Procurement Plan Strategy - Sellafield Ltd

acquisition and sub-contract strategy; other considerations such as those outlined above arealso taken into account.Figure 1 Purchasing Portfolio Analysis at SellafieldRISK / EXPOSURE HighLowStrategic SecurityRelatively low spend; few suppliers -possible monopoly; high risk anddependencySeek alternatives, question IPR or closerelationship with supplier, increase spendTactical AcquisitionLow spend, many suppliers, low risk anddependency, relatively high processcostsCall off agreements / purchase cards; e-procurement, outsourcedStrategic CriticalHigh spend; few suppliers - possiblemonopoly; high risk and dependencyPartner with suppliers, joint ventures,joint projectsTactical ProfitHigh spend; many suppliers; low riskand dependencyPlay the market; short contracts;benchmarkLowSPENDHighHow Sellafield applies Purchasing Portfolio AnalysisStrategic Critical – Spend in this category is relatively large, with a small number ofpotential suppliers. Items in this quartile are often of core importance to Sellafield. For theseareas, Commercial would prefer to work closely with suppliers, developing partnering-typerelationships, running joint improvement programmes, and ensuring that both parties benefitfrom the arrangement over the long term. In this way, the risk of supply discontinuities isreduced, performance can be closely monitored, whilst the supplier can make reasonableprofits from the associated contracts.Tactical Profit – Spend in this category is relatively large, with many potential suppliers. Inorder to take advantage of competition, and obtain the best value for money, contracts arecompeted on a regular basis, and suppliers are chosen to get the best Commercial dealsover the lifetime of the requirement.Tactical Acquisition – Spend in this category is relatively low, with many potentialsuppliers. Often in the Tactical Acquisition quartile, the transaction costs associated withbuying the goods can be greater than the costs of the goods themselves. For this reason,the focus is on reducing acquisition costs. This is achieved via e-procurement (through SAPSupplier Relationship Management), through the use of purchasing cards, and in somecases by using framework agreements.Page 8 of 23