e-procurement A Guide For Suppliers

Transcription

1 e-procurement A Guide For Suppliers 1. Introduction Background The Government has given councils targets for the implementation of e-procurement and for benefits to be achieved from e-procurement. These targets have implications for the way in which South Somerset District Council will trade with suppliers in the future. This information is intended to provide practical advice to suppliers by highlighting the implications of e-procurement and suggesting responses that suppliers should be considering. Structure This document has the following structure: Section 2 What does e-procurement mean for suppliers? Section 3 What will be different? Section 4 What do suppliers need to do? Section 5 Checklist Section 6 Frequently asked questions Section 7 What is Somerset County Council doing about e-procurement Section 8 Where to get further information Section 9 Glossary of terms 2. What does e-procurement mean for suppliers? Background Using and internet technology, e-procurement removes traditional paper processes, providing organisations with the ability to trade electronically. It has the benefits of making trading simpler and more cost effective for both purchasers and suppliers. Since it is a government requirement for councils to trade electronically with suppliers, councils will have a preference to work with those suppliers that have e-procurement capability. e-procurement will affect the following aspects of the way in which councils trade with suppliers, eventually: Request for quotations and tenders (non-ojeu and OJEU) will be done online via e- tendering systems. Final price submissions will be made online via e-auctions Selection of suppliers will be made via e-marketplaces and e-tendering Purchase orders will be made electronically Invoicing will be done electronically Payment will be completed via BACS, and / or p-card. Suppliers should be aware that having an e-procurement capability would be equally important for the way in which they are likely to trade with their private sector customers in the future. 1 of 8

2 Benefits to suppliers e-procurement offers a range of benefits to suppliers: The automated capture of orders means that more business can be accepted without having to increase administration staff. Orders will be received by and can be uploaded electronically into the supplier s order management system. This saves time in comparison to the traditional process of receiving manual orders which have to be manually entered onto the supplier s order management system, meaning that suppliers can process more orders with the same levels of administration staff. In addition, errors will be reduced since details of orders will not be manually keyed into the supplier s order management system. Faster order processing (which is particularly important where goods or services are expected to be delivered within a short timeframe). Since orders are sent electronically to suppliers, receipt of the order is immediate and orders will not be delayed or lost in the post. Prompter payment, partly because invoices are likely to be approved more quickly (because they will be automatically matched to orders and evidence of receipt) or as a result of purchasing with a purchase card (payment is typically made within 3 days of placing the order). Greater exposure to new customers, for example, if a supplier s catalogue is included in a marketplace accessed by many purchasers. The catalogue will contain a description of the goods and services that the supplier is offering to the council and may be used by other councils who have access to the e-procurement system. It is not necessary to invest in expensive or complex technology to start taking advantage of the opportunities offered by e-procurement. At the most basic level it is possible to take part if a business has just one computer and an internet connection Challenges for suppliers Whilst e-procurement offers benefits to suppliers, it can also pose challenges: Increased competition and keener prices. For example, as a result of advertising requirements on the internet, more suppliers will have the opportunity to bid for the council s business. Whilst suppliers can participate in e-procurement with just a computer and access to the internet, achieving some of the benefits described above may require investment in mores sophisticated systems. For example, to capture orders automatically from the council, the supplier will need to have an order processing system. There is a range of low cost systems available for suppliers to consider. 2 of 8

3 3. What will be different? Understand the implications for your business. As a supplier you need to ask yourself are we easy to do business with? in the context of e-procurement, and to make changes where necessary. You need to prepare a plan for responding to any gaps between how you currently trade with South Somerset and other councils and how we will be looking to trade with you in the future. You need to think about the business relationship you want to have with local councils: Are you likely to be bidding for tenders? Are you supplying goods or services that could be included in an electronic catalogue on the e-marketplace used by the council? Are you likely to be supplying low value (but potentially high volume) goods and services? If you expect to bid for tenders, you need to prepare for e-tendering and e-ordering: e-tendering means that the tender process will be undertaken via the internet, you will need to ensure that you have the capability to receive tender documents and send tender responses electronically (e.g. by ): e-ordering means that orders, invoices and payments will be made electronically, you will need to ensure that, at a minimum, you can receive orders electronically (e.g. by ). However, you may want to go further than this and look at ways to automate the way in which you process orders. This will enable you to either process more orders for the same level of staff, or process the current volume of orders at lower cost. Councils may choose to join an e-marketplace, whereby they can select suppliers and purchase goods and services through an electronic catalogue. If suppliers expect to supply goods and services that could be included in an electronic catalogue (i.e. the specification of the goods or services can be easily defined, such as office supplies), they will need to discuss with the council how their goods or services can be included on the marketplace. South Somerset District Council recognises the need to help suppliers and are here to offer advice where possible. If suppliers expect to supply low value goods and services, they need to prepare to accept purchase cards or p-cards as a means of payment. This will mean that instead of receiving orders by post/fax purchasers will quote a visa card number. There will no longer be the need to post out an invoice you will need to complete a card transaction slip and waiting for a cheque to arrive will be replaced by electronic payment usually within 3 days. 3 of 8

4 4. What do suppliers need to do? Understand the implications for your business Prepare an action plan The changes you need to make will depend upon the way that you intend to do business with South Somerset District Council and other councils and the your current approach to trading with us. The actions you need to take are: Identify the goods and services that you supply to the council. You can get this by analyzing invoices that you have sent to the council over the last 12 months Consider how the council purchases these goods and services from you: - were they in response to a tender? - were they in response to orders received from the council? Assess whether the goods and services you supply could be included in an e- catalogue Analyse invoices to determine whether you supply low value, high volume goods (such as IT consumables) Contact the council to understand how they intend to trade with suppliers in the future Compare how you currently work with the council and how the council wants to work with you in the future and consider the implications. Examples of the considerations that a supplier will need to make are contained in the following table. nepp.org.uk Key considerations 1. Are you able to trade electronically with South Somerset or other Councils? Depending upon how you see the relationship with SSDC and other councils, you will need to prepare to receive or send the following purchase transactions electronically: Tenders Orders Invoices Purchase Cards 2. How can you best cope with the changes necessary to cope with e-procurement? You should have a plan in place to understand what e-procurement means, what the implications are for the way you trade with a council, and how you will respond to these changes. 3. Are you in a position to take advantage of the opportunities provided by e- procurement? Have you decided which councils you want to work with? Do you have staff allocated to review the websites of the relevant councils to identify tenders that you could bid for? 4 of 8

5 8. Where can suppliers get further information? Further information is available to suppliers from a range of organisations, including: Business Link - Somerset Website: Chamber of Commerce Somerset Website: South West Regional Development Agency Website: South Somerset District Council Procurement Team gary.russ@southsomerset.gov.uk

6 9. Glossary Table 3: Glossary of terms used in this document Term BACS (Bankers Automated Clearing System) Cashable Benefits Catalogue e-marketplace e-purchasing e-procurement e-procurement Website e-tendering Non-cashable savings and benefits Definition An electronic method used by councils to pay supplier invoices. The amount due to a supplier is transferred electronically from the council s bank account to the supplier s bank account. Cashable benefits are those where the money saved can be extracted from one budget and used elsewhere. For example, a price reduction on office furniture would mean that an office could be equipped for less and the remaining money redirected to delivering frontline services. A description of the goods and services that a supplier is offering to a council. These descriptions are held on an electronic catalogue. Internet based facility that enables trade between one or more purchasing organisations and a variety of suppliers. Automating the activities involved in purchasing goods and services from the creation of a requisition through to payment of suppliers A range of technologies that allows procurement processes such as the issue and receipt of tender documents, the issue of purchase orders and the receipt of invoices to occur electronically. The area of the council s website used for issues relating to the purchase of goods and services. It could include advice to suppliers on how to sell to the council, relevant policies, tender procedures and details of tenders that are currently open to suppliers. e-tendering comprises: undertaking the tasks of advertising the requirement for goods and services, registering suppliers, and issuing and receiving tender documents via the internet; automating the evaluation of responses to tender Non-cashable benefits are those that free-up staff from a task (because it is automated or eliminated) but the time saved for each member of staff is not large enough to result in a reduction in the number of staff required. Other non-cashable benefits include better management information, a more robust audit trail and increased compliance with regulations.

7 Non OJEU Tender OJEU Tender Process Efficiencies Purchase/p-Cards Request for Quotation (RFQ) Tender Documents The selection of a supplier through a tender. The level of expenditure at which suppliers must be selected through a non-ojeu tender is determined by SSDC financial regulations and Contract Standing Orders. The selection of a supplier through a tender, where the contract value is close to, or above, the level of expenditure at which EU Regulations require the contract to be advertised in the Official Journal of the European Union (OJEU). Link to current EU thresholds A reduction in the cost of a process or the time taken to complete a process (e.g. processing a purchase order) as a result of automating the process. p-cards or purchase cards, are charge cards which work in a similar way to credit cards and can be used to purchase goods or services. They can be controlled effectively at both a transaction value (i.e. an order) and spend type level (i.e. which goods or services can be purchased). The selection of a supplier through a request for quotations from a number of potential suppliers. The level of expenditure at which suppliers must be selected through an RFQ and the number of quotations required will be determined by SSDC financial regulations and Contract Standing Orders. Documents issued by the council specifying what they wish to purchase, the contractual terms and conditions for the tender and instructions for how bidders are to respond. Tender documents may be for non-ojeu and OJEU contracts. Page 7 of 7