Category Management Template - DOC - DOC by emj68678

VIEWS: 227 PAGES: 10

More Info
									Monash University
Category Management
Monash University Guidelines – Category Management


1.   INTRODUCTION                                           1

2.   ASSOCIATED DOCUMENTS                                   1

3.   THE STRATEGIC PROCUREMENT GROUP                        1

4.   OBJECTIVES OF CATEGORY MANAGEMENT                      2



6.1 IMPLEMENTATION OF THE CONTRACT                          3

6.2 DATA CAPTURE AND ANALYSIS                               4

6.3 PERFORMANCE MONITORING:                                 4

6.4 COMPLIANCE MONITORING                                   5

6.5 CATEGORY REPORTING                                      5

6.6 RISK MANAGEMENT                                         6

6.7 SUPPLIER MANAGEMENT                                     6

6.8 CONTINUOUS IMPROVEMENT                                  7
Monash University Guidelines: Contract Management

1. Introduction
Category Management is the management of the awarded contracts to ensure that all
benefits from the awarded contract are realised and continuously improved.

Category Management is based on the fundamental premise that at contract execution
only a platform for potential benefits is created: actual benefits are only realised (or not
realised) during the contract period.

These guidelines have been developed to assist individuals who are responsible for
managing contracts to comply with policy and procedures. Most importantly, they seek to
advise how to undertake category management to ensure that:

       Strategic sourcing benefits
       Contract objectives
       Continuous improvement opportunities
       Environmental sustainability opportunities

are fulfilled throughout the life of the contract.

2. Associated Documents
Category Management should be undertaken in reference to these guidelines and the

           Procurement Policy
           Category Management Procedure
           Strategic Sourcing Procedure and associated Guidelines
           Probity Guidelines for Procurement Staff
           Category Management Template

It is strongly recommended that the Category Manager complete the following training
courses available through Staff Development:

           Introduction to Procurement
           Advanced Procurement

3. The Strategic Procurement Group
Monash University’s Strategic Procurement Group will assist Category Managers to
establish the Category Management Plan as required. Category Managers are
encouraged to engage with the Strategic Procurement Group during the development of
the Category Management Plan.

                                            Page 1
    Monash University Guidelines – Category Management

    4. Objectives of Category Management
    The objective of Category Management is to ensure that all benefits from the awarded
    contracts are realised and continuously improved.

    The Category Manager achieves this by undertaking the following:
        Ensure that contracts are implemented according to the agreed terms
        Ensure that all users adhere to the established agreement (endorsed and
          strategic contracts)
        Act as the main point of contact with suppliers and internal stakeholders
        Resolve operational issues raised by contract users and suppliers
        Communicate operational procedures to contract users and stakeholders
        Report on supplier performance, transaction data, savings and continuous
          improvement initiatives to stakeholders
        Ensure all goods and /or services are provided in accordance with the contractual
        Progress the continuous improvement opportunities identified during strategic
        Maximise opportunities to improve environmental and social performance of the
          University and its suppliers.

    5. Strategic Sourcing and Category Management
    Whilst strategic procurement and category management are two distinct activities, they
    are closely intertwined. Strategic sourcing establishes the commercial relationship with
    involvement from the Category Manager. After the contract has been agreed, the
    management of the contract is undertaken by the Category Manager.
                                            Strategic Sourcing
                                   •   Opportunity analysis
                                   •   Category selection
                                   •   Core ranging optimisation
                                   •   Category sourcing strategy
                                   •   Market engagement
                                   •   Negotiation

                                          Category Management
                                   •   Contract performance
Provides complete                         –    SLAs & KPIs                        Informs on cost and
information to fully                      –    Rebates and discounts              value drivers to
                                          –    Pricing                            progress Continuous
inform the sourcing                       –    Supply behaviour
process                            •   Saving tracking/benefits realisation       Improvement
                                   •   Continuous category performance            initiatives
                                   •   Data collection and analysis
                                   •   Industry, business and environmental
                                          –    New entrants
                                          –    Competitor pricing
                                          –    Manufacturing cost trends (eg:
                                               Oil; Steel; Energy)
                                          –    Manufacturing location analysis
                                          –    Interest rates
                                          –    Exchange rates

                                             Page 2
Monash University Guidelines – Category Management

         KPI – Key Performance Indicator
         SLA – Service Level Agreement

The role of the Category Manager during the strategic sourcing phase is provided in the
Strategic Sourcing Process and associated Guidelines.

6. The Category Management Process at Monash

Following the strategic sourcing process, the Category Manager is responsible for
administering the Category Management Plan which is a tool by which the contract is
managed to maximise the benefits and the value from the ongoing relationship.

The Category Manager should undertake the following:

6.1 Implementation of the Contract

The Category Manager is responsible for implementing the contract. This will include
undertaking the following key elements:

(a)       Documentation

          The Category Manager should maintain all contractual documentation, including
          the strategic sourcing documents. These should be referred to as required, and
          be made available at the end of the contract to facilitate strategic sourcing.

(b)       Communication to users

          The Category Manager should undertake stakeholder workshops, and undertake
          additional launch activities (eg: global email, flyers) to inform contract users of the
          new arrangements. The Procurement Project Leader (PPL – refer Strategic
          Sourcing Guideline) should support the Category Manager.

          The Category Manager should also ensure that the appropriate websites have
          been updated to reflect the new arrangements

(c)       Supplier integration

          The Category Manager integrates the supplier to enable contract users to
          transact efficiently and effectively. This may include process and system changes
          agreed to in the contract

                                            Page 3
Monash University Guidelines – Category Management

(d)       Benefits tracking

      The Category Manager should engage with the Business Analyst Strategic
      Procurement Group to ensure that the on going benefits tracking processes are

6.2 Data Capture and Analysis

The Category Manager is to obtain the data required to manage the contract. This
includes obtaining reports from the supplier (in the format and level of detail defined in
the contract), which should be cross referenced to objective internal sources of data,
including SAP and Procurement Card reports.

The Category Manager is to provide data in the required format to the Business Analyst
Strategic Procurement Group to enable benefit tracking to be reported in management

The Category Manager should also obtain such data as is required, and undertake the
level of analysis to:

         Identify and action improvement opportunities
         Measuring supplier performance against environmental and social objectives

6.3 Performance Monitoring:

Utilising the data and subsequent analysis, the Category Manager is responsible for
monitoring the performance of the contract by undertaking the following:

(a)       Service Delivery
          Monitor and remedy non performance against the Service Level Agreement
          (SLAs) utilising the Key Performance Indicators (KPIs) defined in the contract.

(b)       Benefits Tracking
          Measure, monitor and attain the contractual benefits identified in the
          Procurement Plan during strategic sourcing. This will include elements relating to
          price, improvements to processes and systems and environmental and social

                                          Page 4
Monash University Guidelines – Category Management

6.4 Compliance Monitoring

The Category Manager is responsible for undertaking corrective actions as a result of
monitoring the suppliers’ compliance to the agreed contract; this will include:

(a)    Price Monitoring
       Undertake audits to review contractual to actual pricing charged to identify
       discrepancies between contract and invoiced prices.

(b)    Environmental sustainability monitoring
       Undertake supplier reviews to track supplier’s performance in relationship to
       environmental and social objectives (e.g. Does the refurbishment project meet
       the University’s Guide for Design & Management of Ecologically Sustainable
       Buildings: the Eco-Accord model).

(c)    Contract Users
       Undertake reviews to ensure that endorsed and strategic supplier contracts are
       being adopted by Monash users. Where off contract spend is identified, the
       Category Manager should undertake the corrective actions necessary, which
       may include:
            Informing users of the contract, and the associated benefits
            Remedy process issues which prevents compliance, if required
            Inform Deans and Divisional Directors to enable corrective action to be
              undertaken. This may also include preparing reports which identifies the
              value of lost benefits as a result of the off contract spend.

6.5 Category Reporting

Following the supplier review meetings, the Category Manager is responsible for
preparing management reports. These should be provided quarterly, and provide the

          Benefits tracking
          Progress on continuous improvement opportunities
          Progress on category objectives
          Off contract spend analysis, and remedy mechanisms to be progressed
          Significant open issues and associated corrective action plan

                                       Page 5
Monash University Guidelines – Category Management

6.6 Risk Management

The Category Manager should ensure that the Risk Assessment conducted during
strategic sourcing is monitored and updated as required. The Category Manager should
undertake actions to reduce the on going risk in the contractual relationship.

6.7 Supplier Management

The Category Manager is responsible for establishing and maintaining the supplier
relationship. This will include the following:

(a)    Issues Tracking and Resolution
       The Category Manager is responsible for managing the issues resolution
       process, including establishing and maintaining an issues log. As a minimum,
       issues should be resolved using the following format:
            Day to day operational issues should be resolved between contract users
               and the suppliers account representative
            Where issues impact multiple Faculties and/or Divisions, the Category
               Manager engages with the suppliers key account representative to obtain
               a remedy
            Where contract users cannot achieve a satisfactory outcome, the
               Category Manager should be involved. The Category Manager should
               engage with the appropriate senior leadership of the University in cases
               where additional support is required; in some instances, Director
               Strategic Procurement Group may be involved

(b)    Supplier workshops
       At least annually, the Category Manager should conduct a Supplier and Users
       Seminar, where the supplier and contract users are able to engage in direct
       discussion. These meetings should seek to:
            Promote understanding between users and the suppliers to enhance the
               operational aspects of the contract
            Progress continuous improvement opportunities
            Promote the benefits of the contract

(c)    Supplier reviews
       The Category Manager should conduct quarterly supplier reviews as a precursor
       to preparing the management reports (refer 6.4). During these reviews, the
       Category Manager seeks to obtain the suppliers input with respect to:
            Performance of the contract
            Continuous improvement opportunities
            Issues arising

                                      Page 6
Monash University Guidelines – Category Management

6.8 Continuous Improvement:

Integral to the role of the Category Manager is the need to ensure that continuous
improvement opportunities are identified and progressed through the life of the contract.

(a)    Specification Improvement

       During the life of the contract, the Category Manager should ensure that the
       goods and/or services being supplied remain relevant as user needs may change
       for a variety of factors. This requires that the Category Manager to:
            undertake reviews of the goods and/or services being purchased, and
               assess any trends requiring a change to the contract
            determine options for product substitution and/or aggregation
            determine whether substitutions will enhance the environmental and
               social objectives of the agreement. The Category Manager should refer to
               stakeholders where these may not represent the lowest price, but support
               the environmental and social objectives of the University.

(b)    Process Improvement

       The Category Manager should seek to eliminate non-value added processes
       which will decrease users workload. This may include:
        Modifications to current processes and/or systems
        Facilitate best practice amongst all contract users and seek to obtain a
          consistent means of engagement with the suppliers
        Promote supplier forums and workshops to identify and eliminate non-value
          added processes and procedures
        Focusing high value suppliers: The Category Manager will seek to reduce the
          lower level suppliers through development and culling. For example reducing
          the number of suppliers for a category from nine to three to establish the
          optimal supply base for that category.

(c)    Knowledge Sharing

       The Category Manager should inform the Strategic Procurement Group on
       lessons learnt on the management of the contract, which will promote knowledge
       transfer to other Category Managers. The Strategic Procurement Group will host
       a Category Manager Forum at least annually for all Category Managers to
       discuss best practices.

                                       Page 7
Monash University Guidelines – Category Management

7.0 Category Management Plan

The Category Manager should prepare a management plan which should include the

      Objectives to be fulfilled over the life of the contract
      Define the benefits to be achieved, which benefits will be measured and how
       progress of value for money and continuous improvements opportunities will be
       reviewed and reported.
      Communication with stakeholders, including who these are, and the means of
       engaging with them. This includes aspects such as face to face forums, internal
       and external meeting, and workshop forums.
      Updated Category Baseline Analysis. This should follow a similar format as that
       undertaken during strategic sourcing.
      Category opportunities, including those identified during strategic sourcing and
       over the life of the contract. The opportunities should include a benefits statement
       and the means by which these will be progressed.

                                       Page 8

To top