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Manchester City Council

Manchester City Council. Purchasing Card Programme Lol Nugent – Exchequer Unit Manager Paul Murphy – Corporate Procurement. Background H ow the programme was implemented. Corporate Project Team Tender documentation Selected card provider Internal Audit Developed procedure manual

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Manchester City Council

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  1. Manchester City Council Purchasing Card Programme Lol Nugent – Exchequer Unit Manager Paul Murphy – Corporate Procurement

  2. BackgroundHow the programme was implemented • Corporate Project Team • Tender documentation • Selected card provider • Internal Audit • Developed procedure manual • Two Pilot Departments • Departmental project teams • Implementation • Supplier recruitment

  3. The story so far First cards used April 2000 • 2000/01 £5m 16,700 transactions • 2001/02 £21m 60,000 transactions • 2002/03 £37m 97,800 transactions • 2003/04 £45m 116,000 transactions • 2004/05 £55m 125,000 transactions • 2005/06 £69m 158,000 transactions • Still the largest LA programme in the country

  4. Why Purchase Cards at MCC? • Reduce numbers of invoices processed • Reduce payment and processing costs • Simplify the order to pay process • Count towards Government 30 day invoice payment targets (BVPI 8) • Rationalisation of suppliers • Discount from suppliers • Rebate from Card Supplier

  5. How this was achieved (1) • Strategic Management Team backing • Now a contract evaluation requirement • New suppliers are set up on vendor database as PCard only • “Actively encouraged” our suppliers • Moved away from the original concept of “Low Value High Volume”

  6. How this was achieved (2) • Secure procedures • Internal Audit • Departmental • Corporate Guidance (Manual) • Only use approved suppliers • Minimum VAT Summary (L2), LID preferred (L3) • However some L1 may be acceptable. • All cardholders are trained • Credit/transaction limits, MCC Blocking

  7. How this was achieved (3) • In 2000 MCC initiated the card programme via HSBC using VISA cards • Management of the programme was achieved through the use of: • Scorpion • Business Objects

  8. How this was achieved (4) • Tender exercise in 2003 and MCC decided to move to RBS and MasterCard • Management of the programme through: • Smart Data On Line (SDOL) • Using a mixture of SDOL reports and Business Objects • Following move to SAP now managing the programme through Smartlink (XiBuy).

  9. Issues with initial implementation • Departmental take up • Initially not fully supported by all departments • Retrospective checking • Moving away from order pads – cultural issue. • Supplier recruitment • Procedures not being followed • Checking of transaction logs • Preferred suppliers (maverick spend!)

  10. Issues with change over • Withdrawal of VISA cards from cardholders • Reissue of over 1,400 cards (logistics) • Supplier sign up • Training of Users • Customisation of feeder file to GL • VAT Issues

  11. Issues with move to SAP • Wanted to integrate PCard programme with the new ERP system. • Decided to use Smartlink (XiBuy) from Paymetric as this is SAP accredited and integrated. • No reflection on SDOL from Mastercard. • Much the same functionality between SDOL and Smartlink (XiBuy) but within SAP so presents less training issues and greater prospects for future integration (3 way match!)

  12. Ongoing Activities • Non PCard spend with PCard enabled suppliers (system blocks in place) • Monitor significant non PCard spend • Identify and recruit new suppliers (Procurement staff) • Ensure PCard enabled suppliers are correctly recorded (will block non PCard methods of payment) • Target new areas of spend • Capital • Catering • E procurement • Extensive use of On-line catalogues

  13. Ongoing Activities • Cash Replacement Cards • Because of the proliferation of Petty Cash accounts (Bank and Cash based) reconciliations a nightmare. • SAP and PCards provide a “hole in the wall” solution. • Pre-Paid Cards • Considering introducing in some areas of the Council to improve accountability (e.g. Foster carers, Asylum seekers). • Can be topped up and restricted. • Cash Loaded Cards • For one-off type payments (reduce cash handling costs, security issues etc.)

  14. Final thoughts • For those considering embarking on a PCard Programme: • Only use VAT enabled suppliers • Use software to manage the programme • Be positive with supplier recruitment • If you are going to pilot cards have a decent sized pilot • Forget the original concept but remember ….If you have a purchasing problem now PCards will not solve it, only pay it quicker.

  15. And over to Paul ……

  16. The Programme at Manchester City Council • How much do we spend with Purchase Cards? • Council expenditure • Current Purchase Card spend • How do we get here? • Where are we now and what are we doing? • Supplier recruitment and program growth • Supplier issues and education • The next steps • New areas of spend • Any questions…

  17. Expenditure – 2004/05 Estimate (£1,121 million) How much do we spend?

  18. What do we spend it on? Supplies and Services - 2004/05 Estimate (£360 million)

  19. Supplies and Services - 2004/05 Estimate (£360 million) What do we spend it on?

  20. Supplies and Services - 2004/05 Estimate (£360 million) What do we spend it on? • Computer Training • Couriers • Graphic Design • Hire and Rental Services • Language Training • Pest Control • Recruitment agencies • Removals • Taxis • Vehicle Hire and Repair

  21. Supplies and Services - 2004/05 Estimate (£360 million) What do we spend it on? • Concrete and Aggregate • Doors and Windows • Forklift Trucks • Insulation • Ladders • Protective Clothing • Rivets • Timber

  22. Supplies and Services - 2004/05 Estimate (£360 million) What do we spend it on? • Catering Engineers • Catering Equipment • Catering Services • Cleaning and Laundry • Food and Drink Suppliers • Protective Clothing • Uniforms

  23. Supplies and Services - 2004/05 Estimate (£360 million) What do we spend it on? • Portable Toilet Hire • Recycling • Security Services • Storage • Arts and Crafts • Classroom Materials and Toys • Lift Repairs and Maintenance

  24. How did we get here?

  25. Where are we now? • Average value of transactions • £311 Average value of transactions (2005/6) • 2,800 cardholders (2005/06) • 570,000 cumulative transactions since inception • Largest individual transaction: • £1.2 Million – computer equipment!

  26. Where are we now? April 2004 Conversion to onecard Migration of suppliers to Streamline • Deleted all Level 1 suppliers • Deleted all off contract suppliers • 28 suppliers refused to migrate • 10 suppliers with other acquirers • 281 suppliers migrated in total

  27. What are we doing now? 297 Suppliers • 281 suppliers from conversion • 16 new suppliers to Purchase Cards • 8 Level 3 (Line Item Detail) • 8 Level 2 (Summary VAT) • Potential total annual spend of £70 million • Projected spend for 2006/7 £75 million

  28. What are we doing now? Main areas of new recruitment • Recruitment Agencies • £2 million per annum potential • City Works • £3 million per annum potential

  29. How are we increasing our program? • Welcome letter • Purchase Card Brochure • Acquirer brochure • Faxback form

  30. How are we increasing our program? Supplier Recruitment Form • Ensures consistency across Council • Ensures financial checks of suppliers • Form is kept electronically • Keeps internal audit happy (!!!)

  31. How are we increasing our program? • Online Catalogue Purchasing • intranet based so available to all staff • must be a Purchase Cardholder to use • Requirement of all new tenders/contracts • contractor must be Purchase Card capable • Ongoing recruitment program • Recruitment seminars • Departmental, Igenico Bureau Service • Identify new areas of spend

  32. How are we increasing our program? • Reduce “invoice leakage” • ensure all Purchase Card capable suppliers are correctly identified in Vendor list. • Target rogue spending • Off Contract spend • Target non-contracted areas • Identify areas with multiple suppliers and take spend to tender

  33. Our next steps for Purchase Cards Identify new areas of “non-traditional spend such as: Construction Industry Taxation Scheme Suppliers Tighten up Business Travel spend and other leakage Payments to Local Authorities/government bodies • Payments to Inter-authority services • Greater Manchester Waste • Greater Manchester Fire and Civil Defense

  34. Any further questions? Feel free to contact us at… • Lol Nugent • 0161 234 3716 • l.nugent@manchester.gov.uk • Paul Murphy 0161 234 3005 p.murphy@manchester.gov.uk

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