement Accreditation Program – Accreditation development support/ assessment: NSW Health, Justice,

Police, Education and Communities, Sydney Trains, Rural Fire, SHFA etc. – Gap Analysis, Gap Closure, Mentoring, Accreditation

• CIPS Corporate Certification Program

– International Benchmark - Standard and Advanced


• Professional procurement

• Influencing the business

• Transactional

• Order placement

Level 1

Emergent

Level 2

Basic

Level 3

Developing

Centre of Excellence across all expenditure

Procurement foundations in place with improved controls

Some functional and category strategies in place

Focus on meeting legislative and compliance requirements

Largely unco-ordinated procurement with gaps in

compliance

Level 4

Advanced

Levels of procurement maturity


Clear Structures


Approaches to Assessment


Personal Assessment - Process Overview

Procurement Competence Questionnaire

* 13 Competencies

* 156 Multiple-Choice questions

* 100% objective

* Completed on-line

* Supported through semi-structured interviews

Gap Analysis and Benchmarking

* Gap Analysis

- Score against benchmarks

- Score versus peers

* Benchmarking

- By industry sector

- By role

- By geographic region

- By experience

Reporting

* Learning footprint

- Development priorities

- Recommended interventions

* Group & Individual reporting


• 13 common procurement technical competencies

– Governance, Leadership and Functional Design

– Supply base and Category Analysis

– Risk Management

– Category Strategy and Go-to-Market processes

– Supplier Appraisal, Evaluation and Audit

– Contracting and Legal Aspects

– Finance and Purchase Price Cost Analysis

– Negotiation and Influencing

– Supplier Performance, Contract and Relationship Management

– Transactional procurement and Procure-to-Pay processes

– E-Procurement and Technology

– Project Management and Change

– Sustainability & CSR

PCQ - Assessed Procurement Competencies


0.00

1.00

2.00

3.00

4.00

5.00

Procurement Leadership, Governance and Financial Design

Supply Base and Category Analysis

Risk Management

Category Strategy and Supply Market Engagement

Supplier Appraisal, Evaluation and Audit

Contract Selection & Legal Aspects

Pricing, Cost and Financial Analysis Negotiation and Influencing

Supplier Performance, Relationship and Contract Management

Transactional Procurement

e-Procurement and Technology

Project Management and Change

Sustainability and Corporate Social Responsibility

Group Average (All Roles)

Average (Transactional Role)

Group Min (Transactional Role)

Group Max (Transactional Role)

Graphical Results


Features of successful integrated teams

• Leadership with: – External focus – gaining organisational influence and engaging stakeholders – Internal focus – clear delegation and program oversight

• Organisational Governance and on-going buy-in • Clear roles and responsibilities

– Organisational – e.g. centre-led model with documented, well-understood roles and responsibilities for Procurement, Business Units, others

– Team – clear, consistent and communicated roles and responsibilities

• Effective structures • A clear Strategy for Development and Continuous Improvement • A well established and managed ‘infrastructure’

– Meeting and approval structures – Documentation and systems – A Program Management Model

• The right culture – Customer Service vs. Compliance • On-going training and development programs


Organisational Assessment

Strategic

Procurement

External Focus Internal Focus


NSW Accreditation Model

•Procurement Management Plan

•Procurement Strategies

•Performance and tracking Strategy

•Risk management processes

•Polices and procedures

•Financial delegations

Governance, Control & Policy

•Business case •Specifications •Tendering and negotiations

Procurement Process

•Use of tools •Training in tools

Procurement Tools & Systems

•Reporting •KPI’s •Procurement data

Information Management &

Reporting

•Level of resourcing •Organisational design

Organisation & Capability

Weightings

15%

10%

25%

15%

10%

25%


Successful change programs

• Programs based on sound integrated multi-dimensional models – People, organisation, process, projects etc. – Measurable and repeatable

• Ability to benchmark against peers/ ‘good practice’ • Value of sector-wide implementation programs • Engaging the right stakeholders

– Senior Leadership, Business Owners – The process itself helps deliver the change

• Need for real incentives to participate and to change • Need a ‘start’ and ‘end’ date for the intensive period • Establish on-going review and continuous improvement models built in • models • Involve your team through the whole program • Be willing to ‘take’ the opportunity • Provide positive leadership and adequate resourcing


Understanding the change process


Influence


Understanding stakeholder groups

Chief Engineer

Corporate Relations

SER

Finance

HR

Operations

ProjectsCustomer Service

Network Asset

Management

Infrastructure

Delivery

Rolling StockOperational Rail

Safety

Network Control

Network Planning &

Development Train Services

Delivery

Project Controls

RRL

Delivery

Major

Renewals

SQ&E Finance

Learning &

Development

Business

Development

ICT


Formal processes to assess stakeholders - e.g. Power Interest Grid


Category Management and the value curve of procurement

Value

Need Strategy Market

engagement Negotiate contract

Manage contract

Stages of Procurement

Time

Spent

Category Management – a whole of

life approach


Traditional Sourcing

• Focus on Strategy, Market Engagement and Negotiate Contract • Time or event based for specific product or service • Requirements immediate to near term, individual • Commodity cost down focus • Step by step transactional process • Culminates in new or revised contract for specific requirements


Category Management

• More in-depth long-term needs analysis as well as manage contract

• Ongoing definition, analysis and review across category • Requirements medium to longer term, across business • Strong ‘total cost of ownership’ focus (internal and external costs) • Collaborative ongoing review process • Adaptable to (guaranteed) change in needs or conditions


New Approaches to Achieving TBL Objectives

• All levels of Government & (Private Sector) have social, economic, environmental and Leadership/ Governance objectives (TBL) – Traditional ‘silo’ approach to achieving objectives

• Innovation – Complex issues require new models

– New ways to address complex, multi-causal and long-standing community, economic and environmental issues

– Integrating TBL objectives into procurement, service design and employment

• For Government these may include:

– Breaking cycles of long-term disadvantage – Providing genuine pathways to training and sustainable employment – Achieving ‘Zero Waste’ and carbon footprint reduction targets – Driving local and regional economic development outcomes


Strategic Procurement

• Procurement is how we spend most of our money – E.g. NSW – State Gov’t $25bn and Local Gov’t $7bn each year

– Private development – housing and infrastructure

– Major Projects

– Service delivery

• Procurement represents significant market power to: – Deliver high quality, value for money goods, services and works;

– Drive sustainable cost savings;

– Influence, enable and stimulate the private and social enterprise

markets to deliver social, economic and sustainability outcomes;


What is social procurement?

Social procurement is a strategic approach to meeting social and economic development objectives through procurement

Social procurement involves using procurement processes and purchasing power to generate positive social and economic

development outcomes in addition to the delivery of efficient goods, services and works


Social Procurement and Economic Development – Areas of Focus

• Often focussed in areas of Place-based disadvantage

• Providing employment and employment pathway opportunities to disadvantaged communities – Indigenous, long-term unemployed, disability, older workers, minorities

• Strengthening and creating opportunities for local business

• Maximising local and regional benefits from investment in the region (private/ Government)

• Diversifying the supply market

• Engagement of SMEs and social benefit suppliers


Growing number of examples of social procurement

• Private and public sector case studies

– Construction - North-west rail/ Nowra Jail

– Local Services – Councils/ Telstra

• New Health Sector examples - e.g. St. Vincent’s Health Australia (Vic, NSW, Qld)

– Café spaces to be operated by social enterprises

– Toowoomba – Grounds maintenance provided by disabled personnel

– Exploring new opportunities including laundry, ward services, waste, landscaping and maintenance

– Working with organisations such as Toowoomba Clubhouse – a social enterprise providing employment to people with metal illnesses

– Specific link to St. Vincent’s priorities working with indigenous, refugees and homeless


Broader Benefits of a structured approach to TBL Procurement

• Integration - Achieving TBL goals, and addressing community issues as part of the way we do business

• Innovation – Encouraging innovation and the development of new forms of partnership and service delivery models.

• Team and Organisational Identity and Reputation – Building and broadening the role of procurement and organisational identity.

• Competitive Advantage –Directly demonstrating the capacity to add social, environmental and economic value in delivering on Government funded projects

• Planning Ahead - Rather than responding in an ad hoc way as community and Government expectations grow, TBL procurement can be introduced through a managed, systemic and achievable program.


Support available

www.socialprocurementaustralasia.com

• Case Studies/ clauses/ research

• Social Procurement in NSW – Public Sector Guide

www.arcblue.com.au

• Procurement Capability Assessment/ Development

• Category Management

• Training

• Sourcing project support and delivery

• Spend and opportunity analysis

• Project Support

http://www.socialprocurementaustralasia.com/

http://www.arcblue.com.au/


Questions

Chris Newman - ArcBlue Consulting; Social Procurement Australasia - Driving Change: Successful...

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