As part of the implementation phase* of the project, where the design phase* has helped identify needs that cannot be fulfilled with British Red Cross-owned resources (such as stock, staff, licenses or premises), the programme team and procurement lead will need to raise a procurement plan. This will capture sourcing options and manage the programme team’s expectations in terms of what should be available and when and enable the fulfilment of the activities that the programme has defined for itself.

The procurement plan is as much a work plan for the procurement team as a communications tool, and it will act as a service-level agreement between the procurement team/lead and the programme team/lead.

* These refer to the different stages identified in the British Red Cross International Quality Methodology (IQM) process. Details available from British Red Cross staff if required.


The procurement plan

How a procurement plan is designed


A diagram depicts how a procurement plan is designed. The steps are: programme-defined objectives, programme-scheduled activities, goods and services needed, procurement support needed, procurement process definition, procurement plan

An indicator of likelihood of change should be included in the programme plan for each activity and objective.


Roles and responsibilities in developing a procurement plan


  
ResponsibleProcurement lead | Programme team
AccountableLogistics department
ConsultedFinance | Warehouse | Technical adviser I UKO logs
InformedProgramme quality management | Programme team

Available to download here.


Who can help develop a procurement plan?

  • UKO logistics
  • for cash programmes: the Cash Hub
  • experienced programme managers
  • supply chain experts with local expertise
  • finance staff (for cost indications)
  • IFRC, ICRC, HNS colleagues and other organisations.

What to consider when developing the procurement plan

How to obtain the goods

There are different methods to ensure that the material needed for the delivery of a programme are made available to the programme team.

  • procurement – for high-value or high-risk items needed
  • purchasing – for lower value, low-risk items needed
  • donations – where reliable sources have resources beyond their needs
  • loans – where items can be temporarily supplied by partners with subsequent replacements.

Waivers must be submitted to the UKO head of logistics and approved on an individual basis, regardless of the value of the procurement. For procurement conducted in UKO, this is the role of the CPT but UKO logistics can always advise and inform.

All waivers requested and obtained must be logged on the procurement plan. For UK-based procurement, a list of the waivers requested/obtained must be kept on a list of exceptions.


Where to obtain the goods from and where to deliver them

  • local – small-scale retail, loan or donation system
  • national – large suppliers who are part of a national supply network, national partners
  • international – international supplier or donors, IFRC, ICRC and PNS.

Note: the procurement plan also needs to define the exact delivery point for all the goods or services to procure.


Defining responsibilities

The below table displays an example of how the procurement process can be broken down into steps, matching each step with responsible, accountable, consulted and informed stakeholders.

This matrix should be completed, formally or informally, for each large procurement that is undertaken. There can be as many steps added to the matrix as necessary!

 ResponsibleAccountableConsultedInformed
Defining needs
Raising requisition(s)
Validating procurement
process/route
Procurement sign-off
Contract negotiation
Order management
Quality check at delivery

Available to download here.


When to conduct procurement

  • Link to project timeline – match up procurement timeline to project objectives. Identify dependencies between activities.
  • Procurement lead time – sourcing, contracting, manufacturing delivery – how long will it take?
  • Reverse logistics plan – plan for any returns or exchanges which could be required.

Documents to support the procurement plan development


Reference documents for procurement plan development:

  • project plan
  • financial approvals matrix
  • project budget
  • specialist procurement guidelines*
  • donor requirements*
  • local procurement legal framework
  • due diligence reports*
  • audit reports*
  • market assessment*
  • HR matrix and organogram.

* Not always available or relevant


The scope of the required a market assessment (how deep and how wide does it need to be?) needs to be identified at the idea stage of the project (see British Red Cross IQM guidance document) in alignment with both the available time and resources and the objectives defined for the project.

There are several tools available in the International Red Cross and Red Crescent Movement to support logisticians and programme teams in the market assessment and analysis process:

  • Market analysis survey tool to capture average prices and availability of standard goods and services.
  • Market assessments for cash-based interventions (such as RAM or MAG) are key to understanding the functionality of markets, and its ability to support the objectives of the programme. They are available from the Cash Hub. The output of the market analysis will feed into the response options analysis and programme design and decision making.

For more details on market assessment and monitoring for cash programmes, refer to the Cash Hub and the logistics support to cash programmes RACI matrix, from the Market Assessment and Analysis Principles paper.


Validating a procurement strategy

Based on the procurement plan and the estimated costs of items or services to be procured, it is helpful to identify the procurement lines that will consume the biggest share of the total cost at the design phase. This is useful for understanding where the efforts to conduct procurement should be focused.

A good rule of thumb to use is pareto analysis: calculate the total estimated spend on procurement, identify the 20 per cent highest-value procurement lines and invest 80 per cent.

There are other considerations to take into account, such as the urgency of the requirements. However, based on the pareto analysis, it will be critical to define and plan the procurement process of those lines which make up more than 80 per cent of the expected spend.

The pareto analysis can be based on expected amount to be spent, or on expected quantities to be procured. Typically, items that are purchased more than 50 per cent more often than others (and at regular intervals) should be purchased through long-term procurement agreements such as framework agreements.

In the UK, this is the role of the CPT at SSC – the UK logistics team act as an adviser or stakeholder in the procurement planning and strategy, driven by similar analyses. See the pareto step-by-step tool for more details on how to build your own pareto analysis into your procurement strategy.

The procurement strategy will flow from the procurement plan and from the pareto analysis and evolves based on the procurement reports that are available throughout the lifecycle of a project.

View and download a diagram of the procurement strategy flow here.


Read the next section on Planning resources for procurement here.



Download the full section here.

Please wait while flipbook is loading. For more related info, FAQs and issues please refer to DearFlip WordPress Flipbook Plugin Help documentation.


Procurement vs purchasing

The terms “procurement” and “purchasing” are often used interchangeably but purchasing is just one of the many activities involved in procurement.  

Procurement is concerned with acquiring the goods, services and work that are vital to an organisation. Procurement encompasses both sourcing and purchasing. 

Sourcing is a set of activities conducted before purchasing, usually including market research

It revolves around the needs definitions and formalisation of the relationship with potential providers of required goods and services.  

A diagram depicts activities involved in sourcing such as supplier identification, supplier management, contract negotiation and category analysis

Purchasing focuses on how goods and services are ordered and delivered.  

At the time of purchasing, sourcing has usually either already been completed, or its requirement may have been waived under exceptional circumstances. 

A diagram depicts the activities involved in purchasing, such as identifying needs, making a purchase order, receiving a goods service order and sending an invoice

Roles and responsibilities

Roles and responsibilities evolve along the procurement cycle. 

RACI matrices are used throughout this manual. They break a process into steps, specifying who is responsible, accountable, consulted and informed at each step of the process.


Sourcing RACI matrix

SOURCINGResponsibleAccountableConsultedInformed
Needs definitionRequestorRequestorTechnical adviserProcurement lead
Category analysisProcurement leadProcurement managerTechnical adviserRequestor
Supplier identificationProcurement leadProcurement managerTechnical adviserRequestor
Request for quotesProcurement leadProcurement managerRequestorRequestor
Contract negotiationProcurement leadProcurement managerLegal | Finance
Requestor
Requestor
Contract managementProcurement leadProcurement managerLegalRequestor
Supplier managementProcurement leadProcurement managerTechnical adviser
Requestor
Requestor
Risk managementProcurement leadProcurement &
supply chain dept.
Legal | Finance
Requestor
Requestor
Finance

Available to download here.


Purchasing RACI matrix

PURCHASINGResponsibleAccountableConsultedInformed
Needs definitionRequestorRequestorTechnical adviserProcurement lead
Raise requisitionRequestorRequestorTechnical adviserProcurement lead
Obtain internal
approvals
RequestorRequestorBudget holder | FinanceTechnical adviser
Raise purchase
order(s)
Procurement leadProcurement &
supply chain dept.
Budget holder | Finance
Requestor
Requestor
Goods receptionWarehouse
Proc. lead | Requestor
Procurement &
supply chain dept.
Technical adviserRequestor
PaymentFinance leadFinance dept.Procurement &
supply chain dept.
Requestor

Available to download here.


Authority to procure

Authority to conduct procurement includes entering contracts, negotiating them or amending them and inviting suppliers to bid for contracts for the organisation.

Authority to procure is usually, but not exclusively, held by the logistics division.

The Grant Agreement Document (GAD) that the British Red Cross signs with the PNS, HNS or IFRC may also delegate procurement authority, by which the British Red Cross allows partners to conduct procurement activities with funds that it provides to them.

A text box describes what Authority to procure means: The person with procurement authority is accountable for improper use of this authority or for anyone acting without proper authority in their delegation, office or programme

Authority to procure must be stated in job descriptions for roles which include procurement responsibilities.

The programme manager can propose a list of staff who should be given authority to procure.

In all cases, the regional logistics coordinator at the British Red Cross should be consulted by the programme manager when allocating authority to procure.

It is good practice to keep records of authority to procure – staff with authority to procure should fill out a Delegation of procurement authority, to be signed off by the head of logistics and head of programme as applicable.

When the British Red Cross signs an integration agreement with the IFRC in a country where the British Red Cross works with the NS (in other words, a multilateral partnership), the integration agreement sometimes includes procurement rules. In this case, the IFRC’s procurement procedures apply to British Red Cross-led procurement. This is also the case when NS staff conduct procurement under a British Red Cross-funded programme.

Where the IFRC is not part of the partnership, the applicable procurement thresholds will be defined in the GAD with the PNS (this is called a bilateral partnership).


Procurement principles

Principles of organisation:

  • placing the requirements of the British Red Cross at the heart of what we do
  • managing our suppliers in a way that mitigates the exposure to any risk
  • driving value for money
  • enabling effective competition that is open, fair and transparent
  • driving continuous improvement that delivers innovative solutions and sustainable benefits.

General procurement principles:

  • proportionality – the larger the risk, the more complex the process
  • fairness – all suppliers are treated equally
  • transparency – all suppliers receive the same information
  • value for money – the best possible quality at the best possible price, for the best possible impact
  • segregation of duty – different decision-makers along the process
  • respect for applicable framework.

Risk management

Identifying risks

All procurement activities present different levels of risk to the organisation conducting them.

Before starting the procurement process, it is important to assess that risk and the appetite there is to expose the organisation to it.

Adopt a risk-based approach that considers different types of risk and the appropriate mitigating actions to adhere to the general and organisational procurement principles.

There are different types of risks in procurement:


Procurement risks:

Financial

  • relates to the total value of the procurement
  • particularly high in cash transfer programmes where the total value of transfers may have to be paid in advance

Type of goods

  • some goods are “riskier” than others to procure

Supply chain

  • actors involved in the supply chain, transport needs, etc.

Payment recipient

  • investigation into ownership of engaged companies may be required

Country of origin/destination

  • legal framework for manufacturing, shipping or quality management may be below acceptable levels

Programmatic risks

  • regardless of value, a specific procurement being delayed or compromised can put the entire programme at risk.

Managing the identified risks

Use a risk management matrix and discuss options to mitigate risks with the procurement lead.

Use a risk assessment tool to capture these factors and include the findings in a programme risk register.

Remember
Risk Rating = Likelihood x Impact


The risk management matrix measures the likelihood of risk against the impact of an action

Available to download here.

Possible outcomes of the risk analysis are:

  • The level of risk is acceptable to conduct the procurement.
  • The procurement process needs to be flagged on a risk register for the consideration of management.
  • The procurement process should be cancelled.

The decision must be made by the programme manager, in consultation with the procurement and finance teams.


Due diligence

Due diligence involves taking steps to be certain that the relationship with the supplier does not put the organisation at risk. This is done through a comprehensive appraisal of a supplier that looks at assets, liabilities and processes against financial, ethical and environmental considerations.

When due diligence is considered as part of a procurement process, it is the responsibility of the procurement lead to conduct it. The due diligence framework in the British Red Cross is managed by the corporate procurement team (CPT), and the international department supports the implementation of systems to ensure that due diligence is conducted appropriately.


Fraud and corruption

An anti-fraud and corruption policy should be in place in each partner organisation that is involved in procurement activities. The British Red Cross anti-fraud and corruption policy sets out our approach to preventing fraud and corruption within the organisation, as well as how to manage it if it occurs. It is available from RedRoom or from the logistics team for reference.


Conflict of interest and confidentiality agreements

Conflict of interest is a form of corruption and occurs when someone conducting a procurement process has an interest in driving it in a specific direction, based on relationships, financial interests or favouritism.

Anyone involved in procurement should be aware of emerging conflicts of interest and make them explicit. They must also declare any way in which they might have a conflict of interest in a particular procurement process, through a declaration of conflict of interest form (see conflict of interest policy).

All instances of failure to disclose a conflict of interest will be investigated in line with the established disciplinary process, which may lead to dismissal where gross misconduct is proved.

For details on Due diligence and counter-terrorism checks, go to the Supplier due diligence section of Sourcing for procurement.


Read the next section on Planning procurement here.



Download the full section here.

Please wait while flipbook is loading. For more related info, FAQs and issues please refer to DearFlip WordPress Flipbook Plugin Help documentation.