Procurement Strategy to 2017

The University

The University of Leicester is ranked in the top 20 universities in Britain and prides itself on its inclusive academic culture. The Times Higher Education described the University as “elite without being elitist”. We place equal emphasis on teaching and research. We believe that teaching is inspirational when delivered by passionate scholars engaged in world-changing research – and that research is stronger when delivered in an academic community that includes students.

The University comprises four colleges, within which our 35 departments and schools are located. The four colleges are:

  • College of Arts, Humanities and Law
  • College of Medicine, Biological Sciences and Psychology
  • College of Science and Engineering
  • College of Social Science

Such a structure enhances opportunities for research and teaching, facilitating interdisciplinary and multidisciplinary work, and helps minimise any administrative barriers.

The Higher Education sector is a fast growing and fast moving, multi-billion pound, international market. It includes multinational corporations, national governments and the traditional universities and colleges. From 2015, UK universities will be afforded less protection from the dynamics of this market as they are required to compete for candidates whatever their A Level results, as the Student Number Controls is removed.

In order for the University of Leicester to survive and prosper in such an environment it will be important that it maximises the value it gains from its procurement activity, with the procurement function fully integrated into its strategic decision making processes.  

Our Procurement

‘Procurement’ is the process of acquiring goods, works and services, covering both the acquisition from third parties and from in-house providers. The process spans the whole life cycle from identification of needs, through to the end of a services contract or the end of the useful life of an asset. It involves options appraisal and the critical ‘make or buy’ decision which may result in the provision of services in-house in appropriate circumstances.

The University spends £120m a year on a wide range of goods and services; from IT hardware and software to laboratory supplies, from cleaning supplies and equipment to space research equipment, from consultancy services to large scale construction contracts. The pie chart below shows how this spend breaks down across category groups.

 Spend by Category Group

 We currently employ a fairly devolved structure for organising and undertaking the procurement of goods and services. Whilst we have a Central Procurement Unit (CPU) that must approve and support all procurement exercises over £50k, the CPU has limited resources which reduces the impact it can have in creating value, inspiring innovation and making savings.

We employ a number of procurement systems that work independent of one another, including an ERP system (SAP) for raising requisitions and orders, an e-tendering system (InTend), purchasing cards, as well as paper requisitions and orders still being used in some parts of the University. 

Towards the end of October 2013, the University was independently assessed against the English National Procurement (ENP) procurement maturity model. The resulting report and high-level action plan identified a number of areas where the University could improve its performance in procurement and contract management were it to commit more resources to its CPU and implement a category management approach.

This Procurement Strategy takes the ENP report/action plan as its starting point, detailing how a more heavily resourced CPU will implement a category management approach and increase the procurement and contract management capability and capacity of the wider organisation through the development and delivery of guidance and training, and through greater engagement with its internal customers.

It is critical that we effectively implement this strategy given the large scale of the procurement activity planned over the next few years, including a £156m capital programme.

Our Vision, Mission and Aims

Our vision is that, “All of the University’s procurement activity supports its corporate strategy and priorities, taking proportionate account of risks and facilitating innovation”. 

The mission of the CPU is to, “Proactively engage with all relevant stakeholders to ensure that procurement exercises, and the subsequent contracts, fully reflect requirements and demonstrate value for money on an ongoing basis”.

We aim to develop the University’s procurement function to the extent that it is ‘Best in class’, so capable of:

  • Making 3.5% annual savings on impactable non-pay spend
  • Realising the target for collaborative spend of 30% set by the Diamond Report (Footnote 1) 
  • Actively influencing (Footnote 2)  90% of the University’s impactable non-pay spend
  • Identifying and realising significant ‘social value’ (Footnote 3)  through its procurement activity

Our Values

The following values underpin our vision, mission, aims and strategy:

Focus on the customer - We must listen to, and understand, the customer

Seek early involvement - We can add the greatest value for the customer by being involved at the earliest/business case stage of the commissioning/procurement cycle

Be proportionate - We need to take a balanced approach that ensures legal compliance whilst being as lean as possible

Look to collaborate - We should endeavour to collaborate wherever this represents best value, taking advantage of the benefits afforded by framework agreements; the economies of scale, speed to market and established contract terms and conditions

Facilitate innovation - We must give suppliers as much opportunity as possible to provide innovative solutions

Performance-orientated – We must measure both our own performance as well as that of our suppliers to ensure that value for money is being delivered and to allow lessons to be learnt and to facilitate continuous improvement

How we intend to realise our vision

The high-level actions that we must take in order to realise our vision and aims can be broken down into four areas – Savings, Partnership, Social Value and Organisation. These four areas also make up the balanced scorecard that we will use to measure our progress (outlined in the following section).

In order to realise our vision and aims, we will: 

Savings

  • Roll out a Category Management approach, providing Category Managers with appropriate data, tools, templates and training for developing savings-orientated Category Strategies
  • Introduce and maintain a Savings Tracker, informed by Category Strategies, for recording savings from identification through to approval by Finance
  •  Ensure that Category Managers regularly meet with relevant internal stakeholders, including gaining membership of appropriate project boards, to gain early involvement in procurement projects where opportunities to add value and identify savings are at their greatest
  • Identify the best opportunities for collaborating with other higher education institutions (HEI) , as well as the wider public sector, in order to benefit from economies of scale
  • Establish and promote the corporate contracts and framework agreements that represent the best value, maximising aggregation and eliminating off-contract spend

Partnership

  • Establish a framework whereby the level of CPU involvement in a procurement exercise is proportionate to its risk and value, and the training, guidance, tools and templates made available to non-procurement professionals makes them sufficiently capable and confident in playing their part in undertaking the exercise
  • Work with other HEIs and public sector organisations, not only to identify  opportunities to collaborate and make savings, but also to share best practice to improve the University’s and the sector’s procurement capability, capacity and performance
  • Develop a Supplier Relationship Management (SRM) approach that identifies the University’s strategic suppliers and the means by which we can manage their performance and engage with them to realise further value and savings
  •  Establish mechanisms for gaining regular feedback from internal customers on the performance of the CPU and its policies, procedures and guidance material, in order to improve the service that it provides

Social Value

  • Develop procurement policies, guidance and training that ensures consideration of the social, economic and environmental benefits that may be realised as part of each procurement exercise, including giving due regard to equality
  • Develop and implement a policy for ensuring that our procurement processes are as SME (Footnote 4) -friendly as possible, including publicising a pipeline of upcoming contract opportunities on our website and delivering regular ‘How to do business with us’ presentations to potential suppliers across the private, voluntary and public sectors
  • Use outcome specifications wherever appropriate, so allowing for innovative solutions
  • Ensure that Equality Impact Assessments (EIAs) (Footnote 5)  are undertaken at the planning stage of the commissioning/procurement cycle, where appropriate
  • Encourage the use of whole life costing when evaluating tender submissions, wherever appropriate
  • Work with our suppliers to reduce the University’s Scope 3 (Footnote 6) carbon emissions as far as is possible
  • Adopt the Government Environmental Buying Standards, where there is a sound business case
  • Engage with suppliers to encourage them to invest in skills development to help drive economic growth, for example by recruiting University students as interns

Organisation

  • Review the University’s procurement procedures to ensure that they are as lean as possible, ensure adherence to procurement law and best practice, reflect the University’s corporate objectives and risks, and align with grant application processes   
  • Review, develop and deliver procurement guidance and training to ensure that corporate risks, including those relating to business continuity, information assurance, and fraud and corruption, are given due consideration throughout the procurement process and contract management
  • Review and develop standard procurement and contract management templates, including our suite of terms and conditions, so as to be as lean (and SME-friendly) as possible, whilst also reflecting the University’s procurement policies and procedures
  • Roll out a full Purchase-to-Pay system (‘Smarter Purchasing’) across all four colleges/35 departments, as well as Professional Services (Footnote 7) , so as to create transaction efficiencies and enhance the management information available
  • Explore the potential for implementing a fully integrated electronic sourcing, contract management an SRM system
  • Undertake a Procurement Competency Audit of all staff involved in procurement and contract management activity to identify any knowledge and skills gaps, then develop and deliver training and guidance to fill these gaps
  • Establish a Procurement & Contracts Review Board, with senior management representation, with the purpose of reviewing high value/high risk procurement exercises/contracts and making recommendations that ensure procurement rules and best practice are followed

How we will measure our performance

We will measure our performance using the balanced scorecard shown below, reporting progress against the scorecard, as well as providing the following information, to the University’s Finance Committee on a quarterly basis:

  • Tenders underway
  • Upcoming tenders (to commence in the next reporting period)
  • Contracts awarded
  • Procurement procedure waivers
  • Status of significant procurement risks

Procurement Performance Balanced Scorecard (Footnote 8) 

Balanced Scorecard

 

 

Footnotes:

1 The Diamond Report, ‘Efficiency and effectiveness in higher education: A report by the Universities UK Efficiency and Modernisation Task Group’ was written by Professor Ian Diamond, Principal and Vice Chancellor University of Aberdeen, in 2011. It identified a number of areas in which HEIs needed to improve their procurement performance: better strategic leadership in procurement, greater collaborative procurement and improved procurement capability and capacity. (RETURN)

2 ‘Actively influenced’ impactable non-pay spend comprises that directly procured by the CPU, that procured as directed by the CPU via framework management, as well as that procured in line with robust processes, procedures, guidance and/or advice provided by the CPU.  (RETURN)

3 ‘Social value’ is any social, economic or environmental well-being benefits. The Public Services (Social Value) Act 2012 makes it a statutory requirement for public authorities (including universities) to consider if any improvements in the economic, social and environmental well-being of an area may be generated when tendering for a public services contract or framework agreement caught by the Public Contracts Regulations 2006, and where relevant to the nature of the contract.  (RETURN)

4 SME – Small and Medium-sized Enterprises. A company that employs fewer than 250 people  (RETURN)

5 Equality Impact Assessment (EIA) - A process designed to ensure that a policy, project or scheme does not discriminate against any disadvantaged or vulnerable people  (RETURN)

6 Scope 3 carbon emissions - Indirect emissions that organisations produce through their activities, but occur from sources not owned or controlled by the organisation. These are distinct from Scope 1 emissions that are direct emissions from owned or controlled sources and Scope 2 emissions that are indirect emissions from the generation of purchased energy  (RETURN)

7 Professional Services -  The administrative, support, clerical, technical and manual staff of the University, located in the academic departments, colleges and Corporate Services (including Finance, Estates, HR and IT)  (RETURN)

8 The Scorecard includes National Audit Office Best Practice Indicators which the UUK Strategic Procurement Group proposes for use across the higher education sector. These are the performance indicators prefixed NAO, followed by PPI or PSI based on whether a Procurement Primary Indicator or Procurement Secondary Indicator  (RETURN) 

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