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Solution
Executive Summary
In this report, sourcing approaches for a spend category in Crown Commercial Service (CCS) has been evaluated. The selected category of spend include the financial services (Post Office Card Account). This is further compared with payment services and document management categories which are office suppliers and postal services. For evaluating the identified spend categories, various tools have been selected which are Kraljic Analysis Tool, Mendelow’s Analysis Tool for Stakeholder analysis and the Maslow Hierarchy of needs. Further, by using the SWOT analysis, the internal and external factors of the sourcing have been selected. A further analysis by use of Peter Block Grid’s has been applied to evaluate the interests of stakeholders to source appropriate position. The sourcing approaches identified included single, sole, dual and multiple.
The findings from the supplier appraisal of financial services (Post Office Card Account) for CCS have been identified through the application of the Carter’s 10Cs tool. The various findings highlight on the need for CCS for actively invest in strategic sourcing strategy to guarantee their domination in the UK Public sector and quality services delivery. The findings in this assessment identify the multiple sourcing as inclusive of many suppliers engaged while single sourcing include a single supplier. This is with the sole-sourcing including a single monopolistic supplier involved in provision of the products/services. For dual sourcing, suppliers operate through demand conflicts.
Finally, from the findings, a set of recommendations have been suggested which are;
- CCS need to establish the best sourcing approach informed by the features of their category of spend
- Coming up with appropriate policies development in their procurement and supply (PS&M) department through an integration of technologies in their practice
- Simplified procurement process and ensure entire stakeholders interests are holistically prioritised
- Put in place appropriate technology in their different product lifecycle such as RFQ, RFP, negotiations of e-Auction. Currently, CCS is leveraging on use of SAP software for improving information flow in their sourcing approaches
Table of Contents
1.1 Organisation Background. 3
2.0 Spend Category and Position. 4
2.1 Kraljic Analysis Technique. 4
2.2 Business Hierarchy of Needs. 6
3.0 Sourcing Approaches Analysis. 9
3.1 Multiple Sourcing Approaches. 9
4.0 Sourcing Appraisal Checklist 12
5.0 Conclusion and Recommendations. 15
Figure 1:Financial Services in CCS Spend Category. 5
Figure 2:Kraljic Analysis for Financial Services. 6
Figure 3:Maslow Hierarchy of Needs in CCS organisation. 7
Figure 4:Mendelow Stakeholder Analysis in CCS. 8
Figure 5:Peter Block’s Stakeholder Categories. 9
Figure 6:Summary of CCS SWOT Analysis 10
Figure 7:Cater’s 10Cs Supplier Appraisal 13
1.0 Introduction
1.1 Organisation Background
In this assessment, the Crown Commercial Service (CCS) has been selected for evaluating the sourcing approaches. As evidenced in CCS (2022) the organisation play a core responsibility in assisting the UK public sector in saving financial resources in purchase of common goods and services. This is identified as the most popular public procurement organisation in the entire UK. Through the application of commercial expertise, they are in a position of helping buyers I the central government and in entire public and third sectors for procuring everything from locum of doctors and laptops to police cars and electricity. Through their commercial agreements, the organisation leverage on competition by suppliers for increasing quality and value. To evidence their success in their operations, in the years 2021/22, the organisation has managed to attain commercial benefits amounting to more than £2.8 billion of public money by use of their agreements. This is classified in CCS (2022a) as CCS agreements amounting to £1.9 billion in terms of benefits for their central government and further £0.9 billion for the broader public sector.
Currently, CCS operates an upward of 4,000 suppliers who are registered and certified and readily available in the Ariba/SAP system technology. By working actively through an active partnership with other Original Equipment Manufacturer (OEM), CCS is in a position of integrating technology and harnessing the government saving in resources in this area. This is by providing an appropriate public sector requirements, suppliers list with high-level capability of delivery of all set requirements and standard contract terms.
1.2 Scope of Report
In this assessment, this report focus on evaluating four different sourcing approaches and how they are relevant in various spend categories in CCS. For CCS procurement department, it ensure that they guide success in their supply chain management to improve their entire supply relationships and improve their sourcing approach. This is to maximise overall value and assigned functions for procurement of goods and services for ensuring suppliers comply with UK and organisation procurement policies. This is at the same time guiding implementation of best practice for public sector. At the end, an appropriate supplier appraisal checklist has been developed for the category of spend.
2.0 Spend Category and Position
The identified spend category by CCS is informed by what CCS (2022b) identify as demand for delivery of vital, world-class services albeit unprecedented pressure on resources (human and financial). As illustrated in figure 1, the need for the financial services category of spend is to promote;
Figure 1:Financial Services in CCS Spend Category
Considering the financial services spend category, identification of the best sourcing approach mean that they are holistically controlling the overall procurement and supply process (CIPS, 2022). For the purpose of identifying the potential risks incurred, the value of the spend category, Kraljic matrix analysis and the Business Hierarchy of Needs has been selected for its application. Further, for noting o the sourcing approaches influencing CCS stakeholder, use of Mendelow Stakeholder Analysis Matrix is evidenced.
2.1 Kraljic Analysis Technique
The Kraljic Matrix technique is relevant for establishing risks which are faced in selecting an appropriate sourcing approach from suppliers in a supply chain. As evidenced in CIPS (2022a) the selection of best sourcing approach would lead to establishment of the relationships and ensuring supply risks are mitigated in an organisation (see figure 2);
Figure 2:Kraljic Analysis for Financial Services
In summary, in context of CCS, Kraljic analysis entail;
Leverage- Considering the suppliers here, they are defined by existence of many supports representing an increased cost implication and supply risks reduced. For financial services sourcing, CCS would focus on prioritising on holistic negotiations with cost savings increased use in procurement. For this spend category, particularly during COVID-19 pandemic, increased quality of services delivery to the UK public is relevant and lowering all supply risks.
Strategic Items- For the payment services sourcing, this is defined with immense risk of suppliers. As a result, a single supplier could be involved contrary to sole or dual sourcing. The rationale of this is that single supplier is involved contrary to sole or dual sourcing. An immense confidentiality for suppliers relations management for CCS is relevant in locked-in sole or dual sourcing. The importance of this is significantly reducing all supply risks (Dyili et al., 2018).
Bottleneck Items- This entail the document management category. It leads to less profits incurred by CCS despite of their immense risk in the supply chain. In line with Kang et al. (2018) guidance, the most appropriate sourcing strategy would ensure reduction of negative implications due to inappropriate position.
Non-critical items- This is inclusive of the products and services available in plenty hence multiple suppliers engaged. Further, in CCS, in the identified spend categories, single and sole sourcing is the most popular. For solving the likely complex issues in standardisation, iSourcing by integrating RFQs (Electronic Requests for Quotation) and entire specifications would be shared (https://www.cips.org/intelligence-hub/sourcing).
2.2 Business Hierarchy of Needs
Considering the selected financial services spend category in CCS, to identify its positioning, Hierarchy of Needs Model is relevant (CIPS, 2012). Financial services are defined with intense competitiveness and immense costs required in implementing their sourcing approach selection (see figure 3);
Figure 3:Maslow Hierarchy of Needs in CCS organisation
For preferred sourcing approach in CCS, it is important ensuring they attain the various figure 3 needs and harness their prioritisation. For example, in the financial services spend category, they would need to prioritise on level of quality, contributions to business sustainability, minimising entire risks by CCS as a priority. Considering the Kraljic Analysis, financial services would be more appropriate if sole supplier is engaged and a single supplier for their payment services. As evidenced in McEvoy and Ferri (2020) the high purchase power is important for exploitation since they input costs management and long-term contract implications by the various engaged suppliers.
2.3 Stakeholders Analysis
In order to identify the impact the various sourcing approaches have to the involved stakeholders, Mendelow Stakeholder Analysis Matrix can be used (CIPS, 2022b). The analysis is as illustrated in figure 4;
Figure 4:Mendelow Stakeholder Analysis in CCS
In figure 4 summary, the best practice in their sourcing approaches are;
High-Interest; High-Power- For the financial services being sourced by CCS, in their various operations, they would make sure they opt for the most appropriate approach. To management, misunderstanding prevalence impact change or alteration of their practice.
Low-Interest; High-Power- The legal team, finance and UK Government, they are significantly engaged in selecting suppliers. Hence, they ought to achieve satisfaction with sourcing approach.
High-Interest; Low-Power- The stakeholders interest are inclusive of information of best approach used in sourcing. Considering CCS PS&M, the board of management, efforts need to be exerted for convincing them. This is while ensuring they guide organisation in selecting the best sourcing approach.
Low-Interest; Low Power– Considering the IT teams, marketing and competitors, they only need to be kept informed. The rationale of this is that their interest is the organisation to select the most appropriate sourcing approach.
In line with the various stakeholders noted, Peter Block Grid Leadership (Center Leadership Center, 2022) is applicable in arranging the different stakeholders based on their positioning as illustrated in figure 5;
Figure 5:Peter Block’s Stakeholder Categories
Bedfellows (High Agreement & Low Trust levels)- This is characterised by a lot of issues to identify the best sourcing approach as the interest is to operate for a long-term basis. Communication is prioritised for coming up with most appropriate sourcing strategy.
Allies (High Agreement & High Trust)- The category is defined by facilitation of maximum support and vision sharing to attain their given roles. This is best achieved through an engagement of multiple sourcing approach.
Opponents (Low Agreement & High Trust)- This stakeholders group demand constantly being updated and sourcing feedback, honest-based answers and most appropriate sourcing approach adopted.
Adversaries (Low Agreement & Low Trust)- In most cases, this group operate through an opposition of process of change which demand CCS to make challenging decision regarding sourcing. Prioritisation is on individual interests.
2.4 SWOT Analysis
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