Appendix A E-PROCUREMENT STRATEGY, POLICY AND PROCEDURES DOCUMENT

Transcription

1 Appendix A E-PROCUREMENT STRATEGY, POLICY AND PROCEDURES DOCUMENT

2 CONTENTS Executive Summary page 3 1. Definition of E-procurement page 4 2. Drivers for E-procurement and links to Corporate Strategies page 5 3. The County Council s Current Position page 6 Oracle IP Model page 7 4. The Council s Vision for E-procurement page 9 E-procurement Model page 9 Procurement Portal Model page Schools page How the Council will achieve its Vision page 14 Action Plan page Benefits of E-procurement page Potential Barriers page 16 Appendices Appendix A Roses E-marketplace Appendix B SOLO Appendix C Purchase Cards Page 2 of 16

3 EXECUTIVE SUMMARY Vision Statement All the Council s procurement activity will be processed electronically, via a single, common solution, in order to release resources that can be re-invested in improved service delivery and managed procurement Introduction This strategy sets out the County Council s position on e-procurement and how it can benefit from electronic systems. E-procurement automates the internal and external processes associated with buying goods, works and services from third parties. The E-procurement Strategy forms part of the County Council s Procurement Strategy. It supports the Corporate Plan by releasing resources that can be re-invested in improved service delivery and better managed procurement. Key Objectives Implementation of a complete end-to-end e-procurement system, integrated with financial back office systems, by the end of 2007 All e-procurement activity to reflect a corporate approach To identify and agree efficiency savings and measurable performance benefits by the end of 2005 To develop effective e-trading relationships with suppliers 75% of invoice value processed electronically by the end of 2007 To develop opportunities for regional e-procurement solutions and collaboration Continuous improvement of the e-procurement strategy Benefits of E-procurement Financial transparency and accountability Enabling staff to concentrate on their prime function Meeting prompt payment targets Meeting e-government targets Savings on non-pay expenditure Process savings Reduced overhead costs e.g. paper, storage, printing and postage The following document provides details of the County Council s current position (including all e-procurement solutions) and maps out the way in which the County Council will meet its targets. Page 3 of 16

4 1. Definition of E-procurement for the Purpose of this Strategy 1.1. This strategy applies to all County Council directorates and DSOs. Schools are excluded from this strategy, but the strategy does provide options for them to benefit from the corporate facilities via the Schools Portal E-procurement describes the use of electronic systems to acquire goods, works and services and payments from third parties These electronic systems use technology to improve transactional processes involved in; Sourcing - the process by which the Council identifies, selects and manages its suppliers, and Buying goods and services - the day to day transactional process of ordering, commissioning, receipting and making payments. The resulting e-procurement cycle is sometimes referred to as Procure to Pay (P2P). P R O C U R E T O P A Y ( P2P ) M A P Source > Requisition > Approve > Order > Receipt > Pay > Analyse e-sourcing e-transactions e-content e-payment Management Information E-procurement includes various systems; currently available on the market are: complete end-to-end procurement systems that are integrated with financial back office systems (e-ordering from a managed supplier database, linking to budgets, enabling receipting and payment to be carried out electronically, therefore providing a paperless process) stand-alone modules used to seek tenders or quotations (e-sourcing) electronic invoicing web-based systems that enable ordering from approved catalogues (emarketplaces) other web-based systems such as e-auctions portals providing access to services for suppliers procurement cards for ordering and payment payment through BACS and CHAPS (electronic transfer of monies from the Council s bank account to suppliers bank accounts). Page 4 of 16

5 2. Drivers for E-procurement and Links to Corporate Strategies 2.1. This E-procurement strategy forms part of Lancashire County Council s Procurement Policy and Strategy document which aims to support the County Council s Aims and its Commitments. This strategy specifically supports the following procurement objectives: Long term, strategic view of procurement Compliance with corporate contracts Joint Working Process management Payment of invoices Environmental procurement This strategy also supports the Corporate Plan by releasing resources that can be re-invested in improved service delivery and better managed procurement There are several internal and external factors for the development of an e- procurement strategy; Internal Factors Council s commitment to accessible, high quality, value for money services which meet peoples needs Lancashire Performance Report 2004/05 E-government Strategy Finance Strategy Implementation of Oracle Financials and i-procurement Realisation of e-procurement benefits Rationalisation of procurement systems Improving the managed procurement structure The need for good quality management information External Factors National Procurement Strategy for Local Government Comprehensive Performance Assessment (CPA) Best Value Performance Indicators (BVPI) 008 and 157 Implementing Electronic Government (IEG) process Public Service Agreement (PSA) Gershon Efficiency Review NW Centre of Procurement Excellence The wider electronic business environment Page 5 of 16

6 2.3. The National Procurement Strategy for Local Government has set the following e-procurement targets for all local authorities: By 2005: Every council should have implemented an appropriate e-procurement solution. For low value purchases, every council should be making appropriate use of a procurement card. By 2006: Every council should be using an appropriate e-marketplace In addition, central government also expects each local authority to deliver by December 2005 establishment of a single business account (i.e. a cross-departmental account run by the local authority whereby businesses are allocated a unique identifier that can be stored and managed) regional co-operation on e-procurement inclusion of small and medium enterprises (SMEs) in e-procurement programmes agreed targets for efficiency savings 3. The County Council s Current Position 3.1. Oracle P2P solution - The business case for an Oracle Financials system and i- Procurement (IP) module has been approved, the software and implementation consultancy purchased and a multi-disciplined in-house project team set up to implement the solution. IP will entail all expenditure being managed from the point of raising a requisition. In brief the system will electronically manage the following processes (shown in the diagram below): Raising requisitions, approving and placing orders whilst electronically storing line by line data on categorised goods and services against budgetary codes. Sourcing and selecting goods and services online from a managed supplier database. Electronically receipting goods and services to perform three way matching of order, invoice and goods/services receipt and enable automatic payment of invoices centrally. Internal trading between units of the County Council in an identical manner to that for external purchases. The detailed project plan is still being prepared, but at this stage it seems likely that it will take up until 2007 for Oracle Financials and iprocurement to go live and for iprocurement to start being rolled out across the Council, probably service area by service area. Page 6 of 16

7 ORACLE IP MANAGED SUPPLIERS 7. E-receipt 9. Invoice matched with order and receipt (centrally) 10. BACS payment transferred (via BANK) 11. Supplier receives payment 1. Raise requisition 2. Check Budget 8. Supplier sends Invoice 3. Approve Order 4. Supplier Receives Order 5. Supplier acknowledges Order 6. Supplier Delivers Order Oracle IP Model 3.2. The Council also has several corporate e-procurement initiatives in operation at the moment: Roses e-marketplace (for background paper see Appendix A) Single On Line Ordering (SOLO) system in operation for ordering and payment of goods from purchasing agent LPA (for background paper see Appendix B) Purchase Cards (for background paper see Appendix C) 3.3. Within directorates, the Council has various IT systems that contain purchasing components, listed below. Some of these systems have been developed inhouse, some are departmental specific and some link by electronic data interchange (EDI) to the Accounts Payable system. Due to the departmentalized nature of these systems it is difficult for LCC to identify an overall view of spending and purchasing patterns. Page 7 of 16

8 Name of System Description Electronic link to Pay Services* Department PAMS Purchase system for Residential Care Yes, monthly payment schedule linked to BACS/Cheque payments Social Services RAMP Purchase Order system for parts Yes, process own hardcopy invoices LCES MICE Purchase Order and Costing System for maintenance Yes, process own hardcopy invoices LCES FIS Fleet Maintenance system No, provide disc and batches to A/P LCES FOSTER Purchase system for Foster Care Yes, fortnightly payment schedule linked to BACS/Cheque payments Social Services BEACON Purchase system for property subcontractors Yes, batched invoices processed Resources NON RES Purchase system for Non-Residential Care Yes, monthly payment schedule linked to BACS/Cheque payments Social Services UBETS/UWETS Utilities payment management system No, CT299 Payment voucher raised monthly for consolidated spend. Resources TALIS Library Book ordering system No, Consolidated invoices processed. Education & Cultural Services LOAN STORE Stock control system No, traditional invoice process Social Services THARSTON Print management system No, traditional invoice process Resources ORDERDESK ICT purchase order system No, traditional invoice process Resources BUDGIE Directorate finance and purchase order system No, traditional invoice process Environment INVOICE SCANNING Scanning of multiple food supplier invoices No, Consolidated invoices processed. LCComS EXCEL Spreadsheets to record and track orders No, traditional invoice process Various * All EDI documents processed within Pay Services are held electronically on VISION 3.4. The Council externalised its central purchasing function in 1997 to the Lancashire Purchasing Agency (LPA). In January 2003, the Council appointed a Head of Procurement to manage strategic procurement and focus on the corporate management of the authority s spending activities. The Council s procurement structure is and will remain devolved to departments, where centres of excellence have developed within their specialist fields There are several regional initiatives that are relevant to LCC s e-procurement activities: Procurement Centre of Excellence for the NW a national, government funded project to share best practice and provide collaborative opportunities for all public sector authorities in the North West. The project is led by Tameside MBC North West e-government Group (NWeGG) an association of NW Authorities working on funded projects to promote e-government. NWeGG have identified a requirement for a Business Gateway for the North West, which could provide: suppliers, access to all Council contract opportunities councils, with an electronic contracts database and supplier database e-tendering facilities good practice documents and templates opportunities for collaboration Page 8 of 16

9 Roses Marketplace an electronic marketplace which Lancashire County Council has been involved in since its conception in Nine authorities across Lancashire, Cheshire and Yorkshire form the Roses partnership along with the hosts, BVP Ltd and Lloyds/TSB. (See Appendix A). 4. The Council s vision for E-Procurement All the Council s procurement activity will be processed electronically, via a single, common solution, in order to release resources that can be re-invested in improved service delivery and managed procurement The Council has committed itself to the implementation and development of Oracle Financials and i-procurement (IP). IP is the Council s chosen Procure to Pay (P2P) option and therefore forms the basis of this vision and the single, common solution. There are however many other elements of the procurement cycle that need to be integrated and made accessible via IP in order to encapsulate the whole process, as shown in the model below: Corporate Procurement Team (e-manage) LCC PROCUREMENT AGENTS Contract Managers (e-source, e-tender) Operational Users (e-order, e- receipt) Schools Oracle i-procurement Schools Portal Procurement Portal (see detailed model) e-marketplace (e-catalogues) Bank (e-payment) SUPPLIERS (delivery, e-invoice) LCC E-procurement Model Page 9 of 16

10 4.2. To create a single, common solution all officers will use the Oracle IP interface as the first port of call for any procurement exercise. Oracle IP will integrate with the Procurement Portal and provide a transparent punch out to The E-Marketplace. Any departmental systems will either have to be integrated with and be accessed via Oracle IP or be replaced by it as appropriate. The Oracle Financials project team will review each system and determine the appropriate approach and timescale with system owners as part of the implementation plan. In order to manage the complete procurement process in a seamless, paperless environment Council officers responsible for procurement will access Oracle IP via the intranet to: Electronically create a requisition, approve and transmit orders to suppliers from any PC with intranet access. Requisitioning can be compared to filling a shopping cart from an electronic store of approved supplies and services (e.g. internet home shopping). A requisition/order will represent any supplies, services and/or works that the Council has to process payment for, or allocate expenditure to. Budgets can be checked prior to purchase. Oracle IP is fully integrated with the back office financial system so all procurement activity is committed against the budget at the requisition stage, and managed through to payment and beyond. There will be no need to retain paper records Receive goods and services. The electronic receipting of goods and services is a new process for many officers, but will have to be carried out in order for the system to automatically match supplier invoices and process payments. Electronic receipting will replace the need for ordering staff to check, code and process invoices Process and monitor payment. Oracle IP ultimately means the complete automation of payment. Both electronic and hard copy invoices can be received centrally and matched within the system, thereby authorising payment. Automatic 3-way matching is carried out by comparing invoice, order and receipt data. Once matched, payment will be sent electronically via BACS transfer to the supplier. In the long term self-billing can be developed with the Council s key suppliers so invoicing is not required and payment is made upon the successful receipt of goods and/or services. Oracle IP can also process payment by purchase card Conduct competition exercises. Contract Managers can manage tendering procedures via the Procurement Portal, see section 4.3. for further detail. All contracts will need to include terms and conditions that meet the requirements of this strategy. By linking the portal with Oracle IP all contracts can be allocated an order reference and ensure 100% capture of information within Oracle IP. The council can then contract manage all its supplier arrangements, performance and spend patterns from internal sources. Page 10 of 16

11 4.3. A Procurement Portal provides the technology to manage the sourcing process electronically. Sourcing is the process by which the Council identifies, selects and manages its suppliers. The portal will enable Contract Managers to manage a database of suppliers interested in tendering and doing business with the Council. The portal can be accessed directly from the internet, via the Council s website or intranet, and will enable Managers to securely and electronically manage the tender process. The portal, when interfaced with Oracle IP will share contract and supplier data. The portal will enable the Council to publicly: provide free registration and access publish a profile of Council procurement activity publish a procurement plan and contracts register provide information on How to Do Business with Lancashire County Council advertise tender and award notices provide free downloads of invitations to tender, when using the open procedure provide free downloads of best practice, guidance and policy documents Internal to the council the portal provides Contract Managers with; Contracts register and management system Standard documents and toolkits Access to online system of placing OJEU contract notices E-tendering Supplier database and pre-qualification selection A more detailed model, below shows all the stakeholders and various applications that the portal can deliver; Page 11 of 16

12 LCC Website Procurement Portal Model LCC PROCUREMENT PORTAL Buyer Profile and 'How to do Business Guide' Supplier Registration Forthcoming Contracts Current Contracts Awarded Contracts LCC INTERNAL ORGANISATION EXTERNAL ORGANISATION CONTRACTING OFFICERS CORPORATE PROCUREMENT ECONOMIC DEVELOPMENT HEADS OF SERVICE E-GOV'T OFFICERS E-Guidance - Strategy, policy, standard documents, best practice. E- Supplier Management - Database of registered suppliers, by commodity, profiled and with prequalification infromation (held once). E-Notification - Contract notices and awards posted to OJEU, website (portal) and invited suppliers. E-Expressions of Interest (EOI) - Recorded online. Clarifications can be sent electronically. Simultaneous communication. E-Qualification - Pre-qualification information maintained in supplier profile. Weightings can be applied to criteria and evaluation carried out electronically. E-Tendering - ITTs posted and received electronically. E-Tender Management - Timetable, notification, EOI, selection, PQQ, scoring of PQQ, ITT, receipt, opening, evaluation, award, expiry all built and managed online. E-Contracts Register - Database of past, present and future tenders and contracts. E-Guidance - 'How to do Business with LCC' E-Information - LCC buyer profile, procurement plans and policies available online. E-Registration - Supplier profile held in directory for buyers to source/select tenderers. E-Pre-Qualification - Standard PQQ response details held online and maintained once only. E-Contracts Register - Access to forthcoming, current and awarded contracts/tenders. E-EOI - Expression of interest can be logged electronically. E-Selection - Suppliers can receive contract notification and/or invitation to tender electronically. E-Tendering - ITT can be downloaded and tender delivered electronically. E-Award - Award notification can be received electronically. EXISTING SUPPLIERS REGIONAL LOCAL AUTHORITIES OTHER LOCAL AUTHORITIES POTENTIAL SUPPLIERS CENTRAL GOVERNMENT PROCUREMENT ENVIRONMENT EUROPEAN UNION REGIONAL PORTAL/GATEWAY Joint Contracting Opportunities Greater Sourcing Opportunities Opportunities for Economical Development Shared Best Practice REGIONAL PORTAL/GATEWAY Multi Authority Contract Information Profiles/Data Available to all Authorities Standard Documentation to Complete STAKEHOLDERS REGIONAL BENEFITS E-CONTENT PORTAL CONTENT PUBLIC ACCESS Page 12 of 16

13 4.4. The Council s current e-marketplace (The Roses Marketplace), when integrated with the Oracle IP solution can provide the following benefits: A single transmission mechanism to all the Council s suppliers via a registration service at no cost to the supplier. The Council currently has over 70,000 suppliers on the legacy creditor system. E-orders (from Oracle IP) are sent either by , fax or direct into supplier systems as is the case for suppliers that are integrated into the marketplace. Suppliers can send e-invoices to the Council either by ing a simple electronic template or automatically into the Council s IP system and corporate back office financial systems. Common, self-managed e-catalogue source, approved by the Council Further benefits and background information for the Roses Marketplace can be found in APPENDIX A. 5. Schools The Schools portal provides all Lancashire schools with access to electronic services. Lancashire County Council may also provide access to its intranet for schools to use either Oracle IP or the e-marketplace. The Education and Cultural Services Directorate are currently developing ways to support schools in their role as purchasers and are looking to provide such services via the Schools Portal. There are 639 schools in Lancashire. With the exception of three schools, all Lancashire schools operate the SIMS accounting and management system which is undergoing development to enable integration with other software systems. 589 schools use the Council s Account Payable service to process the payment of paper invoices; the rest have their own bank accounts. The following options are available to schools: Adopt Oracle Financials, IP and the Council s e-procurement strategy (including integration with e-marketplace and SIMS). Use the Roses Marketplace as an e-procurement solution, interfaced with SIMS. Adopt their own e-procurement solution either in collaboration with other schools or individually. Page 13 of 16

14 6. How the Council will achieve its Vision This strategy outlines a three year action plan aimed to achieve the Council s vision for E-procurement as shown in the table below. Key Objective Target Implementation of Oracle IP as the Council's P2P solution by the end of All e-procurement activity to reflect a corporate approach, both internally and externally to the business, professional and public communities. 3. To identify and agree efficiency savings and measurable performance benefits by the end of To communicate and consult with suppliers, including local, SMEs regarding the Council's E-procurement Strategy in order to develop effective, e-trading relationships for the future % of invoice value (non-schools) processed electronically by the end of a. Implementation of Oracle IP completed ready for roll out. 1b. Integration of the Roses Marketplace into Oracle IP. 1c. Integration of all procurement systems. 1d. Identify the Council's procurement structure and levels of approval. 2a. Creation of the 'Procurement Portal' 2b. Free registration set up and linked to Roses Marketplace/Oracle IP integration. 2c. Contracts Register available on portal. 2d. E-tendering solution piloted and implementation plan in place. 2e. E-auctions available on-line. 2f. Rationalisation of processes (best practice guidance) and documents available on-line. 2g. Interface with a LCC single business account by providing suppliers access to Oracle i-supplier. 2h. Review procurement operations with a view to improving routes, contracting options and service provision. 2i. Develop Schools E-procurement Opportunities 3a. Identify, return on investment, performance indicators and methods of measurement (inc. BVPI 8). 3b. Produce annualised KPI data. 4a. Develop a Supplier Communication and Adoption (to E-Trading) Strategy 4b. Send out initial communication to all suppliers, once creditor data has been cleansed and strategy agreed. 4c. Identify key suppliers. 4d. Develop Supplier Management Programme 4e. Procurement to develop links with Economic Development 5a. Develop the use of purchase cards for all transactions under 1000 (inc VAT) with approved suppliers. 5b. Implement E-invoicing via Roses Marketplace for non purchase card, approved suppliers. 5c. Develop self-billing solutions with key suppliers. 6. To establish a network to develop regional e-procurement 6a. Identify areas or work on developing e- solutions and opportunities for collaboration by the end of procurement with the NW Centre of Procurement Excellence. 6b. Collaborate with the NWeGG on developing a 'Business Gateway' for the NW. 6c. To pro-actively contribute to the Roses Strategy Board, develop use of the e- marketplace and manage outcomes. 7. Continuous improvement of e-procurement strategy. 7a. Internal consultation, communication and marketing programme to be carried out. 7b. Funding to be identified and secured for e-procurement initiatives. 7c. E-procurement strategy to be approved and linked to ICT strategy. 7d. Annual Review of Strategy and Action Plan. Page 14 of 16

15 7. Benefits of E-procurement The drivers for change and the implementation of this e-procurement strategy should enable the realisation of the following benefits. The impact of these benefits is dependant upon the Council s current level of sophistication in the management of its procurement activities. For example, in areas where procurement is well managed there will be less benefit than in those areas where procurement is less well managed Financial transparency and accountability By implementing an electronic process you capture all procurement activity across the Council which enables the identification of: Aggregate demand Buying patterns Maverick buying 7.2. Enabling staff to concentrate on their prime function Technology should allow many of the more routine transactions to be handled electronically, helping scarce skills to be used more effectively. Non procurement staff can concentrate on service delivery and professional procurement staff can spend time on more complex contracts and higher value activities, such as: Developing procurement strategies Partnerships and Supplier Management Authority wide data analysis Monitoring outcomes Benchmarking performance Building procurement skills Rationalisation of processes and documentation Reviewing procurement structures and routes 7.3. Meeting prompt payment targets Electronic invoicing and automated matching of supplier invoices can reduce the time taken to process payment, therefore helping to meet Best Value targets (BVPI 008). Payment by purchase cards provides payment to suppliers by the bank in four days (without adversely impacting the County Councils cash flow) Meeting e-government targets as in sections 2.3. and Savings on Non-pay expenditure E-procurement enables accurate consolidation of spend areas enabling the Council to identify the need for contracts and negotiate contracts from a position of Page 15 of 16

16 greater strength. The National E-Procurement Project (NePP) has published indicative savings from 2.1m for a County Council, representing an average of 2.8% across all authorities. Any savings in the cost of goods and services through e-procurement would only be realised long term and should not be expected in the first year Process Savings The accurate cost of sourcing and buying goods and services is difficult to identify, and would vary tremendously across the Council. For guidance the NePP have published average savings for each local authority of: 26 per purchasing transaction across all types of councils 33 per purchasing transaction if using purchase cards (representative of 18 FTE within a County council) 13% to 25% for tendering depending upon whether or not it is a request for quotation, non OJEU tender or OJEU tender (representative of 7 FTE within a County council) Process savings include: less staff time to process and access information faster turnaround of information fewer errors greater transparency greater availability and flexibility 7.7. Reduced overhead costs Electronic systems reduce the need to retain paper documents, therefore the costs associated with document management i.e. paper, photocopying, storage, printing and postage can be less. 8. Potential Barriers There are a number of issues that need to be addressed for the successful implementation of e-procurement: Supplier Adoption - without suppliers on board the Council s strategy will fail Council Adoption - e-procurement must feature in corporate strategies and service plans Change Management - communication, training and resources are key Technical Integration - rationalisation of existing systems Culture of the Council - team work and a can do approach is needed Page 16 of 16