Taking the High Road to eProcurement
Based in the most northerly area of mainland Scotland, the Highland Council is responsible for this huge geographical area that covers Inverness, Ben Nevis, Loch Ness and the Isle of Skye - an area almost the size of Wales, serving around 209,000 people.
As well as being the most widespread, Highland has also been the pioneer of an eProcurement service that is proving to other local authorities how they can save millions of pounds by buying online from contracted suppliers.
Since the official launch of the eProcurement Scotl@nd service (ePS) in March 2002, the Council has demonstrated that using ePS slashes the time taken to process orders. Each year, the Council spends around £153 million buying goods and services, and eventually, it hopes, all of its purchasing will be carried out electronically.
A Seven Year Contract
The framework for Highland's new purchasing model is a seven-year contract for the world's first national public sector eProcurement service between Cap Gemini, Elcom, and the Scottish Executive, the devolved government for Scotland.
Adopting eProcurement means local authorities, with little spare flesh on their budgets, can drive down apparently more convenient, but actually more expensive non-contracted, or "maverick" buying from unsanctioned suppliers, and use those budgetary savings for other council services.
Before adopting ePS, The Highland Council was in the position of having:
- No previous procurement strategy in place
- £126m worth of spending in "scope" for e-Procurement
- Having to process 300,000 invoices a year
- A significant number of suppliers
- A highly decentralised staffing structure
Targeting Savings of £3m
Now, as a result of its move into eProcurement, The Highland Council has targeted long-term savings of £3m. The considerable savings are already being earmarked to help fund the Public-Private Partnership programme for providing 21st century schools. Even its short-term goal by March 2003, is to have the opportunity to save around £250,000.
Considerable Process Benefits
Considerable process benefits are also expected to follow, including savings in staff time to improve front line service delivery, and softer benefits, such as staff being able to adopt more user-friendly systems. In addition, the Council is also on track to meet the government's targets for delivering all of its services electronically by 2005.
Using eProcurement creates efficiencies, which clearly benefit the taxpayer. A benchmarking exercise by Highland showed that orders placed via its Oracle system were taking 10 minutes to process. In contrast, ePS users currently take just one minute.
Highland Council's Chief Executive Arthur McCourt, believes such a successful adoption of ePS, with the prospect of up to £3m being saved, means that money can be diverted instead towards other vital council services.
"The Highland Council is at the forefront"
"I am delighted that The Highland Council is at the forefront of such a cutting-edge project which can transform relationships between public sector organisations and their suppliers." Says Arthur McCourt. He added, "The innovative electronic techniques used will connect buyers and suppliers using the Internet in a quicker and more effective way than was previously possible, enabling efficient purchasing across the Highlands."
Fittingly, it was Scotland's First Minister Jack McConnell who inaugurated the service at Highland, making the first transaction with the ordering of schoolbooks at Portree Primary School on the Isle of Skye using ePS.
Live Transactions Have Been Flowing
Live transactions have been flowing through ePS since March 2002 and by March 2003, 80% of transactions are expected to be processed electronically.
ePS will also benefit The Highland Council's suppliers. By embracing the new technology, suppliers will be able to improve customer relations, reduce their own internal costs and improve efficiency. Suppliers are already getting orders from The Highland Council more quickly and invoice returns have reduced as well.
That's good news for the suppliers who in turn get paid more quickly. Eventually, The Highland Council hopes to benefit from supplier discounts through speedier ordering and payment.
When ePS went live in March 2002, Findel-Novara became the first 'electronic' supplier of educational goods to the Scottish public sector. The Highland Council soon had 8 suppliers and 20 buyers ready to use the system by the end of May 2002.
Roll out from December 2002 after integration with financial systems will eventually cover 1000 staff, with 80% of transactions going through ePS by the end of December 2003. Clearly, the remotely-hosted nature of ePS, which only requires a web-browser and access to the Internet, was of significant benefit to an organisation so geographically dispersed.
Road Shows
The Council is now in the process of conducting a series of road shows to explain how ePS will work for both suppliers and users.
"With the authority covering such a broad area, we inevitably have a decentralised procurement structure. Because of our geography, we may be more supportive of local suppliers, and keep small and medium-sized companies on board - but not at the cost of good purchasing," says Hazel Young, Highland's eProcurement project manager working in the authority's Assistant Chief Executive's office.
"There is no alternative to adopting ePS"
Hazel Young insists that there is no alternative to adopting ePS.
"Local authorities like ours procure a huge range of services. We have a strong budget-holders system and they want to have goods and services online. Requisitions could come to Purchasing, but that would remove the empowerment of budget-holders. No, we have to use ePS, because that gives us compliance to contract, builds management information, and leads to better processes," she says.
In summary, the benefits for Highland of adopting ePS are:
- Greater compliance to contracts
- Elimination of maverick buying
- Fewer returns and invoice queries
- High employee satisfaction with easier to use processes
- Faster, easier service for users
- Benchmarking
- Accessibility to good management information
For More Information . . .
For more information relating to this article or for further general information regarding the eProcurement Scotl@nd service please contact:
The Highland Council
- Hazel Young (01463 702 027)
- hazel.young@highland .gov.uk
eProcurement Scotland General Enquiries