The electronic revolution at the heart of current business process re-engineering has many elements that need consideration, particularly when looking at procurement. But these form part of a bigger 'joined-up' working picture and e-procurement specialist, Peter Robbins, considers what many believe is the public sector's greatest paradigm yet.
Stepping Stones to Joined up Working
In 2000, the transition from paper to the web kick started the automated journey of efficiency in procurement. The first steps towards process re-engineering began with some crude system by today's standards progressing through to e-auctions. However, these technologies, are only the early stages of adopting an efficient best practice purchasing approach that delivers reduced overheads and value to the bottom line.
Whilst the National e-Procurement Project (NePP) has highlighted savings of £1.1BN to be had from e-procurement and the 'Efficiency Review' has sharpened the public sector's focus on going electronic to save, it is within the private sector that technology well beyond P2P has been developed.
Modern Procurement Solutions
Modern modular solutions that impart powerful aggregation technology genuinely take us to a new level of efficiency and eliminate the timely need to pick up the phone to negotiate or manage the interface to suppliers. Such a solution simply joins you to a myriad of suppliers in a structured manner, inviting them to offer competitive price and availability on a daily basis to keep enjoying your business.
Commercial organisations are successfully using such technology that requires no user training, no supplier education, operates on an Application Service Provider (ASP) model - hosted/managed off site - and delivers management, planning and budget reconciliation benefits to procurement teams.
This type of technology offers transparency of supplier relationships, showing cost price and cost plus agreed margin price on screen, so users can rest assured they are getting a fair deal. Separately, all transactions and RFQ communication with suppliers is handled/recorded on-line to deliver a clear audit trail. This means auditable, transparent relationships within a micro environment of joined up supplier relationships.
Within the e-procurement mantra, high quality content is paramount for efficient product selection, effective user adoption and meaningful analysis, which is where e-procurement solutions add real value through enhanced spend visibility. But to fulfil that role there must be a joined up link between an organisation and its suppliers and only the most powerful of aggregation and cataloguing e-procurement systems can truly offer this kind of approach.
These new systems offer an ability to provide historical pricing intelligence. It is the modular elements of the new wave of technology that can help purchasing teams police preferred supplier agreements to ensure they are getting that 3% or 5% cost plus price agreements on an ongoing basis. So, even though an organisation might be buying through a structured e-procurement process or framework, the purchaser has the intelligence to consider trends and forecast price and stock changes.
The result is market intelligence which provides greater negotiating power to identify when is the best time to purchase "best value" for any given product in the IT marketplace. This knowledge means purchasing "best value" or smarter buying every time you buy.
New Joined up Procurement for the Public Sector
For the provider of the new e-procurement technology, it is undoubtedly a challenge to get it right, but the ability to manage and deliver dynamic content is of supreme importance for an equitable supplier relationship and an efficient purchasing process. Of course, with quality content comes quality reporting and planning.
Again, the very fact that modular solutions exist that offer a joined up approach now means buyers can truly maximise their time for better purchasing. That means a public sector buyer needs informative, standardised, relevant, updated content to make a judgement on a purchasing transaction.
For electronic purchasing to work in the public sector we have already established that buyers need highly functional 'joined up' technology that intuitively provides superb malleable content focused on the needs of the sector. Successful next generation e-procurement is about more than great technology. It is about people, new business processes and change management in equal measure.
All the aforementioned factors play a role in ensuring the new generation of e-procurement is used to its maximum potential and are key to unlocking the broader capability of more complex total commerce solutions. That does not mean it is more complex for the user, but without the user's psyche tuned to the power of the system, the maximum benefits are not gained from a joined up procurement solution.
Fully integrated solutions that join back office to buyer to suppliers to customers and other public sector bodies within a fully auditable environment are the first example of shared services.
These are the true reality of how big the electronic revolution has become in terms of generating hard efficiency savings. The challenge for the public sector is to seek help from the private sector where this type of solution is tried and tested and has helped organisations return huge efficiencies for growth. The private sector has learnt the lessons of joined up working and now the public sector can capitalise on ready made propositions. The big question is when?
Peter Robbins, MD, Probrand Ltd