D31SQ Service Procurement and Provision Tutorial Assignment Briefing 2

Topics Aims Assignment review Methodology Further readings Discussions

Aims Assignment review Questions Linkage with the Module Definitions Methodology Quantitative analysis

Assignment Review Questions Developing a Sourcing Strategy Based on an organisation with which you are familiar, develop a sourcing strategy for a particular service or bundle of services. The sourcing strategy considered should be different from their existing one. A report to be presented to the Board of Directors that covers the following

Assignment Review Questions Developing a Sourcing Strategy 1. Examination of the client’s current situation (baseline position). (20%) This should cover existing service delivery levels if any; affected stakeholders; value for money; the existing service plan; monitoring procedures; customer review processes and any other information you consider relevant.

Assignment Review Questions Developing a Sourcing Strategy 2. Examination of the opportunities that might exist (target position). (25%) Issues such as synergy between services (overlaps); market testing; value for money; opportunities for integration.

Assignment Review Questions Developing a Sourcing Strategy 3. Identify a possible sourcing strategy. (35%) This should include a rationale of ‘fit’ between service characteristics and service relationships. The desired level of substitution level, strategic impact and thus partnering relationship should be considered. In the case of an in-house sourcing strategy, similar considerations should also be made regarding the nature of the service relationship. The proposed sourcing strategy should be verified through whole life evaluation.

Assignment Review Questions Developing a Sourcing Strategy 4. Develop a suitable outline Service Level Agreement for the service under consideration. (20%) This should be tailored to the specific requirements of the service identified.

Assignment Review The linkage

Assignment Review Definitions Types of FM services 10

Assignment Review Definitions Single sourcing A method whereby a purchased part is supplied by only one supplier. Close relationships can be established with a smaller number of suppliers. These close relationships (and mutual interdependence) foster high quality, reliability, short lead times, and cooperative action. 11

Assignment Review Definitions Multi-sourcing Procurement of a good or service from more than one independent supplier. Companies may use it sometimes to induce healthy competition between the suppliers in order to achieve higher quality and lower price. 12

Assignment Review Definitions Insourcing The goods or services are developed internally. 13

Assignment Review Definitions Outsourcing The process of having suppliers provide goods and services that were previously provided internally. Outsourcing involves substitution - the replacement of internal capacity and production by that of the supplier. 14

Assignment Review Definitions Service Level Agreement The contract between service providers and customers that define the services provided, the metrics associated with these services, acceptable and unacceptable service levels, liabilities on the part of the service provider and the customer, and actions to be taken in specific circumstances. 15

Assignment Review Definitions Complex Procurement 16

Methodology 17

Methodology Quantitative Analysis Techniques Prediction Description Evaluation Optimisation

Methodology Quantitative Analysis Predictive techniques To predict events occurring in the future. Time series analysis; Associative forecasting; ANN Cost Predictions of Facilities

Methodology Quantitative Analysis Descriptive techniques To describe the reality of a decision. To expose some underlying relationship that enables informed decision making. Productivity; Capacity; Work measurement; Failure; Reliability; Redundancy; Feasibility; Buildability; Statistical process control; Process simulation Productivity control – equipment and facilities

Methodology Quantitative Analysis Evaluative techniques To articulate the consequences of adopting different decision options. Using criteria to compare alternative options. ANP; Weighted score method; Decision trees. Post-occupancy evaluation of facilities

Methodology Quantitative Analysis Optimising techniques To identify the optimum answer to a problem based on an objective function and constraints. Performance optimisation in facilities management

Further readings OGC Complex Procurement Yorkshire and the Humber Centre of Excellence Complex Procurement Procedure Google: “sourcing strategy” The Supply Chain Management (SCM) Information Portal DAU Service Acquisition Workshop Step 5: Sourcing Strategy