Case Study: New Zealand Defence Force - Tejari · Case Study: New Zealand Defence Force ... Air...

The adoption of strategic procurement solutions in New Zealand’s public sector is picking up pace. For some time the government has been running initiatives to encourage agencies to streamline the buying and selling of their goods and services, to buy better and reduce costs.

Case Study:New Zealand Defence Force

While the use of electronic strategic procurement solutions is not mandated by the government, uptake is gradually gaining momentum by those with the vision to change their behaviour and perception to realise the benefits that an automated system can bring to the wider organisation. New Zealand Defence Force (NZDF) is one such organisation, and is fully embracing a step change away from traditional purchasing methods. It is focusing on improving buying decisions through innovation and transparency, and making more informed choices over supplier selection while providing SMEs with a fairer, easier-to-use tendering and contract management system.

Defence Commercial Services (DCS), whose role within NZDF is to provide professional, commercial expertise, runs a centralised procurement function that supports NZDF’s end- to-end procurement needs. It ensures the organisation achieves long-term commercial value-for-money outcomes in relation to all its third-party spend. NZDF is a large, geographically widespread organisation with more than 14,000 full-time service and civilian personnel across its three services; Air Force, Navy and Army. As a large taxpayer-funded organisation it holds itself accountable to the public and strives for excellence in the way it spends those funds to maintain a world-class armed services capability. It is therefore paramount that its procurement systems are equally up to the task.

Challenge: to implement an integrated strategic procurement system to gain a collaborative approach towards buy-side and supply-side activities across a diverse set of locations

The NZDF Procurement function carries out tendering for opex (operational expenditure) and minor capital purchases needed on an ongoing basis to run its military capability including lower-value corporate purchases, special military equipment and ongoing costs, like uniforms and equipment. In an organisation as vast as this, the purchase volumes can be extremely large. To make sure the armed forces are prepared at all times for immediate deployment, procurement of goods and services is not only time-critical but heavily reliant on standards of quality. Getting the price/value balance right is essential.

Implementing a strategic procurement solution was seen as the way forward, primarily to help drive efficiencies and support best practice. At a strategic level the NZDF vision is for Joint Operational Excellence, to become fully integrated in the way it works and operates. A strategic procurement system would also help to provide visibility and transparency across locations to support this.

The information contained in this document has been supplied to you by BravoSolution who are CIPS’s Knowledge Partner for eProcurement/eSourcing. CIPS takes no responsibility for any loss or damage in anyway arising from your interpretation or use of this information. To find out more about Chartered Institute of Procurement & Supply visit www.cips.org or call +44 (0)1780 756777 or email [email protected]. CIPS, Easton House, Church Street, Easton on the Hill, Stamford, Lincolnshire, PE9 3NZ

www.bravosolution.com

Tamsyn Rouse is Acting Group Manager, Commercial Support, DCS. She was part of the team that oversaw the Tendering and Contract Management module implementations and is responsible for contract drafting and issuing tenders. “What we needed initially,” she said, “was an electronic tendering and contract management solution. We issued an RFI and collected details on a number of suppliers and their solutions. BravoSolution came out top for us: not only was it rated amongst the top providers in the world, but it is used extensively by a large number of organisations, especially in the UK public sector, so we were confident it would work for us.”

Implementation favoured an iterative approachProcurement had been employing a mostly manual process. “We had been issuing documents in MS Word via email or we published them online, and we would get hard-copy responses back. We then evaluated manually. We did have an electronic contract system in place, but its coding was very out-of-date and only a limited number of people could make changes to the system,” she explained.

In their transition to an automated system, they decided to let the capabilities of the BravoSolution tool dictate how they would implement it. The goal was simply to match their processes as closely as possible to the system rather than adapting the tool to perfectly match their processes. It was also important to deliver value as early as possible: BravoSolution’s best practice functionality meant it could start working almost straightaway. They would lose no time to development or risk interfering with schedules and delivery times.

“We assumed a staged approach, implementing the Tendering module first, which we ran for about 6 to 12 months. Once we felt it was well enough embedded, we moved on to implementing the Contract Management module and are now in the middle of the Supplier Performance Management module. In terms of training, it was mostly about getting our hands dirty by getting stuck into using the system – it was a hands-on approach and it worked for us. We can sum up our experience of adoption simply: we bought it, we’ve used it, and we’re very pleased with the results.”

Tamsyn observed that some internal users were more resistant to change than suppliers: “People who have been in their roles for a long time find it hard to accept a new way of working, especially if they have always done something in a particular way. But acceptance is growing. Conversely, those who now use it regularly just love it – and tell me they could never go back to the old way of working. It’s particularly encouraging for me when people who move on to other departments say ‘it’s like going back to the dark ages,’ – it really has transformed what we do.”

Security is obviously to be taken very seriously, as Tamsyn says:

“Before implementation we looked at all the information BravoSolution gave us at the outset, and our IT department verified that it aligned with our requirements. Obviously we are still cautious about what information we make available online, but the system gives us the ability to set access levels, so we know exactly who is able to do what.”Electronic Tendering used for the majority of tenders, regardless of size, complexity or duration NZDF Procurement started using the BravoSolution Tendering module in 2010. “We now use it for almost every tender and it has improved the efficiency of our processes. Tenders range from small $100,000 contracts to $20 million-plus contracts. This could be long-term facilities management contracts, looking after all facilities at army, navy or air force bases in a particular region,




or specialist military equipment and ammunition, or a diverse array of services and goods. It can be used for procurements of any category, size, complexity and value, and is a way for us and our suppliers to share and track our interactions.”

“The system allows us to restrict supplier input, this ensures we only get the information we need, which has enhanced our decision-making process. While this was rather rigid for suppliers at first, it did force them to think more carefully about the information they provided and now the feedback we get from them is very positive.”

Creating a comprehensive library of key tendering information has saved considerable time and effort during the tendering process. All documentation relevant to a tender is stored and is easily downloadable.

“Some evaluation is carried out within the system too”, said Tamsyn, “all evaluators, whether internal or external, can be given visibility. The evaluator just logs on and comments and scores from their own location to complete their individual evaluation.

It doesn’t matter how geographically dispersed you are – everyone can see and use the information in the system at the same time. And this goes for suppliers too – from all over the world. They are no longer at the mercy of the postage system to meet closing times, now it’s a much more even playing field anywhere in world – there is absolutely no discrepancy.”

“One massive benefit for us is the quantity that we can put through the system, almost everything we do is managed within it. And in terms of admin procedures, we have seen tremendous benefits from the amount of automation, for example, opening tender responses is now just the click of a button.”Electronic Contract Management brings control and ownershipContract management is a resource-heavy activity, and disputes can easily arise over who is responsible for what. Using the BravoSolution Contract Management module, Tamsyn’s team has instant access to expiration dates, changes and renewals and can be alerted automatically when actions are due. There is less risk of oversights which can prove costly. “Anyone can request official information, and we are generally required to supply it. We can see all contracts we have and what is current, so we can respond to official requests.”




Supplier Performance Management leads to more meaningful discussions with suppliersKelly McAlpine is Supplier Relationships Manager, DCS. She is responsible for supporting relationships with key suppliers while ensuring contract performance compliance, extracting best value for money and providing operational support. She has overall responsibility for supplier performance monitoring and reporting. “Supplier performance is something we have been monitoring for a long time,” she said, “but we relied on various sources like MS Excel spreadsheets, calendars and SharePoint folders to find out information. What BravoSolution has brought us is one source and one place for everything. We have been able to capture, standardise and make supplier data across our entire supply base visible to all stakeholders. Performance trends are given in a clear, concise format that is visually very attractive."

"The red, amber, green and blue coding gives performance ratings, so with one quick glance we can see how well they are doing. The record of performance makes our decision making much more informed and, frankly, easy. It’s so much more efficient and streamlined, with just a click we can get a more detailed view of each supplier’s performance. And it’s easy to configure it for monthly, quarterly or annual reviews – according to your preference or need. Monitoring is automated and emails are automatically generated reminding contractors when they are due for review. Relying on calendars is a thing of the past."

"The Supplier Performance implementation is underway with help from BravoSolution and local support, which has prompted us to rethink our KPIs and has led to us having more meaningful discussions with suppliers.”

The system has made it much easier for them to stay abreast of contract reviews: “the lower-risk contracts are reviewed annually and the higher risk ones more frequently, we categorise them under transactional, strategic and leverage. What is really helpful to us is having a core source of all backup data to support KPI measures. We are filing KPIs and are now at the point where we can consider bringing in larger volumes of contracts.” NZDF Commercial Services and its suppliers have a simple, secure and efficient means of conducting procurement activities and storing all critical documentation. In summing up Tamsyn

said: “If I were to single out what BravoSolution has contributed to us, I would say it has first and foremost standardised our processes. To an extent, people work differently, but it has forced us to think in a more aligned way and ask the right questions to make the right decisions. All evaluation criteria are in the system before it is published and the questions flow through to the evaluation. With everything in one place, it maintains an accurate audit trail, from publishing the tender right through to contract award. We can easily access all the information, and refer back quickly. It has made responding to enquiries so much easier and helps us comply with the New Zealand Government Rules of Sourcing.”

NZDF, through a centralised market-facing procurement function, places great emphasis on encouraging innovative suppliers and building strong supplier relationships. Its adoption of world-class technology to achieve a coordinated approach to managing contracts and suppliers puts it squarely ahead of the game by employing the software so extensively and so successfully.




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