Procurement
Corporate e-Procurement Strategy 2004 to 2007
e-Procurement Functionality
The action plan contained in this strategy highlights the main tasks which are required to implement the elements of e-procurement which the County Council has assessed will provide the greatest benefits and are appropriate to its needs.
Advertising of opportunities
An internet website on Hantsweb will advertise potential tender opportunities to the business community, publish information on how to do business with the County Council and provide access to pre-tender questionnaires. This is expected to encourage greater competition and interest from potential suppliers and will make information on opportunities for the business community more accessible. In the longer term it is planned to have an 'e-mail alert' facility so that businesses can register to receive automatic e-mail notification of recently advertised tenders within selected categories.
Sourcing and tendering
The benefits of electronic tendering (e-tendering) will be assessed by the County Council through a pilot scheme. The pilot will be evaluated and a decision made on whether e-tendering is suitable for full adoption across the County Council.
We are also committed to exploring the benefits of e-auctions in the longer-term and to identify areas for which this process would be most suitable.
Catalogue management
We are currently managing our own electronic catalogue and believe it is appropriate to continue to do so. Catalogue data will be provided by suppliers, where appropriate, through a process of supplier adoption once the relevant infrastructure is in place. Our strategy is to work with key corporate suppliers on developing electronic catalogue uploads or 'punch-out' to their own internet catalogues.
We do not plan at this stage to engage with an external marketplace because we do not envisage considerable benefits from this approach. However we will review this decision in the longer term as the market develops.
Ordering
All purchase orders will be raised electronically in 'Enterprise Buyer' or, in agreed circumstances, directly in the Core R/3 SAP system. Workflow will be used to send orders electronically for internal authorisation. Purchase orders will be sent to suppliers by auto fax, electronically (XML format) or on paper. We have set targets for the electronic transmission of purchase orders and we will focus efforts on those suppliers which account for the greatest volume of transactions.
Consolidated ordering, where many purchase orders raised locally are combined into one purchase order for a specific supplier, does not fit within the devolved structure of the County Council, would not be responsive to local service needs and provides little benefit for the County Council. Consolidated ordering will therefore not be adopted within the County Council.[1]
Goods receipting and delivery notes
All purchase orders require electronic goods receipting and this process is a pre-requisite for enabling more automated invoice processing and facilitates the preparation of the County Council's year end accounts. Goods receipting must be seen as a 'goods and services acceptance process' because invoices will be matched to orders and receipts and will be paid without further intervention.
The automation of purchase ordering and invoice processing is of greater benefit to the County Council than receiving goods receipts and delivery notes electronically from suppliers. Electronic goods receipts and delivery notes will not be pursued at this stage.
Invoice processing
There are a number of different approaches which could be adopted for invoice processing. These are:
- Consolidated invoicing (where one invoices covers more than one purchase order)
- Electronic processing of invoices against individual purchase orders
- Self-billing (known as 'evaluated goods receipt' in SAP), where invoices are not submitted, but payment is made by processing the goods receipt transaction.
Consolidated invoicing could provide immediate benefits in reducing the volume of processing undertaken locally even if paper invoices are retained in the short term. However, this would require additional funding centrally and, as it would not be practical to realise tangible cash savings locally from this approach, consolidated invoicing will not be implemented.
The electronic receipt of invoices against individual purchase orders will reduce the volume of manual keying locally and will facilitate automatic payment where the invoice matches the purchase order and goods receipt. This approach will reduce workload in local establishments and improve invoicing and payment processes. Electronic invoicing will be pursued with those suppliers that account for the greatest volume of transactions. The County Council has also set targets for reducing the volume of paper invoices received.
Self-billing is considered to be an advanced form of electronic receipt of invoices and will be pursued in the longer term with key suppliers.
Payment
The County Council has made considerable progress in making electronic payment by BACS over recent years. Currently, 70.9% of payments, covering 82.1% of invoices, are made electronically and the County Council actively continues to encourage suppliers to receive payments in this way. Payment performance is also currently good, with 91.4% of payments being made within 30 days.
Paper remittance advices are currently sent to suppliers. Whilst this will remain the format for cheque payments, it is possible to fax or e-mail BACS payment advices therefore making savings on postage costs. This project has been identified with the Enterprise Project as a future development, although no implementation date has been set, because the roll out of SAP across the Authority and the implementation of the SAP upgrade during 2004 are higher priorities.
Supplier access
There is potential within the corporate IT system (SAP) to enable suppliers to gain access via the internet to track the progress of their invoices and payments. This facility could reduce the number of queries and provide benefit to both suppliers and the County Council and will be developed as resourcing allows. As with electronic payment remittance advices above, this project has been identified as a future development, although no implementation date has been set, because the roll out of SAP across the Authority and the implementation of the SAP upgrade during 2004 are higher priorities.
Purchasing cards
The use of purchasing cards should reduce transaction costs particularly for low value or ad-hoc purchases. We are planning to explore the benefits of this process more fully and to prepare a business case for the County Council.
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[1] The only exception to this is for stock replenishment orders for the County Supplies warehouse.
