October 2007 Best Practice Contract Management Workshop SRM at Essex County Council Procurement Services Working to achieve Excellent Procurement

October 2007

Best Practice Contract Management Workshop

SRM at Essex County Council

Procurement Services Working to achieve Excellent Procurement

Essex County Council

Step Change Procurement

Page 2Procurement Services

Introduction

• Consider 5 Suppliers

• Would you consider they are capable of providing the

service you require?

• Are they delivering as expected?

• Have you got Value For Money?




Value Losses

Overall Performance - Across All MeasuresMeanScore

Capability, Knowledge & Experience 4.2

Dependability / Reliability 4.1

Responsiveness 4.1

Understanding Client Needs 4.1

Quality of Output 4.0

Delivery to Specification 3.9

Project Management Skills 3.9

Business Compliance 3.9

Delivery to Milestone / Deadlines 3.8

Cost Certainty / Delivery to Budget 3.8

Ability to Innovate / Add Value 3.7#

Value for Money 3.7

Overall Performance 3.9

43

40

38

31

28

22

30

23

24

19

17

14

25

41

35

37

48

48

53

40

49

41

46

40

46

50

13

20

19

17

18

21

21

23

26

28

35

34

19

3

6

6

4

5

4

8

5

9

8

8

7

6

Good Adequate Poor/V.PoorVery good

Inputs

Process

Outputs

Outcomes

Chart shows live example of contracted

supplier performance

showing value lost after

appointment of capable suppliers

Contract management alone will not secure value from contracts. It needsTo be complemented by appropriate supplier relationship management.

SRM is about sustaining and improving mutual value




Look in the Mirror

• Our Key suppliers told us that

– Current contracts are tighter that the previous set but can stifle innovation

– Budget management cycle makes planning difficult

– They want to use target costing …We do not seem inclined to follow.

– We want control. Suppliers feel to be subservient and arms-length contractor rather

than partner. Win/Lose.

– We do not understand risk & reward

– They want turnover certainty and we want budget spend certainty…but we do not

appear to have goal alignment

• SRM looks to restructure those relationships in order to drive win/win situations

and to enhance bottom line results and service improvements for the benefit of

both parties




Supplier Relationship Management

• A Strategic Approach

• To Achieve Maximum Value For Money

• To Ensure Efficiency and Effectiveness in Budget Spend




• Ensure capability to consistently deliver against Essex County Council’s

needs

• Improve that capability to make service delivery better, faster and at

lower cost

• Develop new capability to meet emerging Essex County Council needs

• Measure and manage overall key supplier performance.





• A joint approach to continuous improvement

• Encourage innovation.

• Our vision is that strategic suppliers move to a position where

they can actively contribute to and deliver against the strategic

objectives of Essex County Council.





SRM Skills

• Commercially minded

• Knowledge & experience of process improvement activities

– Lean and Agile improvements

– Innovative and analytical thinker

• Ability to drive process change

• Delivery focussed

• Tenacious

• Driven

• Ability to influence





Relationship with Contract Management

CATEGORY MANAGEMENT

CONTRACT LIFECYCLE

MANAGEMENT

SUPPLIER RELATIONSHIP MANAGEMENT

Ø Demand managementØ Supply market monitoringØ Industry cost analysisØ Procurement portfolio

managementØ Aligned business

processes

MORE DAY TO DAY

Ø SpecificationsØ Contract designØ T&Cs / SLAsØ ComplianceØ Contract performanceØ Close out

MORE STRATEGIC

Ø Capability managementØ Communication

managementØ Supplier competency

assessmentØ Account planningØ Continuous improvement




BASELINING ACTIVITY

CONTRACT MANAGEMENT

ACTIVITIES

SPONSORSHIP REVIEW

CONTINUOUSIMPROVEMENT

CYCLE

High Level SRM Process

Methodology based on best practice from private sector

tailored to meet public sector requirements




Progress

• Achievements

– Programme now underway with 7 Strategic Suppliers

– 3 Additional Suppliers entered programme this month

– Relationships all Benchmarked

– 8 Projects already identified to deliver mutual benefit and

potential cashable savings




Take Away

“SRM aims to deliver value for money over and above

traditional contract management”

Documents

October 2007 Best Practice Contract Management Workshop SRM at Essex County Council Procurement Services Working to achieve Excellent Procurement