Appendix 4 Buckinghamshire County Council Corporate e-procurement Strategy 2006 2009 DRAFT September 2006 1
1. Background 1.1 What is e-procurement? e-procurement is a collective term for a range of technologies that can be used to automate by computer workflow, the processes associated with sourcing and purchasing; request quotation, purchase order, receipting and invoicing. The following table contains a list of e-procurement functional process areas with associated e-procurement technologies. Process area e-option Description Controlling Sourcing Managing e-tendering e-auctioning e-contract Management e-analysis Facilitates the complete contract tendering process from advertising the requirement through to contract award. This includes the exchange of all relevant documents in secure electronic format. Following the tendering process the private e-auction facilitates on-line bidding to achieve price reduction and market rate levelling. Software used to automate the management processes associated from contract award to termination/re-letting. Ensuring that value parameters are not breached quantity, quality, price, time. Real-time management reporting to evaluate the results of the above e-options. Purchasing Process Area Cataloguing Purchasing Paying e-option e-catalogues/ Content Management e-purchasing Description Creation and maintenance of frequently used product data in electronic form. Enables quick selection of materials for use in requisitioning. A workflow based order application to authorise the need and update the finance system. A web-based purchasing facility that can be integrated e-marketplace to the finance system. Punch-out' from your finance system to each supplier Supplier Websites website enabled with on-line ordering. Bankers Automated Clearing Service Purchasing Cards Direct Debit An automated payment method 'BACS' advised from your finance system. Charge cards can be used to reduce the amount of invoices. An automated payment method where the bank is advised of the amount from your supplier and then updates your finance system. 2
1.2 Why do we need a Strategy? The Council has a policy and strategy for delivering effective procurement clearly linked to the Government ational Strategy for improving procurement practice within Local Government. The vital part e-procurement will play in this drive for procurement improvement was recognised with the launch of the ODPM ational e-procurement Project (epp) aimed at assisting local authorities in meeting their e-government targets and to gain the benefits available from e-procurement. Significant progress has already been made in Bucks, however, it is considered important at this stage that we set out in a Strategic document our aims and objectives for e- Procurement for the next 3 year period. 1.3 The Government Agenda ational Procurement Strategy Targets and IEG Priority Outcomes The ational Procurement Strategy was published in October 2003. The e- procurement targets are detailed below alongside the relevant IEG Priority Outcomes, which were published in May 2004. Delivery of these targets is specifically linked to the IEG funding that authorities have received in the past four years. These targets are described as follows: Key ational Theme: Doing business electronically Strategic Objectives To achieve efficiencies in the Procure2Pay cycle including the reduction in cycle time and transaction cost. This will free resources to concentrate on front line service delivery. To use e-marketplace to assist access to collaborative framework agreements and contracts. Councils are expected to achieve these targets: 1. For the 3 years commencing April 2005: E-Procurement is expected to be a significant source of the annual 2.5% efficiency saving that is to be re-invested in frontline services. (Treasury spending review). 2. By December 2005 every Council has to achieve efficiencies in the procure2pay cycle to free resources for frontline service delivery: 3
Every council should implement an appropriate e-procurement solution and use Purchase Cards or P-Cards for low value purchases (ational Procurement Strategy). 100% of undisputed invoices paid within 30 days of receipt (BV8). umber of types of transactions that are enabled for electronic delivery as a percentage of interactions permissible for electronic delivery (BV157). Mandatory outcome, an e-procurement solution has to be in place, that delivers paperless ordering, invoicing and payment (Implementing electronic Government R8). 3. By April 2006 Good Outcomes Establishment of single supplier business account where business are allocated a unique identifier that can be stored and managed via a corporate system (Implementing Electronic Government G8) Regional co-operation on e-procurement between local authorities (Implementing Electronic Government G9) 4. By December 2006. Use e-catalogues to assist the council s access to framework agreements and contracts. Every Council should be using an appropriate e-marketplace (ational Procurement Strategy). Excellent Outcomes Access to collaborative e-marketplace established (Implementing Electronic Government G5) Inclusion of Small Medium Enterprises (SME s) in e-procurement programme, in order to promote the advantages of e-procurement to local suppliers and retain economic development benefits within local community (Implementing Electronic Government G6). Failure to meet these targets will impact on a council s CPA rating. In effect, the ational Procurement Strategy and Implementing Electronic Government priority outcomes mandate the use of e-procurement technologies such as p- cards, e-purchasing and e-marketplaces. 4
1.4 What does the e-procurement Strategy cover? Successful implementation of e-procurement systems and business change underpins the corporate objectives contained in the Council s Procurement Strategy. It will also help ensure that we meet the targets contained in the Governments ational Procurement agenda. Significant progress has already been made with the SAP ERP system and its associated Supplier Relation Management module. The e-procurement Strategy will clearly set out where we are now, where we want to be and how we plan to get there. How does it link with the Council s Corporate and Government objectives? The e-procurement strategy is one of several inter-related strategies including the Council s Corporate Plan, e-government Strategy, ational Procurement Strategy, the Corporate Procurement Strategy and Financial Instructions. 2. Purpose of the Strategy To provide a clear and achievable vision for e-procurement with a clear programme for development. To clearly define our e-procurement objectives and how they integrate with Council and ational Procurement Strategies. To establish our approach in the drive to improve business efficiency. 3. s 1. Embrace the principles of Best Value To ensure the Council achieves value for money in relation to its investment in e-procurement systems. Action The Procurement Consultancy Development Manager to ensure that appropriate business cases are made and approved for e-procurement projects and that resultant efficiency are accurately costed. 5
2. To establish a plan and roadmap for the ongoing development and implementation of e-procurement systems To ensure that a focused, corporate approach to implementing e- procurement is employed. Action The Procurement Consultancy Development Manager to ensure that an appropriate roadmap is being followed. 3. To reduce the costs associated with the Procure to Pay process To ensure that the infrastructure in place and any future system developments successfully and cost effectively deliver the change programme. Action The Procurement Consultancy Development Manager to ensure that cost savings are identified as cashable or non-cashable. 4. To help improve efficiency in service delivery. To establish e-procurement systems which are more efficient and free up staff time to focus on front line service delivery. Action The Procurement Consultancy Development Manager to ensure system development and outcomes are properly assessed and where necessary reflected in future efficiency statements. 5. To comply with the ational Procurement and Efficiency Agendas. To ensure compliance with the Government milestones and targets contained in these initiatives. 6
Action The Procurement Consultancy Development Manager to monitor e- procurement system development and ensure relevant targets are achieved. 6. To improve the current management information on procurement. To use e-procurement systems to improve the current quality of management information on procurement. Action The Procurement Consultancy Development Manager to implement improvements in line with the roadmap. 4. 2006/07 Current Position Statement and Action plan Where are we now and where do we want to go from here. We have set out below our current position and the action being taken to meet the targets. The How we plan to get there and when column in this table will be used to formulate and implement our RoadMap to change. Function Option Current Position Where we want How we plan to Target/ March 2006 to be get there anticipated outcome Sourcing e-tendering We do not currently Research into e- have an e-tendering tendering system, however systems we post our tenders suggests that the on our website for cost of acquiring potential and monitoring a contractors to view. full e-tendering The Procurement system would not website also be cost effective. provides useful However we will advice, information continue and guidance, monitoring SECE enabling Procurement Hub engagement with a progress, which wider supplier base. may provide a cost effective solution. Monitor SECE project. Highlight reports to CP&CB. 7
e-otice e-auctioning Submission of OJEU notices now done fully electronically We have participated in 2 auctions to date for goods relating to Stationery/IT consumables and Telecoms, in collaboration with other council's. Actioned. We believe that auctions are rarely affordable for an individual council. We will continue to take advantage of any opportunities to work collaboratively on e-auctions. Projected savings from increased participation in e-auctions will be calculated as opportunities arise. Contract Management We do not have a corporate contract management system, however we have an established corporate contracts register on implemented contracts to ensure we are aware of contracts awarded, value and period they run. Individual units We will are responsible for managing awarded contracts. Our SAP ERP system does have the capability of contract management although was not included in the initial implementation. investigate SAP Contract Management functionality. Report to CP&CB. Managing Spend/ Supplier analysis We are able to provide spend analysis using financial data from SAP. In addition w have participated in a regional spend analysis project. Our own spend analysis will provide us with knowledge to improve such things as oncontract spend. The regional analysis will identify collaboration opportunities. Continue with own analysis reports and improve. Continue with regional reporting project. Spend reports for contracted commodities ongoing. Offcontract purchasers targeted to use contracted suppliers. Regional analysis ongoing. 8
Purchasing e-catalogues / content management e-purchasing We currently manage internal catalogues on our SAP SRM system. Although we have found benefits of catalogue functionality, we have found that this is resource intensive. SAP e-purchasing module being used. Upgrade required in 2007 may require re-implementation of this module. Our ideal position would be to have supplier maintained e- catalogues accessible via our own ordering system. eed to increase the usage of e- purchase order compliance. Currently only 25% of invoices processed through this system have an associated order. Evaluate 'Punchout' to individual supplier or marketplace options. Understand requirement for upgrade through workshops By Jan 2007 license on internal catalogue needs renewal. Decision needs to be made by August 2006 to determine way forward. Increase numbers of purchase orders e- marketplace ot using an external marketplace. Currently evaluating external marketplace options for local government. SAP will no longer be supporting the current catalogue software Evaluate SAP offering v Marketplace Discuss with SAP and Marketplace suppliers Evaluate offering and present to CP&CB. (April 07) 9
Supplier websites The expense of o plans to take building and forward. maintaining specific connections to supplier websites is not seen as cost effective. BACS BACS payments in place with email notification of payment. Currently 92% of payments by BACS. Current level is seen as very good and we will still strive to increase. Financial Revenue unit engage with suppliers still paid by cheque. Maintain. Paying P-Cards We are currently operating a purchasing card within the council, which is sanctioned for ad-hoc spend. The use of our P- card is sporadic and not essentially targeted. This achieve's ational Strategy requirements for council's to be operating a P-card by Dec-05. Where the e- purchasing system is not able to interact with supplier systems for document to be transmitted electronically, the use of P-cards is seen as a possible solution to gain bigger efficiencies. Evaluate and Report to make CP&CB. recommendation for increased usage. Invoicing e-invoicing With the implementation of the SAP ERP system. Invoices are now processed in to the system at the order point and then sent to a central point for scanning on to the ERP system for retrieval if necessary. Current analysis highlights that over 8,000 invoices per month are processed in this way. We are determined to substantially reduce the number of invoices processed by the council as this is seen as process cost. One method to reduce process cost is to electronically receive and automatically match the invoice to a purchase order. Considered as part of a marketplace offering. Assess and implement other options to reduce invoice numbers such as P-card and supplier discussion. Marketplace evaluation. BT, and Onyx waste already approached. We have reduced the no. of invoices with Onyx. Mobile phone billing with O2 has moved from monthly to quarterly 10
5. Monitoring and Review 5.1 The e-procurement Strategy attempts to tackle many issues that have implications for not just support units, but for front line service delivery units as well. Formation of a Project Team on e-procurement to be responsible for implementing e-business change via the new systems and ensuring that the Procurement Working Group is kept up to date with progress against the Roadmap, is therefore considered essential. 5.2 Our Strategic drive has been to replace manual, centrally serviced and controlled systems with electronic systems utilised by individual service units. However there is a realisation that some central management will be necessary through the Corporate Procurement & Commissioning team. 5.3 It is also essential that we begin to more formally assess and cost the efficiency savings in processing time already achieved and ensure a robust mechanism is in place to deal with further changes and resultant efficiencies. 11