Strategic Planning For Purchasing

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Strategic Planning For Purchasing

• Dick Florey, CPPO
• Director of Purchasing
• St. Louis County

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REGISTRATION
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CELL PHONES

• Off or Low Tone

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LEAP DIFFERENCES
Academia vs. Practitioner
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OBJECTIVES

• Informative and Practical
• Meet Your Expectations
• Keep Your Attention
• 1 to 2 Resources To Use
• Develop Three Year Purchasing Plan
• Have Fun!

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3 YEAR PLAN

• Totally Manual
• 10 Staff with Little Training
• 2 Rooms with 50 File Cabinets of Files
• Develop Budget with Five Lines
• Evaluate Process
• PP 74 Base Line to Work From

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PRE-TEST
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EXERCISE

• Relationship

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What is Planning?
Strategic vs. Tactical
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Why Dont We Plan?

• Hard
• Culture

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What is Purchasings role?
15 18
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PLANNING FRAMEWORK

• Mission
• Vision
• Goals
• Objectives
• Strategies
• Performance Measurement
• Evaluation

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PLANNING FRAMEWORK
14 18
Internal/External Environment
Mission and Values
Vision
Goals and Objectives
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PLANNING FRAMEWORK
14 18
Action Plans
Performance Measures
Monitoring and Tracking
Evaluation and Feedback
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EXERCISE

• WBS

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PROCUREMENT CYCLE
20
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40
PUBLIC SECTOR LIMITATIONS

• Lack of commitment to planning
• Failure to develop and implement sound
  strategies
• Lack of meaningful objectives or goals

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PUBLIC SECTOR LIMITATIONS

• Failure to see planning as both a rational and
  creative process
• Excessive reliance on past experiences
• Failure to identify the most critical factor for
  success

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PUBLIC SECTOR LIMITATIONS

• Lack of clear delegation
• Lack of adequate control techniques and
  information on results and
• Resistance to change.

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PLANNING MODEL
42

• Evaluation of the current environment and, if
  applicable, evaluation of current strategy
• Identification and evaluation of the role of the
  organization within its internal and external
  environments

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PLANNING MODEL

• Development/determination of anticipated
  adjustments to identified goals, objectives,
  and/or strategies
• Examination and evaluation of practical
  alternative courses of action

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PLANNING MODEL

• Implementation of changes
• Development of performance measures
• Monitoring progress and
• Evaluation and feedback.

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EXERCISE

• Mission Statement

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PLANNING ELEMENTS
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• Who are we as an organization?
• Whom do we serve?
• What basic purposes do we serve, and why do we
  exist?
• What basic accomplishments are we established to
  accomplish?

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PLANNING ELEMENTS

• What is unique about our purpose/vision/mission?
• Is the mission/vision/purpose in harmony with the
  jurisdictions enabling legislation?

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SMART

• Specific
• Measurable
• Assignable
• Realistic
• Time Related

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EXERCISE

• Robbery

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AGENDA FOR PLANNING
51

• What
• How

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Who Are Stakeholders?
54 57

• Management Personnel their particular strengths
  and weaknesses
• Political council, commission, state level
  support and threats across governments

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SWOT
56

• Strength
• Weakness
• Opportunity
• Threats

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EXERCISE

• SWOT

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54 57
Who Are Stakeholders?

• Economic tax structure limitations, user fees,
  future changes
• Citizens their needs, perceptions,
  expectations
• Ethical mostly internal values and standards

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54 57
Who Are Stakeholders?

• Technological resources, opportunities and
  limitations
• Private/Joint what have others done,
  opportunities, and limitations and
• Demographic citizens served, businesses served,
  future growth potential.

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EVALUATION FEEDBACK
66
1 Review Strategic Plan
2 Create a Study Team or Task Force to Develop
Evaluation Plan
3 Prepare Evaluation Plan
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EVALUATION FEEDBACK
Clear Statement of Purpose
Evaluation Concepts
Constraints
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EVALUATION FEEDBACK
Methods/Techniques
Resources Needed
Timeline
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EVALUATION FEEDBACK
4 Gather Data
5 Analyze Data
6 Write the Report
7 Follow-Up
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MORE DETAILS

• Projecting Procurement Spend
• Monitor Measure
• Budgets
• Public Sector Budget Cycle
• Good Budget

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MORE DETAILS

• Procurement Planning
• Model
• Departmental Plan
• Analyze Options
• Positioning
• Key Supplier Impact
• Departmental Capacities

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TYPES OF BUDGETS
110 117

• Line Item
• Performance
• Program
• Zero Based
• Results Orientated

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BUDGET NEEDS
118

• Budget Approach
• Preparing an Operating Budget
• Service Needs
• Staffing Needs
• Operating Needs

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ADMINISTER/AUDIT BUDGET
123

• Financial and compliance audits are performed by
  an independent accounting firm with the main
  purpose of detecting of fraud. The Internal
  Audit group or Inspector General section can do
  these audits internally.

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123
ADMINISTER/AUDIT BUDGET

• Economy and efficiency audits are management or
  operational audits. These audits examine a
  governmental units managerial and administrative
  practices for economy and cost efficiency and
  strive to identify the cause of any cost
  inefficiencies.

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123
ADMINISTER/AUDIT BUDGET

• Program audits or evaluations monitor results to
  determine the extent to which a governmental unit
  has achieved program objectives. They also
  evaluate the cost effectiveness of the
  alternatives that were employed.

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ADMINISTER/AUDIT BUDGET

• Performance audits review all the operations of a
  governmental unit and encompass all three types
  of audits financial, economy, efficiency, and
  program results.

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ADMINISTER/AUDIT BUDGET

• Performance audits are an increasingly common
  means of ensuring that those entrusted with
  management of public services and programs are
  held accountable.

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RISK MANAGEMENT
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• Identification of exposures
• Evaluation of loss potential
• Selection of a method of loss control

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RISK MANAGEMENT
126

• Implementation
• Monitoring of results and
• Modification of programs based on results.

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LOSS CONTROL
127

• Risk Retention
• Risk Transfer

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STRATEGIES
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NEEDS
133

• Coordinating with user agencies
• Recognition of the need
• Description of the need
• Budget analysis

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NEEDS

• Creation of market studies for important
  materials and
• Discussion with sales representative.

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BUYING PLANS ANALYZING
139 141

• VA
• Forecasting
• Spot
• Term
• Inventory Forecast

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METHOD OF SOLICITATION
144 145

• Method of Solicitation
• Market Conditions

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PLANNING STEPS
151
1 Receive Request
2 Discuss with User
3 Understand Use
4 Analyze Past Usage
5 Include Revisions
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154
PLANNING STEPS
6 Evaluate Performance
7 Assess Market
8 Determine Method
9 Schedule Process
10 Select Offerors
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SPECIFICATIONS
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154
SOURCES
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CONTENT
158

• Identify minimum requirements
• Allow for competition
• Describe testing methods, if applicable
• Result in an equitable award to the lowest
  responsible bidder

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158
CONTENT

• Be simple, concise, and avoid loopholes that
  would allow the bidder to offer a product below
  the stated quality level
• Be common to at least two manufacturers and

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158
CONTENT

• Identify measurable physical, functional and
  quality characteristics that meet the
  requirements, including basic design, physical
  dimensions, weights, percentages and types of
  ingredients, and types of grades of materials.

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TYPE OF SPECIFICAITON
159 162

• Design
• Performance
• Combination
• Brand

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QUALIFIED PRODUCT LIST
164

• QPL

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STANDARDIZATION PROCESS
167

• Issuing and maintaining all standard
  specifications for supplies, services, and
  construction needed by the organization
• Revising all standard specifications

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167
STANDARDIZATION PROCESS

• Establishing guidelines for drafting these
  specifications
• Establishing standards for materials and
  products and
• Evaluating the products for the Qualified
  Products Lists.

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STANDARDIZATION PROCESS
168

• Purchasing of fewer items in larger quantities
  and at a lower cost is made easier.
• Purchasing is simplified, and time needed to
  complete transactions is shorter.

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168
STANDARDIZATION PROCESS

• Processing and stocking of fewer items is
  possible.
• Control of inventories is simplified and less
  costly.
• Overall operating costs can be reduced more
  quickly while retaining a high efficiency level.

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MORE

• Prior Strategies
• Competition
• Seller Pricing
• Vendor Selection

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PRICING STRATEGIES
175

• Price
• Cost
• Life Cycle Cost

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POST TEST