E Procurement Increase Profits Enhance Control Automate Your Procurement System
The Business Case For E-Procurement, A Caribbean Perspective
Authored by: R. George Stephenson -email@example.com
E Procurement - Context Within Supply Chain Management:
In order to understand e-procurement one must understand first the supply chain and how e-procurement can be used to enhance management of the supply chain.
The objective of a Purchasing Manager or a Procurement Manger is to facilitate the in flow of goods and services to the organization, in such a way as to match specific organizational requirements, in the timeliest way, at the most advantageous prices.
The supply chain in its simplest terms is the route we must travel to achieve this objective. Clearly we would wish to travel the route in the most efficient manner i.e. in the shortest time, at minimum cost, producing the highest quality goods and services and thereby enabling generation of the highest profit. The supply chain has been around since the dawn of time and the first exchange of goods and services. It was not called Supply Chain Management until as part of an evolutionary heritage, the term was coined by Consultant Keith Oliver of the strategy consulting form Booz Allen Hamilton in 1982.
The application of e-Procurement techniques provides a means of improving efficiencies in specific segments of the supply chain, thereby facilitating the achievement of the Procurement Manager’s objectives.
Definition of Supply Chain
The supply chain encompasses all activities associated with the efficient flow and transformation of goods from the raw materials stage (extraction) through to the end user as well an associated information and financial flows. Material and information flow both up and down the supply chain. Supply chains also relate to services which in most cases require the availability of materials and or goods to support the delivery of the services. There are many examples of this e.g. hotel services – they require a the bringing together of a plethora of food and beverages, cleaning and gardening supplies etc. for final delivery. The same applies to janitorial services. A large global oil company for example which is engaged in exploration and development requires multiple and complex sets of direct and indirect supply chains comprising equipment, materials, consumables and professional services to deliver oil and gas which are its core objectives. Each of the supporting services both direct and indirect can be analysed in their distinct supply chains. This is a good example of how supply chains and services integrate with and are required to support supply chains for products.
There are in the broadest sense1) upstream Supply Chains, 2) internal Supply Chains, relevant to the processes internal to the company, e.g. in the automotive industry, the process required to transform the internal inputs into finished goods e.g., stamping, assembly of power train and components which are eventually brought together in their final assembly operations into automobiles and 3) There are external supply distribution channels processes and functions to get product to end customers. (Reference pages 2-4: Introduction to Supply Chain Management)
Supply Chain Management (SCM) is the integration of these activities through improved supply chain relationships/processes to achieve a competitive advantage. (Introduction to Supply Chain Management – Robert B. Handfield and Ernest L. Nichols Jr. Prentice Hall Press 1999). It is theprocess of planning, implementing, and controlling the operations of the supply chain of goods and or services with the purpose to satisfy organizational requirements as efficiently as possible. Supply Chain Management spans all movement and storage of raw materials, work-in-process inventory, and finished goods and services from point-of-origin to point-of-utilization. It in its entirety encompasses the informational and financial flows which support the supply chain. In essence, Supply Chain Management integrates supply and demand management within and across companies.
Supply Chain Event Management (abbreviated as SCEM) is a consideration of all possible occurring events and factors that can cause a disruption in a supply chain. With SCEM possible scenarios can be created and solutions can be planned.
Some experts distinguish supply chain management and logistics, while others consider the terms to be interchangeable.
1st Tier Suppliers
1st Tier Suppliers
2nd Tier Suppliers
1st Tier Suppliers
2nd Tier Suppliers
2nd Tier Suppliers
Product and material flows
Information and financial flows
Strategic business units
Linking e-Procurement to Supply Chain Management
Most organizations as we illustrated above, are members of multiple supply chains. An organization in each chain would typically offer a number of products and services, purchases materials from a wide range of suppliers and sells to multiply customers. An organization to be effective and efficient must focus its efforts on those supply chains related processes and customers that offer the greatest potential to achieving the highest competitive advantage. The basic types of advantage are price, quality and delivery time.
Development of supply chain process maps (flowcharts) for the most important supply chains and their processes within a company is a useful technique to establishing and understanding the internal supply chain. This is best accomplished through the use of cross-functional teams from all parts of the organization included in the supply chain under review. Team members must be knowledgeable regarding their part of the supply chain and must have an understanding of how their part interfaces with the other supply chain members. Once the key areas are understood, the opportunities to apply e-Procurement will emerge.
1. E-procurement (Electronic Procurement) is the business-to-business (B2B) purchase and sale of supplies and services through the Internet as well as other information and networking systems, such as electronic data interchange (EDI) and Enterprise Resource Planning (ERP).
2. An important part of many (B2B) sites,
B2B Web sites can be sorted into:
- Company Web sites, since the target audience for many company Web sites is other companies and their employees. Company sites can be thought of as round-the-clock mini-trade exhibits. Sometimes a company Web site serves as the entrance to an exclusive extranet available only to customers or registered site users. Some company Web sites sell directly from the site, effectively e-tailing to other businesses.
- Product supply and procurement exchanges, where a company purchasing agent can shop for supplies from vendors, request proposals, and, in some cases, bid to make a purchase at a desired price. Sometimes referred to as e-procurement sites, some serve a range of industries and others focus on a niche market.
- Specialized or vertical industry portals which provide a "subWeb" of information, product listings, discussion groups, and other features. These vertical portal sites have a broader purpose than the procurement sites (although they may also support buying and selling).
- Brokering sites that act as an intermediary between someone wanting a product or service and potential providers. Equipment leasing is an example.
- Information sites (sometimes known as infomediary), which provide information about a particular industry for its companies and their employees. These include specialized search sites and trade and industry standards organization sites.
3. e-procurement is also sometimes referred to by other terms, such as supplier exchange. Typically, e-procurement Web sites allow qualified and registered users to look for buyers or sellers of goods and services.
4. Depending on the approach, buyers or sellers may specify prices or invite bids. Transactions can be initiated and completed.
6. E-procurement software may make it possible to automate some buying and selling.
7. Companies participating expect to be able to control parts inventories more effectively, reduce purchasing agent overhead, and improve manufacturing cycles. E-procurement is expected to be integrated with the trend toward computerized supply chain management.
There are six main types of e-procurement:
- Web-based ERP (Electronic Resource Planning): Creating and approving purchasing requisitions, placing purchase orders and receiving goods and services by using a software system based on Internet technology.
- e-MRO (Maintenance, Repair and Operating): The same as web-based ERP except that the goods and services ordered are non-product related MRO supplies.—indirect procurement
- e-sourcing: Identifying new suppliers for a specific category of purchasing requirements using Internet technology.
- e-tendering: Sending requests for information and prices to suppliers and receiving the responses of suppliers using Internet technology.
- e-reverse auctioning: Using Internet technology to buy goods and services from a number of known or unknown suppliers.
- e-informing: Gathering and distributing purchasing information both from and to internal and external parties using Internet technology.
Vocabulary for E-Procurement:
- RFI: request for Information.
- RFP: request for Proposal
- RFQ: request for Quotation
- RFx: the above three together.
- eRFx: software for managing RFx projects.
E-Procurement How Did it Evolve:
One may argue that e-procurement is not new because many large firms have been applying technology to the purchasing process for several decades through Electronic Data Interchange (EDI). EDI facilitates the transfer of transactions between two business partners by integrating databases, using a standardized format for purchase orders and other elements in the purchasing transaction. It uses proprietary technology called a value-added network (VAN) to tie the buyer and seller together.
Whereas EDI was an improvement over the traditional paper-based exchange of information by allowing the buyer to forward important purchase-related information directly to the supplier’s system, it is very expensive to implement, often running into millions of dollars. Therefore, implementation cost was a significant barrier to the widespread use of EDI as a large-scale facilitator of e-procurement. Its use was limited to only the largest and most powerful firms in the business-to-business arena. Recent developments in Internet-based EDI that obviate the need for expensive value-added network technology will open this oldest form of e-procurement to more businesses. (Industrial Marketing Management 32 (2003) 219-–226 Supply management and e-procurement: creating value added in the supply chain; William D. Presutti Jr.)
Purchasing departments have never been the front-runners in ICT use, purchasing processes have been based on information systems and Electronic Data Interchange (EDI) networks for over a decade. The use of EDI has not been widespread on a global scale. Its use has been greater in Europe where approximately 50-60% of the companies in Western Europe currently utilize a standard form of EDI for their purchasing transactions. (reference: E-Procurement and Online Marketplaces – Ronald Koom, David Smith and Carsten Muller; article in Compact 2001/1)
Examples of frequently used EDI transactions are:
- purchase order;
- order acknowledgement;
- advanced shipping notifications.
EDI invoices and payments remittance have been used to a lesser extent. EDI transactions for facility management products and services are relatively uncommon.
EDI transactions are performed directly between trading partners (suppliers and buyers) or are handled by Value Added Networks (VAN), such as Sterling, GE Information Services, Harbinger and AT&T (ex-IBM), who act as intermediaries between sending and receiving organizations. They have standardized the X.400 protocol. Besides these global EDI VAN service providers, local and specialized networks have been established, for instance in the health care industry.
In order to provide background information for the positioning of e-Procurement, the advantages and disadvantages of EDI – as a key e-Procurement ‘ancestor’ – over manual or non-standardized electronic data exchange are summarized in table 1.
With the increasing popularity of the Internet, organizations have evaluated its support of purchasing processes. Early users have developed proprietary systems or have adopted systems by specialised e-Procurement vendors and online marketplaces. Online marketplaces reduce the number of relationships between N suppliers and M buyers from (N – 1) * M to just two. The three main types of online marketplaces that gradually developed are ([Hart00]):
1. Independent marketplaces: primarily in industries with standardized, frequently traded products, such as metals, energy, office supplies and electronic components. The marketplaces were initiated by Internet start-ups.
2. Marketplaces with buyers and sellers equity stakes: independent marketplaces created liquidity and aligned with the interests of the key market players.
3. Industry marketplaces: groups of buyers and – to a lesser extent – suppliers have established their own marketplaces, sometimes by abandoning their initial participation in marketplaces of the previously mentioned types.
This development instigated the ERP vendors and EDI VAN service providers to offer Internet-based e-Procurement solutions as well. Several parallel initiatives have taken place on the sell- and buy-side, including Application Service Providers offering e-Procurement services by hosting applications or even complete marketplaces. In the following section, the different types of e-Procurement systems that have emerged are described.
E-Procurement lacks some of the EDI disadvantages, while preserving most of the benefits. With table 1 in mind, the potential improvements include:
- Business process: enabling the purchasing processes with Internet technology allows for an end-to-end solution, in conjunction with supply chain management optimisation. Although there’s no store-and –forward mechanism in place, real-time transactions cannot be guaranteed on the Internet at this time (i.e. new Internet protocols such as RSVP (resource reservation protocol), IPv6 and Quality of Service initiatives may provide this guarantee in the future). check
- Usage: e-Procurement systems can be used by any employee with a browser and can offer a multi-media catalogue of products and services offered.
- Standardisation: the level of standardisation is not yet at the level of EDI (see also summary of standardisation initiatives in Appendix C), but offers more flexibility than the fixed-message EDI structure.
- Return on Investment: the first research shows significant improvements for the medium-sized and larger organization. Appendix A (on e-Procurement costs and benefits) shows where money can be saved. However, initial implementation costs may be substantially higher than with those of an EDI system, unless an online intermediary with low enrolment fees is chosen (which may charge higher transaction costs to recover their investments).
- Reliability and security: currently, e-Procurement offers little improvement due to the open nature of the Internet on which service levels cannot be guaranteed.
- Proprietary software does now offer very improved levels of security. This subject will be addressed in more detail in the section on operational controls.
- Legal: progress has been made by several parties (Organization for Economic Cooperation and Development (OECD), International Chamber of Commerce (ICC), US Federal Trade Commission (FTC), European Union (EU) in the creation of a legal framework for e-Business; however, it does not yet cover all aspects of e-Procurement.
Supply Chain Management Challenges:
Supply chain management must address the following:
a. Distribution Network Configuration: Number and location of suppliers, production facilities, distribution centers, warehouses and customers.
c. Information: Integrate systems and processes through the supply chain to share valuable information, including demand signals, forecasts, inventory and transportation etc.
d. Inventory Management: Quantity and location of inventory including raw materials, work-in-process and finished goods.
E-Procurement Can Increase Efficiency Within the Supply Chain:
E-Procurement can be alternatively defined as the application of integrated software programmes and databases which enable direct linkages between the various elements of the procurement cycle and its accounting interfaces in such a way as to:
E procurement through its application of rapid data processing electronic technology, provides a means to improve efficiency within specific areas of the Supply Chain and provide solutions to the challenges b) and c) above. It provides improved efficiency across the supply chain thereby extracting a number of tangible and quantifiable benefits which we will elaborate on later in this paper. E-Procurement applications:
a. reduce processing time at each stage of the procurement cycle
b. reduce generation of paper files
c. Creating consistent reports at the point where the market is engaged thereby enabling consistent comparison of terms based on predetermined criteria e.g. compliance with specifications, most advantageous delivery time, technical/after sales support and price.
d. Providing easily accessible information on spending and supply patterns e.g. what do we buy? How much do we buy? Who do we buy from? What’s the average price paid? What’s the average spend per period for important categories of goods and or services?
e. In other words e-Procurement facilitates the creation of useful management information and increases the control over spend.
f. E-Procurement further enables the direct creation from requisition, RFQs, and repeats/modifications of previously issued Purchase Orders or the issuing of blanket Purchase Orders.
g. It facilitates accounting in terms of control thereby reducing the likelihood of fraud and or accounting errors by enabling the electronic matching of Requisitions, Purchase Orders, Invoices and Receipts
h. Enables generation of information which will improve inventory control, inventory valuation, support reorder points and track inventory balances
i. Facilitate accurate Accounts Payable information
j. Measures and records key aspects of vendor performance which can be used as the basis for strategic decisions in future re deepening vendor relationships
k. Reduces paper bottlenecks almost inevitable in a paper based system
Give Yourself a Quizz
Give Yourself a Quizz
Give Yourself a Quizz
List: Developed internet in country system, in use by suppliers and buyers , business culture which supports competition strongly driven by competitive end profit motivation and willing to adopt new technologies, strong commercial culture, actively competitive markets for MRO goods availability of market wide systems which support information exchange and link buyers and sellers ,e.g. telephones, faxes internet, newspapers, television and advertising developed transportation links for the delivery of goods roads couriers , extra national supply options available to buyers media, financial infrastructure available to facilitate payments for e proc transactions e.g. banking services, chequing e-banking. These all exist in our marketplace so we are ready to advance to the next level
When To se E-Procurement:
Ironically, while companies may think they have examined every facet of their businesses in pursuit of lowering costs, there is a huge cost area that is almost always ignored. This area is referred to as “indirect spending” – all those purchases among different departments to keep them operating. These items include things such as courier services, kitchen and bathroom supplies, office supplies, computers, computer paper, consultants, temporary help, etc. In other words, indirect spending refers to all maintenance, repair and operating (MRO) goods and other non-production goods that do not make their way into the final product. This area of spending is usually ignored because upper management wrongly assumes that indirect spending is unimportant, and, therefore, not really worth the time it would take to make the required changes.
But, here’s the real story. These small dollar, high volume items can represent a no- fail opportunity to lower costs. Companies spend between 45 and 80 cents of every dollar on MRO, and that percentage is increasing (Supply Chain e-Business – April 2002). Every penny saved in operational efficiency and managed spending goes straight to the bottom line. These items represent about 90% of all purchase orders, shipment expense and invoices. Often the overhead costs involved exceed the cost of the items, which is usually under $50.
If a company wants to boost its’ profits, it should first look at the process of how it purchases its’ goods and services. What it will probably find is that different departments use different vendors for the same items, the price of the items varies from vendor to vendor and there are no discounts; moreover, no one is held accountable because no one is really overseeing the process. To complicate things even further, the whole purchasing cycle is probably still on a paper system. If this sounds all too familiar, it is time to change the way the company purchases its goods and services, and automation is the key.
The move to e-procurement provides a unique opportunity for supply managers for 2 reasons 1) the application of technology to boost competitiveness and profitability is on the agenda and 2) the application of technology to supply management, where firms spend most operating dollars, is focusing more top management attention on that issue. “A recent study by Deloite Consulting of 200 global firms indicate that 30% have been implementing a basic e-procurement solution whereas 61% are either planning or are considering an implementation” This dates back to 2003 (Industrial Marketing Management 32 (2003) 219-–226 Supply Management and E-Procurement: Creating Value Added in the Supply Chain; William D. Presutti Jr.)
The Business Case:
Making a business case for e-procurement requires that supply manager understands the concept of Economic Value Added (EVA), considered the comprehensive financial measure of value creation.
The types of products and services initially purchased through e-procurement systems were mainly office supplies, ICT products and travel services. Then temporary services, parts, maintenance services, facility management services, car leasing, and other non-direct materials followed. All these can be categorized as MRO products and services. (Maintenance Repair and Operations). It has been estimated that MRO purchases amount to 40 – 60% of purchasing volume and approximately 70 – 85% of purchasing transactions generally. And this is even more in financial and professional service organizations e.g. banking, insurance, architectural, accounting.
There are 3 main reasons for us to focus on MRO purchases and applying e-procurement to improving efficiency in MRO spend.
1. Administrative costs for the large number of MRO purchases each year are relatively high in comparison to the value of each purchase.
2. The primary purchasing processes relating to direct materials have already been optimized
3. The number of employees who can make purchasing requisitions is usually limited to a relative few in regard to direct materials, but is virtually unlimited in regard to MRO purchases. This is a general statement which we can bring to our own experience e.g. many large organizations in my own experience in the energy industry seek to bring the purchase of indirect procurement under control e.g. stationery, taxi services, catering to name a few. Finally, MRO products is more suited to e-procurement than direct materials because while their total value maybe relatively high the significance of each to the company’s core business is reasonably limited. Give example
These factors can be visualized in a matrix of purchasing types.
Supply risk axis indicates the availability of product on the market. Supply risk depends on the number of competing suppliers and complexity of the product purchased. The financial impact refers to the significance of the purchases in relation to the financial situation of an organization e.g. in relation to large capital value projects.
High supply risk fuels suppliers’ complex high value products or services direct negotiation strategic contracts.
Low supply risk large numbers of suppliers simpler uncomplicated items relatively low individual value high volume apply e-procurement coincide with low financial impact.
Low financial impact coincides with purchases of routine MRO items of relatively low individual value.
High financial impact relate to which coincides with high supply risk do not suit e-procurement as organizations would have invested heavily in medium to long term strategic contracts for both the critical and strategic quadrants.
Leverage where a supplier maybe in a relatively buyer dominant p:osition in relation to a large number of suppliers i.e. where supply risk is low is suited to e-procurement. (reference page 29 e-Procurement and Online Marketplaces)
Using Opportunity Assessment to Build the Business Case:
Assessing opportunities for use of e-procurement is supported by the use of a strategic sourcing process which continuously improves and re-evaluates the purchasing activity of a company. The results of this process would dictate how and where and when e-procurement could be best deployed. Building the business case begins with an opportunity assessment. It’s objective is to assess the potential for savings or value additions using a rigorous, consistent, analytical process it determines if there is a credible fact driven case to initiate a project to achieve the benefits. It does the following:
1. Establishes a foundation to launch a strategic procurement project by building a clear understanding of the spend category, people involve, the processes and organization impact.
2. Establishes credibility with all stake holders who have been involve in creating the case and with management by clearly presenting facts in a discipline and analytical format.
3. Helps to decide where and when to commit resources to bring the best probable returns. Finally it sets an initial baseline on which to evaluate ongoing progress.
The opportunity assessment has 4 key parts:
1) Define the category a 5 step process comprising
a) Determine the facts we need to know
b) Identify the data sources
c) Perform analysis
d) Summarise the findings
e) Developing, documenting and testing hypotheses
The objectives here is for the team and stakeholders to understand the spend information as well as or better than anyone else regardless whether they are on the seller or buyer side
2) Identify the opportunity based on part one analysis to reduce services cost and process costs.
3) Define the business impact the object being to identify the points of resistance or support for the project and to build this knowledge into the sourcing strategy.
4) Integrate the results the object is to pull together all the results into overall assessment and to establish project direction.
Assessing Administrative Costs for purchase orders:
If administrative costs are not established for your organization, calculate the cost savings for work eliminated as follows. (Purchasing Today, August 2001). Create a flowchart that represents the purchasing cycle before automation. Then create another flow chart that shows steps eliminated due to automation. For each flowchart do the following:
- Identify who does each step
- Identify how long it takes to do each step
- Calculate the value of each person’s time per minute, using the mean salary of the labor grade
- Multiply the value of his or her time per minute by the number of minutes of the task
- Add the costs of all the steps and include all additional costs incurred such as consumable supplies, postage, etc.
- Subtract the before and after flowchart numbers, and the resulting number represents dollars saved.
According to the National Association of Purchasing Managers (NAPM), for every purchase put through a paper system, the company will pay approximately $150 in administrative costs. Compare that to about $32 to process an order through an integrated purchasing system. That’s a savings of $118 per purchase order. If a company processes 2,000 purchase orders per year that translates to $236,000, which is pure profit.
Benefits of Automating the Purchasing Process:
The role of E-procurement in the purchasing process as already noted, E-procurement, the application of internet technology, pervades each major component of the purchasing process. In establishing buying requirements through the specification development process, the concept of e-design has emerged to help facilitate early supplier involvement Buyer and seller share information in real time to build specifications that add value to the resulting product .That communication helps to minimize design complexities and avoids building in unnecessary costs into the specification.
This real time exchange of information is also crucial because shrinking product life cycles and the competitive advantage that comes from reduced time to market. The final step in the purchasing process is supplier evaluation and rating .This process requires extensive and accurate performance data. In the traditional paper-based system, it is difficult to capture and retrieve that data to conduct an effective and efficient supplier assessment. E-procurement solutions provide the firm with data warehousing capabilities on which the supply manager can draw. Not only does an e-procurement solutions help to capture aggregate purchases by purchased product code, it also help to chronicle the salient detail’s in a supplier’s performance record including delivery and quality –level performance. This can be used as a basis for developing strategic long term arrangements
Paper systems are time- and labor -intensive. Bottlenecks, which are inherent in paper systems, form along the routing/approval cycle. The process is long, and many pieces of paper pass through numerous hands before the transaction is complete. Automation eliminates bottlenecks.
Another benefit is buying power. When businesses re-engineer themselves in the procurement area by automating, they are able to reduce their number of venders and negotiate better pricing due to larger volumes. Users simply place their order online from catalogues that have been pre-approved by higher management with pre-negotiated pricing. Any approvals are automatically routed to the correct sign-off people.
E-business is not geographically tied to any one area, so nation-wide branch offices can order from the same pre-approved catalogues.
Automation can reduce cycle time anywhere from 20% to 50%. A fully integrated purchasing software package will reduce unnecessary spending, or “rogue” spending, which can account for as much as 45% of indirect corporate spending. Automation will eliminate common errors, do away with redundancies and automate the workflow
a. -Market leadership shaping the market and culture
b. Using E-procurement in support of strategic objectives build information on supplier, aggregate demand create strategy
Local companies can begin shaping the market by requesting major suppliers to create online catalogues market and by accessing online catalogues from foreign sources thus creating a more competitive environment.
Companies can use E-procurement in support of strategic objectives: build information on supplier performance, and where there is value use e procurement as a basis for building long term contracts with the most reliable suppliers Aggregation of demand across departments or divisions or service lines can lead to leverage and value in terms of price, delivery, quality assurance and control.
E-Procurement in the Context of Caribbean Governments’ Procurement Initiatives
The subject of Government procurement within the Caribbean is too wide to be covered in detail. There is a very comprehensive document published by the Inter-American Development Bank –Regional Operations Department “NATIONAL LEGISLATION, REGULATIONS AND PROCEDURES REGARDING GOVERNMENT PROCUREMENT IN THE AMERICAS”.
Public procurement as a whole covers definition, scope, legal framework administrative structure, procurement procedures, publicity for invited tenders, requirements for suppliers, criteria, for assessing bids and awarding contracts, disclosure of bids received and contracts awarded, treatment granted to domestic and foreign goods, services and public works and their suppliers, procedures for hearing and reviewing complaints and or appeals.
What is certain is that with combined GDP growth expected at approximately 4 % in the English speaking Caribbean, with increasing government involvement in public projects as well as louder demands for accountability by political constituents; Caribbean governments will be seeking ways in which to better manage public procurement.
Jamaica and Trinidad have taken the lead in this regard. Jamaica has enacted the Contractor General Act of 1999, subsumed within which is the establishment of the National Contracts Commission (NCC). No relation to the National Carnival Commission - The NCC in Jamaica is in effect is an oversight body which has purview over the administration of government contracts for goods, services and consultants. The Contractor General reports to Parliament.
The Trinidad Government has had in place the Central Tenders Board (CTB) as its main public procurement arm for 45 years. The CTB ordinance was enacted in 1961. But through a series of amendments to the Central Tenders Board Ordinance of 1979, (increased the power of CTB as government sole procurement agency and to contract consultants),1987, 1991 and 1993; the procurement regime was decentralized to allow other agencies/ministries to procure outside of the ordinance in the case of emergency and national security; as well as in 1993 establishing the National Insurance Property Development Company Ltd. (NIPDEC) as the procurement agency for government outside the ambit of the CTB.
The current proposal for reform of the public procurement system in Trinidad and Tobago is to adopt the operating principle of value for money, transparency and accountability. This is very similar to the Jamaican objective cited in the National Contracts Commission’s mandate, which is to promote efficiency, transparency and equity in the award of government contracts. In the Trinidad White Paper which sets out the framework of public procurement reform, the use of e-procurement is specifically recognized as one of a means to attaining value for money, by making the procurement process more efficient. A National Procurement Advisory Council is to be appointed and that Council will advise a Regulator who with a secretariat will have powers of administration, development of procurement guidelines, monitoring and investigatory powers. The Regulator will have some of the powers of the Contractor General in Jamaica and the National Contracts Commission to administer and oversee public procurement.
Interestingly the Regulator will be required to “proactively support new approaches to implementing, operating principles such as e-procurement and provide support to agencies and the public in using these new approaches”. SeeRepublic of Trinidad and Tobago REFORM OF THE PUBLIC SECTOR PROCUREMENT REGIME A White Paper (August 2005) Ministry of Finance www.finance.gov.tt
In other words ladies and gentlemen the application of e-procurement systems within government is both consistent with and integral to the new vision of public procurement as enunciated by the governments of Trinidad and Tobago and Jamaica.
And it is very likely, particularly with the advent of the Caricom Single Market and Economy that other member states will follow.
Caribbean Economy, Positioning Your Business to be Profitable
The 12 member states of the CSME as of January 1, 2006 are Antigua and Barbuda, Barbados, Belize, Dominica, Grenada, Guyana, Jamaica, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Suriname and Trinidad and Tobago have enacted the treaty into domestic law. As in the case of public procurement the subject is too wide to be covered on its own today. Interesting information is available on the Caribbean Community (Caricom Secretariat) website. Suffice to say that businesses which can drive down cost within these territories by adopting strategic sourcing techniques combined with e-procurement techniques will be strategically placed both in their territorial markets as well as within intra-regional markets to be more competitive and profitable. What must be remembered is the goal of the CSME to transform these distinct geographical spaces into one common market space. Thereby through the free and unrestricted movement of goods and services, capital, labour, the right to borrow money, the right to establish businesses and the establishment of a common external tariff as well as a common trade policy. In effect CSME will become one market with significant opportunity for the expansion of business. And via the consolidation resources will provide the basis for the export of goods and services outside the boundaries of the CSME.