Commodity Profile & Strategy for the [Contract / Framework Agreement] for: [insert] Reference: [insert]

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Slide 1

Version Control
Version Name Date Completed Comments

When drafting and amending the Profile & Commodity Strategy, the PPS should complete the above table to ensure changes can be tracked and queries can be directed to the appropriate UIG member/others as appropriate

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Slide 2

Contents:
Below is the mandatory minimum contents of the Profile & Commodity Strategy. Other slides can be added on a commodity specific basis as appropriate. Further slides are contained in the Scottish Public Sector Toolkit

Contents Version Control

Consultation with HoCP (delete slide prior to issue for signoff) Executive Summary UIG Role & Input Stakeholder Contacts Business Requirements Expenditure Analysis Total Cost Model (OPTIONAL) Supply Market Overview Benchmarking Opportunities Risk Analysis - Including Barriers to Change Corporate Social Responsibility Strategic Tendering Options ITT Considerations PQQ/Tender Award & Weighting Criteria Contract Implementation Strategic Contract Management Commodity Project Plan Commodity Life Cycle & Technology Roadmap (OPTIONAL) Supply Chain Considerations (OPTIONAL) Sign-Off

Slide Number
2 4 5 6 7 8 10 14 16 20 21 22 25 27 29 32 34 35 36 37 38

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Slide 3

Mandatory consultation with the Head of Collaborative Procurement (HoCP)

PPS must consult with the HoCP in the following circumstances:
y where Single Tender Action (non competitive action) is proposed y where a procurement has a strong potential to influence CSR issues y where an extension to a contract or framework agreement is proposed y where the negotiated procedure, competitive dialogue, or dynamic purchasing system is the proposed tendering option y where it is proposed to shorten the EU minimum tendering timeframes or use the accelerated procedure y where it is proposed that the duration of a framework agreement will exceed 4 years y Where TUPE may apply

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Slide 4

Executive Summary
y Current status: y Scope:
[list]

PPs to complete this slide after completion of the Strategy and prior to

forwarding for sign off by the UIG/HoCP

y Spend total versus addressed:

[detail]

[list]

y Strategic recommendations and reasoning: y Benefits how much, how, by when?

     Price parity opportunities of a achievable by DATE Benchmarking opportunities of b achievable by DATE

[detail]

Market competitiveness e.g. new player breaking into the market, driving pricing down but want commitment , c by DATE Product standardisation/ rationalisation potential of d, assuming xyz by DATE Supply chain redesign, moving to ex-works, e by DATE

y Any major barriers to success: [detail]

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Slide 5

UIG Role & Input

PPS to agree with the UIG their role, responsibilities, input and actions at each stage in the strategic sourcing process e.g.
y PPS to agree with the UIG who will sign off all key stage documentation e.g. strategy, award recommendation etc y [if applicable]: PPS to agree with the UIG the role UIG members will play in PQQ evaluation [insert] e.g. PPS to evaluate all sections of PQQs and the UIG to evaluate Part E only y PPS to agree with the UIG the role the UIG members will play in ITT evaluation [insert] e.g. PPS & UIG (or nominated individuals) to evaluate technical aspect of tenders and PPS to evaluate commercial aspects etc. y PQQ/ITT results will be revealed by the [overall weighted results/ the average] of Tender Evaluation Board scores etc

Refer to:
y UIG Interface Model - detailing actions required in the various stages in the procurement process y Communication Maps - detailing which documents will be issued, the respondees, and the expected actions e.g. for info, to comment etc
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Slide 6

Stakeholder (& UIG) Contacts for [Contract/Framework Agreement]

y List names and contact details of all stakeholders relevant to this commodity:
Name Job Title Division Contact Tel E-mail

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Slide 7

Business Need and Functional Requirements

Sector Requirements Where we are
y What does the commodity do, standard v customised, level of customisation, quality requirements, real v perceived function, service requirements, user perception, value to institution, specific specifications

Where we want to be
y NB use of generic specifications if these dont exist the UIG needs to start working on them as soon as possible

XXXXXX V6 23/10/2008
Slide 8

Scope of [Name of Commodity]

y Scope the commodity to be covered i.e. what is included in this commodity group, breakdown into subcommodities, which products fall under which sub-commodity

Detergents Cleaning Materials Disinfectants Oven Cleaner Deodoriser Furniture Cleaning Products Soap Powder/Tablet for dishwashing Alcohol / Detergent Wipes

Floor Pads Cleaning Bucket Brushs Mops and associated equipment Disposable gloves PVC / Marigold, Cleaning Equipment discussion with medical category initial identify a potential to purchase from medical contract Cleaning & Hygiene systems for kitchen and general cleaning

Cleaning and Laundry

Hygiene Care Plans

Laundry Chemicals Potential Future Developments

Laundry Detergents Laundry Conditioners Laundry Bleach

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Slide 9

Expenditure Analysis - Spend Distribution

y In scope spend distribution by universities and colleges, supplier, by sub-commodities: [detail]

PPS to add an acknowledgement, for future reference, of the source(s) of data used:

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Slide 10

Future Expenditure Trends

y Demand Profile: [insert]

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Slide 11

Spend Analysis & Conclusions

y Demand Profile: [insert]

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Slide 12

[Commodity] - Typical Cost Breakdown

Profit 10% Complete the breakdown for the commodity

Recommendations
y What are the recommendations

xxxx V6 23/10/2008
Slide 13

Total Cost Model [Name of Commodity] (OPTIONAL)

y List the activities carried out under each step of the product life cycle, Determine the impact of each step on the total cost of ownership in terms of High, Medium or Low, Brainstorm the cost drivers associated with the activities under each step, Determine the opportunities in each area. Which costs can be reduced (savings)/avoided (cost avoidance)?, Identify Low, Medium and High Savings Opportunities, Identify the barriers and enablers related to realising the opportunities
Raise Need
Activities:

Acquire / Order y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y y

Use y y y y y y y y y y y y y y y y y y y y y y y y

Dispose

y y y y y y y y y y y y y y y y y y y y y y y y

Impact: (on TCO )

Cost Drivers:

Savings Opportunity:

Barriers:

Enablers:

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Slide 14

Total Acquisition Cost (OPTIONAL)

Example acquisition costs:

Sample Cost Drivers

Organisations Costs
y y y y y y y Uniform specification and range Delivery frequency and location Order frequency Order value Requisition to P/O Returns Queries Reporting Goods receipt Sewing Rooms Delivery

Supplier Costs
Product Driven Costs Customer Driven Costs

Total Acquisition Costs

Order Fulfilment Costs Administra tion Costs Order Fulfilment Costs

Order Fulfilment Costs

Order Fulfilment Costs

Material Labour Overheads Warehousing Special tooling

Quality Inventory handling specifications Defects/rejects/retur Transportation Picking & Packaging ns IT Costs Customer support Sales

Requisition to P/O Order Transmission Expediting Invoice Reconciliation Timely Payment Queries Reporting

Defects Inspection Rejects Repackaging Reshipping

Storage costs Labour Overheads

Goods receipt Delivery Requisitions

y y y y

Cost Drivers e.g: Product specification and range Delivery frequency and location Order frequency Order value Lead time

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Slide 15

Supply Market Overview

y Market Trends detail what is happening in the market for the commodity, current and future technologies, changing customer demands, new players, mergers and acquisition y Supply Market Share detail the key players within the industry, identify size in terms of turnover, sales, number of customers and capacity

NOTE: trends are important - they reveal:

who is winning/ losing business whos trying to win market share in the UK whose business objectives match the sector what do profit margins typically look like for the industry

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Slide 16

Current Contract Position [Contract/Framework Agreement]

Contract Contract Value Contract Start/End Dates (plus any extension period (s) Comments

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Slide 17

Current APUC/Sector Suppliers of [Name of Commodity]

Current APUC/Sector Suppliers of [Name of Commodity]
Supplier xxx
y xxx

Spend

Total Revenue
y xxx y xxx

Background on the Supplier

xxx

y xxx

xxx

y xxx

xxx

y xxx

y xxx

y xxx

xxx

y xxx

xxx

y xxx

xxx

y xxx

xxx

y xxx

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Slide 18

Main Suppliers in the Market in Context of their Total APUC/Sector Business

Supplier APUC/Sector Spend on Commodity
y xxx

APUC /Sector Total Spend

y xxx

Other commodities supplied; recent APUC/Sector business awards or losses; other business they are tendering foretc
y xxx

xxx

xxx

y xxx

xxx

y xxx

xxx

y xxx

y xxx

y xxx

xxx

y xxx

xxx

y xxx

xxx

y xxx

xxx

y xxx

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Slide 19

Benchmarking Opportunities
y We should look to understand opportunities from: internal APUC price parity I.e. if different Institutions pay different prices and all move to the lowest price point; and, from benchmarking with other organisations e.g. PASA, Value Wales, N Ireland Procurement Service, OGC, Scotland Excel, councils, fire and police service, private sector etc Product Apron Yellow 25mu Apron Clear 20mu Apron Blue 20mu Yellow Clinical Waste 26mu Black Houshold waste bag Pasa Price 1.90 1.57 1.90 12.48 NHSS Price 1.82 1.77 1.82 15.93 Notes -

12.66

10.08

PASA currently use only the 30&40mu, NHSS use 50,40&30mu. Those Health Boards that are using the 50&40mu are currently being identified with a view to standardising to the 30mu

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Slide 20

Risk Analysis for [Name of Commodity] Inc Barriers To Change

Risk Analysis
Description of Risk y xxx Probability of Implications to Risk APUC/Sector y High / Medium / y xxxx Low Measures to Minimise / Eradicate Risk y xxxx

y xxx

y xxxx

y xxxx

y xxxx

y xxx

y High

y xxxx

y xxxx

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Slide 21

Corporate Social Responsibility (CSR)

PPS & UIG to consider CSR issues relevant to this procurement: y General issues: [list] y Result of the Risk Coding Analysis for [goods/services] regarding relevance and risk: [detail results: Equality: X, Environmental/Sustainable: X , WEEE/disposal: X, Social issues: X ] and the impact will be managed by [detail]. NB: The risk
coding analysis results inform the degree of relevance and risk in the above 4 areas associated with the commodity being procured. Taken together with the outcome from completion of the SPRAT (see below), this will enable the PPS/UIG to accurately target these areas in the PQQ/ITT CSR Questionnaire.

y Completion of the Sustainable Procurement Risk Assessment Tool (SPRAT) for [goods/services]: The resulting actions are required to be managed by [detail] NB: areas may already be adequately covered by the existing
CSR questions.

y PQQ CSR Questionnaire (if applicable): exclude any questions which are not relevant to the commodity and do not require
completion by PQQ applicants completion by tenderers

y ITT CSR Questionnaire (if applicable): exclude any questions which are not relevant to the commodity and do not require y EAUC assistance required (optional): [Yes/No] (consider approaching EAUC if the commodity has a high CSR impact, there is
no/little CSR expertise in UIG, if any additional input required etc). If Yes approach EAUC via the standard letter of engagement.

y ITT Statement of Requirements: consider the applicability of the Buy Sustainable-Quick Wins product specifications detailed in
SPPN 15/2008. NB: these contain a set of sustainable specifications covering a range of commonly purchased products and are considered best practice y * Part of the AUPO revised CSR Toolkit (the Risk Coding Analysis and SPRATS have been created by the Environment Agency on behalf of the UK Government)

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Slide 22

CSR
y SMEs, Supported Businesses & Social Enterprises* including Social Issues** & Community Benefits:
y barriers to participation identified as: [insert]. The proposal for removing barriers to participation is [detail] e.g. lotting, sub-contracting opportunities, consortium member etc y Identification of any social clauses or community benefits relevant to this procurement: [list] NB: areas may already be adequately covered by the existing PQQ/ITT CSR Questionnaire.

y Reserved Contract under Regulation 7 of the EU Procurement Regulations: applicable to the contract/framework agreement?: [Yes/No] and brief reason if
not [detail]. Refer to Paragraph 3.5 of the Procurement Manual for guidance.

*refer to section 3.4.3 of Procurement Manual for information on supported businesses and social enterprises.

** social issues might broadly be defined as issues which impact on society or parts of society and cover a range of issues including equalities issues (i.e. age, disability, gender, race, religion and sexual orientation), training issues, minimum labour standards and the promotion of small and medium-sized enterprises (SMEs), including black and minority ethnic enterprises and the third sector including social enterprises. Refer to SPPN 03 2008
for community benefits guidance or SPPN 06 2007 for social issues guidance
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Slide 23

CSR
y
1. 2. 3. 4. 5.

Race Equality Impact Assessment

To determine whether race equality is a core requirement in a contract or framework agreement for goods, services or works, the following questions should be considered: What is to be provided under the contract or framework agreement? [list] Is the provision of the goods, services, or works one of the functions or policies relevant to meeting the duty to promote race equality? [Yes/No]. Refer to Appendix 3 of the Procurement Manual Is the provision of the goods, services or works likely to affect (directly or indirectly) the ability to meet the duty to promote race equality? [Yes/No] Is it necessary to include requirements for promoting race equality in the contract to make sure the duty is met? [Yes/No] What race equality requirements are appropriate for the contract or framework agreement? [list] If the answer to questions 2, 3, or 4 is Yes, race equality is a core requirement. Refer to paragraph 3.7 of APUCs Procurement Manual which details how and where race equality should be implemented into the strategic sourcing process.

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Slide 24

Strategic Tendering Options

y On the basis on the internal and external analysis, plus opportunity assessment, detail the available options and the pros/cons of each. Several examples are detailed below:
 Option 1: Negotiate and extend current contract
Pros: analysis shows limited opportunity in this area compared with rest of portfolio, would achieve savings whilst minimising resource effort; would also allow APUC to approach the market jointly with PASA next year Cons: will not optimise savings as suppliers looking for volumes commitments which is dependant on extended work with stakeholders

 Option 2: Use OGC framework for next 12mths to allow quick win and gathering of better management information
Pros: initial assessment shows saving of 3% on OGC contract, this could be quickly implemented and allow management information to be collated as currently data is poor Cons: comparisons with industry suggest savings of 20% if had APUC commitment contract

 Option 3: APUC tender and contract for x years, with the aim of being in y position in z period of time e.g.
product rationalisation as part of contract requirements. Intention would be dual supply award to maintain competitive tension etc Pros: Maximise savings Cons: Resource effort involved given other portfolio opportunities have higher potential V6 23/10/2008
Slide 25

Strategic Tendering Options

y Lead-In Period - detail period required: y Extension Period: y Tendering route:
[insert justification] NB: consider the period for implementing the commodity onto PECOS agreed with Supplier eEnablement during the project start up stage detail proposed period (s): [insert]

Option [insert number] is recommended because [insert reasoning] following the [Open/Restricted] procedure because

y Option [insert number] to be tendered:

y The framework agreement will be established as follows:  framework route:

[detail] [single supplier/multi-supplier] [insert number proposed] and the justification for this is:

 Multi-supplier framework lots:  Call off contract mechanism:

[detail]

[direct/ranked/ mini competition] and the justification for this is:

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Slide 26

ITT Considerations (particularly relevant to consider at this stage in more detail when the Open Procedure is
proposed so as to reduce the time taken to compile the ITT at the ITT composition stage)

y Statement of Requirements (SoR): the main areas and issues needing to be inserted into the
SoR are: [detail]

y IPR: [IPR does/doesnt apply]. If IPR applies, the impact is [detail] y Access by institutions: detail the number of institutions, affiliated bodies, and if APUC requires to
access the contract or framework agreement: [insert]. Estimated number anticipated to access the contract/framework agreement from commencement date: [insert]

y TUPE: establish if TUPE is likely to apply: [Yes/No]. Check applicability at

www.idea.gov.uk/idk/core/page.do?pageId=6908271 or http://www.out-law.com/page-448 . If yes, obtain the following detail for insertion in Schedule 4 of the ITT: name(s), sex, employment location of individuals who may be subject to TUPE and consult with the HoCP to determine whether legal advice should be sought.

y Monitoring & Evaluation: view the core areas detailed in Schedule 5 of the ITT and detail the KPIs to

apply: [insert] y Detail any other performance indicators or management reports required (other than detailed already in Schedule 5 of the ITT): [insert]

y Pricing Strategy:
  detail the how the commodity will be priced (taking into account whole life costing and cost avoidance [insert]) State the period of price stability (e.g. 1 year etc) and the reasoning for this: [insert]

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Slide 27

ITT Considerations
y Mechanism for addressing variation in the charges e.g. via RPI/CPI etc:
[detail]. More info can be found at www.statistics.gov.uk/statbase/product.asp?vlnk=868

y State the payment period: [detail] NB: if no date is inserted, the default position under the Late
Payments of Commercial Debts Act 1998 is 30 days

y Parent Company Guarantee/bond: state if either is to be included in the ITT for the framework
agreement and/or call off contracts or a contract and why use would be beneficial: [detail]

y Ts&Cs: list any clauses required over and above the standard ts&cs: [list] y Questions for tenderers (to populate Schedule 7 of the ITT): [detail in outline]

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Slide 28

PQQ Award & Weighting Criteria

Award Criteria:
award criteria is based on [MEAT/lowest price]

REFER TO PQQ GUIDANCE NOTE Criteria:

y Part A Background Information y Part B Financial Status

y Section not scored for info only y Insert minimum standards in the Contract Notice or list as an objective criteria in section III.2 in the Contract Notice - refer to Appendix 2 of the Financial Analysis of Accounts for details. NB: if minimum standards are set and arent met, the applicant should be excluded from the process y If the applicant answers Yes to any question they MUST be excluded from the process y If the applicant answers Yes to any question they MAY be excluded from the process y If minimum standards are set and arent met, the applicant should be excluded from the process

y Part C Conviction of Criminal Offences

y Part D Business Probity y Part E Service Operation & Quality y If restricting number of PQQ applicants, the minimum*/maximum number able to participate is: [number]. NB: clarify if this number relates to per lot or to the overall framework y * minimum number must be 5

We need to ensure that we are able to objectively score against each criteria and there is V6 Slide 29 consistency & transparency right through the strategic sourcing process
23/10/2008

ITT Award & Weighting Criteria

Award Criteria:
award criteria is based on [MEAT/lowest price] Price   y      y       y      Best Value, Benchmarking/Whole Life Costing Financial risk Supply Chain Process Minimum order values Stock Management Contingency Implementation Risk Disaster Recovery Plan References/Site Visits Product recall Process Complaints Process Accreditations Fit for purpose Licence Product Labelling & Packaging Product Presentation CIVAS considerations where appropriate. y

Price Quality Ratio:[insert] Weighting Criteria:

y Price XX%
NB: the weighting for sub criteria must also be added

Order Process

y Order Process - XX%

Quality Assurance

y Quality - XX% y Technical Merit XX%

Technical Merit

We need to ensure that we are able to objectively score against each criteria and there is V6 Slide 30 consistency & transparency right through the strategic sourcing process
23/10/2008

ITT Call Off Contract Award Award Criteria: Criteria

[insert criteria]

Price Quality Ratio:[insert] Weighting Criteria:

award criteria is based on [MEAT/lowest price]

y [insert weighting]

We need to ensure that we are able to objectively score against each criteria and there is V6 Slide 31 consistency & transparency right through the strategic sourcing process
23/10/2008

Contract Implementation Lead-In Period

y Detail what will need to happen, when, and whose responsibility is it to e.g.:
       Communicate with universities and colleges to prepare them for any changes Conduct product trials (if applicable) Start running down stocks of current product ranges (if applicable) Prepare/ complete any required training Clarify supplier change management/ implementation expectations Ensure smooth transition Follow-up on progress

Note requirements for completion later in the strategic sourcing process:

    Systems updates, CUPID, SharePoint Savings notification to individual institution Notification and award letters Buyers Guide/ Commodity Action Report (CAR)/ ePS Bulletin etc

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Slide 32

Trading Strategy
y Detail how end-users will see and access contract content N.B. link with ePS team to plan and complete

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Slide 33

Strategic Contract Management

y All contracts or framework agreements will be strategically contract managed by the PPS. Refer to Schedule 5 of the ITT for PPS and UIG roles and responsibilities. Note that once the pan Scotland strategic contract management guidance, processes, and templates are available, these will be incorporated into the strategic sourcing documentation.

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Slide 34

Commodity Project Plan

y Open Procedure
 Complete and attach the Commodity Project Plan or complete equivalent APUC commodity tracker

y Restricted Procedure
 Complete and attach the Commodity Project Plan or complete equivalent APUC commodity tracker

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Slide 35

Commodity Life Cycle & Technology Roadmap Considerations (OPTIONAL)

By understanding where a product is in its lifecycle we get an insight into suppliers likely approach to price and market share

Product Introduction

Early Adoption

Product Maturity

Product Decline

BMS

DES

Branched Bio absorbable DES DES

By looking at product developments in the context of life cycles we can estimate the time based impact on price

Price 1999 To 2005

Now ??

2005 to 2007

Future

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Slide 36

Supply Chain Considerations (OPTIONAL)

Suction Liners

RMS Healthcare 65651930

Abbot

Procare / Serres

VacSax 9910-208

Manufactured UK

Manufactured Malta

Manufactured Finland (Serres)

Distributor SSS

Shipped to Cardinal Health

Warehouse Selby, UK

Dispatched to hospital

Shipped to RMS Stirling

Distribution SSS

Direct dispatch to hospital

Dispatched to hospital

Dispatched to hospital

Distributor link to be removed going forward

Mapping the Supply Chain will allow institutions to understand additional benefits to them from the restructuring of the Supply Chain
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Slide 37

Commodity Strategy Sign-Off UIG & HoCP UIG:

NAME TITLE INSTITUTION DATE

HoCP:
Profile & Commodity Strategy approved by HoCP, APUC: .. Date: ..

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Slide 38