Transcript Document

eProcurement – Fast but is it safe…
Gary Richardson
[email protected]
13th September 2006
Content of Presentation
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Who am I?
What is Procurement
Few facts…
Sourcing v Buying
What is eProcurement
Procurement is changing - drivers
Case study
2005 Exercise Results
Who am I?
• Slough
• IDeA
– IDeA:marketplace
– Zanzibar
• Royal Borough of Windsor and Maidenhead
• South Eastern Centre of Excellence
What do we mean by
procurement?
“Procurement” is the process of acquiring goods,
works and services, covering both acquisition from
third parties and from in-house providers. The
process spans the whole cycle from identification
of
needs, through to the end of a services
contract or the end of the useful life of an asset.
It involves options appraisal and the critical “make
or buy” decision which may result in the provision
of services
in-house in appropriate
circumstances.
National Procurement Strategy for Local Government October 2003
Few Facts…
• Councils spend £25bn (plus housing and
capital) each year.
• Savings are there for the taking.
• Commodity spend is typically 30% of
councils spend.
• Variation in Price is minimum of + 5%
Few Facts…(2)
• Gershon/Spending Review 2004
– 21.5 bn across all government
– 6.45bn Local Government
• 50% Cashable
• 50% Non-Cashable
Sourcing v Buying
• Sourcing (Contracting)
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–
–
–
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Make or Buy
Specification
Evaluation
Negotiation
Implementation
Contact management
PFI – Transfer of risk/Value for Money
Sourcing v Buying
• Buying (Shopping)
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–
–
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–
Standard commodity items
Delivery
Requisitions
Orders
Delivery address
Standing Orders
EU Regs
So what’s eProcurement?
e-Procurement is a tool to E enable procurement
activities, including sourcing, ordering,
commissioning, receipting and making payments
for the whole spectrum of an authority’s activities.
The prime objective is to e-enable the management
of the supply chain that can be achieved by stand
alone, shared or integrated software tools.
The Benefits of
e-Procurement
Local e-Gov - National e-Procurement Project
So what’s eProcurement?
So what’s eProcurement?
Sourcing is the process by which an authority
identifies, selects, and manages its suppliers. (etendering and e-auctions)
Buying goods and services is the transactional
process executed by many members of the authority
during the day to day delivery of services. (epurchasing and procurement cards).
e-Procurement is a collective term for a range of
technologies that can be used to automate the internal
and external processes associated with sourcing and
buying.
Procurement is changing…
Drivers For change (1)
1. Every council should have implemented an
appropriate e-Procurement solution as part of
its Government program by December 2005
(National Procurement Strategy).
2. Every council should be using an appropriate
e-Marketplace by the end of December 2006
(National Strategy).
3. To promote the development of e-procurement
in the region, in collaboration with the
National e-Procurement Project. (Core
function of the Centres of Excellence)
Drivers For change (2)
4. Every Council shall have an appropriate eProcurement solution in place including at the
minimum paperless ordering, invoicing and
payments” by the end of December 2005 (Priority
Outcome).
5. Every Council shall engage in Regional co-operation
on e-procurement by the end of March 2006 (Priority
Outcome).
6. An optional “stretch target” for high-achieving
councils is to have established access to a virtual eProcurement “Marketplace” (Priority Outcome).
Drivers For change (3)
7. There are Performance Indicators to measure the
Percentage of corporate spend through electronic orders,
invoices received electronically, corporate spend through
electronic sourcing, orders raised electronically and
invoices paid electronically. (Local Performance
Indicators).
Case study – RBWM
• Gershon/SR ‘04
– 6.45bn (national)
– 2.09m (RBWM)
• 50% Cashable
• 50% Non-Cashable
Few Facts…
Variation in Price is + 5%
30
29
28
27
26
25
24
23
22
21
20
£25m as average
RBWM
[Worst]
Best
Few Facts…cont
Variation in Price is + 5%
30
29
28
27
26
25
24
23
22
21
20
RBWM
[Worst]
Best
£23.75m
Few Facts…cont
Variation in Price is + 5%
£1.25m Potential;
Saving
30
29
28
27
26
25
24
23
22
21
20
RBWM
[Worst]
Best
£25m
£23.75m
Few More Facts…
• Stationary/Computer Consumables – £287,500 spent
– Average Value = £110
• Spend with 6 suppliers of Stationary/Computer
Consumables = £228,851 (over £400k incl
Schools)
• Variation in Price on just printer cartridges is
30% - 40% below current costs
What we did!
• Phase 1 is to grab the low fruit
• Where the “Best” are available on
Framework agreements we use them.
• How:
– Via Agresso/IDeA:marketplace - looks like…
paper
“Qty”
“Product Description”
“Supplier ID”
“Item Code”
“Manufacturer”
“Unit Price”
“Total Price”
What we had to do?
• We needed to build the link between
Agresso and IDeA:marketplace
• It looks like this…..(for illustrative purposes
and not to be read on screen)
Supplier
Online Catalogue
Supplier
Punch
Out
Online Invoice
Punch
Back
1a
XML
Order
1a
5
Fax or email
XML Invoice
6
Order
IDea Supplier Management
and PO processing
IDea Catalogue
XML
Order
IDea Invoicing
IDeA:marketplace
7
4
XML Invoice
1
2
Punch
Out
Post
Back
XML
Invoice
(eBis)
XML
Purchase
Order
(eBIS)
Invoice
Manager
3
Web Req
Authorisation
Workflow
POP
Paper
Invoices
eMail
IDeA Process
TIFF
Image
Image
Server
Remittence
6a
Paper Document
10
Authorisation
Workflow
AGRESSO
Business World
Accounts
Payable
Invoice
Scanning
Delvery
Note
AGRESSO Process
9
Good
Receipt
3a
XML Schema
8
BACS
Payment
Cheque
Supplier
Bank
What are we going to do?
• We needed to build the link between Agresso and
IDeA:marketplace
• We now have access to numerous Framework
Agreements one of which is the Stationery
contract which was our “lowest fruit”
• At first buyers were be able to purchase as
existing
BUT
BUT
• We needed to stop people buying without using
the Agresso system
– Suppliers were told NOT to accept telephone orders
except in an emergency or by special arrangement
– Use MI from Agresso to inform managers of maverick
activity
• We needed to stop people buying from
“expensive” suppliers
• The next step was to “extract” the efficiency
savings
st
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Steps (work packages)
Data analysis
Comparison
Negotiation with supplier
Commodity Champion and Departmental
Representatives
• Establish new Supplier
• Communications
• Roll-out and Training
ALARM National
Conference Exercise (2005)
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Your organisation uses eProcurement or is
about to – List the risks inherent in this
new way of purchasing?
Give each a rating 1-5 (5 is high) for
1. the probability of them occurring
2. the impact on the organisation if they occur
3. what you would recommend to either stop the
event occurring or mitigate its effects.
Exercise Results
Risks
Staff resistance,
not adapting to
change
IT System
failure/Breakdown
Inability to use
local supplier
Prob’ty
Impact Action
5
5
Training and
Comms
5
5
Back-up
systems
5
5
Exercise Results
Risks
Breaches in
security (eg.
Passwords) Lack
of audit trail/fraud
Prob’ty
4
Impact Action
4
Password
protocols
Discipline
procedure
Restricted
delivery
address
Exercise Results
Risks
Prob’ty
Human error
4
3
Loss of control
4
5
Impact on local
business
sustainability
4
5
Impact Action
Training and
audit
Build in
checks
Exercise Results
Risks
Prob’ty
Unauthorised
purchasing
4
Impact Action
4
Segregation
of duties
Different
levels of
access
Exception
reports
Exercise Results
Risks
Product not fit for
purpose
Lack of control
over suppliers
(Automatic
payment)
Maverick spend
Prob’ty
Impact Action
4
4
4
2
4
2
???
Processes
Training
Checks
???
Thank you…