In our experience a meaningful Strategic Procurement Policy can only be one which incorporates the processes and procedures required to govern all organisational procurement, including one-off purchases and repeat transactions, through to tactical contractual acquisitions. Differences in the application of the policy to accommodate the type of procurement being made can be detailed at length in the body of the policy itself.
Our view is that a Strategic Procurement Policy should be built with due consideration for;
- The size and type of organisation it serves, i.e. Manufacturing, Retail, Service Centre
- The status of the organisation it serves, i.e. Private, Public, NGO, Corporate, SME
- The people, groups and internal/external stakeholders it will touch
- The scope of goods and services it is being designed to govern
- Legislative and civil obligations, rules and regulations that the organisation may be subject to
- Probity, transparency and ethical behaviour
The essential inclusions of a functional Strategic Procurement Policy are;
a) Purpose – The reason for the existence of the policy, its stated purposes and objectives, goals and aspirations.
b) Scope – The policy’s organisational jurisdiction and the extent of the area or subject matter that it deals with, or to which it is relevant.
c) Policy Statement – The core document is the formal policy document containing a detailed description of the ways in which the organisation intends to conduct its procurement affairs. The Policy Statement governs all relevant activities by staff, suppliers, others involved in the process, the extent of the authority of individuals and the circumstances and conditions under which the policy statement applies.
The key components of the procurement Policy Statement are listed below. Each of these is a distinct element which will be dealt with in detail in the statement. All elements will combine to form the core document of the Strategic Procurement Policy.
- Transactional Purchasing (Procedure, Guidelines, Spend Limits, Exemptions, Approval)
- Strategic (Tactical) Procurement (Procedures Guidelines, Best Practice, Authority)
- Going to Market (Benchmarking, Expressions of Interest, RFP’s, Tenders)
- Accountability and Transparency (Probity, Ethics, Compliance, Disclosure, Sign-Off, CSR)
- Evaluation Guidelines (Balanced Scorecards, Weighting, Assessment Criteria)
- Demand Management (Communication, Field Requests, Products/Services Knowledge)
- Category Management (Categorising & Defining, Lifecycle, Supply Chain Alignment)
- Supplier Management (Selection, Performance Measurement, Dispute Resolution)
- Compliance Management (KPI’s, Billing, Reportage, Entitlements, Financial Incentives)
- Contract Management (SLA’s, Terms and Conditions, Extensions, Risk, Terminations)
- Co-operative Procurement (3rd Party Alignment, Role Defining, Aggregating, Leveraging)
d) Related Policies – Clear reference to other Policies, by name, version and location, that affect or are affected by the Strategic Procurement Policy.
e) Related Procedures – Clear reference to other Procedures, by name, version and location, that affect or are affected by the Strategic Procurement Policy.
f) Related Guidelines – Clear reference to other Guidelines, by name, version and location, that affect or are affected by the Strategic Procurement Policy.
g) Related Legislation – Clear reference to any Legislation, by source, title and date, that affects the Strategic Procurement Policy or that must be adhered to by staff and suppliers in the conducting of procurement activities.
h) Related Documents – Clear reference to other documents by name, version and location, that affect or are affected by the Strategic Procurement Policy.
i) Stakeholders – The list of key Stakeholders, individuals, groups or bodies with responsibilities, governance or application relevant to the Strategic Procurement Policy.
j) Implementation Responsibility – The person or persons, group or body responsible for the publication, implementation, training and operational application of the Strategic Procurement Policy.
k) Approving Body – The name of the body under whose authority the Strategic Procurement Policy exists. Evidence of approval of the policy by that body; meeting date, agenda, resolution, sign off.
l) Endorsing Body (if applicable) – The name of the body that endorsed the Strategic Procurement Policy. Evidence of approval of the policy by that body; meeting date, agenda, resolution, sign off.
m) Definitions – An explanation of the meaning of terms, acronyms and references contained in the Strategic Procurement Policy.
n) Effective Date – The date and time from which the Strategic Procurement Policy became or will become effective.
o) Revision Process – The designated process for revision of the Strategic Procurement Policy. The review cycle and timeframe (dates of future meetings) for the review to be conducted and for formal revisions to be published and implemented.
p) Policy Owner – The individual appointed as the organisational focal point to act in matters relating the application of the Strategic Procurement Policy.
q) Version Control Reference – The date and reference of the latest updated version of the Strategic Procurement Policy.
r) Content Enquiries – The method and procedure for making enquiries relating to the interpretation, correct application and revision of the Strategic Procurement Policy.
If you are looking to introduce new (or refresh your existing) policies and procedures in respect to procurement, or if you would like an agnostic opinion on this or the closely related subjects of Documentation or Governance, contact us to hear how we could work with you.