purchase card supplier recruitment mark stevenson corporate procurement business development manager
TRANSCRIPT
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Purchase Card Supplier Recruitment
Mark Stevenson
Corporate ProcurementBusiness Development Manager
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Purchase Card Seminar
• Purchase Cards at Manchester City Council spend and growth philosophy
• Supplier recruitment program Start at the beginning of the relationship On-going supplier recruitment program Supplier partnership approach
supplier buy-in supplier education supplier commitment by the Council
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Purchase Cards at Manchester City Council
Council/Supplier Driven Council Driven
Supplier DrivenCouncil Driven
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Purchase Cards at Manchester City Council
Leverage Spending Stragetic Spend
Bottleneck SpendLow Value Non
Business Critical Spend
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Purchase Cards at Manchester City Council
Low Value Non Business Critical
Spend
Strategic Spend
Bottleneck Spend
Leverage Spend
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Purchase Cards atManchester City Council
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Purchase Cards at Manchester City Council
Annual Spend Transactions Avg Value
2000/01 £ 5,000,000 16,700 £300.00 2001/02 £ 21,000,000 66,000 £318.00 2002/03 £ 37,000,000 98,000 £377.00 2003/04 £ 45,000,000 116,000 £387.00 2004/05 £ 56,000,000 136,000 £410.00 2005/06 (est) £ 70,000,000 170,000 £412.00
Number of Cardholders 1,900+ Trees Saved 376 or 4,324,000 sheets of A4 paper or 8,648 reams
Largest Single Transactions
£1,127,889.52, Computer Equipment (2005)
£330,973.28, Office Furniture (2003)
£264,081.23, Computer Equipment (2003)
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Purchase Cards at Manchester City Council
Year to date figures
Spend £38,462,074.93 Transactions 99,739
Savings £1,543,385
Trees Saved 87 or 1,995 Reams of paper or 399 boxes of A4 paper
October 2005
Spend £7,209,338.14 Transactions 14,224
468 suppliers
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10
20
30
40
50
60
70
2000/01 2001/02 2002/03 2003/04 2004/05 2005/06
Mil
lio
ns
£21,000,000 £37,000,000 £45,000,000 £56,000,000£ 5,000,000
estimated £234,000,000 cumulative spend
*projected to 2005/06 year end
£164,000,000 cumulative spend
£70,000,000
Purchase Cards at Manchester City Council*
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100
200
300
400
500
600
2000/01 2001/02 2002/03 2003/04 2004/05 2005/06
Th
ou
san
ds
66,124
98,068
116,080
136,074
16,697
estimated 603,000 cumulative transactions
*projected to 2005/06 year end
170,000
433,043 cumulative transactions
Purchase Cards at Manchester City Council*
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1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
2000/01 2001/02 2002/03 2003/04 2004/05 2005/06
Th
ou
san
ds
£ 927,000
£1,488,000
£1,785,000
£2,138,000
£ 208,000
£6,546,000 cumulative savings
*projected to 2005/06 year end
£2,687,000
estimated £9,233,000 cumulative savings
Purchase Cards at Manchester City Council*
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Millions
10.8
10.9
11.34.0
18.7 £1,000 - £10,000 = 33.6%
£0 - £250 = 19.4%
£250 - £1,000 = 19.7%
£10,000 - £50,000 = 20.3%
£50,000 + = 7.2%
Purchase Card Transactions, by Value, 2004/05
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112,524
46544
5,621
17,388
0 - 250
250 - 1,000
1,000 - 10,000
10,000 - 50,000
50,000+
£1,000 - £10,000 = 4.1%
£0 - £250 = 82.7%
£250 - £1,000 =12.8%
£10,000 - £50,000 = 0.3%£50,000+ = 0.0%
Purchase Card Transactions, by Value and Volume, 2004/05 (136,074 transactions)
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405,763
1,06987
19,995
92,032
0 - 250
250 - 1,000
1,000 - 10,000
10,000 - 50,000
50,000+
£1,000 - £10,000 = 3.9%
Purchase Card Transactions, by Value of Items Purchased, 2004/05 (518,946 items)
£0 - £250 = 78.2%
£250 - £1,000 =17.7%
£10,000 - £50,000 = 0.2%£50,000+ = 0.0%
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3.4%
4.8%
6.8%
7.8%
8.9%
10.7%
4.5%
16.8%
25.5%
28.7%
0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0%
Test
Purchase Card Spend by Department, 2004/05
Galleries and Museums
Environment & Operational Services
Corporate Services
Hospitality and Trading Services
Housing
Education
Leisure Services
Chief Executives
Children, Families, and Social Care
Libraries & Theatres
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0.3%
29.7%
29.9%
31.2%36.0%
36.6%
5.9%
38.6%40.2%
64.3%
0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0%
Purchase Card Transactions by Department, 2004/05
Environment & Operational Services
testHousing
Corporate Services
Galleries and Museums
Hospitality and Trading Services
Leisure Services
Chief Executives
Education
Children, Families, & Social Care
Libraries & Theatres
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Purchase Cards at Manchester City Council
What are Purchase Cards???
First and foremost they are…
a payment mechanism
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Purchase Cards at Manchester City Council
• Purchase Cards are used in all departments one department alone has converted nearly 65% of its transactions to Purchase Cards another department has a target of 70% supplier recruitment by end of 2005/06
• Moved away from the traditional “low value-high volume” use
use Purchase Cards whenever we can an invoice not processed = £12+ savings regardless of value
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Supplier recruitment program
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Supplier recruitment program• Start at the beginning of the supplier relationship
all new suppliers are vetted for Purchase Cards Purchase Card potential suppliers are sent an information pack Follow up with second letter if no response
• Existing suppliers are targeted by value and volume• Departmental buy-in for supplier recruitment is crucial
• Invite suppliers to a Supplier Recruitment Seminar
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Supplier recruitment program• Regular supplier recruitment seminars
business fair style-seminars and surgeries invite onecard capable banks and software companies so they’re in the same room as the suppliers expanding seminars this year to make them full- fledge “How to do Business with Manchester City Council” seminars
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Supplier recruitment program• Supplier partnership approach
Getting suppliers on board is crucial talk about our savings and achievements tell suppliers how they can help us achieve more
nearly £1.7 million in processing savings in 2005/06 but still £4.5 million in payment (!) costs
environmental savings – will save over 150 trees in 2005/06 but we could save over 230
benefits of automated VAT reporting
our staff can be more productive
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Supplier recruitment program• Supplier partnership approach
Getting suppliers to buy-in to the program emphasis their savings
paid in 4 business days save staff time – no invoice or payment chasing no abuse of purchasing authority
reduced rogue spending = improved contract compliance = more spend potential for business growth at the Council and beyond – estimated 4,000 Purchase Card programs in the UK in 2004
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Supplier recruitment program• Supplier partnership approach
Getting suppliers educated about Purchase Cards is fundamental to a Program’s success
How Purchase Cards work
How Purchase Cards are used
How they can accept Purchase Cards
How you plan to drive up their spend
Online Procurement Catalogue – open to any Purchase Card capable supplier but only to
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What is a Purchase Card?
MasterCard Only
Summary VAT
LID
• Order Reference
• Invoice Number
• Commodity Code
• Product Description
• Quantity
• Unit of Measure
• VAT Rate
• Total Amount: ex VAT
• Total Amount: net VAT
• Total VAT Amount
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Supplier recruitment program• Supplier partnership approach
Getting suppliers educated about Purchase Cards is fundamental to a Program’s success
How Purchase Cards work
How Purchase Cards are used
How they can accept Purchase Cards
How you plan to drive up their spend
Online Procurement Catalogue – open to any Purchase Card capable supplier but only to Purchase Card capable suppliers Separate Purchase Card capable supplier database
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Traditional Purchase to Pay Cycle
Input to Accounting SystemPay The Supplier
Raise Requisition
Line Manager Approval
Submit to
Purchasing
Identify Supplier
Raise the
Purchase Order
Receive the Goods
Receive the
Invoice
3 Way Match
COST = £12 to pay each order
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Input to Accounting System
AUTO UPDATE
Submit to
Purchasing
NOT NECESSARYIdentify Supplier
Raise the
Purchase Order
Receive the Goods
Receive the
Invoice
NO INVOICE PRODUCED
3 Way Match
NO MATCHING REQUIRED
Purchase Card Cycle
Pay The Supplier
ALREADY PAID IN 4 DAYS
Raise Requisition
NOT NECESSARY
Line Manager Approval
NOT NECESSARY
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Bank Sends Payment & Management Information to
Manchester City Council
Identify the Supplier
Order the Goods by Phone/
E-mail/Online
Receive the Goods
Supplier Requests Payment from Bank
Bank Authorises
Payment
Supplier Receives
Payment in 4 Days
Purchase Card Pay Cycle
COST = £0.90 to pay each order
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Supplier recruitment program• Supplier partnership approach
Getting suppliers educated about Purchase Cards is fundamental to a Program’s success
How Purchase Cards work
How Purchase Cards are used
How they can accept Purchase Cards
How you plan to drive up their spend
Online Procurement Catalogue – open to any Purchase Card capable supplier but only to Purchase Card capable suppliers Separate Purchase Card capable supplier database
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Supplier recruitment program• Supplier partnership approach
Getting suppliers educated about Purchase Cards is fundamental to a Program’s success
How Purchase Cards work
How Purchase Cards are used
How they can accept Purchase Cards
How you plan to drive up their spend
Online Procurement Catalogue – open to any Purchase Card capable supplier but only to Purchase Card capable suppliers Separate Purchase Card capable supplier database
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Enhanced customer relationship and the potential to win new business
Potential business with Government bodies – nearly 500 programs across Local Authority and Central Government
Improve your cash flow and profitability, reducing complex invoicing and collection procedures
Free marketing for your company and increased customer loyalty
No credit risks or abuses of purchasing authority
What are the benefits to you, the supplier?
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Supplier recruitment program• Supplier partnership approach
Continually target new areas of spend Replacing petty cash with Purchase Cards Replacing Corporate Cards with Purchase Cards Insurance Services and Capital Projects Card acceptance is criteria for scoring tenders
visibility
auditability
diversity
Continually review your card usage If non-usage find out why
Show your suppliers your commitment to Purchase Cards
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Supplier recruitment program• Supplier partnership approach
Make yourself as contactable as possible [email protected]
Make the process as painless as possible have as much information available as possible transition period for supplier Purchase Card usage
Do what you can to steer Purchase Card spend to your Purchase Card capable suppliers
avoid dual billing systems reduce rogue spending