e-procurement in scotland steve murray april 2005 [email protected]
TRANSCRIPT
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e-Procurement in Scotland
Steve Murray April 2005
www.eprocurementscotland.com
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• Lack of management information;• Lack of skilled resource;• Fragmentation and duplication of effort;• Off-contract buying;• Many different processes;• No strategic approach to procurement at a national
level (and limited at a local level);• Significant extra expense caused to business,
particularly SMEs, by fragmented approach.
Procurement Issues2000
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• Create single platform for whole of public sector
• Hosted service model• Service not software (business not technical)• Emphasis on collaboration• No or Low cost for suppliers
Approach to e-Procurement in Scotland
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• First implementation - March 2002
• Implement 50 organisations by end 2005
• 125 by end 2007
• Annual cost reductions of €290m by end 2007
• Exploit sourcing technologies (e-tender and e-auction)
Scope/Targets
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Objectives
• To make Scotland the best place to do business electronically
• To be the first choice for e-procurement for public sector organisations in Scotland
• To obtain management information about procurement and use it to encourage good practices, collaboration and smarter working
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• Buying on-line - web hosted service • Catalogue Management facilities• Help with integrating to Finance & Stock Control
systems• e-tendering and e-auction facilities and support• Customer service centre• Standardised approach to suppliers• Forums for participation and collaboration
– P2P, Suppliers, user groups, new developments etc.
Service Includes:-
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So far….
• 34 Government organisations using service– Central, Local Government and Health Sectors
• e-orders placed with over 4000 suppliers • €188m since 2001- €150m of orders placed in
last 12 months• This represents 12% of potential for the 34• €12m (12% of all orders through cXML links
with a small number of suppliers (high volume/low value)…
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• A big IT project
• A marketplace
What e-Procurement Scotl@nd is NOT:-
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• Changing the way we do business
• Improving services
• Obtaining and Adding Value
It is about :-
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• Keeping it simple and easyKeeping it simple and easy
• How we presently do something ………the How we presently do something ………the “Process”“Process”
• How we improve – step by stepHow we improve – step by step– How to simplify and make more robust solutions How to simplify and make more robust solutions
…. “Business Process Re-engineering”…. “Business Process Re-engineering”
• How we overcome the ‘we’ve always done it How we overcome the ‘we’ve always done it that way’ ….. Change Managementthat way’ ….. Change Management
Making Progress
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• Transactional (Process) Savings• Payments savings and… efficient and on-time• Catalyst for Change:-
– Sourcing – Reinforcing best practice– Supplier Development– Improved Supplier Relationships– Management Information – improved planning– Collaboration/Sourcing
Expected Benefits
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A Local Council – Improving internal ordering and payment…
Issues with existing process
• Non standard ordering process• Re-keying of data to stock management• Issues over deliveries• Duplicate orders• Query resolution (lack of MI)• Query on price• Time taken to effect payment
Example
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Benefits after e-procurement:-
• Standard purchasing process for internal and external suppliers• Paperless, efficient transaction with management information• Removal of journals and assoc. spreadsheets• Reducing processing time from 4 days to 1• Accurate and timely internal charging with full audit trail • Best use of the investment made in ePS
Example
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Scottish Executive internal process improvements:-
•Pertemps provide temporary admin staff to the 8 core Departments
•A manual ordering and invoicing process was in place that involved several stages and multiple staff
•Solution – ‘Punch Out’ from ePS to Pertemps and electronic consolidated invoicing
•Change - HR Teams now order temps centrally 8 weekly Departmental invoices rather than 1 weekly invoice per temp
Example
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Benefits…..
‘Punch Out’ – provides HR Teams with greater visibility & control and much improved management information
Electronic Consolidated Invoice – has improved invoice accuracy and allows fast and accurate data upload into the
finance system
Example
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The cost of processing a €40 million The cost of processing a €40 million subsidy paymentsubsidy payment
is the same as processing a paper invoice is the same as processing a paper invoice and payment for the hire of a meeting and payment for the hire of a meeting
room and coffees at €85...room and coffees at €85...
It takes the same time, resource and It takes the same time, resource and efforteffort
Payment Costs
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Payments
• 10% of Expenditure “Transactional 10% of Expenditure “Transactional Purchasing” which previously accounted for Purchasing” which previously accounted for 95% of paper invoices...95% of paper invoices...– Stationery, Business Travel, Catering, Temporary Stationery, Business Travel, Catering, Temporary
staffstaff
• 90% of expenditure accounted for 5% of paper 90% of expenditure accounted for 5% of paper invoices...invoices...– Policy Initiatives, Fisheries Protection vessel etcPolicy Initiatives, Fisheries Protection vessel etc
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The Scottish Public Sector receive “millions” of paper The Scottish Public Sector receive “millions” of paper invoices:invoices:
• Local Authorities 20,000,000 invoices per annumLocal Authorities 20,000,000 invoices per annum
• Health 4,000,000 invoices per annumHealth 4,000,000 invoices per annum
• Central Govt 2,000,000 invoices per annumCentral Govt 2,000,000 invoices per annum
………………..these in the main are processed manually..these in the main are processed manually
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Estimated Cost of processing a paper invoice:-
€15
Estimated cost of automated / integrated p-card within eProcurement Solution
€0.16
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Approval
Approval
33% administrative cost PURCHASE TO 66% administrativeordering PAY PROCESS cost invoicing
Place Purchase Orders
Suppliers
Receive PaperInvoices
AccountsPayable
Old way…..
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Business Travel and Electronic Consolidated Invoice
Approval
Place Purchase Orders
Supplier Consolidated Invoice1 x Electronic File to be checked and loadedonto Finance System
AccountsPayable
New way
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For…business travel - eliminated For…business travel - eliminated 18,683 invoices, saving over 18,683 invoices, saving over
€200,000 per annum€200,000 per annum
For… temporary staff - eliminated For… temporary staff - eliminated 14,560 invoices, saving over 14,560 invoices, saving over
€160,000€160,000 per annumper annum
e.g.
Implementation in one organisation:-
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e-Procurement as a catalyst for change:-
Planning and collaborating improves sourcing…
e.g. Collaborative savings opportunities identified in Health for 2005:-Stationery (€2m), non-sterile gloves (€2m), agency nurses (€5m), travel (€1m)
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• Limited Expertise & Experience
• Reluctance to Change
• Slow Decision Making in Organisations
• Large no. of stakeholders (Finance, IT, HR, Audit)
• Large User and Supplier base (Communications!!)
Issues 2005
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In Summary…
e-Procurement benefits are about ‘change’….
Process change (the full purchase to pay process)Culture changeUsing best tools and resources available… …..and making them work together
Continuous improvement – not big bang!
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End