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e-procurement in public purchasing
of around 200,000. Gateshead undertook an e‐Procurement project guided by UK e‐Government targets designed to make local authorities more electronically efficient.
It first set up an e‐Commerce Steering Group, comprising its Head of Information and Communications Technology, Head of Corporate Procurement and key users in these sections, whose remit was to examine all council services, and look at what the options were before deciding how to build up electronic‐driven systems and stocks.
After considering e‐tendering and an e‐marketplace, Gateshead realised that an e‐ marketplace would be the best fit for its plans and put together a pilot focusing on collaboration and local regeneration issues. The goal was to bring local suppliers on board, work with other nearby local authorities to develop a central portal, and develop an e‐Procurement toolkit to help demystify the process of doing business electronically.
The portal provides a central hub with up‐to‐date contact details for key staff at local authorities; all the purchasing organisations standard documents, such as tender documents, canvassing certificates; and a discussion forum regarding the electronic tendering facility and Request for Quotations. It also enabled suppliers to have the facility of a forward planning tool so they could interrogate what local authority contracts were coming up for renewal and thus express an interest. The portal also includes health and safety documentation, environmental questionnaires, and a calendar and diary of events.
Gateshead was one of five local authorities in the North East that made up the project team in developing the portal, and the overall goal was to make sure the project strands met all their objectives, both business and social, and to ensure that adequate resources and finances were available to enable the project to come to a satisfactory within timescale and budget.
Gateshead determined that taking part in an e‐marketplace would provide it with efficiency
gains and streamline council procurement processes. Areas of the e‐marketplace that were carefully observed in order to distinguish which issues could be resolved with possible solutions included e‐tendering, e‐sourcing, e‐invoicing, purchase cards, and an information sharing website. The councils annual budget is ￡200 million including staffing costs, half of which is considered addressable spend.
A challenging factor in the introduction of e‐Procurement was the initial government targets laden by time and budget constraints. Further, working as a collaborative body meant that the existing processes already in place didnt always facilitate the standardization of processes. Gateshead understood that the implementation process would mean a re‐engineering of procurement processes which in turn would require a great deal of support for the rollout of e‐Procurement. Gateshead also had to make sure that it had a good communications plan in place so that people knew why a new system was being introduced and what it meant for them, how it can streamline processes and reduce the amount of time spent on administrative tasks, and how that would allow them to do more interesting and productive work.
The financial benefits from collaboration and e‐Procurement and introducing good procurement practices have enabled cost savings in supplier products, lower administrative costs and time‐saving benefits. The greater purchasing power of the give local authorities involved has also enabled Gateshead to access high‐quality products from dependable suppliers. Monetary benefits include the reduced cost of administration, reduced staffing requirements and more fairly‐priced standardised products.
Organisational benefits have included a faster, efficient and a more cost effective service.
Another area that has benefited is collaboration with suppliers. Gateshead has been heavily involved in helping suppliers to trade electronically. With great emphasis placed on the harmonisation of processes and, to a certain extent, the harmonisation of mindset and sharing of knowledge, e‐Procurement seems certain to produce a long‐term win‐win situation for all parties involved. This is particularly true for small and medium‐sized companies, some of who may feel threatened by e‐procurement technology, and may be reluctant to use it.
Gateshead produced a 10‐page guide for suppliers called Delivering e‐Procurement a guide to trading electronically, which explains what electronic trading is, what it means for both the buyer and supplier side, and contrasts how sales orders were done previously versus how they will be done in future. Gateshead found that existing suppliers were the first joiners and now e‐tendering has become their normal method of transaction business, with very few orders manually sent.
Question
What are some potential applications of electronic purchasing in other, non‐public sectors?