Christ Church Purchasing Procedures by mikeholy


									                Christ Church Purchasing Procedures

1. Introduction
The course is designed to give people who regularly place orders details of the correct
methods of placing orders and where certain commonly used products can be purchase from.
The areas to be covered are:

                Course Aims
                Preparation
                Sourcing Goods & Services
                Placing Orders
                Receiving Goods
                Invoices
                Future Developments

2. Aims of the Course
There are four key points that it is important that anyone attending the course should take on
board. By the end of the session you should be able to:

       Correctly process Purchase Order forms and pay invoices
       Identify a range of suppliers from which to purchase the goods you require
       Achieve value for money when placing orders
       Be aware of future developments in purchasing at Christ Church

If the course does not explain these points in sufficient details you can contact the Purchasing
Office for more details

3. Why is Purchasing Important?

The university has in place a number of procedures relating to purchasing, many of which will
be covered in this course. Currently, there are a many departments and individuals who are
not following these procedures and in the past the university has not rigorously enforced
them. This is beginning to change and the SMT have agreed to ensure that all of their staff
are following these procedures.

So why is it important to follow the procedures and go about purchasing in a structured and
effective way? There are a number of reasons, some of which concern management of the
university as a whole and some which concern the individual and the department they operate

Reasons why good purchasing is important to the university

    Financial Stability          Good purchasing practice is used to ensure that order
                                 placers are achieving value for money i.e. stretching the
                                 university’s resources as far as they will possibly go. HEFCE
                                issue guidelines to all HE institutions that they should strive
                                to make a surplus of at least 3%, which would equate to over
                                £2m for Christ Church. Without achieving good value for
                                money in all transactions this will be impossible.

    Audit Trail                 As Christ Church is a publicly funded institution we are
                                obliged to keep records of what we have spent our money
                                on. Without using the correct forms and procedures there is
                                no way to demonstrate to our auditors that we have been
                                following our own guidelines.

    Value for Money             A significant proportion of the income the university receives
                                is from public money i.e. money collected through taxation.
                                Therefore Christ Church has an moral obligation to ensure
                                that this funding is not wasted in any way. Achieving value
                                for money is of primary importance.

    Legislation                 The European Union has put in place legislation that obliges
                                any publicly funded body to offer all countries within the EU a
                                chance to quote on any high-value contracts that are being
                                offered. This involves advertising Christ Church’s
                                requirements across Europe. If departments do not follow the
                                correct procedures it is impossible to determine which
                                contracts should be advertised. The university risks legal
                                action if we do not advertise these contracts.

Reasons why good purchasing is important to an individual or department

    Stretching Budgets          As mentioned previously, good purchasing practice is
                                designed to achieve greater value for money and therefore
                                stretch budgets further. Many departments this year have
                                had their budgets cut and this can impact directly on staff
                                and students. By following the university’s purchasing
                                guidelines money can be saved and this can then be re-
                                invested in other areas that may benefit staff and students.

    Accountability              The university is audited on a regular basis and one of the
                                areas covered by the audit team will be the purchasing
                                process. If you do not follow the university’s purchasing
                                procedures you may be reported by the audit team. As the
                                SMT are hoping to introduce more accountability into our
                                financial systems it is possible that action may be taken
                                against those who are not observing the guidelines.

As you can see, it is important that all departments within the institution follow the correct
course of action when placing orders. This course outlines those actions in some detail and it
is important that this information reaches as many order placers as possible. Therefore if
there are other order placers in your department who have not read this document or
attended the training course then, if possible, you should either encourage them to sign up or
relay the basic points of purchasing to them so that they too can follow the correct systems.

As mentioned previously the SMT have agreed to ensure that all of their staff are following the
guidelines properly and they may be making regular checks to ensure this is happening.

4. Preparation
Purchasing is a cyclical process where the same actions are repeated every time an order is
placed. We shall examine each one of these actions and discuss what factors you should be
considering at each stage. The first stage is the preparation which takes places prior to
placing the order.

The first and most important part of your preparation is specifying the goods that you wish to
purchase. It is important to spend some time considering exactly what it is that you need as
this will help you communicate these requirements to a supplier and it will also ensure that if
you are buying goods from two or more suppliers you can ensure that you are comparing like
with like.

        Example          Company 1 can supply a hire car for £27.00 per day
                         Company 2 can supply the same care for £23.00 per day

                         At first glance it appears that Company 2 is the cheapest option.
                         However, they have not included the cost of insurance at £7.00 per
                         day in their price.

                         A well written specification that asks for the price of a car including
                         insurance means that it simple to compare the actual prices of the
                         two suppliers.

When putting together your specification there are two questions that you should consider to
ensure that you will not be spending money unnecessarily.

        Question 1 - Do I really need this item?

        Many items are simply “nice to have” rather than an essential requirement. You
        should consider if the money you are about to spend will have a positive impact for
        the university. If it won’t then do you really need to buy the item? The money you do
        not spend could then be invested better in other areas.

        Example          A department currently has no photocopier of its own and therefore
                         has to walk down a flight of stairs to the floor below to make copies.
                         They like the idea of buying their own copier to save the journey.

                         The department must consider that the total cost of the machine over
                         a three year period could be as much as £5,500. This is a large
                         financial investment to save a small amount of time.

        Question 2 - What do I need to do the job satisfactorily?

        To achieve value for money it is important that you do not over-specify products. You
        should always buy a product that is “fit for purpose” rather than an item that is “nice to
        have”. Some examples of over-specifying are:

               Buying products with a high capacity or large number of additional features
                that won’t necessarily be used
                Example: Ordering a colour photocopier when colour copying only makes up
                a small percentage of the department’s output.

               Using very high quality products when the item will only be used rarely and
                therefore the additional quality is not required.
                Example: Buying a leather chair and antique oak desk for an office where a
                standard office desk and chair would be sufficient.

               Branded products are always more expensive than a supplier’s own brand
                and are often not of a higher quality
                Example: Avery labels cost £12.70 per box but a box of Office Depot labels,
                which performs the same function and is the same quality, costs only £2.4.2
                – a saving of 81%.
It is also important that you question products that you may have been buying for many years.
Just because you have always purchased an item of a particular standard does not mean that
you will always need to so. You should always review your proposed purchases to ensure you
are buying a product that is not over-specified.

Once you have decided on the products you need, a written specification can be produced.
This is vital when purchasing an item that is technically complex. It is also useful when
ordering any type of service as you can use to document to accurately define what your
supplier is or isn’t responsible for. However, for low value purchases such as stationery a
written specification is not essential, although you should still ensure that you ask yourself the
two questions outlined above.


All purchases made by a department need to be approved by an authorised signatory. While
this process is formally undertaken later on in the purchasing cycle it can be a good idea to
ask your head of department for a verbal authorisation before commencing the process of
placing an order. This is especially relevant for high value orders as it would save you the
work of specifying and sourcing a product only for your manager to veto the purchase at a
later date. For regular or low value orders such as stationery or copier paper this kind of pre-
authorisation is not always necessary.

5. Sourcing
Once you have decided what it is that you are going to buy you then need to identify a
suitable supplier. This process is called sourcing. How you source a product depends on
what it is.

Central Contracts

Certain commonly used items must be purchased from what are called “central contracts”.
These are deals that are negotiated on behalf of the whole university for items that have
common usage across the institution. It is mandatory that departments purchase from these
central contracts because by putting all of our spend with one supplier it ensures that we get
the best possible prices. These central contracts cover the following products:

                Stationery              Photocopiers           Computer Software
                Computer Hardware       Car hire               IT Consumables
                Copier Paper            Furniture              Couriers
                Fax Machines            Mobile Phones          Waste/Recycling
                Audio Visual Supplies   Diaries

Further details on how to order these products is available on the Purchasing website. If for
any reason you wish to buy one of these commodities from somewhere other than the central
supplier/department then you must first contact the Purchasing Office to discuss the reasons
for this. If, for example, you have managed to find a cheaper source this information needs to
be shared with all other departments so that everyone can benefit from lower prices.

Sourcing Outside Central Contracts

If the item you wish to order is not available from one of the central contracts then you will
have to source it yourself. This can be done in a number of different ways.

    Recommended Suppliers         The Purchasing Office is currently compiling a list of
                                  recommended suppliers. These are companies that can
                                  supply various types of product but it is not mandatory to buy
                                  from them. A full list of recommended suppliers is available
                                  on the purchasing website.
                                 Suppliers can also be recommended by other departments
                                 within the University. It is always worth contacting other
                                 departments who use the product you wish to buy to see if
                                 they can suggest any companies who may be able to help.

    Directories                  Local phone directories such as the Yellow Pages and
                                 Thompsons can be useful for identifying local suppliers.
                                 There are also national business directories that you can
                                 search for a specific product or service. The two best known
                                 of these are the Kelly’s Directory and Europages. All of these
                                 directories have searchable websites that make locating a
                                 supplier much quicker.


    Higher Education Suppliers There are several higher education purchasing consortia in
                               the UK and it is the responsibility of these organisations to
                               negotiate large contracts on behalf of their members. Christ
                               Church is a member of the Southern Universities Purchasing
                               Consortium (SUPC) and as such has access to all the
                               contracts negotiated by them. You can view all of the SUPC
                               contracts at their website.


                                 Christ Church can also access contracts negotiated by other
                                 consortia. A full list of higher education contracts is available
                                 on CuPID (the Central Universities Purchasing Information
                                 Database) which you can visit at:


                                 Finally, another body that negotiations contracts on behalf of
                                 all public sector institutions is the Office of Government
                                 Commerce (OGC), This is a body set up by the Treasury to
                                 reduce costs in the public sector. They too have a number of
                                 contracts in place covering a large number of commodities.
                                 Details of these contracts are available on their website but
                                 you do have to register first.


Pricing & Availability

Once you have located a suitable supplier you then need to request a price for the item(s) you
want and also check how long it will take for them to be delivered (the lead-time). The
institution’s financial procedures state that for any orders over the value of £10,000 but less
than £40,000 you must obtain at least 2 written quotations. For any orders over the value of
£40,000 a full tender exercise must be carried out, Finally, orders of £144,000+ must be
advertised across the European Union – a process managed by the Purchasing Office.

When requesting quotations it is important that you request the information in writing. This
ensures that the supplier is making a bona fide offer and it will also ensure that you have
proof if there are any queries later on when it comes to paying an invoice.

A tender is a more formal procedure than simply requesting quotations. It is appropriate for
higher value orders or where the purchase it complex. The usual method of tendering is to
issue an Invitation to Tender (ITT), a document requesting not just pricing information but also
details on financial stability of the supplier, environmental policies, payment terms,
management information requirements etc. etc. Suppliers are required to submit a formal
response, in writing, by a certain date and the person writing the tender has a set number of
criteria on which they will select the successful supplier. For more details on conducting a
tender exercise you should contact the Purchasing Office.

The exception to these rules of quotations and tenders is if you are buying from a contract
that has been pre-negotiated by another body on behalf of the university, for example, the
Southern Universities Purchasing Consortium or Office of Government Commerce. Again,
more details on these pre-negotiated contracts are available from the Purchasing Office.

If you are buying from a central contract you will find that in the majority of cases the prices
have been pre-negotiated and therefore official quotations are not required. If you are dealing
with a supplier that is not centrally contracted then you must ensure that you follow the
guidelines outlined above.

6. Placing Orders
The Purchase Order form

All orders placed with an external supplier need to be accompanied by a completed Purchase
Order form. This is important for a number of different reasons:

        Avoidance of confusion             If the supplier receives a written order there can be
                                           no confusion about exactly what is required.
                                           Therefore if there are any disputes later on they can
                                           easily be resolved.

        Audit Trail                        The completed form is the first stage in creating an
                                           audit trail. As we are institution that spends public
                                           money it is important that we can satisfactorily
                                           demonstrate what we have purchased. The order
                                           form allows us to do this.

        Authorisation                      Once the form is completed it needs to be signed by
                                           an appropriate signatory. Again this is part of the
                                           audit trail that allows us to show that we are following
                                           our financial procedures.

It is important that the form is completed with all of the required information. A guide to filling
in the form is shown in Appendix 1. These forms are available from the Purchasing Office and
are normally dispatched in packs of 10.


One of the most important parts of completing the form is obtaining an authorised signature to
approve the spend. As part of preparing your order (see section 4. Preparation) you may have
obtained a verbal authorisation. If this is the case you now need to follow this up and ask your
manager to physically sign the order form. If you have not discussed the order prior to
completing the form you may need to provide additional detail to ensure that your authoriser
can make an informed decision.

It is vital that this authorisation is obtained before any commitment is given to the supplier. If
you verbally place the order then the university has been committed to that spend. If your
manager subsequently refuses to sign the order for some reason, the university will still have
to pay for any goods delivered.
In most cases you will be aware of who within your department is able to sign your purchase
order. If you need an up to date list you can contact the Finance Department.

Placing the Order

Once the form has been properly completed and authorised you can then place the order with
the supplier. You can place orders in a number of different ways. If your order is for a small
number of simple items then placing the order by phone is normally the quickest and easiest
option. However, if your order is more complex then it is standard practice to send the order in
writing. This could involve simply faxing a copy of the purchase order to the supplier. You
could also take a scan of the form and e-mail or just send an e-mail detailing your
requirements. Whichever method you use you should always include the purchase order
number and ask the supplier to quote it on all correspondence, including the invoice. You also
need to confirm that the invoice should be sent for the attention of Accounts Payable rather
than to the ordering department (See section 8. Invoicing).

If you place the order over the phone you can also send a copy of the purchase order to
confirm the details of the order. If you do this then you must clearly mark the order form
“Confirmation Only” to ensure that the supplier does not duplicate your order.

Finally, when placing your order it is a good idea to confirm an exact delivery date so you
know when to expect your order. Therefore if it does not arrive when promised you know
when to chase the supplier. It is best to agree an exact date (e.g. 17 November) rather than
the amount of time it should take to arrive (e.g. 10 days). This avoids any confusion regarding
different interpretations (e.g. 10 working days).

7. Delivery

Once you have placed your order and determined the lead-time you simply wait for your
goods to be delivered.

Delivery Paperwork

With every order you place, whether for physical goods or a service of some kind, you should
receive some paperwork confirming that the order has been fulfilled. This will usually be a
delivery note or a job sheet. Whatever form the paperwork takes you need to file this with
your purchase order form to continue to build the audit trail mentioned earlier. By stapling the
delivery note to the order form you can then double-check the invoice when it arrives to
ensure that you have only been charged for what was delivered.

What if something goes wrong?

In the majority of cases your order will arrive as promised on time and in good condition.
However, there may be occasions when there is a problem with your order. In these cases it
is vitally important that you notify the supplier as soon as possible. There have been
instances within the university where an item has been delivered that has been faulty and the
ordering department didn’t complain as “they didn’t want to make a fuss”. Although the value
of the order was small, the department still ended up paying for something they didn’t receive
and this is an unacceptable waste of university funds.

Making a complaint to a supplier is an important skill to learn. Many people don’t find it an
easy thing to do but with a little planning then you can usually achieve the required result.

Making a complaint
There are a number of things to consider when making a complaint

            1. Preparation – This is the most important element if you want a positive result.
               Collect any facts that you have to hand – the date you placed the order, the
               name of the person you spoke to, the delivery date they gave you, any
               paperwork from the supplier and any other correspondence. It is very difficult
               for a supplier to argue if you have hard facts to hand. It is also important to
               only complain if you are in the right. It is impossible to argue from a position
               of strength if the problems were caused by you! If you are partially
               responsible for the problems, make this clear from the start.

            2. Manners – When you first contact the company you should start off being
               polite. The person you are speaking to is much more likely to want to help
               you if you do not start shouting at them. Also, don’t start off being angry.
               There is nothing wrong with shouting later on if things are not going as you
               want them to but if you begin like this there is no way to escalate your
               complaint later.

            3. Outcome – You must also have in mind exactly what you want to happen at
               the end of the discussion. It is all to easy to go through all of your arguments
               to prove that the supplier is in the wrong just to have the salesperson turn to
               you and admit that they are at fault and ask you what you would like them to
               do about it. At this point, unless you have prepared a list of what you want,
               you will have to think on your feet and this could result in you not getting
               exactly what you want.

            4. Make Notes – During your discussion it is a good idea to take brief notes –
               the names of the people you spoke to, times and dates of conversations, any
               actions that were agreed etc. This will allow you to return to the discussion
               later on if you need to with all the details to hand. As mentioned above it is
               very difficult to argue against solid facts.

            5. Escalate your complaint – The person that you first speak to, whether it be a
               telesales person, a sales rep etc., is not usually the most senior person in the
               company. If you are convinced that you are in the right and the person you
               are speaking to is not being helpful then ask to speak to their manager or
               supervisor. The more important the person you are talking to, the more likely
               they are to want to resolve your complaint satisfactorily.

If your complaint relates to a central contract then you can, of course, complain directly to the
department you ordered from or, if you are ordering directly from a supplier, the Purchasing

8. Invoicing
Once an order has been satisfactorily completed, the supplier will dispatch an invoice to
charge you for the goods or service. You must ensure that the invoice is addressed to
“Canterbury Christ Church University” as the use of any other institution name may cause
problems with the payment.

Although many departments arrange to have this invoice sent to the order placer, it should
actually be submitted to Accounts Payable before it gets to the department. The reason for
this is that it allows AP to log the receipt of the invoice on the Agresso system so that if for
any reason the paper copy of the invoice goes missing, the university still has a record that
we had received it.

Once AP receive the invoice they will, as stated above, log it into Agresso. They will then fill
out a Payment Authorisation form with the relevant details, namely:

    2                                                                                                         3



    5                                                                                                         7


                  1.   Department Name
                  2.   Supplier Invoice Number
                  3.   Supplier ID (taken from Agresso)
                  4.   Value of the invoice
                      Supplier Name (not shown on the above form)

            The form is then stapled to the paper copy of the invoice and forwarded to the ordering
            department for authorisation. The order placer then needs to complete some additional detail
            on the Payment Authorisation form:

                  5.   Cost Centre
                  6.   Nominal Code
                  7.   Value
                  8.   Project code (if applicable)

            It is possible to split the cost of an invoice across a number of different cost centres. To do
            this you need to calculate how much you want each cost centre to pay and then enter the cost
            centre, nominal code and value under the correct headings on the form (fields 5, 6 & 7 on the
            above diagram).

            Once the form has been properly completed it needs to be authorised by an appropriate
            signatory. Ideally this would be someone different to the person that signed the Purchase
            Order form but in some smaller departments this is not always possible.

            The university’s standard payment terms are 30 days from date of invoice. This would mean
                                     th                              th
            that an invoice dated 15 November would be paid by 14 December. If you agree different
            payment terms with your supplier you must indicate this on the Payment Authorisation form
            so that Accounts Payable can ensure the invoice is paid on time. You then need to return the
            authorised form and invoice to AP well before the due date to ensure that it can be paid on
            time. Payment runs are made every Thursday so if you need the invoice paid on a specific
            run you need to return it to AP by lunchtime on the Wednesday before.

            If your goods are faulty or have been returned to the supplier, you may receive a credit note.
            This should be processed in the same way – arrange to have it sent to AP who will attach the
            authorisation form then return it you for authorisation and coding.
9. Future Developments
The purchasing systems at Christ Church are currently in a state of development. Currently
there are many variations between how individual departments process their orders – some
follow procedures precisely, some partially and some have no knowledge of the current
system and do not follow it correctly at all.

The university has recognised the need to move everyone onto one common system to
ensure that the benefits of a structured purchasing system (outlined in section 3. Why is
Purchasing Important?) are realised. The first step is to train all departments on the current
paper-based system. The next stage is to develop an electronic purchasing system.

A project team is currently working to develop such a system utilising the existing Agresso
platform that is used by the Finance department. The purchasing procedures that will be built
into Agresso will be based on the existing system as outlined in this paper and therefore it is
vital that all order placers understand this system prior to moving over to the web-based
system that will be introduced into selected departments in the next six months.

When this new system is rolled out it will involve another round of training to enable users to
be confident in placing orders. More detailed timescales for the introduction of the new
system and the training will be advertised by the project team later this year.

Click Here for Appendix 1
                           Appendix 1 – How to Complete a Purchase Order Form

There are several different sections that you need to complete on your order form. These comprise

   1. Supplier name and address

   2. Invoice contact details

   3. Date of order

   4. Financial code

   5. Product description (including quantities, codes, unit prices)

   6. Order value

   7. Authorisation




1.Supplier name and address   For suppliers that are classified as a central contract you do not need to complete the address or postcode, the
                              name of the supplier is sufficient. However, for all other suppliers you should list the full supplier name and

2. Invoice contact details    This is the section that you can use to notify the supplier that the invoice should be sent directly to the Accounts
                              Payable department and not to the person placing the order. It is essential that it is sent to AP first so that the
                              invoice can be logged on the Agresso system.

3. Date of order              This is simply the date you send the order to the supplier.

4. Financial codes            You need to enter both your department’s cost centre (Level 1) and the nominal code (Level 2) for the items you
                              are buying. If there is an additional project code/cost centre you can enter this into level 3. If you don’t know the
                              relevant code you can contact the Finance department or visit their website.

5. Product description        A list of the items you are purchasing is listed in this section. If there are any relevant product codes they should
                              also be included to ensure the supplier is fully aware of exactly what it is that you wish to purchase. You should
                              also include the quantity for each individual item as well as the unit price. Finally you need to calculate the total
                              cost for each line by multiplying the quantity by the unit price.

6. Order Value                This is calculated by adding together the total cost for each line, the resulting value being entered in the “Total”
                              field. You then need to calculate the VAT value by multiplying the “Total” value by 0.175. Finally you need to
                              combine the Total with the VAT value to give you the final value of your order.

7. Authorisation              The order needs to be authorised by an appropriate signatory which will change depending on the value of the
                              order. A full list of signatories is available from the Finance Department

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