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»

Reference: PCD54-A Released: 21/04/2015

 Version control

Version # Updated By Date Updated Change Details

1
 Contents
Page/Slide Number
Key Contacts:
Foreword
«Name»
Executive Summary
«Title»
Stakeholder Engagement
Tel:
Commodity Charter
Email:
__________________ Current Situation:
«Name» - Commodity Profile
- Supply Market Analysis
«Title»
Proposed Strategy:
Tel: - Strategic Objectives
Email: - Sustainability
__________________ - Supplier and Contract Management
«Name»
- Principal Options
«Title» - Proposed Approach
- Selection Criteria
Tel:
- Award Criteria
Email: - Deployment
- Risk analysis
- Communication Plan
- Implementation Plan

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
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, Key Findings
options considered • Total spend is over £«value»:
and recommended «i.e. breakdown of spend by organisation»
outcomes are based • Products purchased make up «No.» key sub-categories:
on careful «i.e. breakdown of spend by sub-categories»;
consideration of the
total addressable • More than x-number of suppliers are currently used to provide these products:
spend, cashable and «i.e. breakdown by supplier»;
non-cashable benefits.
Benchmarking and Opportunities, Options Considered
• Scope and Dependencies
«i.e. Department (s), Organisation (s) or sector( s) interested in proposed outcomes;
• Options XXXXXXXXXXXXXXXXXXXXXXX;
«i.e. xxxxxxxxxxxxxxxx;

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 «Commodity» Aug- Oct Nov-Jan
Feb-Apr 2008 May-Jul 2008 Aug- Oct 2008
plan for the 2007 2007/2008
implementation of
Sourcing consolidated contracts
each feasible option
should be included. 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

Development & refinement of core list

Source: Spikes Cavell
Sourcing consolidated contracts

OJEU Notice Issued

Pre-qualification of suppliers

Tender preparation & management

eAuction

Final selection & validation

Formal contract award

Implementation & Mobilisation

Mobilisation

First customers go live

Mobilisation of additional customers

Supplier & contract management

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

Med

Low
Unaware Support and Commitment Advocacy and
Awareness Understanding Ownership
Buy-in and Action
7
Level of Engagement
 Current Status of Commodity/Contracts
Provide details of
commodities covered
by the strategy. 1 - Commodity Definition

Commodity Definition Source

Name

8
 Current Status of Commodity/Contracts
Provide details of
existing contracts.
2 – Current Contracts

Contract Contract Expiry Date Current Pricing

Detail Scope

9
 Current Status of Commodity/Contracts
It is essential that key
stakeholders, across
the organisation 3 – Relevant Policies/ Processes
and/or Public Sector,
are consulted in the
refinement and
Policy Reason of impact Source
validation of a number
detail
of aspects of this
commodity sourcing
strategy.

10
Current Situation

11
 Spend Analysis

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

Annual Spend

£900,000.00

£800,000.00

£700,000.00

£600,000.00
Monmouth
£500,000.00
Value

Keymed
£400,000.00
Diagmed
£300,000.00
Cook
£200,000.00
Conmed
£100,000.00
Boston
£0.00

e
ir e
ow

ds
n
an

rs

nd
fe

ay
n

s
de

le
id
ia

le
ra

le
de
Fi

an
sh
pi

t la
w

bi
sg

ly

ys
th

al

Is
Ar

lo
m

or

Ju
C

hl
rk

he
V
Lo
la

Ta

rn
al
ra

B
&

na

ig
l&
G

r th

S
en
te
G
G

H
ire

La

yl

es
Fo

&

d
sh

rg

ol
W
es

G
A
yr

fri
A

um

12
D
 Sustainability
The Sustainability Test Area Aspects/Considerations Proposed Actions and
will help identify 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
Product Profile
Summarise key
«product profile details including any relevant
findings.
graphs/tables »
Commodity Tree
Commodity

Examples of Templates
Sub Com 1 Sub Com 2
Sub Com 3 Sub Com 4 Sub Com 5 Sub Com 6 Sub Com 7 Sub Com 8 Sub Com 9 Sub Com 11

available – See Slide Notes for

Segment Segment Segment Segment Segment Segment Segment Segment
Segment
details of templates and
guidance
Segment Segment Segment Segment Segment Segment Segment Segment
Segment

Segment Segment Segment Segment Segment Segment

Segment
Segment

Segment Segment
Segment

Segment
Segment

Commodity Characteristics Template

Training

Functionality End User Organisation Future Constraints

Requirements Requirements Trends

14
 Market Summary Template
Summarise key Factor Findings from research
findings. Market definition

Market Overview

Trade Associations

Key Suppliers

Market growth

Trends and
developments

Supply market trends

15
 Supply Market Analysis
Use the Market Include any relevant graphs/tables i.e. Public sector spend £ by supplier size (%),
Summary Template Total Scottish market (£) by supplier size «year» (%), total employment in Scotland
to populate the by supplier size «year» (%), and a synopsis of the SME market analysis”
following:
Market definition
SWOT Analysis
«definition»
Strengths Weaknesses The format of this slide is an
Market size  Text  Text example only. You may choose
«size»  Text  Text to present different analysis
 Text  Text
tools depending on your
Structure requirement.
«structure» Opportunities Threats
 Text  Text
Current supply  Text  Text
«supply»  Text  Text
ECONOMIC
Challenges
«challenges»
POLITICAL
SOCIAL-
Competition DEMOGRAPHIC
«competition»

ETHICAL PEST LEE

Analysis
TECHNOLOGIC
AL
ENVIRONMENT
AL
LEGAL

16
 Supply Market Analysis
Summarise findings Organisation spend as percentage of supplier turnover in Scotland
and conclusions e.g. The table below shows the annual turnover in Scotland for the top 10 suppliers in the UK and the Public
80% of the market is Sector spend with them.
with 20% of the The total Scottish Public Sector spend on «Commodity» is greater than any one of the suppliers’ current
suppliers. turnover in Scotland.

Annual Annual Current Percentage of Percentage

Turnover in Turnover in UK Expenditure turnover of turnover
Supplier Name Scotland £000 £000 £000 Scotland UK

x xx,xxx xxx,xxx xx,xxx «00»% «0.0»%

x xx,xxx xxx,xxx x,xxx «00»% «0.0»%

x xx,xxx xxx,xxx xxx «00»% «0.0»%

x xx,xxx x,xxx,xxx xxx «00»% «00»%

x xx,xxx xxx,xxx x «00»% «00»%

x xx,xxx xxx,xxx x «00»% «00»%

x xx,xxx xx,xxx x «00»% «00»%

x x,xxx xxx,xxx x,xxx «00»% «00»%

x x,xxx xxx,xxx x,xxx «00»% «00»%

x x,xxx xxx,xxx xxx «00»% «00»%

Sub-total Spend with Top 10 Suppliers xxx,xxx xx,xxx «00»%

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 Source of Data Data Confidence

(e.g. Material, Labour, (Use estimates, (Low, Medium, High)
Sub-contract, market, supplier and
Transport, existing analysis)
Overheads…)

19
 Total Cost of Ownership: Considerations

Acquisition Ownership Operation Disposal

• • • •
• • • •
• • • •
• • • •
• • • •
• • • •
• • • •
• • • •
• • • •
• • • •

20
 Risk Analysis
Provide details of risks Risk Identification & Assessment
identified and • The following risks/issues have been identified.
assessed.
Mitigation strategies
Risk Description of Probability/ Date of Mitigating Next review
should be developed
ID Owner Risk Impact Result Assessment Actions date
where
possible/appropriate
Lack of Ensure clear
1 AN Other Stakeholder M/H 01/01/2010 comms and TBC
Buy-in engagement

Supplier Contract
2 AN Other performance L/H 01/01/2010 Mgmt & 01/02/2010
failure monitoring

• The following mitigation strategies have been developed & deployed

• xxxxxxxxx
• xxxxxxxxx
• xxxxxxxxx

21
 Best Value/Opportunity Analysis
Highlight your priorities Best value analysis
e.g. which proposals
will deliver the most Area Examples of leading practice Potential/Proposed/Approach to implementation
significant gains. • Reduce • Eliminate need • «approach»
consumption • Find alternative ways of meeting needs
• Policy changes
• Benchmarking usage and consumption across
comparable organisations

• Consolidate • Common specification • A key component of this strategy is to consolidate spend

spend • Collaboration with other public sector bodies across the Public Sector in Scotland.

• Improve • Detailed specifications • «approach»

specification • Lower cost specification (own brand?) • «approach»
• Optimal service level
• Quantify spend volumes
• Value for Money – cost vs benefits

• Re-structure • Develop strong relationships with key suppliers • «approach»

relationships • Introduce supplier development programmes • «approach»
• Review / establish service level agreements
• Introduce routine supplier monitoring and
reporting
Re latio
Re
on

str ns
ific e
ec rov
ati

uc hip

•
Sp Im p

ture s

Establish incentivised contracts

d
en

Co
Inc pe
Sp

• Increase • •
m
rea titio
nt d

Price / performance benchmarking «approach»

te

m e an
da

se n
ge em

Su anag
oli

M
na e D

Cost
pp em
ns
Co

ly
Ma has

Cash
competition
Ba ent
rc

• •
se

Quality
Pu

Service E- Auction «approach»

Re pply
Su
on

str B
um ce

Innovation
pti

uc ase
ns du

ture

Sustainability
Co Re

Total Cost Management

Optimise Total
Supply Chain Costs
Reduce Total Life cycle
/ Ownership Costs
• Cost driver analysis
•
Reduce / Eliminate
Transactions
Price harmonisation

22
 Best Value Analysis (Cont’d.)
Best value analysis

Area Example of leading practice Potential/Proposed/Approach taken in this strategy

• Re-structure • Tender requirements for all spend • «approach»

supply base • Supplier consolidation • «approach»

• Reduce / • Rationalise suppliers • «approach»

eliminate • Rationalise requirements • «approach»
transactions
• Low value ordering systems (e.g. GPC) • «approach»
• e-Procurement Scotland / other systems • «approach»
• Consolidate invoices

• Reduce total life • Re-engineer processes • «approach»

cost / cost of • Outsourcing • «approach»
ownership
• Reduce inspection/checking
• Reduce stock holding
• Reduce/consolidate deliveries
• Reduce maverick spend

• Optimise Total • Design / development • «approach»

Supply Chain • Integrate logistics
Costs
• Frameworks to reduce for lengthy tender processes

• Corporate Social • Focus on demonstrably sustainable (or reduced • «approach»

Re latio
Re
on

str ns
ific e
ec rov
ati

uc hip
Sp Im p

Responsibility impact) products, services and solutions

ture s
d
en

Co
Inc pe
Sp

m
rea titio
nt d
te

m e an
da

se n
ge em

Su anag
oli

M
na e D

Cost
pp em
ns
Co

ly
Ma has

Cash
Ba ent
rc

se

Quality
Pu

Service
Re pply
Su
on

str B
um ce

Innovation
pti

uc ase
ns du

ture

Sustainability
Co Re

Total Cost Management

Optimise Total Reduce Total Life cycle Reduce / Eliminate

Supply Chain Costs / Ownership Costs Transactions

23
Proposed Strategy

24
 Strategic Objectives
The strategy, and the Objectives
key options Implementation of this category strategy is intended to address «No.» key objectives:
considered, have been
• «i.e. To leverage the £«00»+ million, spent annually, to realise improvements in the value for money
tested against the
obtained in the sourcing of «Commodity» including reductions in product prices, enhancements to product
aims of the strategy
quality and improvements in service levels, where appropriate»;
and a number of other
important • «i.e. To increase the take up of leading processes and practices across the sector, including increases in
considerations. 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
Whilst the proposed other areas of spend, increasing the range and depth of third-party expenditure influenced by procurement
approach represents across the public sector»; and
the preferred option for
realising these aims a • «i.e. To reduce the negative environmental and social impact of the use of «Commodity».
number of options
were given careful
In striving to achieve these objectives, the strategy will also seek to consider its impact on:
consideration.
•«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 Recommendation
Option 1 Option 2 Option 3 Option 4
& Justification
committed to
managing, monitoring Procurement Not Do nothing Use existing Develop
and developing Route applicable framework bespoke
supplier performance contract

and understanding Benefits &

whether our contracts Concerns
1

are delivering and

meeting the needs of
our customers.

OJEU Open Restricted Competitive Other

Procedure Dialogue

Benefits &
Concerns
2

26
 Principal Options Appraisal
Recommendation &
The Authority is Option 1 Option 2 Option 3 Option 4
Justification
committed to
Lots Not 1 Lot Geographical Product /
managing, monitoring applicable Service
and developing
Benefits &
supplier performance
Concerns
and understanding
whether our contracts 3

are delivering and

meeting the needs of
our customers.

Suppliers Per Not 1 Supplier 3–5 5 + Suppliers

Lot applicable Suppliers

Benefits &
Concerns

27
 Proposed Initiatives
The proposed Key Principles
approach is based on The proposed approach to the supply market includes:
«xxxx».
•«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»;
•«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 Areas to be included in Supplier Evaluation
be evaluated against a
broad range of criteria. Attributes Means of appraisal Minimum Expectations

The criteria listed here Financial Status  «xxxx»  «i.e. “Secure” or better»
are to be reviewed
further and provide Conviction of Criminal  «xxxx»  No conflictions
only an indication of Offences
the range of attributes
to be considered
during the supplier Business Probity  «xxxx»  No occurrences
selection process.
Technical and Professional  «xxxx»  Meets minimum standards
Ability

Health and Safety  «xxxx»  Must be related to the

requirements of the contract

Quality Assurance  «xxxx»  «i.e. ISO 14001 or equivalent»

Corporate Social  «xxxx»  Must be related to the

Responsibility requirements of the contract

Insurance  «xxxx»  Availability of required policies

Transactional Efficiency  «xxxx»  «i.e. Use of ePS and P-Card»

30
 Supplier Award Criteria
Areas to be included in Supplier Evaluation
Potential suppliers will
be evaluated against a
broad range of criteria. Attributes Means of appraisal Minimum Expectations

Price  «xxxx»
The criteria listed here
 «xxxx»
are to be reviewed
further and provide Quality  «xxxx»  meets required quality
only an indication of
the range of attributes Technical Merit  «xxxx»  meets specification
to be considered
during the supplier Delivery  «xxxx»  « i.e. Delivery date, period or
period of completion »
selection process.
After-Sales Service

Technical Assistance  «xxxx»  Can provide required service

Source: Spikes Cavell
Running Costs and  «xxxx»
effectiveness

Implementation Capability  «xxxx»

 «xxxx»

Account Management / MI  «xxxx»

Product Range  «xxxx»

 «xxxx»

Transactional Efficiency  «xxxx»  «i.e. Use of ePS and P-Card»

Environmental  «xxxx»  Must be linked to the subject

Characteristics matter of the contract

31
 Communication Plan
In addition to the work carried out by the UIG outline how the category strategy and final outcomes will be
Comments…. communicated to individual organisations
- << i.e. road shows>>
- << workshops>>
- << website>>
- <<XXXXX>>

Do CoEs 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>>
- << sign a Participation Agreement – after the Framework is established and
prior to the first order being placed>>
- <<XXXXX>>
Timescales for critical activities
- << outline key dates>>
- <<XXXXX>>
- <<XXXXX>>

32
 Implementation Plan
Comments…. Key steps and requirements
• <<Outline requirements>>
• <<XXXXXXXXXXXX>>
• <<XXXXXXXXXXXX>>
Content Management requirements
• <<XXXXXXXXXXXX>>
•<<XXXXXXXXXXXX>>
Resources and structure
• <<outline>>
• <<XXXXXXXXXXXX>>
• <<XXXXXXXXXXXX>>
Timescales
• <<outline>>
• <<XXXXXXXXXXXX>>
• <<XXXXXXXXXXXX>>
Evaluation and Control
•<<outline>>
• <<XXXXXXXXXXXX>>
• <<XXXXXXXXXXXX>>

33
 Contract and Supplier Management
Overview
The Authority is
committed to
managing, monitoring Strategic Objectives

and developing 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
Approach
The Authority is
A balanced scorecard approach has been developed to manage, monitor and develop supplier performance.
committed to
The scorecard has 4 core indicators and suggested sub-criteria as follows:
managing, monitoring
and developing
supplier performance
and understanding
whether our contracts
are delivering and
meeting the needs of
our customers.

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