6.1 Are there efficient and effective processes and systems for ordering goods and services?
A. What is the process for receiving goods and services?
Practices and Processes Suppliers deliver on ad-hoc
basis. Paperwork intensive or
Selected suppliers plan their deliveries. Mainly paper intensive.
Services are formally received by originator (eg GRN raised). All key suppliers plan their
deliveries. (Does not include couriers)
Receipts from key or volume suppliers automated using technology at
delivery point.
Consideration of packaging, returns and waste disposal activities.
Key or volume suppliers electronically transmits delivery documentation in advance. Agreed packaging and specific Unit of Measure activity. Benefits related to packaging reduction evidenced.
B. What is your rate of performance in terms of payments to suppliers?
Overall Value of Results Payments frequently and
deliberately withheld to assist cash flow. High occurrence of supply stoppages due to poor payment. Poor supplier relations as a result or
Terms applied considered poor for public sector. Frequent cases of late payment. Some instances of supply stoppages as a result.
Long-term payment negotiated to support supplier cash flow with received commercial benefit to service. Payment
generally consistent with agreed terms. No supply issues resulting from poor payment.
Consistent payment terms across sector. Terms applied are considered good for wider public sector. Prompt and consistent payment used as a negotiating tool.
Good payment terms used to develop supplier relationships. Prompt payment recognised as good practice by all functions. Terms consistently adhered to. Organisation measures own payment performance.
C. How established is Quality Assurance in the procurement process?
Resources and Skills No QA strategy for any
products or services – simple goods return/ shortage notification processes in place or Ad hoc sampling or inspection on failure. Conformance
documentation supplied for high-risk items. Supplier quality audits conducted for key suppliers.
Selective and focused Good Inwards inspection
(historical based). Supplier Quality Audits conducted and freely monitored.
Manufacturers’ process capabilities qualified for key product. Total Quality Management applied throughout the Supply Chain for key suppliers. Supplier audits carried out and widely communicated Services.
Question
McClelland
Attribute
Section 6
continued
6. Does the organisation have efficient and robust processes and systems to support advanced procurement activity?
6.1 Are there efficient and effective processes and systems for ordering goods and services?
D. Are suitable technology- based tools in place and used? Linked to BPI9
Information Systems Crude manual processes in
place, e.g. paper-based requisitioning process or basic functionality with back to back purchase orders evident to manage replenishment process. A high level of paper-based demand culture still evident. Significant duplication of effort still evident in managing the Supply Chain transactional process, e.g. goods
receiving, master data updates.
Management information is mainly derived from the Finance System’s Accounts Payable (creditors) module. There are local/home-grown databases which hold information on the
organisation’s procurement activity. Central ordering – mainly manual process.
The organisation uses an e-procurement solution (either integrated or stand-alone).
Information from this system is used periodically to analyse spending and identify where improvements in procurement practice can be made.
It has reduced manual processes but overall technological solutions are only in limited use. The procurement team understands which spend data is captured by which system for at least the last year. Data can be structured by geography, business unit and supplier.
There are reports that show the spend evolution over time.
The system also allows me to quickly view my top suppliers and all the contracts I have with them.
The minimum of manual processes remain. The organisation uses a variety of IT tools to actively control and manage the procurement function, e.g.:
Requisitioning and ordering Enterprise resource planning Contract databases eProcurement/ eMarketPlace eSourcing eAuctions Supplier information is regularly analysed for savings and efficiencies, as well as benchmarked against prior year expenditure.
Automated ordering process with commitment
accounting in place.
Management Information is used from the system in daily work.
E. Are standard coding and pricing mechanisms embedded in purchasing systems with interface to general ledger/finance systems?
Information Systems There is no standardised
item, commodity coding and pricing method in use.
Some item standardisation and commodity coding exists and there is limited pricing structures available through e-procurement and/or other purchasing systems.
Standardised item coding exists and key contract pricing is available on the e-procurement and/or other purchasing systems.
There is fully standardised item coding across the organisation and all contract pricing is
embedded in e-procurement systems, assisting the end user to routinely select the correct items and prices.
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Question
McClelland
Attribute
Section 6
continued
6. Does the organisation have efficient and robust processes and systems to support advanced procurement activity?
6.2 Does the organisation use tools to support payment/invoicing automation?
A. How manual is the process for invoice/ purchase order matching?
Practices and Processes Manual checking of
invoices against purchase order/GRN. Low “match 1st time” rate
or
Regular invoicing based on actual cost. Fully manual process.
Regular invoicing based on actual cost. Some
automation involved in matching process. Low to medium “match 1st time” rate.
Regular invoicing. Automated invoice
matching. High “match 1st time” rate. Purchasing Card or consolidated invoicing for low value/high volume items.
Integrated P2P process, extensive use of EDI/self billing technology.
B. Does the organisation use tools such as
procurement cards and aggregate/consolidated invoices, self-billing and e-invoicing?
Information Systems The organisation does not
use any aggregation tools.
Some tools such as procurement cards and aggregate/consolidated invoices, self-billing and e-invoicing is used.
There is a strategy in place on when different types of technology should be used for specific purchases.
A full technology strategy is in place and has been implemented and embedded in the organisation.
Question
McClelland
Attribute
Section 6
continued
6. Does the organisation have efficient and robust processes and systems to support advanced procurement activity?
6.3 Are stock holdings minimised consistent with efficient supply of goods?
A. To what extent is the supplier delivery
framework tailored to meet specific product needs?
Practices and Processes Goods delivered in bulk
from supplier to remote storage point in relation to point of usage
or
Goods delivered in bulk from supplier to local storage point in relation to point of usage or goods delivered in packs to remote storage point in relation to point of usage.
Goods delivered in packs from supplier to local storage point in relation to point of usage.
Supplier replenishment mechanism in place allowing organisation to pull goods from supplier in packs direct to point of usage.
Supply networking evident consolidating the supply of goods packs direct to the point of usage.
B. How developed are the processes for stock management and is inventory managed efficiently?
Practices and Processes No Inventory or availability
measurements or controls in place. Provisioning has little correlation to demand or
Measurement in place but basic stock controls/ demand management processes in place, leading to high levels of inventor/ obsolescence and or regular stock outs.
Stock segmented by identified classifications, with appropriate and differentiated stock
management processes and controls in place that recognise financial exposure and service sensitivity. Evidence of management reporting improving business
processes and performance.
Detailed demand
management and inventory segmentation processes in place, with mechanisms to push inventory back down the supply chain considered where appropriate. Clear inventory optimisation strategy in place with vendor performance improvement as a key contributor.
Optimum stock
management approach in place for each segment. Extensive use of multiple Vendor Managed Inventory options evident. Inventory turns and availability excellence (Turns: 18+; Availability: 98%+).
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