Procurement strategy
2015- 2018
Contents
1. Introduction ...................................................................................................... 3
1.1 Background................................................................................................... 3
1.2 Supplier Spend .............................................................................................. 3
1.3 Local Impact ................................................................................................. 3
2. Scope of the strategy ......................................................................................... 3
3. Drivers and Challenges...................................................................................... 4
3.1 As part of our strategic review of procurement, we have identified the following
challenges and drivers for change: ........................................................................ 4
3.2 Legislation and Regulation .............................................................................. 4
4. The Commissioning and Procurement Cycle .......................................................... 5
4.1 Definitions .................................................................................................... 5
5. Financial Implications ......................................................................................... 6
5.1 Value for Money ............................................................................................ 6
5.2 Resources ..................................................................................................... 7
5.3 Risk Management .......................................................................................... 7
5.4. Performance Management Framework ............................................................. 7
6. Procurement Strategic Aims and Objectives .......................................................... 8
7. Social Value and Sustainable Procurement ............................................................ 8
7.1 Economic ...................................................................................................... 8
7.2 Social ........................................................................................................... 9
7.3 Environmental ............................................................................................... 9
8. Equality and Diversity ........................................................................................ 9
9. Consultation and Communication....................................................................... 10
10. Monitoring and Review ................................................................................... 10
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Strategy date
Strategy owner
31st May 2015
Ian Ankers, Director of Strategy &
Partnerships
Internal/
Customer
facing
Approved by:
Internal & external
Version no
1.0
Board
Review date:
31st May 2018
Date
approved
Date of
Equality
Analysis
n/a
2
New or
review
Review
1. Introduction
1.1 Background
This strategy sets out our position towards delivering a more strategic commissioning
and procurement approach over the next 3 years. It is aligned to our corporate
objectives, new strategic themes and business values. The external environment has
become more challenging with reduced public spending, greater public scrutiny and
emphasis on value for money and managing financial risk. We need to deliver a more
transparent and sustainable commissioning and procurement strategy which goes
beyond continuous improvement, efficiency savings and cost effectiveness.
We are aware that our current procurement activity lacks strategic direction, is decentralised and not optimising value for money and therefore needs refreshing. In
addition, we want to embed social value into our business operations at all levels,
including procurement and contract management to maximise the impact of each pound
that we spend.
1.2 Supplier Spend
As a registered provider and charity, we spend approximately in excess of £50m each
year on goods, services and works with over 1,000 suppliers. We aim to align each
pound that we spend to our corporate objectives and strategic themes to deliver the
greatest economic, environmental and social impact and benefits to our customers and
the local economy. All the goods, services and works that we procure should result in
the best price, for the highest quality that meets customers and stakeholders needs
whilst also driving continuous improvement.
1.3 Local Impact
We are a strategic partner within the local area and through our procurement activity
can contribute to the wider Greater Manchester Strategy and objectives by delivering
economic, social and environmental benefits. These include: tackling food and fuel
poverty; raising wages and living standards; tackling worklessness; regenerating the
local economy; having a positive environmental impact and supporting 3 rd sector, social
enterprises and small and medium sized (SMEs) businesses to grow and flourish.
2. Scope of the strategy
This strategy covers the development and implementation of a strategic approach to
commissioning and procurement for grants, consultancy support, goods, services and
works above agreed threshold levels. It aims to capture all corporate spend with third
party external suppliers as well as with internally delivered services and works to ensure
that all options are fully appraised.
It also extends to our wider sphere of influence as a buyer in terms of brokering
contracts on behalf of customers with partners and suppliers through other procurement
opportunities such as shared services, collaborative agreements, external frameworks
and affinity marketing programmes.
Our new procurement strategy provides will therefore underpin all our future
commissioning and procurement decisions, and is supported by our:


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Continuous Improvement & Value for Money Strategy
Creating Social Value Strategy
Environmental Sustainability Strategy 20X16
Financial Regulations and Scheme of Delegations
Financial Procedures (formerly Standing Orders: (Contracts)
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It aims to reflect our status as a registered provider post-stock transfer and fully
integrate this with our role as a charitable business. Under this new framework, we aim
to more effectively meet the needs of all our stakeholders including regulators, funders,
local and sub-regional authorities, partners, customers, staff, board, suppliers, 3 rd sector
and local businesses.
For an overview of our vision of our future model under our new structure, please refer
to Appendix 1: Procurement and Contract Management Systems Model. This shows
how our more integrated procurement and contract management systems will link to our
new strategic themes and how they will be underpinned by ICT systems.
3. Drivers and Challenges
3.1 As part of our strategic review of procurement, we have identified the following
challenges and drivers for change:
Drivers
(External)
1. Impact of Welfare reform and Universal Credit on customers and
income
2. Meeting efficiency savings targets and demonstrating value for money
3. Complying with changes to regulatory requirements and increased
emphasis on risk management
4. Responding to the impact of reduced public spending on the local
economy and our customers
Challenges
(Internal)
1. Developing a strong vision, leadership and increasing transparency on
our procurement
2. Delivering a common procurement approach and developing tools to
support implementation
3. Understanding procurement spend and planning spend by type of
activity
4. Moving from short term pricing to longer term whole life costing
5. Implementing more robust procurement controls supported by ICT
6. Addressing recent contract management challenges identified by
Internal Audit reports
7. Being more pro-active via market engagement, consultation and
collaboration
8. Embedding social value across the business and within the
procurement process
9. Delivering on the Environmental Sustainability agenda
10. Driving innovation and exploring new technology, products and
delivery models
Our procurement strategy aims to address the above within the next 3 years.
3.2 Legislation and Regulation
The external environment is also governed by changing legislation and regulation. As a
public authority, we need to become more flexible and responsive to any future changes
in order to ensure compliance and meet or exceed relevant standards. The following are
some of the current legislation and regulation that apply to us:

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HCA Regulatory Standards: Value for Money; Governance and Financial Viability
Charity Commission Guidance: Governance and Risk Management
HM Treasury Rules: Best Value and Value for Money
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EC Procurement Directives and EC Treaty common principles: Equal Treatment;
Non-discrimination; Transparency; Open Competition and Free Movement of
Trade
Public Regulations Act 2015
Equality & Diversity Act 2010
Social Value (Public Services) Act 2012
4. The Commissioning and Procurement Cycle
4.1 Definitions
Commissioning and procurement are inter-related, forming a cyclical process that
assesses what an organisation needs to achieve in terms of outcomes and how best to
meet that need by using cost-benefit analysis and options appraisal.
Commissioning is therefore the informed design of what we want to deliver to meet our
strategic objectives and outcomes whilst procurement is the process of acquiring goods,
services and works covering purchasing from both third parties and in-house providers.
The whole life cycle therefore spans the identification of needs (including preparing the
business case), options appraisal and the critical “make or buy” decision, through to the
end contract delivery and/or useful life of an asset.
For a full glossary and definitions of common terms used within this document, please
refer to Appendix 2.
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Diagram 1: Strategic Commissioning and Procurement Cycle
Strategic
Outcome
Setting
Priorities
Commissioned
Needs Analysis
Contract
Management
Procurement
The diagram above demonstrates the cyclical nature of the commissioning and
procurement process and how each stage of the process links together.
We are aware that as part of our strategic review of procurement, we need to forward
plan more effectively and strengthen our pre-procurement and commissioning stage to
improve the identification of need. As part of strengthening our financial viability, we
also need to develop a more robust approach to options appraisals and compare financial
and social returns on investment.
5. Financial Implications
5.1 Value for Money
A key driver for our strategic review of procurement is to comply with regulatory
standards and ensure that it is aligned to our continuous improvement and value for
money (CI&VFM) objectives. Procurement can help to deliver better value for money by
driving competition and delivering continuous improvements leading to higher outputs
and outcomes for fewer inputs. It can also deliver additional Social Value, leading to
additional outputs and outcomes for the same inputs.
The diagram on page 7 demonstrates this link and through supply chain management,
we aim to strengthen our value for money self-assessment and deliver greater financial
and social returns on our investment.
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Economy
Efficiency
Effectiveness
Minimising
costs (£)
when buying
Inputs
Obtaining best
Outputs
use of inputs
ensuring best
results for
customers (quality
and quantity)
Continuous
Improvement
Value for Money
Diagram 2: Continuous Improvement and Value for Money Model
Outcomes
5.2 Resources
As part of our strategic review of procurement, we plan to re-allocate existing resources
to create a central team under the “Procurement Hub”. This team will act as the
gatekeeper for all procurement and contract management above agreed threshold levels
using The Chest e-tendering portal and APEX contract management module. It will
develop standardised Quality Assurance and Control systems, provide guidance, advice,
support and deliver awareness and training to key stakeholders to ensure compliance
and develop competencies. The Director of Strategy and Partnerships will lead on our
Corporate Procurement and take responsibility for implementing our new Procurement
Strategy and ensuring compliance across the organisation. Please refer to Appendix 3:
Procurement Hub Organisation Chart for further details.
5.3 Risk Management
Through the implementation of this Procurement Strategy and supporting annual
Procurement Action Plan, we aim to develop a more pro-active approach to identifying,
assessing and managing all contract risks and liabilities with 3rd parties and across the
business. This will help to strengthen our governance and financial viability.
5.4. Performance Management Framework
Managing and developing relationships with key suppliers, driving value for money and
continuous improvement and innovation are key objectives which are identified within
our Procurement Strategy. We also want to develop a more commercial approach to
strengthen our market position in the longer term.
We therefore aim to develop a market engagement strategy at pre-procurement stage
for suppliers and partners to stimulate competition and gain a better understanding of
needs. We plan to develop more sustained supplier and partner relationships which
assess contract risk and manage performance. This will be achieved through staff
training and guidance in contract management, a review of contract management
processes, implementation of new ICT systems and the development of a Performance
Management Framework for all suppliers. This will provide a high level exception
reporting to Management and Board on key metrics and performance indicators. Our
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longer term goal is to work collaboratively with suppliers and partners to test and
develop more mutually beneficial commercial incentives.
6. Procurement Strategic Aims and Objectives
One of our key business objectives is “Keeping a strong, financially viable, socially
responsible, well governed business”. Our procurement strategy therefore aims to
support this objective and the our continuous improvement and value for money
strategic objectives including:

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implementation of CI&VFM model within the business
awareness and development of competence in CI&VFM
attainment of the national standard on Value for Money
recording and tracking cashable and non-cashable efficiencies
In order to achieve our strategic aim, we have set out the following key objectives:
Overall Aim
To develop a strategic approach to procurement and ensure that
our procurement strategy is aligned to our corporate objectives
1. Strategic
Approach
Develop a strategic approach to procurement and contract
management across the organisation to support Value for Money
and Financial Viability
2. Develop QAC
systems
Develop a standardised procurement and contract management
QAC system to ensure compliance and build organisational
capacity
3. Manage the
Supply Chain
Manage supply chain performance to create commercial incentives
and develop risk management reporting systems to mitigate
against risk
4. Embed Social
Value
Embed the delivery of Social Value, including economic, social and
environmental value within the procurement and contract
management processes
5. Develop
Competence
Increase awareness and develop competence in procurement and
contract management with relevant stakeholders
Our strategic aims and smart objectives are set out fully within our Procurement Action
Plan 2014/15 and 2015/16 in Appendix 4.
7. Social Value and Sustainable Procurement
Delivering sustainability and being socially responsible are essential to our procurement
strategy. We want to assess measure and maximise the “community benefits” including
social, economic and environmental impacts that we can achieve within the local area.
We will include social value requirements in our tender processes and work
collaboratively with our supply chain and partners to measure our local impact and
support the development of socially responsible businesses.
7.1 Economic
As part of our sustainable procurement strategy we aim to have a positive economic
impact within the local economy and have a good understanding of how and where every
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pound is spent. We have established a baseline and target of % spend within the local
economy. We will work with suppliers, partners and businesses to monitor this and
develop a diverse supply chain in order to meet our corporate targets. We will review
our support for SMEs, Social Enterprises and 3rd Sector organisations to ensure that we
do not directly or indirectly discriminate against these within our procurement activities.
7.2 Social
Bolton is a local authority area within the Association of Greater Manchester (AGMA) and
is ranked as 48th out of 328 most deprived districts (Index of Multiple Deprivation 2010)
and now falls within the bottom 15% of most deprived areas. Many of our customers
and communities face social exclusion, food and fuel poverty, poor health and lack the
educational attainment and qualification to access employment and training
opportunities within the wider Greater Manchester area.
As part of our charitable objectives and as a social housing provider with broader
regeneration objectives, our procurement strategy aims to address some of these social
imbalances and supported by our Community Investment Programme, to tackle social
exclusion, worklessness and health inequalities.
We will explore methodologies to measure our social and financial return on our
investment as part of our procurement review.
7.3 Environmental
Our 20x16 Environmental Sustainability Strategy sets out our approach and key actions
required to reduce our carbon emissions and the impact of our business. It is typically
defined as “Meeting the needs of the present without compromising the ability of future
generations to meet their own needs”. Our vision for environmental sustainability
includes:


Providing new and existing homes that are energy efficient, sustainably powered
and heated and use sustainably supplied materials
Promoting and raising the profile of environmental sustainability amongst our
staff, partners, contractors and communities in which we work.
By developing a more strategic and sustainable approach to procurement, we can help to
have a more positive environmental impact through improved decision making and
behaviour change across all our stakeholders including: staff, board, customers,
suppliers and partners.
We aim to embed environmental sustainability decision making into our procurement
and contract management processes and consistently consider the environmental costs,
benefits and impacts of purchasing decisions on our business and the supply chain.
8. Equality and Diversity
We are committed to valuing diversity and ensuring fairness in all our business
operations including our procurement. We aim to promote positive action to ensure that
equality and diversity needs are met for all groups with protected characteristics. As a
registered provider, we also have a general duty to consider equality under our public
functions, in housing and related activities. Equality and Diversity will be considered at
the pre-procurement stage of tendering and where appropriate, an equality analysis will
be conducted with relevant stakeholders including customers.
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9. Consultation and Communication
Key stakeholders including staff, trade unions, customers, board, and strategic partners
have been consulted as part of the development of this strategy to enable a shared
vision and common understanding of our strategic approach to procurement.
We aim to further consult with suppliers and strategic partners and other relevant
stakeholders during as part our Communication Plan and during the implementation
phase in order to create an ongoing dialogue to improve communication, increase
transparency and develop shared ownership.
10. Monitoring and Review
This Procurement Strategy will be reviewed every 3 years by Bolton at Home
Management Team and Board with consultation with relevant stakeholders. Key actions
arising from the strategy will be included in a Procurement Action Plan which will be
monitored quarterly with annual reporting to Internal Audit, BHMT and Board.
We look forward to working with all our stakeholders in developing and implementing our
new procurement strategy.
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