PLEASE NOTE This document has been included as

PLEASE NOTE: This document has been included as an example. The format & contents of your final commodity strategy may vary as per the internal governance, processes and procedures within your organisation. «Commodity» Version 0. 0 Proposed Commodity Strategy «Date» 0

Version control Version # Updated By Date Updated Change Details 1

Contents Page/Slide Number Key Contacts: «Name» «Title» Tel: Foreword Executive Summary Stakeholder Engagement Commodity Charter Email: _________ Current Situation: «Name» - Commodity Profile «Title» - Supply Market Analysis Proposed Strategy: Tel: - Strategic Objectives Email: _________ «Name» - Sustainability - Supplier and Contract Management - Principal Options «Title» - Proposed Approach - Selection Criteria - Award Criteria - Deployment - Risk analysis - Communication Plan - Implementation Plan Tel: Email: Appendices 2

Foreword Purpose This document describes the commodity strategy for procuring «Commodity» . The information within this document will be shared and developed with key stakeholders. It contains certain sensitive commercial information and should not be shared beyond this environment. In particular this document should not be shared with suppliers as it discussed several sourcing strategy options and makes recommendations for implementation. Approval of this document will come through the established governance route. Notes The data contained in this document is based on data provided from several sources. These include: - «i. e. data extracted from the Scottish Procurement Information Hub (formally known as Spikes Cavell Observatory) » ; - «i. e. market information provided by «source» » ; and - «i. e. product and spend data provided by several of the major incumbent «commodity» providers» The document takes into account information gathered during «timeframe» , including that obtained from participants in the cross-sector User Intelligence Group held during this time. 3

Executive Summary The initial insights, options considered and recommended outcomes are based on careful consideration of the total addressable spend, cashable and non-cashable benefits. Key Findings • Total spend is over £ «value» : - «i. e. breakdown of spend by organisation» • Products purchased make up «No. » key sub-categories: - «i. e. breakdown of spend by sub-categories» ; • More than x-number of suppliers are currently used to provide these products: - «i. e. breakdown by supplier» ; Benchmarking and Opportunities, Options Considered • Scope and Dependencies - «i. e. Department (s), Organisation (s) or sector( s) interested in proposed outcomes; • Options XXXXXXXXXXXX; - «i. e. xxxxxxxx; Recommendations and Key Actions • After comprehensive consultation with stakeholders: - «i. e. To go to market on a national, cross-sector basis breakdown by supplier» ; - «i. e. Award new contract/s by «date» , with a phased implementation effective from «date» ; Benefits, Justification and projected savings - «i. e. cashable/non-cashable savings» ; - «i. e. return on investment» ; Key Risks and Resource Implications - «i. e. Insufficient access to accurate and current spend data and current contract data» ; - «i. e. Insufficient stakeholder engagement and demonstrable commitment to required resource» . 4

Project Timeline per initiative An estimated project plan for the implementation of each feasible option should be included. «Commodity» Aug- Oct 2007 Nov-Jan 2007/2008 Feb-Apr 2008 May-Jul 2008 Aug- Oct 2008 Sourcing consolidated contracts Data Gathering & Strategy Product level data gathering & analysis Development of lotting and contract strategy Stakeholder workshops/presentations Confirmation of strategy & approach Formal customer sign-up Development of specification & SLA Source: Development & refinement of core list Spikes Cavell Sourcing consolidated contracts OJEU Notice Issued Pre-qualification of suppliers Tender preparation & management E m a x e l p e. Auction Final selection & validation Formal contract award Implementation & Mobilisation First customers go live Mobilisation of additional customers Key: In process Supplier. Planned & contract management Not agreed Estimated contract awards: May 08. 5

UIG Membership Capture details of UIG members. Add Commodity Name here Name Location Dept. Role Tel. 6

Stakeholder Engagement stakeholders, across the organisation and/or Public Sector, are consulted in the refinement and validation of a number of aspects of this commodity sourcing strategy. Early engagement of key stakeholders will help to ensure the following benefits: - The closer alignment of strategy and specification with requirements of users; - The identification of leading practices already implemented at local level; - The ability to demonstrate increased buy-in to strategy, enhancing leverage in the supply market; and - The improved take up of contracts once awarded. A number of stakeholder workshops are planned for «time frame» : - Focus on procurement managers within end user organisations - Sector based approach, reflecting different operating environments and status of current arrangements - Other stakeholders (see below) to be targeted later in the year, this will include developing: - a standard information pack for users; and - a standard information pack/messages for suppliers High Tender & Contract Award Impact on success It is essential that key Med Low Unaware Awareness Level of Engagement Understanding Support and Buy-in Commitment and Action Advocacy and Ownership 7

Current Status of Commodity/Contracts Provide details of commodities covered by the strategy. 1 - Commodity Definition Commodity Name Definition Source 8

Current Status of Commodity/Contracts Provide details of existing contracts. 2 – Current Contracts Contract Detail Contract Scope Expiry Date Current Pricing 9

Current Status of Commodity/Contracts It is essential that key stakeholders, across the organisation and/or 3 – Relevant Policies/ Processes Public Sector, are consulted in the refinement and validation of a number of aspects of this Policy detail Reason of impact Source commodity sourcing strategy. 10

Current Situation 11

Spend Analysis Create your Spend Analysis and add it here. This is an example of one format 12

Sustainability The Sustainability Test Area will help identify and Aspects/Considerations Proposed Actions and Potential Impact prioritise the sustainable aspects Social and impacts of your requirement and procurement. Consideration and actions identified during strategy Economic development should be reviewed and monitored throughout the life of the contract or framework agreement. Environment 13

Commodity Profile Summarise key findings. Product Profile «product profile details including any relevant graphs/tables » Commodity Tree Commodity Sub Com 1 Sub Com 3 Sub Com 2 Sub Com 4 Sub Com 5 Sub Com 6 Segment Segment Segment Segment Segment Segment Sub Com 8 Sub Com 7 Segment Sub Com 9 Examples of Templates available – See Slide Notes for details of templates and guidance Sub Com 11 Segment Segment Commodity Characteristics Template Training Functionality End User Requirements Organisation Requirements Future Trends Constraints 14

Market Summary Template Summarise key findings. Factor Findings from research Market definition Market Overview Trade Associations Key Suppliers Market growth Trends and developments Supply market trends 15

Supply Market Analysis Use the Market Summary Template to populate the following: Market definition «definition» Include any relevant graphs/tables i. e. Public sector spend £ by supplier size (%), Total Scottish market (£) by supplier size «year» (%), total employment in Scotland by supplier size «year» (%), and a synopsis of the SME market analysis” SWOT Analysis Strengths Market size «size» Structure «structure» Current supply «supply» Challenges «challenges» The format of this slide is an example only. You may choose to present different analysis tools depending on your requirement. Weaknesses - Text - Text Opportunities Threats - Text - Text ECONOMIC POLITICAL SOCIALDEMOGRAPHIC Competition «competition» ETHICAL PEST LEE Analysis TECHNOLOGIC AL ENVIRONMENT AL LEGAL 16

Supply Market Analysis Summarise findings and conclusions e. g. 80% of the market is with 20% of the suppliers. Organisation spend as percentage of supplier turnover in Scotland The table below shows the annual turnover in Scotland for the top 10 suppliers in the UK and the Public Sector spend with them. The total Scottish Public Sector spend on «Commodity» is greater than any one of the suppliers’ current turnover in Scotland. Supplier Name x x x x x Sub-total Spend with Top 10 Suppliers Annual Turnover in UK Scotland £ 000 Current Expenditure £ 000 Percentage of Percentage turnover of turnover Scotland UK xx, xxx « 00» % « 0. 0» % xx, xxx xxx, xxx xxx « 00» % « 0. 0» % xx, xxx xxx « 00» % xx, xxx xxx, xxx x « 00» % « 00» % x, xxx xxx, xxx « 00» % x, xxx xxx « 00» % xx, xxx « 00» % xxx, xxx 17

Supplier Profile Analysis X Supplier is the global leader in the provision of Y solutions Organization and History Strategy and Key Market Segments Products, Service Range and Operations Key Financials and Other Developments Insert commodity specific Supplier Data. Use 1 slide for each of the top 5 suppliers. You should base the top 5 on whether you think the market is global, European, or UK only 18

Supplier Cost Drivers Cost Element % of Overall Price (e. g. Material, Labour, (Use estimates, Sub-contract, market, supplier and Transport, existing analysis) Overheads…) Source of Data Confidence (Low, Medium, High) 19

Total Cost of Ownership: Considerations Acquisition Ownership Operation Disposal • • • • • • • • • • 20

Risk Analysis Provide details of risks identified and assessed. Mitigation strategies should be developed where possible/appropriate Risk Identification & Assessment • The following risks/issues have been identified. Risk Description of Risk Probability/ Impact Result Date of Assessment Mitigating Actions Next review date ID Owner 1 AN Other Lack of Stakeholder Buy-in M/H 01/01/2010 Ensure clear comms and engagement TBC 2 AN Other Supplier performance failure L/H 01/01/2010 Contract Mgmt & monitoring 01/02/2010 • The following mitigation strategies have been developed & deployed • xxxxxxxxx • xxxxx 21

Best Value/Opportunity Analysis Highlight your priorities e. g. which proposals will deliver the most significant gains. Best value analysis Area Examples of leading practice • Reduce consumption • Eliminate need • Find alternative ways of meeting needs • Policy changes • Benchmarking usage and consumption across comparable organisations • Consolidate spend • Common specification • Collaboration with other public sector bodies • Improve specification • • Re-structure relationships • Increase competition Potential/Proposed/Approach to implementation • «approach» • A key component of this strategy is to consolidate spend across the Public Sector in Scotland. Detailed specifications • «approach» • Lower cost specification (own brand? ) • «approach» • Optimal service level • Quantify spend volumes • Value for Money – cost vs benefits • Develop strong relationships with key suppliers • «approach» • Introduce supplier development programmes • «approach» • Review / establish service level agreements • Introduce routine supplier monitoring and reporting • Establish incentivised contracts • Price / performance benchmarking • «approach» • E- Auction • «approach» • Cost driver analysis • Price harmonisation 22

Best Value Analysis (Cont’d. ) Best value analysis Area Example of leading practice • Re-structure supply base • Tender requirements for all spend • «approach» • Supplier consolidation • «approach» • Reduce / eliminate transactions • Rationalise suppliers • «approach» • Rationalise requirements • «approach» • Low value ordering systems (e. g. GPC) • «approach» • e-Procurement Scotland / other systems • «approach» • Consolidate invoices • Re-engineer processes • «approach» • Outsourcing • «approach» • Reduce inspection/checking • Reduce stock holding • Reduce/consolidate deliveries • Reduce maverick spend • Optimise Total Supply Chain Costs • Design / development • «approach» • Integrate logistics • Frameworks to reduce for lengthy tender processes • Corporate Social Responsibility • Focus on demonstrably sustainable (or reduced impact) products, services and solutions • «approach» • Reduce total life cost / cost of ownership Potential/Proposed/Approach taken in this strategy 23

Proposed Strategy 24

Strategic Objectives The strategy, and the key options considered, have been tested against the aims of the strategy and a number of other important considerations. Whilst the proposed approach represents the preferred option for realising these aims a number of options were given careful consideration. Objectives Implementation of this category strategy is intended to address «No. » key objectives: • «i. e. To leverage the £ « 00» + million, spent annually, to realise improvements in the value for money obtained in the sourcing of «Commodity» including reductions in product prices, enhancements to product quality and improvements in service levels, where appropriate» ; • «i. e. To increase the take up of leading processes and practices across the sector, including increases in the efficiency of key transactional processes including order, delivery and payment» ; • «i. e. To release valuable ‘local’ and sector procurement resources to enable them to allow them address other areas of spend, increasing the range and depth of third-party expenditure influenced by procurement across the public sector» ; and • «i. e. To reduce the negative environmental and social impact of the use of «Commodity» . In striving to achieve these objectives, the strategy will also seek to consider its impact on: • «i. e. Incumbent and potential SME suppliers» ; • «i. e. The long term competition in the provision of «Commodity» to the public sector in Scotland» ; • «i. e. The need for continuity of service provision between current and proposed contracts» ; and • «i. e. The need for choice and flexibility to be retained in order to address certain, specific needs of individual end user organisations» . Each of the options considered have been tested against its impact on these objectives and considerations. 25

Principal Options Appraisal The Authority is Option 1 Option 2 Option 3 Option 4 committed to managing, monitoring Procurement Route and developing Not applicable Do nothing Open Restricted Use existing framework supplier performance and understanding Develop bespoke contract Benefits & Concerns whether our contracts are delivering and Recommendation & Justification 1 meeting the needs of our customers. OJEU Procedure Competitive Dialogue Other Benefits & Concerns 2 26

Principal Options Appraisal Option 1 The Authority is committed to Lots managing, monitoring and developing Option 2 Option 3 Option 4 Not applicable 1 Lot Geographical Product / Service Not applicable 1 Supplier 3– 5 Suppliers 5 + Suppliers Recommendation & Justification Benefits & Concerns supplier performance and understanding whether our contracts 3 are delivering and meeting the needs of our customers. Suppliers Per Lot Benefits & Concerns 4 27

Proposed Initiatives The proposed approach is based on «xxxx» . Key Principles The proposed approach to the supply market includes: • «i. e. A single, national and cross-sector sourcing exercise to commence in «Month/year» » ; • «i. e. Contract(s) to be awarded by «Date» with a phased implementation and first orders being placed from «Date» ; • «i. e. Contract(s) to cover an initial term of «Years» years with options to extend by a further «Year/s» year/s» ; and • «i. e. Public sector organisations will be expected to confirm their commitment to using the/these contract(s) during «Month/year» (regardless of their anticipated migration date)» . More detail on the specific requirements to be addressed with this/these contracts is provided in the Proposed Statement of Requirements document (which is available separate to this strategy document). Key Advantages • «xxxx» ; • «xxxx» . It is anticipated to deliver savings of up to £ « 0. 0» million per annum for the public sector in Scotland Potential Issues and Risks • «i. e. Participation by regional SME suppliers may be limited» ; • «i. e. Strategy and sourcing process will need to be carefully explained to stakeholders and suppliers» . 28

Appendices 29

Supplier Selection Criteria Potential suppliers will be evaluated against a broad range of criteria. Areas to be included in Supplier Evaluation Attributes Means of appraisal Minimum Expectations The criteria listed here are to be reviewed further and provide only an indication of the range of attributes to be considered during the supplier selection process. Financial Status l «xxxx» l «i. e. “Secure” or better» Conviction of Criminal Offences l «xxxx» l No conflictions Business Probity l «xxxx» l No occurrences Technical and Professional Ability l «xxxx» l Meets minimum standards Health and Safety l «xxxx» l Must be related to the requirements of the contract Quality Assurance l «xxxx» l «i. e. ISO 14001 or equivalent» Corporate Social Responsibility l «xxxx» l Must be related to the requirements Insurance l «xxxx» l Availability of required policies Transactional Efficiency l «xxxx» l «i. e. Use of e. PS and P-Card» of the contract 30

Supplier Award Criteria Potential suppliers will be evaluated against a broad range of criteria. The criteria listed here are to be reviewed further and provide only an indication of the range of attributes to be considered during the supplier selection process. Areas to be included in Supplier Evaluation Attributes Means of appraisal Price l «xxxx» Minimum Expectations l «xxxx» Quality l «xxxx» l meets required quality Technical Merit l «xxxx» l meets specification Delivery l «xxxx» l « i. e. Delivery date, period or period of completion » After-Sales Service Source: Technical Assistance l «xxxx» Running Costs and effectiveness l «xxxx» Implementation Capability l «xxxx» l Can provide required service Spikes Cavell l «xxxx» Account Management / MI l «xxxx» Product Range l «xxxx» Transactional Efficiency l «xxxx» l «i. e. Use of e. PS and P-Card» Environmental Characteristics l «xxxx» l Must be linked to the subject matter of the contract 31

Communication Plan Comments…. In addition to the work carried out by the UIG outline how the category strategy and final outcomes will be communicated to individual organisations - << i. e. road shows>> - << workshops>> - << website>> - <<XXXXX>> Do Co. Es or individual organisations need to provide information or commitment and at what stage of the strategy development or implementation? - << i. e. intention to participate – before we go out to tender>> - << sign an Agency Agreement – before the Framework is established>> prior to the first order - << sign a Participation Agreement – after the Framework is established and being placed>> - <<XXXXX>> Timescales for critical activities - << outline key dates>> - <<XXXXX>> 32

Implementation Plan Comments…. Key steps and requirements • <<Outline requirements>> • <<XXXXXXXXXXXX>> Content Management requirements • <<XXXXXXXXXXXX>> Resources and structure • <<outline>> • <<XXXXXXXXXXXX>> Timescales • <<outline>> • <<XXXXXXXXXXXX>> Evaluation and Control • <<outline>> • <<XXXXXXXXXXXX>> 33

Contract and Supplier Management The Authority is committed to managing, monitoring and developing Overview Strategic Objectives This approach to Contract & Supplier Management has been developed to; supplier performance • Drive continual improvement and benefits from existing and future contractual relationships and understanding • Ensure that all parties to contracts were meeting their obligations whether our contracts • Measure performance against KPI’s & SLA’s are delivering and • Measure behaviours such as communication, responsiveness and innovation meeting the needs of • Provide end users with an opportunity to provide feedback on supplier & contract performance our customers. • Be consistently applied across all categories Scope The term ‘contract & supplier management’ can be broken down into the following key component parts: • Contract Implementation and Management • Supplier Management and Development • Operational Management • Contract Administration • Supply Chain Innovation & Development 34

Contract and Supplier Management The Authority is committed to managing, monitoring and developing supplier performance and understanding whether our contracts are delivering and meeting the needs of our customers. Approach A balanced scorecard approach has been developed to manage, monitor and develop supplier performance. The scorecard has 4 core indicators and suggested sub-criteria as follows: Balanced Scorecard Quality Fit for Purpose Returns CSR Continual Improvement/Innovation Service Responsiveness Complaints Management Information Education/Training Communication Delivery Lead time/delivery time On time delivery against objectives Accuracy Cost Pricing stability Invoice accuracy Cost reduction initiatives At this stage buyers should be aware of the requirement to consider CSM. Further development is required at the ITT stage when Management Information needs will be defined and when KPIs will be identified. The scorecard will be finalised at the contract award stage. 35