Brent early adopter e-procurement case study _PDF - adopted

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					           D e l i v e r i n g e - P r o c u r e m e n t LG O L N a t i o n a l P r o j e c t


Procurement Profile

      Standard Spending Assessment (SSA)                                                             £287.4m

      Total annual non pay-expenditure (Bought in Goods and Services)                                £200m

      Live suppliers                                                                                 N/A              (N/A)

      Live users                                                                                     N/A              (N/A)

      Estimated no of procurement transactions p.a.                                                  N/A              (N/A)

      Interface with your back-office systems?                                                       No

      Figures in italics – to date via e-Procurement solution

Brent is currently redefining its procurement vision. The council is a highly devolved organisation that values
the benefits that devolved management brings. However one of the consequences of this approach is that
purchasing power can be eroded.
In the first quarter of 2002 the council sought to appoint a Head of Procurement to lead procurement
transformation across the Council. The search failed.
Interim arrangements resulted in the development of a work programme by the Head of Exchequer Services.
A portfolio of projects, carrying different levels of risk and reward, was identified and agreed that would provide
a balanced mix between tactical and strategic, and quick and longer-term wins. The projects also carried different
levels of risk and reward.


How did you choose your solution?
This wasn’t particularly difficult. There was no complicated business case to make.
As the Council’s procurement policy and strategy was under development, there was no agreed e-procurement
policy, strategy, or investment plan. There was, therefore, no money to spend on ‘kick starting’ e-procurement
The Council’s financial management systems were also in the midst of a three-year transformation programme.
As there would be no dominant financial IT system or ERP solution, there was little scope to exploit anything
connected to the e-procurement agenda.
As the Authority was a mature user of web technology and there was a PC and web browser on virtually every
employee’s desk, it provided the opportunity to ‘punch out’ to suppliers’ systems.
Stationery - while not a large category of expenditure - accounting for between £150,000-£200,000 per year –
provided a rich mix of potential benefits.
These included opportunities:
    • to raise awareness around e-procurement and challenge existing thinking and practice;
    • to experiment with altering (and improving) existing purchasing processes;
    • to exploit a standard framework purchasing agreement with Guilbert, negotiated through the London
      Contracts and Supplies Group and offering better terms than those generally available to existing purchasers;
    • to obtain better spend information initially via the supply side performance reporting system;
    • to improve supply management arrangements/supplier relationships;
    • to explore the possibility of e-invoicing and e-payment in a pilot environment;
    • to undertake a low risk, low technology, no direct cost e-procurement pilot.
           D e l i v e r i n g e - P r o c u r e m e n t LG O L N a t i o n a l P r o j e c t


Expected benefits were:
    • cost savings (marginal),
    • increased awareness of the need to change;
    • greater willingness to exploit the opportunities that ICT e-procurement systems can offer in transforming
      procurement practice and service delivery outcomes.

E-procurement solution
A Microsoft-enabled web browser is used to access Guilbert's bespoke supply side system. Goods are selected
and ordered via the system, and supplier performance captured and monitored against critical attributes (e.g. on
time delivery, right first time dispatch).

Current status
The project is half way through a three-month pilot implementation exercise. It will be evaluated at the end of
January 2003 against critical performance indicators, when a decision will be made whether or not to continue
with the arrangements.

Future plans
Business cases have been developed to apply low cost e-procurement solutions to more diverse spend categories,
such as agency staff, by using Request-for-Quotes through the LondonMarketplace™. This will deliver
significant cost savings.
We need to significantly invest in ICT (buy side) systems that will provide us not only with incremental e-
procurement capability but also facilitate a step change in our ability to analyse, and fully understand purchasing
patterns of staff, supplier usage, supplier cost (or competitiveness), and supplier performance.
A programme that will deliver successive waves of savings and benefits is planned to transform hearts and minds
in Brent. The main focus is likely to include:
    • Supply chain management – strategic sourcing – reducing the number of suppliers and optimising the cost
      of managing relationships;
    • Approved contract buying – consolidating purchasing with best value suppliers to achieve economies of
      scale and reduce maverick buying;
    • Transaction costs – training and empowering staff and deploying new technology to minimise processing,
      approval and transaction costs i.e. tackling the procurement to payment cycle; and
    • Specification savings – reviewing user requirements to match specifications with need.

   Key Drivers for Implementation                          e-Procurement Benefits                   Lessons Learnt

   • Business efficiency.                                  • Supplier has responsibility and        • Good internal marketing and
                                                               overhead for maintaining               communication is required.
   • Savings opportunity (improved
                                                               electronic catalogue.                • Early consultation and engagement
     terms using standard framework
     agreement).                                           • On line ordering of stationery
                                                                                                      of key stakeholders is vital.        
                                                               items using familiar shopping cart   • Even relatively unsophisticated
   • Central and local                                                                                                                                  Contact Chris Keady
                                                               and shopping list format.              projects benefit from disciplined
                                                                                                      project management.                            Telephone 0208 937 1160
     improvement agenda.                                   • More streamlined purchasing.
                                                                                                    • Be prepared for the unexpected.          Email
   • Improved supplier relationship                        • Improved management                      It will usually happen.
     management.                                               information via supply side          • Some people will want you to fail
                                                               system.                                – don’t give them ammunition to
                                                                                                      shoot you down.                                   “No budget is
                                                                                                    • Be proactive. If a problem occurs         no excuse for deferring
                                                                                                      deal with it. Better still, anticipate
                                                                                                      it. Don’t let it fester and grow.
                                                                                                                                                                    Chris Keady
                                                                                                    • Don’t prejudge outcomes. Judge
                                                                                                                                                       Head of Exchequer Services
                                                                                                      on what you find not on what
                                                                                                      you’d like to find. Emotional
                                                                                                      detachment helps.