Embedding public sector procurement policy mandates within intelligent spend-management software can increase compliance, enable automation and improve user experience.
Public sector procurement has always carried expectations of transparency and compliance. But how can government workers have more influence on the ethical distribution of taxpayer funds and drive greater efficiencies across the procurement process?
The answer can be found in cloud-based spend-management software that enables judicious and efficient procurement processes.
With SAP Ariba solutions, purchasing can be done with accountability, sustainability and equal opportunity.
Andrew Hunt, Head of SAP Business Network, APJ, explains that sustainable, social and SMEs partners can also be identified early in digital transformation programs, leading to optimal use of taxpayer funds.
“Our solution allows Departments to point their spend towards purpose-driven suppliers or communities,” he says. “For instance, if they want to unlock spend first for Aboriginal and Torres Strait Island suppliers as part of their digital transformation, they can build that into their enablement plan.”
Policy driven purchasing
Procurement technologies like SAP Ariba solutions allow public sector employees to make data-driven decisions about spend. This can enhance risk management and sustainability in supply chains.
A recent case study of a transportation company shows how efficiently this can be achieved.
The company was seeking to remove complexity from its procurement systems by implementing one source for purchasing activity. It moved from a Supplier Relationship Management (SRM) system to SAP Ariba cloud-based procurement solutions and SAP Business Network. It went live in just seven months and exceeded the estimated return on investment.
SAP Ariba solutions enhanced risk management and visibility in its supply chain. The company’s procurement department secured a global network of potential suppliers through SAP Business Network and used SAP Ariba’s guided buying capability to drive efficient, cost-effective purchasing across its international procurement process.
Guided buying enabled users to effortlessly follow procurement guidelines and best practices. It can be flexibly configured to align forms, permissions, and system behaviour for each user, presenting them with customised tiles and categories to streamline purchasing.
With the first year of implementing SAP Ariba solutions, the transportation company converted 500,000 invoices and purchase orders to no-touch, electronic invoices and brought the company’s three-pillar strategy of economic stability, employee satisfaction, and ecological sustainability to the procurement process.
As the company’s Chief Procurement Officer puts it: “SAP Ariba solutions can help us to achieve our procurement goals, especially in case of risk management and sustainability in the supply chain.”
Managing procurement with ease
Recent research from SAP, in conjunction with Oxford Economics, shows there is still progress to be made in terms of digital transformation and supplier collaboration in public sector procurement processes.
Almost half of public sector survey respondents said that most or all of their procurement processes were manual, which can present significant barriers to improving operational efficiency and organisational agility.
Almost 40 per cent had experienced supplier performance issues and 31 per cent had experienced reconciliation issues and exceptions. The same number cited overcharges and duplicate payments when managing procurement and just 47 per cent of executives said their procurement technologies enable them to make data-driven decisions about spend across the organisation.
While invoice automation can save on processing costs and speed up payment times, SAP Ariba drives even greater efficiencies with smart invoicing. Network rules alert suppliers about errors and prevent incorrect invoices from entering the payables system.
The recent deployment of the SAP Business Network in a power generation company led to the transformation of payables and strengthened relationships with suppliers.
SAP Ariba was fully integrated with its existing SAP solutions, which focused on finance, HR and master data governance. The integration allowed users to track invoices and orders online and eliminate errors and exceptions from manual processing.
By automating the invoice and purchase order process and providing a supplier portal for self-service invoice and payment status, SAP Business Network also made it easier for suppliers to do business with the company. It also reduced invoice errors and accounts-payable costs, while ensuring compliance with internal and external business rules.
“Suppliers can log into the portal and not only submit their invoices, they can also see if it’s been rejected or sitting in someone’s inbox,” explains Hunt. “Instead of having to follow up with accounts payable, they can see the status of their invoice straight away. It removes ambiguity about when a supplier will be paid, so they can plan and manage their cashflow.”
With 80 per cent of the power generation company’s invoices managed through SAP Business Network, on-time payment to suppliers have increases to 93 per cent and $1 million is saved each year in accounts-payable costs. By implementing the discount management capability in SAP Ariba Payables to introduce early-payment offers, the company also gave suppliers greater control over their own cashflow.
It’s e-commerce manager notes that now it’s also much easier for suppliers to do business with the Department.
“Suppliers can track invoice status and payment schedules online, which reduces the volume of help desk calls. What’s more, many are taking advantage of early-payment offers to improve their cash flow.”
Shared value with the ‘House In The Cloud’ model
A number of the state government Departments are seeking to share a ‘best practise’ approach, to replicate elements of solution designs and build upon a baseline of similar processes.
Hunt explains that a concept termed ‘House In The Cloud’ has given the various Departments a common landscape or ‘building blocks’, whereby they can pick-up and replicate the design, implementation elements (with minor adjustments), common trading partners (via the SAP Business Network) and training content.
“It provides a framework and a level of confidence that each Department is part of a larger transformation,” says Hunt. “It saves time and also provides greater confidence to transform digitally, while enabling cross skilling among Departments via the common Community. Departments may be buying different products and services, however the processes is largely the same.”
The House In The Cloud concept also allows for trading partners who transact with multiple departments to interact via a common platform. This reduces complexity within the community and encourages more sustainable practises.
By embedding SAP’s solutions in public sector policy mandates, government employees can improve collaboration and communication with suppliers, which can drive efficiencies across the supply chain. It can also increase compliance, improve productivity and enhance user experience while bringing greater accountability and sustainability to the procurement process.
Contact SAP to find out more about how our SAP Ariba solutions can improve procurement across the public sector.
