John Scaife Change Programme Manager

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John ScaifeChange Programme Manager
Redbridge Procurement Conference
22nd November 2005
Meeting e-Procurement Targets with an
Agresso/e-Marketplace Solution
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Content

• What is e-Procurement (and why)?
• Past and Future
• Priority Outcome Targets
• Case study Windsor Maidenhead

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What is e-Procurement? (1)
e-Procurement is a tool to E enable procurement
activities, including sourcing, ordering,
commissioning, receipting and making payments for
the whole spectrum of an authoritys 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.
Source - Local e-Gov - National e-Procurement
Project
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What is e-Procurement? (2)
Sourcing is the process by which an authority
identifies, selects, and manages its suppliers.
(e-tendering 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. (e-purchasing 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.
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What is eProcurement? (3)
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Why e-Procurement?

• Reduce purchase cost
• Reduce cost of buying
• Improve Control and Probity
• National and EU procurement targets

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Past and future

• Commercial models
• Dominance of P2P
• FMS offerings
• Drivers
• Interface v Integration
• E-Invoicing
• RCEs

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The 6 Priority Outcomes for eProcurement

• R9 - Appropriate e-procurement solution in place,
  including as a minimum paperless ordering,
  invoicing and payment.
• G8 - Establishment of a single business account.
• G9 - Regional co-operation on e-procurement
  between local councils.
• E5 - Access to virtual e-procurement
  marketplace established.
• E6 - Inclusion of Small and Medium Enterprises
  (SMEs) in e-procurement programme.
• E7 - Agreed targets for efficiency savings by
  December 2005, including the of undisputed
  invoices paid in 30 days (BVPI 8).

voluntary
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Additional Targets (1)

• Every council should have implemented an
  appropriate e-Procurement solution as part of its
  Government program by December 2005 (National
  Procurement Strategy).
• Every council should be using an appropriate
  e-Marketplace by the end of December 2006
  (National Strategy).
• 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) 

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Additional Targets (2)

•      
• 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).
• Gershon/SR 2004 - 6.45bn (Windsor Maidenhead
  2.09m)
•  

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Case study

• The Big Picture
• Analysis of spend
• Candidates for review
• A few facts
• What we have done so far

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The Big Picture

• Council spends 86m p.a. on bought-in goods
  services

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Analysis of Spend

• 23m Cannot be Influenced
• Pensions
• Subscriptions
• Interest
• National Insurance
• 38m on contract in 2004
• Waste
• Building maintenance
• Client Public Transport
• Residential Care services
• 25m Can be Influenced

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Candidates for early review
High Level of Spend Low














Low Price fluctuation
High
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Givens

• Average price variation is 5
• Commodity spend is circa 25m
• We are able to switch suppliers

Source OGC
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So

• Variation in Price is 5

25m as average
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and

• Variation in Price is 5

25m
1.25m p.a. Potential Saving
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How are we going to do it?

• Phase 1 is to grab the low fruit
• Where the best deal is available on a Framework
  Agreement we will use it
• How (1) e.g. via Agresso/IDeAmarketplace
• How (2) top management and Cabinet member support
• How (3) changing the corporate culture

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Top 6

• Stationery and computer consumables
• Vehicle hire leasing
• IT hardware/software
• Agency staff
• Postage Printing
• Telecomms

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First implementation

• Stationery Computer Consumables - 2004/05
• 2,606 Orders
• 287,500 spent
• The same goods which we bought last year will now
  cost us 28.3 (81,000) less
• Further cashable savings achievable when we
  properly enforce core list selection (currently
  less than half)

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Some typical examples
 
Invoice No. 1 Price Paid 247.90 - Banner
Price 201.41 saving 19
 
 
Invoice No.2 Price Paid 241.90 - Banner Price
138.18 saving 43
 
 
Invoice No.3 Price Paid 287.45 - Banner Price
203.34 saving 29
 
Invoice No.4 Price Paid 259.53 - Banner Price
214.53 saving 17
Invoice No.5 Price Paid 250.45 - Banner Price
161.66 saving 36
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But.

• We must stop people buying without using the
  Agresso system
• Suppliers are being 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 need to extract the efficiency savings

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Broadcast email from Chief Executive 26th Sep 2005
no purchases will be made other than through the
approved purchase system on Agresso. I want to
make it absolutely clear to everyone that this is
a formal instruction that has the full support of
the leader of the Council and the lead member for
Finance. Through Agresso we will be monitoring
very carefully any situation where an invoice is
received for goods delivered by any of our
previous suppliers after this date.
Chief Executive
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Work packages for each area

• Data analysis
• Comparison
• Negotiation with supplier
• Commodity Champion and Departmental
  Representatives
• Establish new Supplier
• Communications
• Training and Roll-out

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E-Procurement with Agresso/Marketplace

• User experience

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Qty
Unit Price
Total Price
Product Description
Supplier ID
Item Code
Manufacturer
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On behalf of John Scaife and Gary
Richardson.Thank you
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R9 - Appropriate e-procurement solution(s) in
place, including as a minimum paperless
ordering, invoicing and payment.
HANDOUT

•  
• Generate orders electronically -
• Via their PC, a buyer should be able to view
  inventory online to select a required product or
  service from an electronic catalogue or by
  entering a product code to generate an
  electronic order and to obtain authorisation for
  it electronically if required and to transmit
  the order directly to the supplier.
•  
• Receipt goods and accept invoices electronically
  -
• The buyer should be able to log the receipt of
  goods electronically to accept and log invoices
  in electronic form and to match the electronic
  purchase order, delivery receipt and invoice
  details on their system before payment to the
  supplier is authorised.
• Make electronic payments -
• Once a payment has been authorised, the council
  should be able to make the transfer of funds to
  the supplier electronically, generating an
  electronic notification of payment to the
  supplier. For low value purchases, the use of
  purchasing cards should be considered.

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R9 Exemptions and Checks
HANDOUT

• Exemptions
• Where existing suppliers have made minimal
  investment in ICT systems, the council may still
  need to generate orders and payments and accept
  invoices in paper form. However, the council
  should have a programme in place to help
  suppliers make the transition to electronic ways
  of working.
• Checks
•   View current stock levels and generate orders
  electronically ?
• Receipt goods and accept invoices electronically
  ?
• Make electronic payments ?

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G8 -Establishment of a single business account
HANDOUT

• To fulfil the requirements of this outcome,
  which every council will have to do, councils
  will have to apply CRM principles to all
  businesses with which they have contact.
• Checks
• Identify businesses and allocate unique
  reference numbers. ?
• Cross-reference information in existing systems.
  ?
• Make this information available on all access
  channels. ?
• Log interactions and generate management
  information. ?

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G9 Regional co-operation on e-procurement
between local councils.
HANDOUT

• Exemptions
• This requirement applies to all councils. It
  will be particularly important for smaller
  councils or authorities at the early stages of
  investigating e-procurement to consider regional
  initiatives and build on the work of existing e
  government partnerships.
• Checks
• Identify existing e-procurement initiatives ?
• Participate with regional centres of procurement
  excellence ?
• Produce business case for developing
  e-procurement in partnership ?

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E5 Access to virtual e-procurement
marketplace established.
HANDOUT

• Exemptions
• This outcome will only apply to councils that
  have volunteered to undertake it.
• Checks
• Identify appropriate e-procurement
  marketplaces ?
• Set up existing suppliers ?
• Establish operating procedures and technical
  infrastructure ?

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E6 - Inclusion of Small and Medium Enterprises
(SMEs) in e-procurement programme.
HANDOUT
Exemptions This outcome will only apply to
councils that have volunteered to undertake it.
Checks Identify appropriate SMEs in local
area ? Understand barriers to wider adoption of
e-procurement ? Develop SME engagement programme
?

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E7- Agreed targets for efficiency savings by
December 2005, including the of undisputed
invoices paid in 30 days (BVPI 8).
HANDOUT

• Exemptions
• This outcome will only apply to councils that
  have volunteered to undertake it.
• Checks
• Develop baseline measures ?
• Analyse potential efficiency savings ?
• Set targets and establish tracking and
  monitoring mechanisms ?