Procurement Practices Review
Information Management and Technology (IMT) branch has responsibility over Department of State Development and Department of Infrastructure, Local Government and Planning for developing, delivering and maintaining technology solutions for its clients, as well as ensuring that information is appropriately managed. Based on concerns with how IMT branch operates to procure goods and services in the context of the department’s centre-led model, Charles Kendall Australia (CKA) was engaged to thoroughly review several aspects of IMT branch’s procurement practices.
The Challenge
Within a tight schedule, CKA was required to undertake a comprehensive review of IMT branch procurement practices, particularly with regard to best practice, as well as compliance with departmental policy and procedures. Throughout the engagement, it was necessary for investigations to recognise that IMT branch is comprised of five individual teams, each with unique characteristics and demands.
Our Approach
To undertake the review, CKA organised an array of interviews, conducted records audits, and reviewed policy and procedure documentation at branch, departmental, and whole-of-government levels. The review focused on several key areas of interest such as:
- administration;
- tools and templates;
- probity considerations;
- roles and responsibilities; and
- forward planning.
Given the context of a coordinated, whole-of-government approach to procurement of information and communications technologies, the review also reflected on applicable governance regimes relevant to the areas of interest listed.
Additionally, as part of the engagement, CKA also reviewed a nominated high value contract to highlight risks and issues and offer recommendations accordingly.
Outcome
- The review of procurement practices led to 24 recommended improvements addressing all the various aspects of procurement operations. The final report logically prioritised recommendations and provided guidance for implementation.
- The engagement was completed ahead of schedule and to the satisfaction of the client.
Spend Analytics for Reserve Bank of Australia
The Reserve Bank of Australia (RBA), Australia's central bank, engaged Charles Kendall Australia (CKA) to perform an in-depth analysis of its procurement spend, and to identify areas for quick-win cost savings. CKA successfully delivered a comprehensive report on spend data across numerous categories and offered recommendations for realistic segmented cost savings.
The Challenge
- Develop a comprehensive report on spend data across a broad cross-section of categories and sub-categories.
- Identify and provide recommendations on segmented cost savings (quick wins, medium-term and strategic)for presentation to department heads and CFO.
- Work within limitations of RBA’s decentralised procurement structure, namely its small team managing major projects and contracts.
Our Approach
- Collect detailed data to determine spend levels in each category, including general ledger accounts, department budgets, invoices, purchase orders and RFxes.
- Relate this data back to supplier transactions, item sourcing groups, data sets and categories.
- Ensure accuracy of data, including data cleansing and cross-referencing.
- Provide analysis, report and spend dashboard for each category, outlining risks, opportunities and potential improvement strategies.
Outcomes
- Successfully delivered report to RBA senior leadership and CFO.
- Identified 11 quick-win procurement savings estimated at several million dollars.
- Identified many medium- and long-term projects to deliver savings and improved efficiency across the procurement process.
- Provided actionable findings to drive organisational improvements related to procurement and the decision making thereof.
Procurement Capability Review
Redland City Council (RCC), a local government authority in south-east Queensland, engaged Charles Kendall Australia (CKA) to assist them in moving from prescribed, spend-based procurement activities to a strategic model. CKA undertook a review of RCC's procurement functions and designed strategies to improve efficiency, capability and alignment with corporate objectives.
The Challenge
- Determine RCC’s procurement capability and maturity level.
- Design strategies to move towards a strategic procurement model.
- Identify opportunities to reduce costs and increase efficiency.
- Mitigate supply risks within RCC’s procurement and contract management function.
Our Approach
- Spend analysis to identify RCC’s management of expenditure and highlight cost-saving opportunities.
- Capability analysis to determine procurement structure, people and processes.
- Governance analysis to establish the appropriateness of existing structure and controls.
Outcomes
- Identified costs savings of approximately AUD$1M through better aggregation of spend and increasing the level of spend under management.
- Developed a sustainable procurement model including corporate social responsibility (e.g. quadruple bottom line, social procurement, etc.).
- Delivered an improvement plan detailing costs/benefits, associated actions and timeframes for recommendations including procurement structure, strategy, policies and procedures, roles and responsibilities, leadership and performance management, and systems and monitoring.
Spend Analytics and Supplier Management
Leading Australasian food manufacturer, Goodman Fielder International (GFI), responsible for numerous household brands including Meadow Lead, Praise, White Wings and Helga's engaged Charles Kendall Australia to analyse expenditure and identify cost-base reduction opportunities across its manufacturing operations in Papua New Guinea.
The Challenge
- Review and report on GFI’s existing supplier spend, risk exposure and potential cost savings.
- Assist in evaluating cost base and centralising categories to Sydney hub.
- Conduct on-site evaluation of Papua New Guinea operations.
- Provide insights to drive cost savings and efficiency improvements.
Our Approach
- Categorise and analyse $100M+ of annual expenditure to determine inefficiencies and identify cost-base reduction opportunities.
- Review existing supplier agreements and segment according to Kraljic Model-based methodology.
- Categorise savings into short, medium and long-term initiatives, including savings pipeline and delivery plan.
- Manage and collaborate with internal stakeholders to ensure understanding and cultural alignment.
Outcomes
- Identified 26 cost-base reduction opportunities delivering an estimated 7-15% reduction in annual expenditure.
- Categorised savings into quick wins, medium-term gains and strategic savings.
- Determined the required resources and offered recommendations to realise these savings and achieve further gains in procurement efficiency.
- Delivered a detailed scoping report to GFI’s Chief Procurement Officer with implementation activities already being planned.
Joint Purchasing and Resource Sharing Strategy
The Roads Alliance engaged Charles Kendall Australia (CKA) to review and provide recommendations for improving uptake of Joint Purchasing and Resource Sharing (JP&RS) among local councils in Queensland. CKA identified, developed and implemented a wide range of tools and processes to assist in promoting participation and the associated gains in capacity, efficiency and return.
The Challenge
- Review why JP&RS was not being adopted by councils and develop a toolkit to assist councils with implementation.
- Identify opportunities and develop pathways for promotion of JP&RS uptake, with the end goal of consolidating purchasing and procurement to achieve mutually beneficial outcomes.
Our Approach
Development of a JP&RS pilot scheme (and later a full toolkit) to deliver:
- Assessment and opportunity identification within current procurement strategies, processes and skills.
- Detailed presentation of options, resources and required improvements to achieve and measure potential gains in return, processes, skills and capacity.
- Recommendations to embed new practices in participating organisations into the future
Outcomes
- Cost savings through aggregation opportunities.
- Increased return on investment and value for money from resources.
- Standardisation of goods and services.
- Advancement of government priorities.
International Procurement Agent
The Government of Nauru engaged Charles Kendall (CK) as its international procurement agent in 2013 to aid in improving its supply chain and goods provision services over the course of five years. Since undertaking these duties, CK has transformed the government's procurement standards, saving around $4 million (12% of total spend) annually and significantly increasing reliability, mitigating risk and improving probity across the entire organisation.
The Challenge
- Improve efficiencies and reduce costs while addressing complexities including remote location and immaturity of existing management and processes.
- Collaborate with 21 government departments and state-owned enterprises, from medical and IT to engineering, port facilities and freight forwarding.
- Mitigate risk and deliver savings within both standard procurement activities and emergency/urgent scenarios.
Outcomes
CK established a Brisbane buying office to provide end-to-end strategic procurement support, with responsibilities including:
- creating a procurement plan to formalise efficient purchasing and sourcing;
- minimising risk of disruptions via a free-market approach and strengthen vendor relationships; and
- adding value through market insight and foster transparency and reporting through record management improvements, plus spend data capture and analysis.
Outcomes
- Successful delivery of $4 million in annual savings (12% of spend), with the project continuing until at least 2018.
- Improved reliability though efficient supply chain management, including introduction of high-use item storage and standardised IT equipment.
- Unique improvements to emergency and urgent-scenario procurement capabilities, including emergency fuel and medical supply delivery.
- Additional assistance in providing critical repairs to Port Authority and national utilities company.
Procurement Process Review and Mapping
Powerlink is a state government owned corporation, which owns, develops, operates and maintains the high voltage electricity transmission network that extends 1700km from north of Cairns to the New South Wales border. To deliver on the business strategy, the Finance & Business Performance Divisional Business Plan 2014/15 committed to undertaking a review of the procurement and contract delivery process as a performance improvement initiative supporting the strategic theme of agile people and processes. Powerlink engaged the services of Charles Kendall Australia to conduct a review of its procurement processes and procedures with the aim of identifying potential improvements and efficiencies.
The Challenge
- Mapping of the current state procurement processes.
- Identification of inefficiencies and opportunities to improve procurement processes and overall operations of the procurement team.
- Mapping of the future state procurement processes.
- Development of a recommendations report with consideration of key factors such as commercial and financial risk, governance and compliance, business needs and industry best practice.
Approach
Identification and analysis of the following:
- Strategic documentation including policies, standards, manuals, business plans and strategies, and organisational charts.
- Operational documentation including work instructions, toolboxes and templates.
- Team structure, resourcing, roles and responsibilities.
- Systems and tools.
- Core service offerings.
- Strategic procurement functions and projects.
- Customer engagement and communication practices.
- Reporting structure and practices.
Outcomes
- A number of recommendations were identified and broken down into seven categories such as contract management, team structure and strategy operations and service delivery.
- Procurement process maps were developed for the current state and future state.
Santos engaged Charles Kendall Australia (CKA) to provide additional in-house support to the Contracts and Procurement (C&P) department to assist in establishing strategies and contracts during the Gladstone Liquefied Natural Gas (GLNG) project, a US$18.5 billion gas export venture scheduled for delivery in early 2015. CKA successfully aided in the delivery of procurement activities, enabling financial savings and ensuring stakeholder satisfaction.
The Challenge
- Support Santos’ in-house C&P team in establishing strategies and contracts.
- Manage joint venture approvals.
- Compile and administer complex tender packages, including contract formation, negotiation and post-award administration.
- Adhere to establish joint venture protocols to deliver operational and financial benefits to stakeholders.
Our Approach
CKA supplied long-term resources to provide capacity and stability to the C&P team, ensuring cost, time and quality parameters were met.
- Deliver strategies and contracts to stakeholders’ requirements.
- Ensure maximum operational and financial value were achieved throughout.
- Abide by established governance, processes and protocols as sanctioned by stakeholders.
Outcomes
- Successful delivery of contract and procurement activities in accordance with stakeholder expectations.
- Contribution to a Master Procurement Plan to schedule and monitor project-wide procurement, ensuring stakeholder objectives were met from the earliest possible stage.
- Financial savings of several million dollars over the life of the project achieved via contracting strategies and stakeholder consultation.
Procurement Value Management Project
The Department of Transport and Main Roads (TMR) engaged Charles Kendall Australia (CKA) to embed Procurement Value Management (PVM) into the organisation and deliver savings. CKA delivered the PVM project on time and within budget, providing a consistent plan and structure to achieve estimated procurement savings of $140 million.
The Challenge
- Coordinate with the TMR’s dedicated project team and wide-ranging (and often conflicting) stakeholders to develop a PVM framework and supporting implementation plan.
- Achieve results for reporting to the Queensland Government Chief Procurement Office (QGCPO) despite decentralised procurement activity and an absence of consistent historical measurement or performance reporting on procurement.
Our Approach
The team faced a number of challenges including absence of consistent historical records, decentralised procurement activity, and a broad spectrum of stakeholders with conflicting priorities.
In order to fulfil TMRs requirements, CKA:
- conducted workshops with TMR to map current procurement activity and identify improvement areas;
- conducted spend analysis and spend categorisation;
- researched and developed best practice procurement performance measures capable of reporting to QGCPO requirements; and
- identified category savings initiatives and developed a corresponding implementation roadmap.
Outcomes
- An estimated procurement department saving of $140 million.
- Delivery of a PVM plan capable of being embedded into TMR, along with consistent methodology and plan for future procurement performance measurement.
- A defined TMR spend category structure and savings initiatives, with full implementation roadmap and reporting process.
- Knowledge transfer from CKA to the internal TMR team to establish in-house capabilities for future development and enhancement.
Capital Works Annual Procurement Plan
Unitywater, a statutory body providing water and sewerage services to the Moreton Bay and Sunshine Coast regions of Australia, engaged Charles Kendall Australia (CKA) to compose its Capital Works Annual Procurement Plan. CKA delivered a timely and highly structured procurement plan that clearly outlined scope and spend strategies, while enabling compliance with both state government and Competition Authority policies.
The Challenge
- Communicate key procurement issues to relevant parties.
- Identify opportunities and strategies for planning and project methodologies, with a key focus on expenditure.
- Provide Unitywater with clearer scope and a timely delivery plan of upcoming capital works.
Our Approach
- Stakeholder engagement to identify capital programs and associated procurement activities.
- Review of current procurement initiatives to establish baseline data
- Development of strategies based on key categories within expenditure and procurement/management.
- Review of the 2012-2013 capital works program to establish a structured approach to upcoming projects.
Outcomes
- Capital expenditure profile (including forecasts to 2017) encompassing key project delivery areas across major network growth and renewals projects.
- In-depth description of existing and proposed procurement structure and methodologies, with a corporate-aligned schedule for 2012-2013.
- Summary of key opportunities, including procurement categorisation, planning and joint activities.