Introduction of

Category Management

into the Highways Agency

Category Management Team

Strategy and Supplier Development

Procurement Division

Outline

• Background

• The Frameworks – Contract Headlines

• How will the Frameworks operate?

• Governance Structure

• Roles and Responsibilities

• How will Value be achieved?

• Benefits Realisation – How?

Background

• 2009 - Supply chain mapping study completed on

a sample of HA projects.

Categorised spend into logical groupings of supply

chain spend.

• 2009 / 2010 - Identified potential opportunities for

increased efficiency in purchasing.

• 2010 / 2011 - Deliver targeted enabling

frameworks.

Category Development

• Analysis and Research:

Market

Cost Breakdown (fixed, variable)

Spend (historic / forecast)

Constraints

Opportunities

• Delivery Plan organised into 3 action areas:

Procurement

Product

Process

Why Category Management?

• Potential for aggregation with other users to

achieve best value

• Improve efficiency and drive incentives

• Better visibility of unit costs

• Increase intelligence

• Drive innovation in the supply chain

• Reduced waste

HA Contract Environment

Highways Agency/ Local Highway Authority Enabled

Framework

MAC/ASCFramework

(ASF)

Managed

Motorways

Spot

Tender

Employer

Contracting Body

Category Management Contractors/ SuppliersFramework Contractor/

Supplier

The Frameworks

• Call-off by Primary Suppliers

• Accessible to:

Local Authorities

Transport for Scotland

Welsh Assembly Government

• 4 years maximum

• Inclusion of design support and collaboration

• Programme approach not project

• Secondary Competition

How – will we work together? Category Management:

Operational Procurement:

Business Intelligence & Assurance:

Category Managers: • Create the Category Strategies to create savings “value”

• Agree Delivery Plans and actions with business to achieve buy in

• Agree procurement strategy and set up cross-directorate CWG

• Manage the strategic supplier relationships • Ensure plan meets needs of business

• Ensure savings are achieved at project / programme level

• Provide Business requirements

• Own and support development of category strategies relevant to their area.

• Ensure that the category strategy is applied to the project/contract plan

• Provide governance on the selection of suppliers within the strategy

• Ensure expected savings and performance targets are achieved within the project

• Business & Supplier intelligence

• Spend data capture & analysis

• Compliance monitoring

• Supplier MST / PMF

• Benefits Realisation / Performance Analysis and Reporting

• Provide feedback of performance (MST / PMF & cost – Any changes during delivery)

Feedback LL with data on

spend in category,

governance compliance, knowledge to support the Category Managers

Plans

To achieve value reporting against SR10 targets

Overview of how frameworks will operate

Stage 1:

Forecast for spend, Programme

Development, Aggregation of demand,

Consider Innovations in product and

processes

Stage 2:

Prepare to use CM framework (s),

Prepare documents, Manage

Secondary Competition, award to

Package to successful supplier

Stage 3:

Mobilise, Manage and Deliver the

Programme. Application of MST.

Stage 4:

Analysis and Reporting of Results.

Feed into improvements for

application and future CM strategies.

Stage 1:

Co-ordinator Lead: Category Manager

NDD Central, Regional, MP Commercial,

MP / NDD Project managers, Primary

Suppliers and Framework Suppliers

Stage 2:

Lead: Primary Supplier

Category Manager, MP/ NDD Project

manager, Procurement Officer

and Framework Suppliers

Stage 3:

Lead: Primary Supplier

Category Manager, MP/ NDD Project

manager, Procurement Officer

and Framework Suppliers

Stage 4:

Lead: Category Manager

NDD Central, Regional, MP Commercial,

MP/ NDD Project manager, Finance,

Procurement Officer and

Framework Suppliers

Process Stage By Who

Governance Structure

HA Board

Category

Management

(Project) Board

Procurement

Strategy Steering

Group

Commercial

Governance

Board

Category

Management

Framework

Board (s)

Framework

Community

Board (s)

Governance Process

1. New Category Opportunity

2. Category Plan – Baselined

3. Procurement Strategy,

Produce & Process Actions

4. Procurement Action Complete,

Sign-off Complete

5. Readiness for Live Operations

8. Category Review

6. Programme / Project Overview

7. Call-off Against Frameworks

Category Management Project Board (1,

2, 3)

MP PSSG (3, 5)

NDD CGB (3, 5)

ICF Panel (3, 4)

Framework Community Board (6)

MP Approvals (6)

NDD Approvals (6)

Framework Board (s) (7)

Category Management Project Board (8)

Governance Groups (1) Framework Community Board

• Membership: Category Manager (lead), Project manager, Framework Suppliers, Primary Suppliers and other contracting bodies (as appropriate).

• Purpose: To stimulate innovation and collaborative working to improve the effectiveness of the category.

Framework Board (s) (FMB)

• Membership: Category Manager (lead), Project manager, Primary Supplier, Procurement Officer

• Purpose: To provides governance on the day to day running of the CM framework operations by:

Ensuring correct operation in line with governance

Performance issues, issue resolution and improvement

Monitor value

Sharing best practice

Reporting performance to the Category Management Board

Lessons Learned - capture, share and implement

Governance Groups (2)

Category Management (Project) Board (CMB)

• Membership: Director of Procurement (chair),

Commercial Director, senior managers representing: MP,

NDD, TTD, Finance and Procurement.

• Purpose:

Provides strategic direction of category management

in the HA

To unlock barriers to enable delivery

Monitors the performance / savings of all categories

Addresses issues raised by the Category

Management Team

Roles and Responsibilities

• Category Manager

• Procurement Officer

• Project Manager

• Primary Supplier

• Framework Supplier

Category Manager 1. To support development and implementation of highway categories

within programme to achieve Highways Agency (HA) goals for category management through:

a) Assessing current supply chain procurement strategy, cost data and commodity profiles and business needs, in order to convert gathered intelligence into a proposed strategy to leverage best possible value for assigned categories.

b) Taking ownership of assigned categories, engaging the customer and supply chain in order to provide the major influence on strategy direction and delivering category benefits.

c) Leading change in introducing and embedding assigned categories within a challenging environment across the HA and supply chain. Applying skills and endeavour to challenge existing boundaries where needed; and overcome challenges in implementation.

d) Drives cost reduction, measures and reviews performance and implements continuous performance improvement, reporting of benefits realisation of assigned categories with over-arching business requirements.

Category Manager (cont)

2. To facilitate the delivery of contractual arrangements and

supporting structures required to deliver results on

assigned categories. Using knowledge gained and

commercial awareness to embed a category management

approach in HA and Supply Chain.

3. To support the Group Manager in acting as a change

agent for assigned categories including driving supply

chain relationships, preparing papers and chairing

meetings, designing and delivering training solutions and

presentations to both internal and external stakeholders.

4. Captures future demand information and continually

reviews changes in the marketplace and industry to reflect

these changes within an adapting category strategy.

Procurement Officer • Framework / Secondary Competition:

Ensure secondary competition process and rules are applied

Provide procurement concurrence

Manage the Selection Procedure in accordance with Framework Information

Advise on appropriate secondary competition route

Advise on contractual issues

Single point of contact - framework board for other contracting authorities

Liaise with other procurement reps to discuss issues / collate best practice

• Performance Management:

Monitor/report on volume/value through the framework

Performance feedback – report on any issues to Category Manager

Assist with remediation plan if suppliers fall below the required threshold

Check that MST / PMF reports have been submitted to SSD.

• Lessons learned – collation, analysis and implementation.

Project Manager • Project manager role – remains

• To work collaboratively with framework suppliers, Primary Suppliers and Category Manager to maximise project and programme efficiencies:

Aggregation of demand to seek value, review of proposals from primary suppliers

Identifying opportunities for savings through innovation

• Secondary Competition:

Interaction with Category Manager, utilisation of CM Frameworks

Membership at Framework Board (s) and Framework Community Board (s) Specific working arrangements between the Project Manager and Category

Manager will be agreed at a local level.

• To manage the performance of the project:

MST Measurement – is being undertaken

Managing performance and driving improvements with suppliers

Working with suppliers and category manager to improve and maximise efficiencies

• Lessons Learned – collation, analysis, implementation

Primary Supplier • To work collaboratively with framework suppliers and HA to maximise project and programme

efficiencies

Recommendations on aggregation of purchasing

Identifying savings opportunity in programme delivery

Identifying savings from innovative processes and product supply

• To carry out secondary competitions within HA governance:

Preparing Competition

Providing Assessment

Preparing assessment report and recommendation for award

Complete and submit the “Certificate of Procurement Compliance” to the HA procurement officer

Obtaining primary supplier internal approvals

• To manage the performance of the framework suppliers:

MST Measurement

Managing performance and driving improvements with HA

Working with HA and framework suppliers to improve and maximise efficiencies

• Lessons Learned – collation, analysis, implementation

Framework Supplier • To work collaboratively with other framework suppliers, primary suppliers and HA to

maximise project and programme efficiencies:

Recommendations on aggregation of purchasing

Identifying savings opportunity in programme delivery

Identifying savings from innovative processes and product supply

• To respond to secondary competitions:

Taking part following guidance

Providing value to the framework

• To manage their performance effectively:

MST Measurement ensure completed on time, accurately and is supported by evidence to support proposed markings

Highlight issues and contribute to problem resolution

Managing performance and driving improvements

Working with Primary Suppliers and HA to improve and maximise efficiencies

• Lessons Learned – collation, analysis, implementation

How will Value be Achieved? • Aggregation to achieve volume discount

– Think programme not project – for procurement

• Early involvement in developing the forecast programme

• Early involvement of framework suppliers:

Designs (innovation, avoidance of unnecessary rework)

Utilisation of materials (cost savings and efficiencies)

Programme (maximise output, alignment of specialism)

• Use of Community Framework Boards for ideas/consistency

• Encouragement of use of frameworks by others

Outreach communications / guidance

Reporting successes

Benefits Realisation – How?

• Contract Management

Framework level

Programme / Project level

• Performance Management

Root Cause Analysis

Problem Resolution

Implementation of improvements across business

• Reporting – Visual Management

• Capturing and reporting accepted Savings

Cost Capture Teams

Finance Directorate

Forecast / Actual Costs

Communication 3

Framework

Supplier

Project Team

Business Delivery

‘Project Manager’

Communication 5

Category Manager

Divisional

Directors/

Framework

Board

Performance Measurement

Information Flow

Business Central

Business

Partners

Procurement

Officer

Performance

Measurement

Database

CEO

Procurement

Officer

Suppliers

Communication 6

Procurement

Officer

Communication 4

Communication 2

Communication 1

Strategic Supplier

Development Team

Primary Supplier

Who to contact

Please contact the Category Management Team:

email to: category management team