Purchasing Policy and Procedures Manual

1 Purpose and Application

The purpose of this policy is to set out the rules for all colleagues of our Society in any situation who are involved in a purchasing process, whether as requisitioners or specifiers, purchasers or negotiators, or those who validate or authorise payment.

‘Purchasing’ includes all procurement activities including leasing and hiring, and may where appropriate include other activities accompanying the life cycle of goods (or service contracts) and the end of life disposal of goods which have been procured (whether or not they remain in our ownership). It also covers both ‘Revenue’ and Capital’ expenditure.

This policy is a public document – it may be quoted in Annual Reports, Operating and Financial Reviews, Members/Stakeholder information, and is freely available to potential suppliers. It binds all persons involved. It confirms to management and all colleagues, to actual and potential suppliers and contractors, to customers, to governmental and other regulators and to stakeholders in the wider community, the principles on which our Society procures and contracts.

 

2 Policy Objectives 

This Policy exists for several discrete but often interconnected purposes.

The Policy commits the Society and every individual involved in purchasing, procurement and supply management processes within the Society, to use their best endeavours to ensure that our purchasing and contracting activities are;

• Legal

• Accountable and Auditable

• Ethically, socially responsible and sustainable

• Consistent with and in support of our Supplier Code 

• Economically Effective

• Conducive to maintaining the Society’s ability to exploit appropriate technological, commercial and organisational developments as they arise

• Capable of identifying, minimising and managing risks that may threaten the supply chain or the wider business

• Open to continuous improvement and development, by the training, development and support of staff

 

In addition, it is the Procurement team’s objective that, as far as possible, it will only employ suppliers and contractors who subscribe to and operate on similar principles.

Joint Venture partners, and the management of outsourced activities on the Society’s behalf, are similarly expected to abide by and promote these principles.

Of these objectives, a) Legality and b) Accountability and Auditability, are non-negotiable. There are no circumstances in which it is permissible for the purchasing activity of those engaged in it consciously to break, or knowingly to risk breaking, the laws that apply. There are no circumstances in which it is permissible to requisition or buy goods or services or commit the Society’s funds without documenting the transaction in such a way as described below.

 

3 Legality

Purchasing and contracting activity will fully respect and comply with:

• All Applicable laws, directives and regulations

• The relevant and distinct laws, regulations of other territories in which we source from

• Environmental regulations

• Employment, Health and Safety

• Anti-corruption

• Modern Slavery

Our Society fully adopts and complies with all legislation in relation to taxation and those in our Society who act as requisitioners or specifiers, purchasers or negotiators, or those who validate or authorise payment will not be a party to the evasion of income, sales, corporate, value added or other taxes, customs duties, or other charges’

Our Society is committed to the fair and effective application of laws and regulations. There is therefore a positive duty on the Society and its members to report and refer all reasonably founded suspicions of illegal activity. The purchasing policy is to support, protect and where possible preserve the anonymity of ‘whistle-blowers’, inside or outside of our Society, who act in good faith, even if subsequently their suspicions prove to be unfounded. 

Our Society will give full cooperation to legitimate authorities investigating such claims, so far as that is reasonably practical, that specifically includes the duty to ensure that any conceivably relevant documentation / system access is preserved and made available.

 

 4 Accountability and Auditability

The Society will maintain systems, whether manual or electronic, that will, for all purchases, contracts and external commitments above the level of ‘petty cash’ and minor allowable personal expenses, record, identify and as appropriate provide justification for:

• The originator of the requirement

• The purpose for which the requisition was made

• The route by which the requisition was approved

• The methods adopted in accordance with the Procedure set out in Appendix 1

• The source of supply

• The compliance or otherwise of the goods or service, and of the supplier or contractor, with the requirement as specified in the contract or other agreement

• All actions taken to remedy any defect as recorded above

• The route by which payment was authorised and when, to whom and in what sum any payment(s) are made

Note: The above is the minimum requirement – there may be many procurements for which more detailed accountability is required.

 

5 Sustainability

Midcounties recognises that its purchasing activities have an impact on the environment at local, regional and national level. The Society is committed to ensuring sustainable procurement principles are applied at all stages of the procurement cycle.

Midcounties Cooperative is committed to the following objectives:

• identify potential environmental & ethical issues associated with each stage of the life cycle

• ensuring outsourced processes are controlled to minimise their negative environment & social impacts.

• making procurement decisions based on a balance between economic, social & environmental factors

• working with suppliers to reduce the environment & social impacts of their goods & services throughout the supply chain

• adopting practices that contribute to reducing waste and maximising the use of resources

• procure energy and water efficient goods, containing less harmful materials and more recycled content.

• buying from reputable suppliers who meet and promote ethical trading standards and behaviours throughout its supply chain

• purchasing goods and services that minimise transport and waste impacts

• provide full & fair opportunities to avoid prejudice and bias in all procurement decision-making.

• working with other Societies and organisations to share experiences and adopt good practices to promote continuous improvement in sustainability & ethical procurement

 

6 Supplier Code

The Society will only employ suppliers for all purchases, contracts and external commitments above the level of ‘petty cash’ and minor allowable personal expenses, who demonstrate willingness, and capability to meet the principles of our Ethical Code of Conduct. 

• Business Conduct and Integrity

• Ethical Trading

• Human Rights  

• Environmental Protection

By only working with such suppliers, our Society can ensure that we meet our Corporate Social Responsibility (CSR) objectives as outlined in our Annual Report to members and the wider community.

 

7 Economic Effectiveness

The Society expends a considerable portion of its revenues on bought-in goods and services. Procuring such goods and services in the most economically effective manner is, subject to the legal, ethical and other restraints outlined above, the central role of the purchasing function but also the role of all other colleagues within the Society who commit such expenditure. In carrying out this role, all those involved in purchasing will have regard to the following:

The desired outcome is that of greatest value gained at lowest total cost

Total cost will, as appropriate, consider the full anticipated life cycle costs of the goods or services, including such factors as maintenance, servicing, reliability costs, and costs of ultimate disposal where our Society may be responsible for them

Value may and should, where appropriate, be assigned, however approximately, to such factors as CSR and of improving the competitiveness of the supplier base on which we depend

In addition to the total cost of acquisition or ownership, it is policy to reduce where possible the administrative cost of acquiring goods and services. Selection of the most appropriate procedure to obtain an approximation to best value without incurring excessive administrative cost is therefore vital.

 

8 Exploitation of Developments

Those responsible for purchasing will take care not to reduce or eliminate competitive development within the supply base, ensuring that the supply chain does not lose the ability to adapt to new or emerging technologies and processes. Consideration shall be given to suppliers who not only offer the best current solution but are also best placed and resourced to offer further innovation and improvement.

 

9 Risk Management

The expenditure of resources outside the Society, and the dependence on an external supply chain, exposes the Society to a wide variety of risks. A significant role for all colleagues of the Society making purchases is to identify, if possible, minimise, and otherwise manage the likely impact of such risks (to the Society and to other stakeholders)

For any significant expenditure, long term commitment, or identifiable ‘pinch point’ (that is where even a small supply problem could have larger ramifications for the wellbeing of the Society) formal risk assessments will be made, as appropriate, addressing:

• Supply risk: resulting from the non-performance or poor performance of a supplier or contractor. This also covers Business continuity, disaster recovery, interdependencies on other suppliers and geopolitical risks (e.g. Brexit)

• Regulatory risk: arising from need to adhere to regulatory and industry standards e.g. GDPR

• Financial risk: arising from requirement to deliver efficiencies, savings or economies of scale through delivery of the contract

• Demand risk: arising from requisitioners ordering too much, too little, or the wrong goods or services, relative to the actual need

• Control risk: arising from deficiencies in internal processes and procedures – including, but not confined to, procedures mandated in this document

• Environmental risk: arising from issues related to the impact of our operations

• Social risk: arising from issues related to CSR e.g. Human Rights, Modern Slavery, Reputational Damage and Environmental Issues

Risk assessment in the supply chain is necessarily subjective: it is nonetheless required that where a significant risk is identified, the nature of the risk shall be identified to the Risk & Audit Team as well as other Society stakeholders, and where possible alternative solutions or fall-back positions considered and documented.

 

10 Continuous Improvement

All personnel involved in the purchasing process are expected to attempt to improve their knowledge and skills, and the Society will support such activities. The Procurement team will assist with this where necessary.

 

11 Personal Gain

Any colleagues engaged in any aspect of purchasing on behalf of the Society shall never use their authority for personal gain and shall seek to uphold and enhance the reputation of the Society by:

• Maintaining an unimpeachable standard of integrity in all their business relationships both inside and outside this Society

• Fostering the highest possible standards of professional competence amongst those for whom they are responsible.

• Optimising the use of resources for which they are responsible to provide the maximum benefit to our Society.

• Complying with the law of the country in which they operate and with which they deal and complying with all contractual obligations incurred by or on behalf of our Society.

• Rejecting any business practice which might reasonably be deemed improper.

• Ensuring offers of gifts and hospitality are recorded in accordance with the Society’s Hospitality & Gifts Policy

 

12 Conflicts of Interest

When dealing with suppliers, potential conflicts of interest can sometimes arise. Such potential conflicts should be reported to your manager as soon as they are identified. They will not normally prevent our trading with the company concerned but full will require disclosure.

Sometimes former colleagues may be potential suppliers – indeed their knowledge of our operations may make them particularly suitable. It is important that they do not receive / expect to receive special consideration. If their ‘inside knowledge’, for instance of our cost structures, appears to give them an unfair competitive advantage, it may be desirable to take steps to ensure fair competition among all suppliers.

Colleagues should avoid as far as possible dealing with our suppliers in their private affairs, particularly if this is likely to put them under some obligation to the supplier. Where such arrangements are unavoidable, it is essential that they ensure that they are not offered any sort of deal which is not commonly available, and which could be construed as a reward for actions taken during their employment.

 

13 Associated Policies   

There are several group policies which are associated with, and should be adhered to, in conjunction with this purchasing policy and procedures manual. They include:

• Whistle-blowing Policy

• Modern Slavery & Human Trafficking Policy

• Contract Management Policy (under review)

• Hospitality & Gifts Policy

• Bribery and Fraud Policy

• Data Protection Policy

• Code of Business Conduct

A full list of policies can be found on the company intranet at: https://colleaguesconnect.midcounties.coop/working-here/policies/

It is imperative, that in complying with this policy, directors, managers and employees of our Society also ensure adherence to these related policies.

 

PURCHASING PROCEDURE

It is recognised that the Society is made up of several operating groups and business units with differing purchasing requirements and needs, to fulfil our services to the customer, as well as having different technology applications in which to carry out these procedures. 

There are however common guidelines between the procedures of each group and business entity:

Procedures should be designed to ensure that all the policy requirements, including that of ‘most effective economic outcome’ are achieved and can be demonstrated to have been achieved.

The Procedures should have a standard model of purchasing, typically following the process flow below:

This process must be followed in sequence and should be in place in all circumstances whether a manual or software enabled process is in use.

 

Tendering Process

1. Complete ‘Business Need form’ to understand what you need from the supplier and product/service

 

2. Work with Procurement to research suppliers in the market that meet your needs. Contact them to see if they would be interested in quoting               for the works/contract. Give brief outline of the project

 

3. If they meet basic requirements and want to proceed, discuss the project/contract with them in more detail

 

4. Collate a list of suppliers to invite to tender. Wherever possible, this must include either a local supplier, social enterprise or a cooperative                   group. Arrange a tender pack to send out including:

• Tender Proposal: Scope, current issues, history, our values & tender timelines

• Tender Questions

• Pricing Exercise

• Quantities

• Draft Sample of KPIs & SLAs

• Key terms of contract in including MCC minimum payment terms

• Our current policy on the area (if applicable)

• Copies of our Policies on: Modern Day Slavery, Purchasing and Contract Management

• Request a copy of their draft contract

 

5. Once tenders are returned, arrange cost & service comparisons which review:

• Service Levels & Key Performance Indicators

• Quality of goods/services

• Credit check on supplier      

• Risk Analysis

• Continuity of Supply

• Contract costs & potential variable costs

• Areas of Negotiation

You may need to bring suppliers in for a presentation or demonstration depending on what you are purchasing. Once completed, present to the relevant Head of the Department (COO for Trading Groups or Chief Officer for Support Services) for review with procurement recommendations for chosen supplier.

 

6. Inform successful supplier of contract award. Our Ethical Code of Conduct, DBS Certificate Request Form (if supplier is working in Childcare sites) and Contractor Contact & Compliance Form will need to be signed by the supplier and returned to the Society. Draft contract sent to Procurement and /or legal for review and final copy agreed with supplier

 

7. Once winning bid is confirmed, feedback to unsuccessful suppliers and work with department and chosen supplier on an implementation plan and roll out.

 

8. Complete the Account Management form and Project Reflection document. Email over copy to Procurement.

 

Repairs/Maintenance Process

Sign off for maintenance & repairs orders should follow the below process:

 

Category A  e.g. EHO issues, Emergency Lights Failure, Store Security Issues

Helpdesk contact suppliers for quote. Signing off limits for instructing the supplier are:

Helpdesk Staff – up to £250

Contracts Manager – up to £500

Head of Property Services – up to £1,000

Above £1000 – Group COO/Chief Property Officer (Kevin Brown)

Once order is approved, helpdesk can instruct the supplier to attend site.

 

Category B e.g. Refrigeration breakdown, Air Con issues

Helpdesk contact suppliers for quotes (ideally 2). Any quotes estimated to be over £1000 to be forwarded to the Group COO/Chief Officer of the relevant department who can check trading figures and advise whether they wish to proceed e.g. immediately, schedule the work in for a later date or not go ahead with the works. Helpdesk to follow the route advised.

For any quotes under £1000, the following sign off limits apply:

Helpdesk Staff – up to £250

Contracts Manager – up to £500

Head of Property Services – up to £1000

 

Category C e.g. Signage, Decorations/Cosmetic Issues

Helpdesk contact 3 suppliers for quotes. Once quote is received, regardless of cost, it is forwarded to the head of the relevant department and wait for their instruction on how to proceed. All future contracts will include KPIs and SLAs so the supplier and service can be monitored on an ongoing basis

 

When to involve Procurement

• Purchases < £10k – Delegated Authority - Procurement team to be informed and to check provision of goods/services against the Procurement Register. The Requisitioner to ensure approval to purchase is established through the relevant senior manager and that available funds exist within the appropriate budget.

• Purchases > £10k - <£25k – Competitive Quote - Procurement team to be informed and to check provision of goods/services against the Procurement Register. Ongoing support / delegated responsibility to be agreed:

• Purchases > £25k – Financial Governance Policy - Procurement team fully consulted prior to undertaking sourcing activity, to discuss and agree route and method of Procurement to be taken i.e. existing contract, amendment of existing contract, Request For Quotation (RFP), Invitation To Tender (ITT), Framework Agreement with another Co-operative or organisation

 

Financial Governance

Society – GNFR (amounts excludes VAT)

All GNFR contracts with a lifetime value greater than: 

1. Less than 25k – Approved by COO, Procurement and signed by Edward Parker

2. £25k –£50k approved by COO, Procurement and by Finance Governance Committee

3. £50k – as above + Society CEO (and/or CFO)

4. £500k – as above + approved by the Board.

 

Contracts

• All contracts must include the following clauses as a minimum; Exit Management Plan for Planned & Unplanned Exits, Assignment, Duration, Commencement Date, Notice of Termination (and roll over period), Insurance - Liability & Indemnity, Publicity Rights, Payment Terms (30 days EOMF), Audit Rights & GDPR.

• Any contracts or orders over £10,000 must be reviewed by Procurement. Once reviewed, Procurement will advise on any amendments or changes required.

• Any new contracts where we have not previously procured that service/goods or a new supplier is being considered to quote, then Procurement must be contacted and advised.

• All contracts should include KPIs and SLAs so the supplier & service can be monitored on an ongoing basis.

• Once a contract is awarded you must obtain the following documents (where applicable) from the supplier which need to be added to contract database or sent to procurement:

          - Contractor Application Form

          - Copy of the Supplier’s Public Liability Insurance

          - Copy of the Supplier’s Indemnity Insurance

          - Copies of any Supplier’s Accreditations

          - Copy of any H&S or Quality Certificates including ISO, CHAPS,

• Once the contract is active, Account Management meetings should take placed either quarterly or bi-yearly between Midcounties Co-operative and the Supplier. These should be recorded on the contracts management database. (See Contract Management Policy)

• All contracts must be signed by the Society’s Secretary and an authorised signature in line with appropriate delegated authority in advance of the service commencement date.

• The contracts must be signed physically in hard copy form by each party. Hard copy signatures can be physically returned to the Supplier and Head of Procurement by post or scanned and returned by email.

• All contracts will be added to the database and assigned to a specific business entity 

 

Non-standard Process

There may be circumstances where the standard procedure cannot be partially or fully followed or may be more resource & cost effective to negotiate rather than complete a full tender. The procedures should then include a variety of approaches that will enable an appropriate, effective and controllable response to such circumstances

Nonetheless, and always, the procedures should be implemented in a way as to align as closely as possible to the standard model.

In no circumstances, may procedures be adopted which conflict, or could tend to conflict, with the overall Purchasing Policy, unless previously authorised by the Group General Manager of Specialist Services and Head of Procurement.