PROACTIS Blog

Case Study: Local Authorities Achieve Over £2.2m Process Efficiency Savings with PROACTIS Integrated End-to-End eProcurement

Charlotte Sutton
Charlotte Sutton,
PROACTIS
Overview

Like every local authority, Denbighshire and Flintshire County Councils must constantly strive to gain the best possible value from limited funds and procurement resources in order to provide the services its citizens need and expect. Collaboration between the authorities and adoption of PROACTIS integrated end-to-end eProcurement suite has delivered over £2.2 million process efficiency savings* to date.  A further £1.3 million cashable efficiency savings has been achieved from eSourcing and eAuctions in respect of Public and School Transport.
The Project

The authorities have a combined annual spend of £280 million and operate a small centralised Corporate Procurement Unit which includes one joint head of procurement and eight staff.  In order to deliver efficiencies against the Medium Term Financial Strategies both authorities adopted an end-to-end approach to transformation. The goal was to realise the benefits to be gained by integrating purchase-to-pay and source-to-contract systems, information and workflow across the two authorities and to collaborate on best practice and technology alignment.

Purchase-to-Pay:

Denbighshire County Council initially deployed PROACTIS Purchase-to-Pay system to 600 users, with that number growing to over 1000 as more functions and schools were brought online and more purchases became Purchase Order driven. Once the authority reached an advanced stage of modernisation of its eProcurement practices it began to share experiences and develop procurement initiatives with Flintshire County Council.
  • Sophisticated workflow and business rules ensure purchasing from approved suppliers where pre negotiated contracts have been made or where quotes are required
  • All active suppliers have been assigned an industry standard procurement classification to enable detailed profiling of spend type and category analysis
  • Over 50 supplier catalogues have been created for commonly purchased items and prices. In addition punchouts to supplier websites and integration to a national procurement marketplace ensure staff can access further supplier catalogues
  • Expenditure is properly coded for both financial allocation and procurement classification
  • Data Import for bulk upload of standalone invoices reduces significant time, cost and potential for human error in handling supplier invoices.
The roll-out of PROACTIS across 200 individual service departments and 160 schools, as well as interfacing to existing operational systems is integral to ensure efficiency targets are achieved.

Source-to-Contract:

The authorities also deployed PROACTIS Source-to-Contract to structure, standardise, streamline and track the entire procurement process and provide a framework of sourcing, contract, catalogue, and supplier management capabilities to leverage full buying power, gain best value agreements, and maximise the percentage of spend under management across all categories of spend. This is enabling the authorities to significantly reduce administration and facilitate effective communication among departments, procurement teams, and suppliers.

As a result, there is more scope to publically advertise low value procurements to SMEs and deal with any increase in volume of supplier bids that may arise. It is anticipated that an additional £20 million of low value aggregated supplier spend could be subjected to market competition.
  • Over 40 best practice templates have been created to manage any sourcing request from a straightforward RFQ to a large scale OJEU tender
  • Procurement controls ensure compliance with Contract Procedure Rules and European Procurement Regulations
  • Electronic processes help to streamline many routine administrative functions and enable self-service supplier maintenance of key information
  • A corporate contract register allows greater transparency of contracts including email alerts of contract review and end dates
  • Online supplier performance reviews enable improved internal and external stakeholder collaboration
  • Supplier approved lists are actively managed with automated supplier rotation policies in place and monitoring of certifications and policy expiry dates
  • Comprehensive analysis is available on budgets, purchasing patterns and supplier performance.
Following success from group procurement initiatives, Denbighshire Council led a joint highway lighting procurement initiative with 28 neighbouring authorities and used the PROACTIS platform to manage the multi-stage PQQ and RFP process. The contract had an estimated value of £40 million and an average of 14% reduction in material costs was secured. £626,220 potential savings have been identified in year one. Calculated across the 28 partners this could generate £1.3 million per annum or in excess of £5 million over the lifetime of the agreement.

Integrated End-to-End Platform

The authorities have adopted a best-of-class approach to eProcurement applications. This has included the extensive range of modular Source-to-Contract and Purchase-to-Pay solutions from PROACTIS with specific configurations and workflow to ensure control and compliance. In addition, adoption and integration into national collaborative eProcurement initiatives and an incremental programme of moving away from silo systems has allowed the authorities to standardise procurement processes.

Integration of PROACTIS Purchase-to-Pay with Source-to-Contract processes and also the authorities existing Infor Masterpiece finance systems is delivering many benefits, for example:
  • Supplier pricing schedules in tenders can be automatically converted into supplier catalogues and made available in Purchase-to-Pay to increase contract compliance
  • Automatic generation of Purchase Orders from eSourcing events ensures budgetary commitments are made visible in both Purchase-to-Pay and the finance systems
  • History of payment details within Purchase-to-Pay can be viewed and tracked against individual contract records within eSourcing
  • Contract variations can be managed and approved through workflow, which then allows the amendment of the original Purchase Orders in order to reflect commitments against budget
  • Requisitions for non-contracted requirements can be routed to generate automated eSourcing events and enable buyers to seek best value for money while ensure compliance.
The integrated end-to-end platform brings with it a host of benefits that improve process efficiency, increase organisational effectiveness, facilitate collaboration with suppliers and optimise control over spend. When these benefits are combined, the net result is 100% spend visibility – the ultimate key to achieving and maintaining organisational savings.  The eProcurement vision should be seen as an exemplar for other Public Sector organisations to follow.

PROACTIS Public Sector Procurement

Over 120 Public Sector organisations, managing in excess of £15bn of public sector spend, 100,000 suppliers and over 30,000 contracts, now use PROACTIS eProcurement solutions to streamline their processes and obtain best value and control in procurement.

To learn more visit www.proactis.com

* Process savings to date based on National Audit Office efficiencies endorsed by Wales Audit Office and Value Wales. Further local metrics will be calculated in due course.