Appendix 1 MEDWAY COUNCIL E-PROCUREMENT STRATEGY

Appendix 1 MEDWAY COUNCIL E-PROCUREMENT STRATEGY

CONTENTS 1. Definition 3 2. Current Position 3 3. The Future 5 4. Drivers for Change 6 5. Issues/Risks 6 6. Timetable 6 7. Additional Information 8 Page 2 of 9

DEFINITION OF E-PROCUREMENT The definition of e-procurement in respect of this strategy, relates to the ongoing and future business relationship between Medway Council and its suppliers and contractors. It does not apply to the relationship and interactions between the Council and its citizens. Procurement by electronic means is a separate but nonetheless integral part of the overall development of procurement methods and initiatives within Medway Council. E-procurement covers all aspects of procurement including ordering, tendering, receipt of and payment of invoices. E-procurement is the use of an electronic system to acquire goods, works and services from third parties (including payment). This includes: - complete end to end procurement systems, integrated with financial back office systems including payment, invoicing and management information. This includes the use of procurement cards for ordering and payment and automated bank payment clearance through BACS and CHAPS web based systems for conducting tenders. web based systems that enable ordering from approved catalogues. web based systems for conducting reverse auctions. purchasing cards for high volume low value expenditure Supplier Adoption communication on how Medway Council procures supplies and services 1. CURRENT POSITION E-procurement is not simply about transactions. It has the potential to improve the performance of the Council s procurement activity and save money. The e- procurement process will not however achieve this in isolation and is intended to underpin the aims and objectives contained in Medway Council s Corporate Procurement Strategy and where appropriate the milestones contained in the National Procurement Strategy developed by the ODPM and LGA. Medway Council has already demonstrated its commitment to e-procurement with the development and implementation of procurement systems in the following areas:- Page 3 of 9

WEBREQ, a web based requisitioning system has been developed in partnership with IBsoft, the supplier of the Council s core financial system INTEGRA. Discussions are currently ongoing with main supplier Kent County Supplies to deliver an XML based e-billing solution for acceptance of KCS invoices electronically. As part of our Local Public Service Agreement with Government, Medway is also committed to increasing the use of technology by small and medium enterprises (SME s) and is committed to a target of 39% having significant e- commerce capability by 31 March 2005. Corporate purchasing cards are already in use by directors, a concept that will be explored for wider application across the council. Payments using bank clearance using BACS or CHAPS are already available. Medway has signed up as a lead partner in the Kent Connects e- purchasing and tendering project, to explore the potential of a collaborative approach to e-procurement. The Kent Connects project will encompass both e-tendering solutions and other e- procurement initiatives. The project will also allow partners to develop common systems to reduce transaction costs and share information. WEBREQ allows purchasing from catalogues and is currently undergoing further development, including XML capability, to provide better catalogue maintenance. The council are moving towards consolidating the number of suppliers it uses for common supplies and services, the content of which will be sourced through an electronic catalogue system. e-auctions are a recent addition to local authority procurement having been sanctioned by central Government as an acceptable means of conducting transactions. No significant work has been completed in this area, however with a number of successes emerging around the country, the council will be looking more closely at how e-auctions can assist in delivering best value. It is envisaged at this point that collaborative opportunities with other local authorities will benefit from this method of procurement. Procurement cards Procurement cards are helpful for controlling the number of purchase orders and invoices being processed and are particularly useful in consolidating high volume, low value expenditure onto one invoice. Page 4 of 9

Supplier adoption It is envisaged that Medway Council will be procuring all supplies and services electronically in the foreseeable future. It is important therefore that our suppliers are made aware of our plans to achieve this. Medway Council has been working closely with local small and medium sized enterprises (SME s) to improve their e-enablement. At the beginning of 2004, only 4% of SME s had the electronic capability to trade electronically. Over the past year, websites have been created for a number of SME s, broadband installed across the area, specialised consultation and the creation of a business portal, and as a result of this work, 41% of SME s now have the capacity and capability to trade electronically. This programme is known as Wired Medway and will continue in future years. 2. THE FUTURE The core financial system was upgraded in October 2003, the new system INTEGRAII offers enhanced capability for e-procurement. Future developments will encompass the following areas. the use of the IPOINT software as a delivery mechanism, will allow purchase orders to be sent by fax or e-mail. Integration of INTEGRAII with the corporate document management software SWORDFISH, will allow indexing and scanning of invoices in electronic format, together with automated workflow capabilities. Management information will continue to be provided by Integra using crystal reports. A review of budget monitoring will ascertain whether a corporate-wide software solution can be implemented. web based systems for conducting tenders will be implemented either through Kent Connects or in isolation by Medway. INTEGRAII will offer more flexibility in purchasing through the use of online catalogues. Investigations into the feasibility of push/pull interfaces to supplier web sites will be evaluated. web based systems for conducting e-auctions will be evaluated either through Kent Connects or in isolation by Medway. Medway will initially be exploring the options around procurement cards through Kent Connects. Page 5 of 9

Supplier Adoption a procurement page will be published on the internet containing important information on How to do business with Medway Council. The Wired Medway programme will continue, expanding and enhancing the business portal, and creating a single business account by the end of March 2006, as part of the National Priorities. 3. DRIVERS FOR CHANGE Reduced administrative and transactional costs. Improved client/supplier satisfaction. Reduction in paper costs. Improved management of requisitioning. Improved contractor/supplier monitoring. Improved supply chain management. Improved services to internal clients. Reductions in off-contract spend. Maximising purchasing power through partnership. To improve the quality and accessibility of procurement management information. 4. ISSUES /RISKS Authentication issues surrounding tender acceptance. Extent to which current and potential suppliers are themselves e- enabled. Compatibility with other partners systems. Impact of e-tendering on local SME s and the local economy. Suitability of e-procurement to local authority business processes and policies. Extent of savings, which can be achieved with e-procurement. Extent of organisational business process re-engineering required to adopt e-procurement. Acceptance of changes by staff and management. Extent to which various vertical markets can adopt e-procurement. Legal issues surrounding e-procurement. Catalogue maintenance. Ability to pull third party catalogues into the WEBREQ system. 5. TIMETABLE 2003-2004 upgrade of financial software to INTEGRAII and integration of workflow. Test of electronic invoice acceptance from Kent County Supplies. Page 6 of 9

initiation of Kent Connects e-procurement project. No action taken. no action taken. No action taken. Supplier Adoption Investigated as part of the Kent Connects e-procurement project. 2004-2005 Investigate implementation of I-POINT e-mail, fax and acceptance of XML invoices into core financial system. Continue upgrading of purchase order delivery software. Commence integration of Swordfish document management system and core financial system. continuation of Kent Connects or Medway e-tendering and e- procurement project. deployment of WEBREQ e-requisitioning software and development of catalogues. Establish links with suppliers web sites for catalogue requisitioning. No action taken. Investigated as part of the Kent Connects e-procurement project. Supplier Adoption Publication of a procurement page on the internet including details on How to do business with Medway Council. Business portal developed for all local businesses to register their company details. Page 7 of 9

2005-2006 Complete implementation of I-POINT e-mail and fax. Enable XML delivery streams. Continue upgrade of purchase order delivery software. Complete integration of Swordfish document management system and core financial system. Continuation of Kent Connects or Medway e-procurement project and completion of a trial using an approved e-tendering solution. Further roll out of electronic catalogues and established links with consolidated supply chain Investigate feasibility of Kent Connects or Medway reverse auction solution. Evaluate areas of high volume, low value expenditure identified and the potential use of procurement cards on a trial basis. Supplier adoption Further development of the internet and ability for local SME s to submit a completed business questionnaire with their company details on the business portal. 6. ADDITIONAL INFORMATION Kent Connects will be considering the feasibility of wider application of e- procurement tools across the 14 authorities within in the Kent and Medway partnership. The business case will be closely aligned with the National e- procurement project (NePP) and will assess: - The level of investment required to implement a solution The level of risk associated with procuring and implementing a solution The starting point for Council s in terms of their level of maturity with regard to their approach to procurement Each Council s capacity to implement solutions How the implementation of e-procurement fits with the overall objectives of each Council Page 8 of 9

The benefits available through a collaborative approach to e- procurement The National e-procurement Project encompasses Pathfinders and case studies of other local Authorities. Although Medway is not directly involved in the National Project, Initiatives will be guided by the case studies and best practice to be found on the National project web site. http://www.nepp.org.uk/ APACS is the governing association for clearance services and deals with standards for BACS, CHAPS, direct payment, purchasing cards and Direct Debits. Information can be found on their web site http://www.apacs.org.uk/ Page 9 of 9