L4M6- Chapter 2- Processes for working with stakeholders Flashcards
What are the 4 Es of Value of Money?
Economy- minimising costs
Efficiency- relationship between output of the product and resources to produce it
Effectiveness- extent to which objectives are met
Equity- services are freely available
What typical factors define value for money?
Fitness for purpose
Quality
WLC
Risk
ESG
Organisational goals
What are the different types of stakeholder?
Internal e.g. employees, managers
External - Competitors, communities, government
Connected- suppliers, customers, clients
What is value for money?
Most advantageous combination of price and quality that makes a product or service fit for purpose
Lowest possible price does not mean value for money
Often assessed through the 4 Es
How can lack of compliance with process affect the procurement of an organisation?
Known as value leaking
Lack of formal contracts meaning you don’t have the best commercial agreement organisation wide
Maverick buying- Not adhering to business processes like thresholds for tendering/ stakeholder management
No specification means you could end up procuring a product that is not fit for purpose
lack of consistency which could breach corporate rules
What is value mapping?
A process in which value is created by reducing or eliminating waste and operational inefficiencies
How can procurement add value in defining the need in procurement?
Make or buy decisions
Cross functional support
Requirement is met (not over specified)
Review where branded can be replaced by non branded
Standardisation
Specification requirements
Suppliers to involve
Processes
How do you do market analysis?
Porters 5 forces
Review monopoloies, duolpoly etc
Levels of demand (e.g. seasonality)
How can procurement add value in developing the strategy?
Having a strategic approach to procurement is often done via category management
Conduct spend reviews across departments rather than a silo area
Aggregation of demand and consolidate spend
SRM
Improved risk management
Specialist market knowledge
How can procurement add value in contract management?
Effectively deal with issues management
Innovation/collaboration with the supplier
Reduce waste
Risk reduction
Normally these are checked through audits
A stage of the procurement cycle is supplier identification, how is this different across private, public and third sector organisations?
Private and TSO has total flexibility and can use- internal knowledge, supplier lists, internet, trade shows, networking, adverts, vendor managed solutions
Public sector has to be more transparent and follow processes- e.g. advertising to OJEU and follow set processes
What is a PIN?
Prior information notice
In the public sector you may want to gauge the interest/capacity of the market by issuing an intent to tender and let suppliers know of a future tender
What is CPV?
Common procurement vocabulary codes- Numerical classifications for products and services. Aim is to standardise the codes so they are common for what you are purchasing
What is competitive bidding and when should it be used?
Competitive bidding is a common practice for procurement that involves inviting multiple vendors to bid for the same material, product, or service per the business’s requirements
WHEN TO USE:
Sufficient value of item
Clear specification so bids can be fairly compared
Competition amongst good suppliers
Enough time for the process
WHEN NOT TO USE:
Not possible to get firm prices
Specification is fluid/changes
Price is not the main driver
Set up times are prohibitive
Unethical market forces
Why would an RFI be used?
Used for supplier selection in the procurement cycle
Aim to create a shortlist of suppliers that will be invited to the next stage
Could be sent to suppliers who have responded to a PIN
Used when theres a high number of suppliers who can fulfil the requirement but the capability of the supplier is unknown
What info is typically asked for in an RFI?
Information on previous relevant contracts
Financial info e.g. profit and loss account
Insurances
Accreditations
Acceptance to payment terms
H&S requirements
What is different between private and public sector for supplier selection?
In the public sector selection is much more regulated:
- Must be transparency in the process of procurement
- Equal treatment of suppliers
- Non discrimination
- Proportionality
There are advertising requirements in the public sector
Often there will be requirements based on size of tender, e.g. a £10k plus contract needs 3 bids (as 2 bids doesn’t give adequate context to what is too cheap)
In the public sector restricted tender processes are used vs competitive (or total flexibility to do what you want) in private
Rules on when PQQs need to be sent in public sector as part of restricted tender process (usually 30 days)
What is a restricted tender process?
Used in public sector to assess, pre qualify and select suppliers
It is a 2 stage process
1) Initial PQQ creates a shortlist
2) Shortlisted suppliers invited to tender
Used when the number of suppliers in a marketplace who can fulfil a need is known to be high, or totally unknown.
How does award criteria work in the private sector?
Send an RFP/RFQ
Need to have detailed info from the supplier on production, risk and pricing
The buyer will evaluate often using weighted scores
Cross functional teams are usually involved to ensure stakeholders are represented
E-auctions may be used on leverage items to lower prices of qualified suppliers- particularly if a number of suppliers have quoted very similar prices. However, you would need to inform suppliers at the start of the tender process that you are going to use e-auctions.
Can also involve rounds of negotiation with qualified suppliers
What types of tender can be conducted? (5 things/criteria)
After the PQQ there are 5 ways that a public sector can use (EU related)
1) Open tender- one stage process, similar to RFP/ITT- used when there are fewer suppliers so shortlisting is not needed. Normally this has no PQQ
2) Restricted tender- Following from the PQQ you have a short list and send an RFP.
3) Competitive procedure with negotiation- Can include a PQQ, shortlisted bidders submit a tender followed by subsequent rounds of negotiation and tender. Then a final tender is submitted which cannot be negotiated
4) Competitive dialogue- Buyers have complex requirements and several phases of negotiation are required. Likely that through the process the spec and T&Cs will be modified. Suppliers will then submit final tenders. This is the only one where negotiation can occur after submission of the final tender.
5) Innovation partnership- allows for R&D where suppliers submit ideas to develop the required innovative products (where no suitable product is currently available)
You can also procure from pre established framework set up (but in this example the supplier selection has already been completed)
What tool can be used for stakeholder mapping?
Mendelow matrix
Power vs Interest
Example of procuring new uniform:
Minimum effort- the cleaners of the uniform
keep satisfied- HR team who manage staff who will be wearing the uniform
keep informed- Those who will wear the uniform
manage closely (key player)- head of marketing/branding
What are the advantages of stakeholder mapping?
Identifies key stakeholders and how they should be managed/prioritised
Level of communication and type of communication required
When managed correctly positive relationships are likely to be better
What are the limitations of mendelow/stakeholder mapping?
Does not consider if the stakeholder is a supporter or against the project
It is subjective so could underestimate players interest
It only provides a snapshot in time
Could result in bias in selection of strategies to satisfy a certain group
How can you use a matrix to assess whether someone supports a project?
Used in synergy with mendelow you can create a matrix that helps overcome resistance
It has 2 axis:
1) influence on other stakeholders
2) Stance on project
Silent opponents bottom left
Negative leaders top left
Promoters top right
Supporters bottom right
How can procurement influence a stakeholder group with an opposing view?
You cannot change the power of a stakeholder, but you can influence their stance
Persuade them on the merits of the project
addressing the reasons they are resistant
Communicate the proposed benefits
Identify senior promoters and engage them further
Put yourself in the place of the stakeholder and understand the drivers of resistance
What is the Kubler ross model?
Historically used for the stages of grief, it can be used for the stages an individual goes through with change
3 stages:
1) Shock and denial
2) Anger and depression
3) Acceptance and integration
What is a force field analysis?
Identifies driving forces for a project or procurement activity as well as restraining forces. Restrain want to maintain the current situation.
What is the Thomas-Killmann model and when is it used?
Matrix to understand the different conflict management styles to cope with identified or emerging conflict (it links to win-win, win-lose etc)
It assesses:
1) Concern for self (assertiveness)- satisfy a persons own needs
2) Concern for others (cooperation)
Top left = Competing
Top right = Collaborating
Middle = Compromise
Bottom left= avoiding
bottom right = accommodating
What are the 5 methods that can be used to manage conflict?
Competing
Collaborating
Compromising
Avoiding
Accommodating
What is Tuckmans team and group development model?
5 key stages to a team development and are considered inevitable for a team to grow
Forming- uncertainty, meeting the team, learn about each others skills/competency and becoming familiar
Storming- A lot of change and competition for acceptance of their ideas and their status, so you may see some performance decline
Norming- Team improves and work together, ways of working are clear
Performing- Delivering benefits and meeting its objectives
Adjourning- Completion and moving onto new projects
What are the characteristics of a team that are not working together effectively?
Poor comms
lack of clarity on roles
Blame culture
Lack of focus
Not meeting deadlines
Low quality work
Conflict
Low level of motivation
Low level of trust
What is ESI?
Early supplier involvement- Involvement of the supply in product development process from a very early stage in order to use the suppliers experience and expertise
What is cost modelling?
A process that buyers use to understand all of the costs that make up a suppliers price
What are the benefits of accurate cost modelling?
Allows buyers to understand the make up of suppliers costs
Understanding of the suppliers pricing strategy
Increases buyers ability to negotiate
Help identify saving opportunities
Accuracy in costs vs when cost modelling has not been done
