Source Planning

1. Source Planning • What • Analytical process that for creating procurement and supply strategies for key categories • Why • A key driver in procurement savings across the business • Creates engagement across the business and locates the decisions closer to the operators • Pulls in extra resources to the procurement programme • Improves the quality and depth of procurement delivery • Establishes supplier management • How • Coordinated, managed and supported by Procurement • Utilises cross functional teams and data and supplier management supported by Supplier Accreditation programme • Commitment to the process and ensuring quality (of data, of thoroughness of options evaluation and business case building).

2. Source Planning Process Overview 1. Create a written supply plan in collaboration with Key people 2. Implement plan 3. Monitor ongoing performance and development Create clear, well grounded category supply plans aimed at introducing appropriate change and ‘Trading Agreements’ for key supply categories. Include other departments and people in the process to make sure that the changes made and agreements created are well adopted. Make agreed changes, carry out tendering needed, select suppliers, negotiate deals, introduce and implement new agreements. Ensure that suppliers and sub-contractors deliver the things that they said they would – including longer term ‘development plans’

3. Source Planning Process Overview 1. Plan 2. Implement 3. Manage

4. Source Planning Process Overview 1. Create a written supply plan in collaboration with Key people 2. Implement plan 3. Monitor and manage ongoing performance and development 2.1 Re-form team for implementation 1.1 Check Opportunity 3.1 Handover to relationship Manager 2.2 Supplier / Market selection 1.2 Gain sponsorship 3.2 Set up relationship management with Supplier 2.3 Change management / implementation 1.3 Get key people involved and define project 3.3 Certify achievement levels 1.4 Pull together data needed 2.4 Review and completion 3.4 Establish ongoing development plan 1.5 Establish proposed approach, plan and business case Executive sign off points

5. Source Planning Process Overview 1. Create a written supply plan in collaboration with Key people 1.1 Check opportunity 1.2 Gain sponsorship 1.3 Form team and define project 1.4 Pull together data needed 1.5 Establish proposed approach, plan and business case • Fit with programme objectives • Ease of implementation • Effort required • Potential savings • Potential for other benefits • Business implications • Agree opportunity with executive • Sponsor agree and sign off outline plan • Kick off meeting • Terms of reference • Overall plan • Cross functional representation • Team commit time • Use of team tools, project management, process templates etc • Issue requests for information (RFI’s) • Interview key people • Analyse purchase ledger/s • Issue questionnaires • Carry out market reviews • Create supplier profiles • Purchase profile and history (volumes, pricing). • Forecasts • Etc • Options meeting • Data analysis • Brainstorming • Business requirements analysis • Process mapping • Alternative scenarios mapped out • Strategy and business case meeting • Direction and approach described in detail • Cost and benefit analysis • Rate of return for overall business case • Cash flow analysis • Category plan document • Sponsor sign off

6. Source Planning Process Overview 1. Create a written supply plan in collaboration with Key people 1.1 Check opportunity 1.2 Gain sponsorship 1.3 Form team and define project 1.4 Pull together data needed 1.5 Establish proposed approach, plan and business case Strategy Agree best option and plan implementation. Create business case Get Sponsor sign off Kick off Set up the team and the project. Agree list of required facts and data. Share out the data gathering workload Options Review and analyse the facts and data to confirm assumptions and generate ideas Brainstorm and then prioritise options Kick off Options Strategy Team gathers required data Team checks options

7. Source Planning Process Overview 2. Implement plan 2.1 Re-form team for implementation 2.2 Supplier / Market selection 2.3 Change management / implementation 2.4 Review and completion • New team brief and updated sponsorship • Time commitments re-assessed • Any new people required added • Positioning analysis • RFP’s RFQ’s • Tender management • Selection panels • Agreement and contracting • Legal review • Finance approval • Sponsor sign off • SLA’s linked to business requirements • Programme director and sponsor agree individual agreements where appropriate • Supplier joint implementation teams • Process re-configuration • Briefing workshops and events • Handover meetings and certification • Measurement and milestones reviews • Learning review • User survey • Team feedback • Completion reports • Handover to operational management • Programme director and sponsor approve completion report and disband implementation team

8. Source Planning Process Overview 3. Monitor and manage ongoing performance and development 3.1 Handover to relationship Manager 3.2 Set up relationship management with Supplier 3.3 Certify achievement levels 3.4 Establish ongoing development plan • High level supplier contact • Executive sponsorship from both sides • Clear approach – written down and explicitly agreed • Sponsor sign off to ensure organisational commitment • Appoint key contacts and clarify accountability • Establish supplier development plan objectives as objectives of ‘account manager’ in both client and supply side • Formal kick off • Testing period • Publishing of results • Formal review • Publish certificate of acceptance of performance levels • Report variances with action plans to develop • Sponsor sign off for certificate and action plane • Bi annual reviews of sector by category manager • Review and carry out situation analysis using breakthrough planning • Agree step change targets • Benchmark results

9. Source Planning Process Overview- Category Roll Out Example - Q1 Q2 Q3 Q4

10. Source Planning Process Overview- Category Roll Out Example -

11. Planning Process Action • Standard approach to ensure: • Consistency and a common language • Ease of programme control and progress • Quality control • Able to repeat • Principles • Creates meaningful and appropriate change • Not just a way of cutting deals with suppliers • Sponsor and core team to get support, involvement, commitment and extra resource. • Importance of not jumping steps in the process: ‘ready fire aim’ • Data = information = insight > lack of data; lack of insight Kick off Options Strategy Team gathers required data Team checks options

12. Kick off • Purpose • Bring team together, effectively kick off the project, agree list of required facts and data and Share out the data gathering workload • Outputs • Team understands the background, rationale and approach for the project, is keen to take part and is willing to commit time. • An agreed set of project documents, project management plan, analysis tools and data requirements list. A ‘Quick wins’ plan (if appropriate) and a Schedule of actions • Agenda • Go over the background to make sure everyone understands what’s gone before • Get agreement to the project documents and situation analysis • Brainstorm data requirements • Action plan who will do what to get the data Kick off Options Strategy Team gathers required data Team checks options

13. Options • Purpose • Review and analyse the facts and data to confirm assumptions and generate ideas • Outputs • Everyone understands the facts and data that have been gathered • All data has been analysed and insights gained • Agenda • Review actions from last meeting • Analyse facts and data – log observations and insights • Brainstorm and then prioritise options • Task the team with actions to test and validate assumptions and to check options ideas Kick off Options Strategy Team gathers required data Team checks options

14. Strategy • Purpose • Create strategy & business case • Outputs • An agreed strategy and business case • Sponsor sign off • Agenda • Get team feedback from options reviews • Agree and write down the strategy • Plan the implementation • Cost up the implementation • Define the benefits • Draft up the business case • Present to sponsor for sign off Kick off Options Strategy Team gathers required data Team checks options

15. Outcome • A well defined plan:- • With validated assumptions and agreed targets • Agreed by a team of supportive colleagues from across the business • With executive sign off • Ready to go straight into implementation Kick off Options Strategy Team gathers required data Team checks options