NEPP Council Report May 2005

7/31/2019 NEPP Council Report May 2005

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National e-Procurement ProjectSupport for Authorities

E-PROCUREMENT REVIEW

Oxford City Council

0.45th May 2005


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Oxford City CouncilNePP e-procurement review

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Revision History

Versionnumber

Revisiondate

By whom Summary of changes

0.1 27/04/2005 R Dallas First draft of findings and recommendations

0.2 27/04/2005 R Dallas Comments from Calum Macleod added

0.3 27/04/2005 R Dallas Changes following comments from OCC

0.4 5/5/2005 C Macleod Further additions and refinements

Confidential Page 2 30/06/2006


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Distribution

NePP Project Manager ..............................................................................................Copy 1 (File)Oxford City Council .............................................................................................................Copy 2

Contents

Background 4

1.1 Background to NePP involvement......................................................... 41.2 Local context ......................................................................................... 41.3 Procurement context ............................................................................. 5

Summary Assessment 6

1.4 Main findings and conclusions .............................................................. 61.5 Recommendations ................................................................................ 7

2. Review findings in detail 8

3.

Recommended outcomes and actions 11

APPENDIX A List of participants 14APPENDIX B Sources of further guidance and support 15APPENDIX C Sample Vision 16

Supporting documentation (provided by the consultant)Document title Date of issue Approved by

Questionnaire March 2005 Calum Macleod

Scorecard April 2005 Calum Macleod

Supporting documentation (provided by the Authority)

Document title Date of issue Author

Various Analysis Documents XXXX OCC

Supplier Newsletter XXXX OCC

Oxford City Procurement Strategy Jaunary 2005 OCC

Other documentation used

Document title Date of issue Author

Comprehensive Performance Assessment June 2004 Audit Commission


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Background

1.1 Background to NePP involvement

The National e-Procurement Project (NePP) has engaged consultants to offer support to a

number of councils with e-procurement. This work is funded by the ODPM.

The consultants have been made available to undertake a brief on-site review and report backto the Council on its progress with e-procurement, identifying next steps and further supportlikely to be required. The report is shared with the NePP for national data-gathering purposes.The findings are confidential, and will not be shared with the ODPM other than at non-attributedsummary level.

The Council has entered into the arrangement voluntarily. The willingness to participate andcommitment by the authority to this review is gratefully acknowledged. The review participantsare listed in Appendix A.

1.2 Local context1

The city of Oxford is centrally located in Oxfordshire and is the largest urban settlement in thecounty. Though essentially urban in character, significant areas of the city are of highlandscape or heritage value. Green belt covers 27 per cent of the land area, 20 per cent isfloodplain, and 17 per cent of the city has conservation area status. It has around 1,500 listedbuildings. Oxford has a comprehensive park and ride system and significant numbers ofcyclists but traffic congestion is a major issue for the city.

Oxford ranks in the middle of English councils in terms of indices of deprivation 176th out of354 councils. One of its 24 wards falls within the worst 10 per cent in England. It has a higherproportion of single person households than the average for England and Wales, but a lowerproportion of family households, and a higher proportion of people living in the rented sector.Overall, the city is prosperous but there are pockets of deprivation.

Unemployment is at 1.9 per cent at June 2003 below the national average but parts of the southand east of the city have levels around 4 per cent. With its two universities, it is not surprisingthat, overall, the city has a well-qualified population, but this masks the fact that it has the lowestrate of successful university applicants in the county. Tourism is highly significant for the localeconomy the city attracts some 7.6 million visits annually.

The district has a population of 134,248 (2001 Census). The proportion of young people (0-15years), is below the county, regional and national averages. The district has a lower proportionof its population over pension age than the regional and national averages, and also lower thanthe other districts in the county. It does however, have a larger proportion between 16 andpensionable age almost 70 per cent compared with the regional and national averages ofaround 61.5 per cent.

The council currently has a Labour administration

The Councils recent Comprehensive Performance Assessment (June 2004) evaluated theauthority as weak.

The area is moving towards working together more collaboratively with discussions around boththe potential to share office space between the City and the County Council as well as thepossibility of shared services throughout the region. The formal group set up to facilitate thesediscussions is the Strategic Procurement Partnership for Oxford.

1Source: June 2004 CPA Report


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1.3 Procurement context

Oxford City Council (OCC) has made significant progress in improving Procurement Practiceover the past four years. This has been achieved through prioritisation of Procurement across

the council and significant investment in effort and resources. The current status is outlined indetail later in the report.

The health check2

carried out by the IDeA in June 2004 raised a number of issues to considerincluding: forming a new procurement board mapping procurement processes, in particular the process to pay procedure updating contract procedure rules to take into account whole life costs creating a centre of

expertise for procurement

These recommendations have been addressed and OCC now have a clear procurementgovernance structure in place and have recently reviewed the contract procedure rules.

The BuyingTeam undertook a Spend analysis for all of the Local Authorities in the Oxfordshirearea in Q1 2004. This included an analysis of the major suppliers and categories of spend. Thekey conclusions from this study were used to identify areas for potential collaboration forstrategic sourcing projects.

The Council had a non-pay expenditure budget of 107m in 2004. Expenditure is largelydevolved to business units with a certain amount of co-ordination and advisory support from anembryonic central Procurement team consisting of Jane Lubbock (Facilities Business Manager),Peter McQuitty (Corporate Projects Manager), and Jimmy Fegan (Admin and PurchasingManager).

To improve the current procurement environment the Council:

Is creating a business case for the implementation of the latest P2P module of Agresso. Is actively involved in the Strategic Procurement Partnership for Oxford (SPPO)

Has three members actively involved in driving procurement initiatives

Has piloted a collaborative eAuction

Is actively recruiting for a full time Procurement Officer

The council has also implemented a range of Performance Indicators in Procurement thatinclude:

Spend, number of invoices and average invoice value per year

Expenditure/ Spend Analysis

Supplier metrics

Invoice and other Purchasing metrics

The Council has entered into a collaborative procurement group with the other councils in theOxfordshire area. This group meets regularly and looks to procure collaboratively in commonareas. Whilst the SE Regional Centre of Excellence is communicating regularly and growing inrole, there is no significant collaboration activity across the whole of the South-East to-date.

Overall, OCC have made considerable improvements to Procurement Practice over the pastfew years and has strong foundations for making further progress.

2Source: OCC Procurement Strategy


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Summary Assessment

1.4 Main findings and conclusions

OCC have taken a pragmatic approach to the implementation of various Procurement initiatives

and has had some clear success in delivering Procurement improvement. The Procurementteam at OCC are supported by an experienced and knowledgeable Strategic Directors Boardand three enthusiastic and involved Members.

Through our interviews at the Council, it is apparent that there continues to be enthusiasm tochange and embrace both good procurement practice and eProcurement initiatives.Furthermore, most of the interviewees had a broad knowledge of eProcurement and thebenefits that it can bring.

The procurement team are have a structured and focussed approach to reporting cashable andnon-cashable savings for demonstrating Gershon efficiencies.

Agresso is used as the main financial management system (FMS), with most purchasing goingthrough this system. SERVITOR is used in stores and has a direct feed into the FMS. The

latest P2P module for Agresso has been bought but is not yet implemented. Theimplementation plan is currently being evaluated and a business case is being written to supportimplementation, as the predicted costs are comparatively high.

The new Agresso module will enable OCC to raise orders and receive invoices from supplierselectronically and have the functionality to fully e-enable the requisition to pay process.

The council has collaborated on a number of areas of expenditure, and are in talks to shareoffice space with the County Council as they both have main offices located within the CityCentre. The Council is also a member of the Strategic Procurement Partnership for Oxfordshirewhose purpose is: to facilitate the development of strategic and collaborative procurement forthe benefit of the citizens in Oxfordshire.

The initial members of the SPPO are:

Cherwell District Council

Oxford City Council

Oxfordshire County Council

South Oxfordshire District Council

Vale of White Horse District Council

West Oxfordshire District Council.

The SPPO is also willing to engage with other Public Sector Procurement organisations locally.

The SPPO has already undertaken a joint spend analysis, a stationery eAuction and developedan action plan which enables the members of SPPO to meet certain elements of the National

Procurement strategy through collaboration. The spend analysis commissioned by the SPPOwas undertaken by The Buying Team. The spend analysis provides useful data across all sixcouncils.

The Council processed 30,147 invoices in 2004/5 with over 60% of those invoices having avalue of


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The main barriers to achieving change were:

Lack of Resources

A perception that change management is difficult at OCC

The ability of suppliers to take on e-procurement.

1.5 Recommendations

The Council should continue to build on the existing procurement improvement activity through:

Reviewing the action plan, taking into account the suggestions made in therecommendations.

Investigate the potential for strategic sourcing and eAuctions within Stores in light of theenhanced refurbishment programme. Further supply chain opportunities may also beavailable here.

Build on the collaborative agenda within the SPPO

Investigate the opportunity for further strategic sourcing. This will deliver good levels of

saving and contribute to the Gershon targets.

Review the Change management techniques used alongside IT improvements.

Implement further tactical Procurement-to-Pay improvements, building on the currentgood practice.

Communicate the success achieved in Procurement across the council.

Section 4 provides further details of our recommendations.


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2. Review findings in detail

These findings are based on meetings with the limited number of interviewees seen in the timeavailable (see Appendix A).

Area explored Findings / Resolution

Procurementand e-procurementStrategy

The Council has a procurement strategy based around the NationalProcurement strategy targets which includes an action plan and a sectionon eProcurement.

Governancearrangements

OCC have a well defined governance structure detailed below:

Three Members having responsibility to drive forwardprocurement within the council.

Strategic Management Team that meets regularly which includesdirector level representation.

Corporate Management Team that meets regularly which includesofficer level representation.

Collaboration OCC are part of the SPPO which has collaborativelysourced stationery in the past. It is currently looking at a range ofcollaborative possibilities.

The South East Regional Centre of Excellence is currently data gatheringand is expected to provide benefit through better co-ordination ofProcurement improvement opportunities and funding of specific efficiencyinitiatives.

OCC have also attended a number of NePP events.

Sourcing & e-Sourcing OCC have a form of centralised procurement inthe Facilities function. OCC are currently advertising for a full timeprocurement person to focus on procurement initiatives.

The current role of procurement has been to liaise with the SPPO andRegional Centre and to provide benefits through such activities asreducing invoices and implementing and monitoring council-widecontracts.

eAuctions have been trialled with Stationery (collaboratively with theSPPO) and appears to have generated significant benefits. It was alsounderstood that eAuctions were not always appropriate and their usewould need to handled in specific circumstances. No further trials areplanned at this stage.

Single contracts have been sourced on various categories includingStationery, Agency Staff (Live tender at time of writing), Mobile Phonesand computer consumables. OCC have also externalised their printrequirements and have some joint contracts with the County Council.

Currentprocurementande-procurementpractice

Ordering & e-Ordering The new Agresso module which has beenpurchased but not yet implemented will give the full e-enabled functionalityfor the requisition to pay process (dependent upon supplier enablement).

Orders are e-mailed to suppliers within the Stationery and Agency Staffcontracts.

OCC are not a member of any marketplace and are not yet persuaded ofthe costs vs the benefits.

The next step in the development of the e-procurement system isexpected to be the implementation of the Agresso module which iscurrently at business case stage.


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Payment & e-Payments BACS is used with the majority of tradecreditors (c85%) and this figure is expected to rise if suppliers arepersuaded to move to this method of payment. The remainder ofpurchases are paid for by cheque or petty cash.

There are 12 corporate purchasing cards (supplied by the Co-Op andutilising Deecal) currently being piloted throughout the council. These arebeing trialled to reduce the number of low value high transactional volumeitems. Currently about 1.6m of expenditure has an invoice value of


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Barriers The councils own assessment is that the main barriers to e-procurementprogress at Oxford City Council are:

1) Lack of Resources

- It was felt that a lack of financial resource as well as staffduring important changes in the council affect the successof change efforts. If this could be improved this wouldenhance buy in to the new processes/ technology fromthe start and improve the quality of implementation.

- More resources would also improve training on the newsystems which was felt to be another issue as employeeswere unaware of the functionalities of certain systems.

- Lack of relevant knowledge around procurement councilwide

2) A perception amongst interviewees that OCC had a conservativeattitude towards change

- In discussion, it was felt that this attitude was perhaps ahangover from years gone by, as all respondentsinterviewed were ready and willing to embrace change

- It was also felt that there were reservations around theimpact that change would have on peoples job roles andthe possibility that the technology would replace the valuethey added.

3) Supplier Enablement

- It was felt that suppliers, especially the SMEs within the

building trade would frustrate certain implementationsregarding eProcurement.

Our assessment is that other barriers are:

1. Capacity Within the Council there is a small team of people whoare managing Council wide procurement who also have otherresponsibilities. It is understood the new appointment will help toreduce this barrier.

2. Over-reliance on the Procurement team. The currentProcurement team is skilled and motivated and beginning todeliver a steady stream of benefits to OCC. However there is arisk that, should the individuals move on, the pace of improvementwill lose momentum.

3. PC availability Not everybody has access to a PC within thecouncil.


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3. Recommended outcomes and actions

ID Recommendation 1

1 Review the OCC Action Plan in the Procurement Strategy

1.1 Consider sub-dividing the plan and allocating tasks into the following areas:Project set-up; Programme Management; Communications; Preparing theProcurement Organisation; Implementing e-enabled Procure-to-pay;Implementing Commitment accounting; E-invoicing; Market-places; E-tendering;Stores/ Stock review; Supplier Enablement; Strategic Sourcing; and, Preparingthe wider Buying Community.

1.2 Consider specifying the resource required for each action and prioritising theactions in line with resource available.

1.3 Look at getting guidance and best practice from other areas for actions that havebeen undertaken by other councils already.

1.4 Review opportunities to evaluate the benefits of each action as they occur

many of the benefits will count as Efficiency Gains.Efficiency potential High Medium Low

Cashable savings X

Non-Cashable savings X

Effort X

ID Recommendation 2

2 Collaboration / Regional Centres / Use of OGC contracts

2.1 Further investigate the collaborative spend analysis to identify largest volumesuppliers throughout the region

2.1 Increased use of collaboration to leverage spend through strategic sourcingexercises fully utilise the SPPO Procurement Group.

2.2 Continue to investigate use of OGC contracts

2.3 Continue to build on existing links to South East Regional Centre of Excellence togain further procurement leverage.

2.4 Investigate procurement of Marketplace and an eTendering solutioncollaboratively

Efficiency potential High Medium Low

Cashable savings X

Non-cashable savings X

Effort X


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ID Recommendation 3

3 Review the projected spend within Stores for the next two years includingthe major refurbishing programme

3.1 As there will be increased expenditure within this area which already has abudget of over 4m there is scope to develop a strategic sourcing approach and

trial eAuctions on certain goods e.g. Soft Furnishings3.2 Measure the impact the Pcard pilot has on Stores and investigate the potential to

roll out further Pcards to reduce the process costs related to invoice processing.A useful contact is Lynda Glover London Borough of Havering 01708 432668with reference to using SERVITOR and PCards.


Cashable savings X


Effort X

ID Recommendation 4

4 Strategic Supplier Development

4.1 Investigate opportunity to use technology to improve business processesbetween OCC and major suppliers. This could include shared documentrepositories, version control and overall streamlining of processes. This isespecially useful for significant, complex relationships.

4.2 Investigate opportunity to put the contracts register (or a simplified variant) ontothe OCC internet site, for access by suppliers.


Cashable savings X


Effort X

ID Recommendation 5

5 Improve Change Management when introducing new Technology

5.1 This should include one-to-one training and sign-off on new processes

5.2 Clearly communicate the benefits and reasons behind the introduction of thetechnology at an appropriate early stage. There should also be a forum to voiceopinions and gain views on the proposed changes.


Cashable savings X


Effort X


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ID Recommendation 6

6 Communicate the Success that has been had in Procurement across thecouncil

6.1 Create a simplified document for general circulation defining the headline themesfrom the Procurement Strategy. Use this document to generate both further

interest in the current procurement reforms, and discussion and agreement onproposed future procurement initiatives.

6.2 Ensure effective communication of the Stationery and Agency Staff savings.

6.3 Effective communication when any new change effort is embarked upon.General resistance to change (its always been done like that) was cited bymost respondents as a barrier to achieving effective change management.Effective communication of the benefits and the reasons will help reduce thisbarrier.

6.4 Look at increasing skills across the council.


Cashable savings X


Effort X

ID Recommendation 7

7 Other Tactical Purchase-to-Pay Improvements

7.1 Investigate the use of an eMarketplace within the council, possibly procuring

collaboratively7.2 Progress the business case for implementing the Agresso module with a view to

e-enable the requisition to pay process.

7.3 Continue to develop P-cards for areas where their flexibility is of benefit

7.4 Work on the contracts database to enable publication on the website


Cashable savings X


Effort X


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APPENDIX A List of participants

Oxford CityCouncil

Caroline Bull Chief Executive

Jane Lubbock Facilities Business Manager

Peter McQuitty Corporate Projects Manager

Mark Luntley Director of Finance

David Walker Stores Manager

Jimmy Fegan Admin and Purchasing Manager

Sue Green Web & Admin Support

Alison Collier Creditors Manager

Andy Brook Technical Accountant

Nicky Atkin Acting Systems and Project Manager

Julie Thomlinson Legal Officer

NePP Calum Macleod, e-Procurement Consultant

Roy Dallas, e-Procurement Consultant


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APPENDIX B Sources of further guidance and support

NationalProcurementStrategy

The National Procurement Strategy for Local Government sets out thenational strategy and targets for all Local Authority procurement, includingsome guidance on the use of e-procurement:

http://www.odpm.gov.uk/stellent/groups/odpm_localgov/documents/page/odpm_locgov_029231.hcsp

e-GovernmentPriorityOutcomes

The ODPMs Priority Outcomes paper defines the expectations andtimetable for all the e-Government outcomes, including the e-procurementoutcomes:

http://www.localegov.gov.uk/Nimoi/sites/ODMP/resources/Priority%20Outcomes%20for%202005.pdfA supplementary guidance paper has been produced by the IDeA.

http://www.idea.gov.uk/transformation/Priority_outcomes_notes.rtfFurther details on e-procurement outcomes can be found here:

http://www.ticon.biz/assets/targets4.pdf

NePP The National e-Procurement Project (NePP) has publishedcomprehensive guidance on e-procurement. This is disseminated via theIDeA Knowledgeweb-site

www.idea-knowledge.gov.uk/eprocurementThe NEPP will also be running regional workshops in early 2005, the

content of which will be informed by e-procurement reviews such as thisone. Details can be found on the NePP website:

www.nepp.org.uk

IDeA The local government Improvement and Development Agency (IDeA) hasset up two ODPM-funded units to support councils with e-governmentgenerally (including e-procurement) through to March 2006.

The e-government Strategic Support Unit (SSU) is available to support allcouncils with advice, guidance and best practice examples. The unit maybe contacted via [email protected] or by telephoning: 020 7296 6194

The e-government Implementation Support Unit (ISU) provides on-site e-government support to a small number of councils nominated forassistance by the ODPM. If your council is one of these, then the ISUsupport can assist in taking forward the e-procurement actions identified inthis review.

http://www.idea.gov.uk/transformation/?id=newunits
http://www.odpm.gov.uk/stellent/groups/odpm_localgov/%0Bdocuments/page/odpm_locgov_029231.hcsphttp://www.odpm.gov.uk/stellent/groups/odpm_localgov/%0Bdocuments/page/odpm_locgov_029231.hcsphttp://www.localegov.gov.uk/Nimoi/sites/ODMP/resources/%0BPriority%20Outcomes%20for%202005.pdfhttp://www.localegov.gov.uk/Nimoi/sites/ODMP/resources/%0BPriority%20Outcomes%20for%202005.pdfhttp://www.idea.gov.uk/transformation/Priority_outcomes_notes.rtfhttp://www.ticon.biz/assets/targets4.pdfhttp://www.idea-knowledge.gov.uk/eprocurementhttp://www.nepp.org.uk/mailto:[email protected]://www.idea.gov.uk/transformation/?id=newunitshttp://www.idea.gov.uk/transformation/?id=newunitsmailto:[email protected]://www.nepp.org.uk/http://www.idea-knowledge.gov.uk/eprocurementhttp://www.ticon.biz/assets/targets4.pdfhttp://www.idea.gov.uk/transformation/Priority_outcomes_notes.rtfhttp://www.localegov.gov.uk/Nimoi/sites/ODMP/resources/%0BPriority%20Outcomes%20for%202005.pdfhttp://www.localegov.gov.uk/Nimoi/sites/ODMP/resources/%0BPriority%20Outcomes%20for%202005.pdfhttp://www.odpm.gov.uk/stellent/groups/odpm_localgov/%0Bdocuments/page/odpm_locgov_029231.hcsphttp://www.odpm.gov.uk/stellent/groups/odpm_localgov/%0Bdocuments/page/odpm_locgov_029231.hcsp


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APPENDIX C Sample Vision

The vision outlined below is a sample vision (taken from another council) of the possibleoutcomes that could be achieved as a result of Procurement Improvement. It is provided as a

suggestion for summarising the direction of Procurement improvement, which will help enrolOCC staff into the overall Procurement Strategy. It is not suggested that this could be the visionfor OCC.

Oxford City Council will:

Have reduced its procurement cost base by a minimum of Xm pa Receive 80% of all invoices (by volume) electronically Order 80% of all items (by value) electronically Use commitment accounting for 100% of transactions > 250 Have clear responsibilities for all elements of the Procurement process Be proactively monitoring the procurement practice and the supplier base Have an innovative, agreed approach to local contractors, which includes bringing them

into the e-agenda Reduction in effort required to manage procurement by XX 000 person-hours Improved procurement skills throughout the organisation Reduced its supplier base to a core of X 000 suppliers Have 80% of its spend covered by formal contracts

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