E procurement in scotland steve murray april 2005
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e-Procurement in Scotland Steve Murray April 2005. www.eprocurementscotland.com [email protected] Lack of management information; Lack of skilled resource; Fragmentation and duplication of effort; Off-contract buying; Many different processes;

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E procurement in scotland steve murray april 2005

e-Procurement in Scotland

Steve Murray April 2005

www.eprocurementscotland.com

[email protected]


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 Issues

2000


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


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


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

Objectives


Buying on-line - web hosted service electronically

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:-


So far

34 Government organisations using service electronically

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)…

So far….


A big IT project electronically

A marketplace

What e-Procurement [email protected] is NOT:-


Changing the way we do business electronically

Improving services

Obtaining and Adding Value

It is about :-


Keeping it simple and easy electronically

How we presently do something ………the “Process”

How we improve – step by step

How to simplify and make more robust solutions …. “Business Process Re-engineering”

How we overcome the ‘we’ve always done it that way’ ….. Change Management

Making Progress


Transactional (Process) Savings electronically

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


Example electronically

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 electronically

  • 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 electronically

  • 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 electronically

  • 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


Payment Costs electronically

The cost of processing a €40 million subsidy payment

is the same as processing a paper invoice and payment for the hire of a meeting room and coffees at €85...

It takes the same time, resource and effort


Payments

10% of Expenditure “Transactional Purchasing” which previously accounted for 95% of paper invoices...

Stationery, Business Travel, Catering, Temporary staff

90% of expenditure accounted for 5% of paper invoices...

Policy Initiatives, Fisheries Protection vessel etc

Payments


The Scottish Public Sector receive “millions” of paper invoices:

Local Authorities 20,000,000 invoices per annum

Health 4,000,000 invoices per annum

Central Govt 2,000,000 invoices per annum

………..these in the main are processed manually


Estimated Cost of processing a paper invoice:- invoices:

€15

Estimated cost of automated / integrated p-card

within eProcurement Solution

€0.16


Approval invoices:

Approval

33% administrative cost PURCHASE TO 66% administrative ordering PAY PROCESS cost invoicing

Old way…..

Accounts

Payable

Place Purchase Orders

Suppliers

Receive Paper

Invoices


Business Travel and invoices:Electronic Consolidated Invoice

Approval

New way

Place Purchase Orders

Supplier

Accounts

Payable

Consolidated Invoice

1 x Electronic File to

be checked and loaded

onto Finance System


e.g. invoices:

Implementation in one organisation:-

For…business travel - eliminated 18,683 invoices, saving over €200,000 per annum

For… temporary staff - eliminated 14,560 invoices, saving over €160,000

per annum


e-Procurement as a catalyst for change:- invoices:

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)


Limited Expertise & Experience invoices:

Reluctance to Change

Slow Decision Making in Organisations

Large no. of stakeholders (Finance, IT, HR, Audit)

Large User and Supplier base (Communications!!)

Issues 2005


In Summary… invoices:

e-Procurement benefits are about ‘change’….

Process change (the full purchase to pay process)

Culture change

Using best tools and resources available…

…..and making them work together

Continuous improvement – not big bang!


End invoices:


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