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 info@exceeding.co.uk 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