Tag Archives: supplier evaluation

5 Ways Procurement Is Building Better Communities

Based on our research, here are five ways that procurement professionals can generate more social value from their next construction project


Many governments around the world, including the UK, are focussing on construction-led recovery post-COVID. 

Here are 5 ways Procurement can play a key role in re-shaping not only our buildings and the way we live, but also our communities through the way we buy during the construction process.

1.     Have a clear social value strategy and framework

There needs to be a clear, transparent and needs-based social value strategy and framework for both procurers and bidders which is embedded at all stages. Procurement frameworks, with required levels of social value commitments, can bring efficiency and good practice application across public sector contracts. They can provide suppliers with more clarity on what is required for social value and how this will be recorded. Procurement services that guarantee work once suppliers are on the framework can incentivise well-considered social value commitments for both SMEs and larger organisations.

2.     Prioritise outcomes in monitoring and evaluation

There is fragmented market of tools and metrics used in both procurement and evaluation. Most do not take into account geographic disparities in their monetisation, nor include negative effects of development to arrive at the final value.  A focus on ‘tick box’ outputs like number of people trained, or number of apprenticeships started, can lead to more aware suppliers knowing how to score well on social value weightings in the tender process, as discussed previously. By procuring outcomes instead of outputs, the procurement profession can open up the doors for innovation and creativity in bid responses, and evaluate bidders on the impact they will achieve, rather than bums on seats.

3.     Consistency and holding to account

There are different procurement frameworks, regional models, and different sector frameworks, adding to the confusion in this area, and sometimes a ‘buy local’ requirement as well – there is no homogeneity in the procurement landscape. Given that Social Value typically accounts for anywhere between 2%-25% on tender scores, it is a key part of the procurement process. Having consistent, appropriate, clear goals at all stages, engaging in more pre-tender dialogue with bidders, and stating the evaluation methodology or tool to be used, will help achieve greater outcomes.  Most importantly, hold suppliers to account for their contractual outcomes.  Our research showed that rigorous monitoring and enforcement of contracted social value activities was very variable and inconsistent. With the high value of contracts in construction, ensuring that what may have secured a major win is actually delivered on the ground is imperative.

4.     Enable straightforward comparisons of value

We recommend that environmental components are separately weighted in procurement, and that ‘normal or good business practices’ e.g. internal diversity/inclusion initiatives, prompt payment codes, training of existing supply chains, modern slavery, managing noise or disruption, should be considered as a given. Social value has to go beyond ‘business as usual’. Activities which may be commercially beneficial to the supplier, such as apprenticeships and educational visits, could be considered as social value if they were supported by a robust needs analysis in the area that this is going to make a difference. Even so, focusing on apprenticeship completions rather than starts would be a step in the right direction.

5.     Guard against potential for disconnect

Our research suggests that a procurement framework approach may provide a further layer of disconnect between local beneficiaries and the provision of social value. The delivery of a locally responsive approach, which links to and utilises community groups and organisations, requires greater clarity. There could be an opportunity for procuring organisations to identify initiatives and local organisations in the tender documentation, embedding local knowledge and understanding of need into the brief, rather than leaving suppliers to try to work this out or to ‘reinvent the wheel’ during the process. Procurers could also consider requiring the upskilling of the voluntary and community sector, as well as the enabling of local businesses not in their supply chains to become fit to supply, which would leave a more enduring legacy.

The construction sector is the sixth largest source of employment in the UK, contributes nearly 7% of the UK’s GDP and is a major recipient of public spending – it is critical for placemaking, economic development and job creation, all of which highlight its importance to Boris Johnson’s ‘New Deal’ and post Covid-19 recovery.

With construction spend estimated to be £500 billion by the end of this decade there is also a need to make sure that every one of those pounds delivers additional tangible social impact, and makes a major contribution to addressing the significant inequalities faced by our most disadvantaged citizens and left-behind communities.

The Social Value Act, published in 2013, requires people who commission public services to think about how they can also secure wider social, economic and environmental benefits. Before they start the procurement process, commissioners must therefore determine how they can secure maximum benefits at all stages of the project for their local communities.

“No common definition of social value”

Given the significance of construction to our economy, we undertook research to support greater understanding of what ‘good practice’ social value looks like, and to find and share examples where innovative, replicable and impactful social value has been delivered at all levels of place-based interventions as a result.

Our final report, From the Ground Up – Improving the Delivery of Social Value in Construction, finds that we are a very long way from the social value nirvana we desire. The barriers are significant, and whilst social value plays an increasing part in the procurement process, there are some pretty hefty challenges running across procurement, definitions, activities, partnerships, monitoring and evaluation.

There is no common, comprehensive definition of what counts as social value, to frame understanding, benchmarking or reporting, and aid comparison of tenders and to determine best practice. This has given rise to significant disparities in what counts as social value activities, and no requirement to focus on improving the wellbeing of the most disadvantaged.

Current examples include attracting/retaining staff, prompt payment codes, internal equality and diversity programmes, fair pay, training of the supply chain, ethical/low carbon sourcing, managing risk/noise, and increasing awareness of the construction sector as a career for young people. So there is a high risk of social value lacking focus and becoming too diffuse.

We also found that projects spanning geographies have multiple project stakeholders often competing for social value outputs, different frameworks with differing social value requirements, and a real lack of alignment around desired benefits and outcomes. There was clear consensus on one of the biggest barriers – the lack of understanding of what social value is – and that substantial improvements need to be made in its monitoring and evaluation.

“Procurement must be a much more effective tool for change”

As covered previously, social value procurement must be a much more effective tool for change. This means putting people at the centre of place-based development, engaging and working with them to understand their needs and wants, so that the development happens with them, not to them. We need to change how we measure the value of our place interventions to take into account what matters to the stakeholders in them, and move from outputs to considering how we can achieve an improvement in wellbeing outcomes as an important deliverable.

In our report, you will see we have made five recommendations in response to our key findings. You can also view our report launch. To join us in the next phase of our discussions for driving change, please email me at [email protected].

Bev Hurley CBE is Chair of the Institute of Economic Development, the UK’s leading independent professional body representing economic development and regeneration practitioners working for local and regional communities.

Critical Factors for Selecting your Suppliers

What critical factors do you look for in your suppliers? What does an organisation have to offer to get their foot in your door?

When you think of procurement, and get beyond the savings agenda, then the first thing that comes to mind is managing suppliers. While employees may be the life-blood of an organisation, suppliers are definitely the nourishment and support that keep organisations alive.

Without suppliers and their extended supply chains, organisations wouldn’t have any raw materials to make into products, any products to sell, or anyone to deliver much-needed services. That’s why a good supplier relationship (or relationships) can be critical to your daily operations.

However, one bad apple, one flawed contractors could not only stop the seamless functioning of your supply chain. It could also harm those two vital elements for all businesses – trust and reputation.

Your Critical Factors

If supplier relationships are key, then surely procurement should be taking its time selecting the right ones. And given the importance of this, procurement also needs to be applying the right ‘critical factors’ when selecting their suppliers.

As has been discussed in the past on Procurious, there are a number of factors that must be considered when selecting suppliers. The only issue is that these don’t appear to have changed very much over the years, begging the question – is procurement doing everything it can to adapt these criteria in line with the external environment?

Sure, it’s high time that procurement was looking past the traditional criteria of cost and quality when making their assessments. But the truth is, there’s no getting away from them.

However, this isn’t necessarily a bad thing if they aren’t the only factors in the equation. As procurement professionals, you are probably only too aware of the myriad of other factors that you need to be accounting for, from cultural fit and financial stability, all the way through to ethics and sustainability.

So which are the critical factors that procurement should be using? Is there a list that we should all be looking at?

Join our Webinar

Help is at hand in the form of Procurious and Ivalua’s latest webinar, ‘Critical Factors for Selecting your Suppliers’.

Sign up now to join our panel of experts at 11am (BST) on Tuesday the 3rd of September:

  • Tania Seary, Founder, Procurious
  • Stephen Carter, Senior Marketing Manager, Ivalua
  • Fred Nijffels, Accenture Operations ANZ – Procurement & Supply Chain
  • Gordon Tytler, Director of Procurement, Rolls Royce

In the webinar, you’ll hear from a panel of experts on a range of topics including:

  • The importance of cultural fit in your supplier relationships;
  • If sustainability, social value and fair working practices are becoming more prominent for procurement;
  • What your suppliers are looking for in your organisation; and
  • How to start the conversation in your organisation to move away from just cost and quality criteria.

FAQs

Is the Critical Factors webinar available to anyone?

Absolutely! Anyone & everyone can register for the webinar and it won’t cost you a penny to do so. Simply sign up here.

How do I listen to the Critical Factors webinar?

Simply sign up here and you’ll be able to listen to the on-demand. 

Help – I can’t make it to the live-stream of the webinar!

No problem! If you can’t make the live-stream you can catch up whenever it suits you. We’ll be making it available on Procurious soon after the event (and will be sure to send you a link) so you can listen at your leisure!

Can I ask the speakers a question during the Critical Factors For Selecting Your Suppliers webinar?

If you’d like to ask one of our speakers a question please submit it via the Discussion Board on Procurious and we’ll do our very best to ensure it gets answered for you.

Don’t Miss Out!

This webinar promises to provide a fascinating insight for all procurement professionals into the Critical Factors you should be considering in supplier selection.

Make sure you don’t miss out by signing up today!

Creating a Strategic Procurement Function

Procurement’s Change Makers – The challenges of creating a strategic procurement function in a diverse investment company in the Middle East.

This article is part of the Future Purchasing ‘Change Makers’ series.

Cory Thwaites - Strategic ProcurementIn the second in our series of articles profiling procurement’s ‘Change Makers’, we spoke to Cory Thwaites, Executive Director of Procurement for Tecom Group, the leading  developer and operator of free zone business parks providing a home in Dubai for over 4,600 businesses & representing a total workforce of 74,000.

Cory shares his experience in the changes needed to create a strategic procurement function within this diverse, capital intensive and services orientated organisation.

Lack of Strategic Procurement

I joined Tecom Group, which is part of Dubai Holdings in April 2015. The procurement team size had dropped by 30 per cent with no clear procurement procedures or process in place. In fact, only one person had any formal procurement experience. Each individual handled purchasing, negotiation and order placement, so there was no specialisation or delegation of duties.

Lack of procurement strategy was creating problems with suppliers and stakeholders. It was also holding up the entire business. For example, the tenders committee (which approves projects over AED 1 million) could take more than a week to convene. Add this to lots of other red tape, and it was clear that Procurement was stifling, rather than supporting, the business.

Initially, I sought advice and feedback from the other senior executives. Next, I structured the procurement department into strategic sourcing and operations teams. Then I presented my plan for a sourcing and operations focus to the board. Getting sign-off on this new strategy from the CEO in June was the turning point.

Bridging Knowledge Gaps

I transformed the existing team by bridging their knowledge gaps. A six-week bespoke training programme featured a day of group training and another for one-to-one coaching. This really helped my team understand aspects like opportunity analysis and even basic spending analysis.

The big challenge came with evaluating suppliers. There had been no financial checking or reference calls and stakeholders simply worked on their own instincts. We implemented a scientific evaluation process with key metrics including pair’s analysis.

I’m proud to have kept the team together. Two colleagues were offered jobs elsewhere but chose to stay because they recognise how much procurement is transforming from a tactical to a strategic function.

Future Aims

Two of my ongoing aims are to improve CSR and to develop a supplier relationship programme, particularly within the thriving construction market.

There are a number of organisations in Dubai who are at least five years behind European procurement culture and best practice. My advice to succeed in the UAE is to be patient and recognise the potential skills shortage.

You need senior leaders to follow your vision, too – so promoting the benefits of procurement is vital. Also, be prepared to roll up your sleeves because talking a good game isn’t enough.”  

Working with Cory, we have seen how he has embraced this new role with vigour and relish. His practical attitude, ability to listen to people and willingness to roll his sleeves up to solve the little problems for his team and the big problems for his customers is key to the progress that he is making in this difficult environment.

Future-Purchasing-Change-MakersDo you have experience of creating a strategic procurement function in a diverse organisation? What works and what doesn’t work? Let us know in the comments below.. 

If you would like to appear in our Change Makers series then contact Anna Del Mar for details here .