Manage Procurement Plan

Establishing a strategy for managing the outputs from the supplier is important to ensure that the desired outcomes of the procurement plan are met. The strategy helps to define the supplier's role in meeting the needs of the organisation and sets expectations for the supplier's performance. It also ensures that the supplier is held accountable for their actions and that the organisation has a clear understanding of what is expected of them. This helps to minimise the risk of project failure and helps to ensure that the organisation receives value for money. Additionally, having a clear strategy in place helps to build a strong and positive relationship between the organisation and the supplier.

Here are the steps to establish this strategy:

1. Determine the desired outcomes: The first step in developing a strategy is to identify the desired outcomes from the supplier. This involves identifying the specific requirements and expectations for the goods or services being procured.
2. Develop performance measures: Once the desired outcomes have been identified, the next step is to develop performance measures. This involves determining how the supplier's performance will be evaluated and measured against the desired outcomes.
3. Develop a procurement fulfilment plan: After the performance measures have been established, the next step is to develop a procurement fulfilment plan. This plan includes the procurement details, an evaluation of resource requirements for the procurement activities and a supplier scorecard where the supplier’s performance is being evaluated.
4. Monitor and evaluate performance: Once the performance management plan has been developed, it is important to regularly monitor and evaluate the supplier's performance. This helps to identify any issues or areas for improvement and allows for adjustments to be made as necessary.

A procurement fulfilment plan is a comprehensive plan that outlines the steps and activities required to complete a procurement project. It includes all the details of the procurement, such as the goods or services to be procured, the quantity required, the delivery schedule, and the budget allocated.

Establishing a procurement fulfilment plan is crucial to ensure that the procurement process runs smoothly and efficiently. It helps to ensure that procurement activities are completed on time, within budget, and to the required quality standards.

In addition to the procurement details and resource requirements, the procurement fulfilment plan should also include a supplier scorecard. This scorecard is used to evaluate the supplier's performance in meeting the procurement requirements. It helps to ensure that the selected supplier is meeting the required standards, and it provides a basis for ongoing performance monitoring throughout the procurement process.

Developing key performance indicators (KPIs) is an essential step in managing procurement. KPIs are specific, measurable metrics that are used to evaluate the effectiveness of procurement activities and ensure that desired outcomes are achieved. The following steps can help in developing KPIs:

1. Identify the critical success factors: Identify the factors that are critical to the success of the procurement process, such as on-time delivery, supplier quality, or cost savings. 2. Develop metrics: Develop metrics that measure the critical success factors identified in step
2. For example, for on-time delivery, the metric could be the percentage of orders delivered on time.
3. Set targets: Set targets for each metric to provide a benchmark for success.

Metrics

Here are some examples of metrics or key performance indicators (KPIs) that can be used to monitor procurement performance:

• Cost savings
  • This KPI measures the amount of money saved by the procurement team in comparison to the original budget.
• Supplier performance
  • Supplier performance
• Procurement cycle time
  • This KPI measures the time it takes to complete a procurement process, from the identification of a need to the final delivery of goods or services.
• Purchase order accuracy
  • This KPI measures the accuracy of purchase orders and helps to identify areas where improvements can be made in the procurement process.
• Contract compliance
  • This KPI measures the degree to which suppliers are complying with the terms and conditions of the contract.
• Supplier diversity
  • This KPI measures the number of suppliers from diverse backgrounds and helps to ensure that the procurement process is fair and equitable.
• Customer satisfaction
  • This KPI measures the satisfaction of internal customers with the procurement process and helps to identify areas where improvements can be made.

These are just a few examples, and the specific metrics used will vary depending on the organisation and the goals of the procurement process.

A management strategy for transition in/out issues refers to a plan that outlines how an organisation will manage the process of transitioning into or out of a procurement contract with a supplier. The strategy should address potential issues that may arise during the transition period and outline steps to mitigate them.

For example, if an organisation is transitioning to a new supplier, the management strategy may include:

1. Clearly defining the roles and responsibilities of all parties involved in the transition process.
2. Establishing timelines for the transition process and monitoring progress against these timelines.
3. Communicating regularly with the new supplier to ensure they are aware of any issues that arise and to address any concerns they may have.
4. Providing training and support to staff members who will be working with the new supplier.
5. Ensuring that all necessary documentation and information is transferred to the new supplier in a timely and accurate manner.

Similarly, if an organisation is transitioning out of a procurement contract, the management strategy may include:

1. Developing a plan for how the organization will continue to meet its needs during the transition period.
2. Communicating regularly with the outgoing supplier to ensure they are aware of any issues that arise and to address any concerns they may have.
3. Establishing timelines for the transition process and monitoring progress against these timelines.
4. Ensuring that all necessary documentation and information is transferred from the outgoing supplier in a timely and accurate manner.
5. Evaluating the performance of the outgoing supplier and identifying any areas for improvement in future procurement contracts. 

Procurement Transition Plan 

Creating a procurement transition plan involves identifying the specific tasks required to smoothly transition in and out of the procurement process. It is important to have a plan in place to ensure a seamless transition and minimize disruptions to operations.

The procurement transition plan typically includes both transition in and transition out tasks. Transition in tasks may include setting up supplier accounts and ensuring they have the necessary information to fulfill the procurement requirements. On the other hand, transition out tasks may include managing the end of the contract with the supplier and ensuring a smooth handover to any new suppliers or internal teams.

Consulting with stakeholders to confirm the procurement plan is important because it ensures that all stakeholders are aware of the procurement plan and that their needs and expectations are considered in the procurement process.

Stakeholders may include project managers, users, suppliers, and other departments or organizations that may be affected by the procurement.

Consulting with stakeholders through all stages of the development of the procurement plan is necessary to ensure that their needs and expectations are taken into account.

By involving stakeholders in the planning process, it helps to identify potential issues, risks, and concerns that may arise during the procurement process. It also helps to ensure that the procurement plan is aligned with the overall goals and objectives of the organisation, and that it supports the needs of all stakeholders involved.

Additionally, involving stakeholders in the procurement planning process helps to build trust and credibility, and creates a sense of ownership and accountability among all parties. This can lead to better communication and collaboration, and ,ultimately, a more successful procurement outcome.

Example

One example of when stakeholders were not consulted during procurement, and it went wrong is the case of the UK's National Health Service (NHS) and the outsourcing of some of its services to private companies. In 2011, the NHS entered into a contract with a private company, Circle Health, to run a failing hospital in Cambridgeshire. The contract was worth £1 billion over 10 years.

However, the decision to outsource the hospital's management was made without proper consultation with stakeholders, including staff and patients. The result was a lack of understanding of the hospital's needs and culture, which led to a failure to deliver the expected improvements in care and financial savings. In 2015, after just three years, Circle Health withdrew from the contract, leaving the hospital in a worse state than before.

This example highlights the importance of consulting with stakeholders during procurement to ensure that all parties are aligned in terms of objectives and expectations and to avoid costly mistakes that can have negative consequences for all involved.

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