Purchase Card Supplier Recruitment Mark Stevenson Corporate Procurement Business Development...

Purchase Card Supplier Recruitment

Mark Stevenson

Corporate ProcurementBusiness Development Manager

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

Purchase Cards at Manchester City Council

Council/Supplier Driven Council Driven

Supplier DrivenCouncil Driven


Leverage Spending Stragetic Spend

Bottleneck SpendLow Value Non

Business Critical Spend


Low Value Non Business Critical

Spend

Strategic Spend

Bottleneck Spend

Leverage Spend

Purchase Cards atManchester 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)


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

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*

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


170,000

433,043 cumulative transactions


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


£2,687,000

estimated £9,233,000 cumulative savings


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

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)

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%

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

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


What are Purchase Cards???

First and foremost they are…

a payment mechanism


• 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

Supplier recruitment program

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

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

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


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


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

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







Online Procurement Catalogue – open to any Purchase Card capable supplier but only to Purchase Card capable suppliers Separate Purchase Card capable supplier database

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

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

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







Online Procurement Catalogue – open to any Purchase Card capable supplier but only to Purchase Card capable suppliers Separate Purchase Card capable supplier database

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?


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


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

Mark StevensonCorporate Procurement

Business Development Manager

0161 234 [email protected]

Purchase Card Supplier Recruitment Mark Stevenson Corporate Procurement Business Development...

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