Strategic Guide to e-Procurement
Planning Tools
CASE STUDY 3
BUYiT – The Department of Education, Science and Technology’s (DEST’s) Procurement Management System
BUYiT is a procurement and contract management system that was developed in-house for DEST. BUYiT is a sophisticated procurement and contract management system which:
- integrates with the department’s Human Resource and Financial Management System;
- guides DEST staff through often complex processes for the purchase of goods or services; and
- ensures that all procurements comply with the Commonwealth Procurement Guidelines and the department’s procurement related Chief Executive Instructions.
At the time of publishing, and since its initial production release on 1 March 2004, BUYiT has been used to initiate more than 4,300 procurements with a total value of more than $880 million. Over the past eighteen months the system has been gradually refined to improve usability, rectify minor bugs and simplify some business processes. BUYiT also supports procurement process changes required as a result of the Australian/United States Free Trade Agreement (AUSFTA) which came into effect from 1 January 2005.
A significant difference between BUYiT and systems previously used in DEST is that all financial data is held in SAP (and not replicated in BUYiT). Consequently the complicated data re–keying and reconciliation processes that were previously used are no longer required – and data integrity has improved significantly as a result. While still a work in progress, BUYiT has already provided substantial benefits to the department in areas such as procurement governance, accuracy and accountability.
Supplier Management Tools
Supplier management is the act of reviewing and providing feedback to the supplier on performance measures as defined in the contract.
Supplier management tools are used to measure supplier performance on a regular basis, identify key milestones for performance review and report on any changes to the supplier relationship. Some online tools also support audits across the contract management process. Supplier management tools automate these activities through electronic measuring of quantifiable metrics such as quality, delivery, scheduling, service level agreements, defects and cost. They can also include subjective concerns like capabilities and cultural fit.The benefits of online supplier management tools include:
- improves the identification of contract requirements and the collection of performance metrics
- provides a repository for the data which can be accessed by the buyer and suppliers
- provides access to data for historical analysis
- provides real-time feedback to suppliers about performance
- collects data on–line to ease integration with other stages in the sourcing process.
Supplier management tools can improve communication and the relationship between the supplier and agency. Supplier management can also improve the supply chain process through improvement in product usability, reduction in overall costs to market while maintaining the organisation’s competitive edge.
Supplier management tools can enable both suppliers and agencies to more readily participate in value for money activities.
Supplier management activities are usually conducted with suppliers that are critical or control a high amount of agency spend. A supplier management template can be built from the RFX documents and/or the actual contract to reduce time and ensure a consistent message is provided to the supplier. Templates should draw on the supplier Key Performance Indicators (KPIs) as specified in the contract and indicate the measures that will be used to assess supplier performance.
Electronic supplier management tools allow performance data to be shared between buyer and supplier facilitating greater clarity in issues management and assisting the speed of resolving supplier issues.
The basis for effective supplier management is to clearly specify the KPIs that the supplier will be measured on, then measure the supplier’s performance against these KPIs. Electronic supplier management tools allow for performance data to be shared between the buyer and supplier facilitating issues management and assisting with the resolution of issues.Historical data from a supplier management system can assist with new contract negotiations. The data can be used to calculate supplier selection criteria and weightings.
Supplier management systems can increase the speed at which issues are recognised and addressed by the supplier, as well as providing clear and visible measurements of a supplier’s performance.
Summary of Checkpoints
Supplier Management
- a Establish criteria to identify suppliers to be monitored
- a Investigate if there is a tool currently in place in your agency that has supplier management functionality
- a Assess the FMIS/ERP system for supplier management functionality
- a Ensure KPIs are in place for all suppliers that are to be monitored
- a Consult with suppliers to ensure:
- a they are aware they will be formally monitored through a Supplier Management program
- a KPI’s are realistic and achievable
- a they have an understanding of how they will be evaluated and measured
Electronic Auctions
Electronic Auctions including reverse auctions utilise interactive software to allow suppliers to submit real-time bids on products and services.
Electronic auctions utilise interactive software and network technology to allow suppliers to submit real–time bids on products and services. Many of the steps of traditional sourcing and negotiation remain intact, but the actual negotiation of one variable, price, is conducted online.
Significant preparation is required before running an electronic auction including supplier pre-qualification, contract preparation and logistics for the auction day.
All e–procurement processes, and particularly electronic auctions, will need to be carefully analysed for compliance with the Commonwealth Procurement Guidelines. Electronic auctions have not yet experienced a high level of uptake in Australia, and have not been used to date by the Commonwealth Government.
Contact for information on this page: ICT Procurement