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02 04 08 12 15
Peter Fanning, Acting Chief Executive, Ofﬁce of Government Commerce (OGC) This year, we enter the tenth year of the GPC Visa framework agreement, and as with all previous years, I am delighted to report another year of growth for the programme. A growth in savings, a growth in annual spend, a growth in the number of schemes and a growth in the number of cards. More than any other year, this expansion demonstrates that there is an increased awareness of procurement and its role in improving the delivery of public services. It is because of programmes such as GPC Visa that we are making excellent progress towards our target of £21.5bn of efﬁciency savings by 2007/8. Every day GPC Visa is helping organisations up and down the UK to make progress towards this very real target. In my role as Acting Chief Executive of the OGC, I see staff working extremely hard across all areas of government to improve the way their organisations undertake business. The response to the challenge of the Efﬁciency Review has been excellent, and we should all be proud of the progress that has been achieved. However, the reality is that the challenge of continuing to deliver efﬁciencies does not get easier as we move forwards. As we continue our search for more cost reductions and greater time savings, we must be prepared to take harder decisions and, where necessary, bolder actions. This does not mean that we need to seek radical innovations in order to make big efﬁciencies. The challenge we face can be met by continuing to do what we have already been doing, yet smarter. The methods that we have used to progress this far are the methods that have already proved to be successful. Meeting the demanding targets we face can be achieved through more collaboration, sharing of knowledge and professionalism. Using GPC Visa is one of the proven methods for delivering efﬁciency. This is why it made very real sense for us to extend the framework agreement for GPC Visa. The agreement we have with Visa Europe and the six issuing banks will now run for another two years until 2010. In order to meet the challenge of making the £21.5bn in savings, each organisation must be prepared to be accountable for the way they deliver services, as well as the services they deliver. This means public sector organisations must adopt proven methods for delivering efﬁciency, methods such as using GPC Visa. If you are responsible for any form of efﬁciency in your organisation, the best step you can take to improve efﬁciency is to use GPC Visa.
2006 in ﬁgures
790 GPC Visa schemes in operation
93,867 GPC Visa cards in use
£676,052,175 spent using GPC Visa cards 3,878,588 GPC Visa transactions
Average spend: £174 per transaction using GPC Visa
£108,600,464 monetary savings
Paper savings: 38,785,880 sheets of A4 paper Carbon savings: 149.3 tonnes of CO2
2006 790 SCHEMES 1998 12 SCHEMES
Number of GPC Visa schemes annually since 1997
2006 in ﬁgures GPC Visa schemes in operation: GPC Visa cards in use: GPC Visa spend on cards: GPC Visa transactions: Average spend per transaction: Monetary savings: Paper savings: Carbon savings:
790 93,867 £676,052,175 3,878,588 £174.30 £108,600,4641 38,785,880 sheets of A4 paper2 149.3 tonnes of CO23
2006 has seen the greatest growth in transactions on GPC Visa to date, with over a million more transactions than in 2005. More organisations initiated a GPC Visa scheme in 2006 than in any other year in the history of the programme. This rapid uptake of GPC Visa, combined with the continued expansion of existing schemes, resulted in more savings being accumulated across more cards than in any previous year. In July 2006, the cumulative spend on GPC Visa passed the £2 billion milestone, through nearly four million transactions. All of the transactions were redirected away from wasteful, work-intensive processes to a more efﬁcient and streamlined process. The GPC Visa programme once again exceeded the previous year’s spend volumes, achieving over half a billion pounds of annual spend for the second consecutive year. Figure 1 (below) shows the annual spend placed through GPC Visa each year since its introduction.
£404.8m £304.5m £208.4m £122.3m £19.7m £61.2m
Figure 1: Annual Spend (£ millions)
Figure 1 demonstrates just how rapidly the programme has been accepted by the public sector and that, despite the programme moving into its tenth year, there is no let up in its rate of growth. When the GPC Visa framework agreement was extended a set of new annual spend targets were established by OGCbuying.solutions and Visa Europe. The annual spend target for 2006 was £665m. Looking at the ﬁgures above, we can see that this target was exceeded by over £10m. The target for 2007 is £840m, which equates to an increase of 25% on the current annual total. Year Average spend per card 1998* £1,732 2002 £5,335 2006 £7,202
Table 1: Average spend per card *The ﬁrst complete year in which statistics are available following the signing of the ﬁrst GPC Visa agreement in 1997.
The average annual spend per card for 2006 was £7,202. This means that the average spend per card has now increased by over 400% in eight years. The increase in average spend per card shows that organisations are using GPC Visa with increasing conﬁdence. GPC Visa is clearly a payment solution that public sector organisations trust to improve their purchase to pay cycle and to deliver procurement efﬁciencies.
Savings calculated using the National Audit Ofﬁce approved ﬁgure of £28 per transaction.
Paper savings based on an estimate of 10 sheets of A4 paper saved per transaction.
Carbon savings based on the estimate of the carbon required to produce a tonne of paper.
£122.0m £72.3m £17.1m £36.3m
13 MILLION TRANSACTIONS SINCE 1997
13,436,725 cumulative transactions on GPC Visa since 1997
Figure 2: Cumulative savings (£million) *Savings calculated using the National Audit Ofﬁce (NAO) approved ﬁgure of £28 per transaction
The UK public sector is currently working to meet the targets laid out by Sir Peter Gershon for the Efﬁciency Review. All public sector bodies are required to deliver 2.5% of efﬁciency gains, either through cashable, monetary savings or through non-cashable, process improvements. GPC Visa contributes to these savings in numerous ways, for example, generating cash discounts from suppliers and achieving compliance to corporate contract. The greatest savings from using GPC Visa are generated through the process efﬁciencies that are gained when GPC Visa is used to reduce the steps and time required to fulﬁl a purchase. The extent of these efﬁciencies is directly related to the amount of transactions processed: a process efﬁciency can be recorded every time a purchase is made using GPC Visa.
13.4m 11.7m 9.8m 8.3m 6.9m 5.6m 4.4m
Q1 Dec 03
Q3 Jun 04
Q1 Dec 04
Q3 Jun 05
Q1 Dec 05
Q3 Jun 06
Q1 Dec 06
Figure 3: Cumulative transactions January 2004 – December 2006 (million)
Figure 3 shows the cumulative transactions processed using GPC Visa between the end of December 2003 and the end of December 2006. It is evident that the number of transactions processed using GPC Visa is growing at an accelerated rate month on month, year on year. Given the scale of the efﬁciencies that GPC Visa is contributing to the public sector, it is clear that GPC Visa is the most sustainable and successful procurement solution in use by government today. GPC Visa continues to make a signiﬁcant contribution in the reduction of waste. By saving an average of ten sheets of paper per transaction, it is estimated to have reduced the carbon output of the UK public sector by 149 tonnes. This ﬁgure is calculated on the basis of the energy required to create the 38.8m sheets of paper and does not account for any of the carbon savings associated with transporting, printing or disposing of the paper. GPC Visa can clearly assist public sector organisations to become more energy efﬁcient and to reduce the use of paper.
% RE- % GPC SOURCE VISA BUDGET SPEND
Annual Spend Number of Transactions Number of Cards
Central, Civil Government and Defence4 2005 £463,444,466 2,533,907 59,558 307 2006 £526,767,717 2,916,142 71,663 347 Percentage Growth 13.66% 15.08% 20.32% 13.03%
Local Government5 and Schools 2005 £30,392,400 161,382 5,643 130 2006 £102,796,709 689,195 14,984 256 Percentage Growth 238.23% 327.06% 165.53% 96.92%
Number of Schemes
Table 2: Breakdown of GPC use in Central and Local Government Health 2005 Annual Spend No. of Transactions No. of Cards No. of Schemes £22,572,057 104,307 2,924 37 2006 £23,420,391 104,346 2,826 44 Percentage Growth 3.76% 0.04% -3.35% 18.92% Higher Education 2005 £10,878,417 83,378 1,953 52 2006 £23,067,358 168,905 4,394 143 Percentage Growth 112.05% 102.58% 124.99% 175.00%
Table 3: Breakdown of GPC Visa use in Health and Higher Education
The central, civil and defence sector has seen steady growth, both in the number of organisations using GPC Visa and in the transactions being placed through the schemes. The departments in this sector represent 78% of spend in the GPC Visa programme, and some of the schemes are nearly ten years old. A growth rate of over 13% in this sector is therefore impressive. The use of GPC Visa in the health sector has not met OGCbuying.solutions’ expectations in 2006. Whilst it is noted that the health sector already has over 300 Visa Purchasing Card schemes that were initiated prior to 2002, these older schemes do not account for the lack of growth. OGCbuying. solutions has noted that a number of new schemes have been put into place in this sector and that the NHS is viewed as a key opportunity for growth. OGCbuying.solutions and their partners will continue to work with health trusts and the NHS procurement hubs in order to develop new schemes and extend existing schemes. The local government and higher education sector ﬁgures for 2006 are extremely encouraging. The growth in spend, transactions and schemes has been exceptional and demonstrates that these sectors are increasingly using GPC Visa as part of their standard procurement procedures. The growth in local government transactions has increased by over 300%, whilst the growth in the number of schemes in higher education has increased by almost 175%. Growth of this nature demonstrates that GPC Visa is a tool that is quick to implement and can be used across all areas of government for organisations with diverse procurement needs.
Central, Civil Government and Defence Savings Percentage of total GPC Visa savings Percentage of total GPC Visa spend 2005 2006 2005 2006 2005 2006 £70,949,396 £81,651,976 87.89% 75.19% 87.89% 77.92% Local Government £4,518,969 £19,297,460 5.60% 17.77% 5.76% 15.21% Health Higher Education £2,334,584 £4,729,340 2.89% 4.35% 2.06% 3.41% Total
Central, Civil Government and Defence Sector
Central, Civil Government and Defence Sector
£2,920,596 £2,921,688 3.62% 2.69% 4.28% 3.46%
£80,732,272 £108,600,464 100% 100% 100% 100%
Table 4: Breakdown of savings by sector Central, Civil Government and Defence
Local Government 16.89% 15.15%
Central Civil Government and Defence includes all central Government departments, associated bodies and devolved assemblies. “Local Government” includes all publicly funded bodies that deliver services on a regional basis. This includes: county, district and unitary councils, ﬁre and police authorities, parks authorities, local charities and organisations such as Regional Development Agencies.
Percentage of Resource Budget6 Percentage of Tatal GPC Visa Spend Table 5: Proportion of savings by sector
The resource budget is the total spending available to individual departments according to their individual departmental expenditure limits. The resource budget does not account for non-departmental spend such as social security beneﬁts, tax credits or public service pensions.
GPC Visa continues to be more established in the central, civil and defence sector, with 78% of the total annual spend in the GPC Visa programme having originated here. This sector represents nearly half the government’s resource budget, and the volume of spend in this sector therefore continues to be disproportionate in relation to the sector’s total resource budget. The remaining sectors’ spend volumes through GPC Visa are still below the relative proportions of their resource budgets, but both the local government and the education sector have shown improvements in relation to their overall proportion of spend. The increase in the proportion of spend by almost 10% by local government brings this sector’s spend much closer to its relative resource budget and demonstrates that local government is using GPC Visa in a positive and meaningful way. The challenge for the health and education sectors is to align their GPC Visa spend percentages with those of their resource budgets. An increase of 5% is readily achievable for the education sector. However, the health sector faces a 23% proportional shortfall, and unless there is growth in the use of GPC Visa by the health sector, it risks seeing its proportion of spend continue to decline as the other sectors continue to use GPC Visa for more and more of their spend. The annual spend on GPC Visa in relation to the total resource budget of the UK public sector shows that GPC Visa covers only 0.24% of the UK public sector’s spend. It is reasonable to expect GPC Visa to cover a larger proportion of the £277bn resource budget spent by the UK public sector, and a four-fold increase in the amount spent using GPC Visa would still only represent less than 1% of the total resource budget. The capacity for growth in the GPC Visa programme remains high, and we expect the programme to continue to grow at a signiﬁcant rate.
93,867 CARDS IN 2006 39,057 CARDS IN 2002 1,872 CARDS IN 1998
Number of GPC Visa cards in use per annum since 1997
Every supplier capable of accepting GPC Visa is classified by a supplier category group code. Analysing the GPC Visa annual spend, it is possible to get a broad understanding of the types of goods and services for which GPC Visa is used. Table 6 (opposite) shows the annual spend broken down by supplier category group code for 2005 and 2006. Travel and ofﬁce stationery continue to account for the largest percentage of GPC Visa spend. During 2006, the proportion of the total spend increased in a number of categories most notably ‘Catering and Catering Supplies’ and ‘Medical Supplies and Services’. Additionally, in 2005, the top three categories by volume of spend accounted for over 53% of the total spend. In 2006, the same three categories accounted for 48% of the total spend. These variations in spend volumes across the supplier category groups are indicative of the diverse purchasing requirements of the public sector organisations using GPC Visa. It is anticipated that the proﬁle of supplier category group spend will vary every year as public sector organisations identify increasingly innovative uses for GPC Visa in order to meet their purchasing requirements. The increase in proportion of the total GPC Visa annual spend on ‘Medical Supplies and Services’ could, in part, be due to some innovative work by local authorities that are using GPC Visa to purchase social care and other care services. One of the authorities leading the way in this area is Kent County Council. Further information on the work carried out by Kent County Council can be found in the 2005 GPC Visa Annual Report, which is available at www.purchasingcard.info. ‘Catering and Catering Supplies’ is a category in which the advantages of using GPC Visa are explicit. Professional kitchens raise daily orders in an environment where access to computers may be limited and where many of the suppliers do not work conventional ofﬁce hours. The ability to make payment using GPC Visa, by phone or through a card lodged with a supplier, allows the kitchen staff to order easily and efﬁciently, and the supplier is assured payment.
Supplier Category Group
Percentage of Total GPC Visa Spend by sector Central Local Health Government Government Higher Education 0.51% 1.98% 0.23% 0.58% 2.43% 2.18% 2.88% 2.29% 0.66% 0.56% 0.30% 0.07% 0.45% 0.76% 0.26% 0.13% 2.11% 2.00% 7.27% 6.07% 0.34% 0.27% 0.12% 0.11% 0.22% 0.19% 10.77% 10.44% 11.49% 13.04% 1.02% 1.48% 5.48% 0.50% 0.93% 5.20% 2.05% 2.07% 0.03% 0.91% 5.34% 5.63% 9.65% 6.80% 0.03% 0.10% 1.48% 2.14% 2.36% 2.47% 1.84% 3.00% 0.04% 0.13% 1.33% 0.99% 0.42% 0.55% 3.51% 3.77% 23.24% 22.92% 0.18% 0.16% 1.05% 0.50% All Sectors 0.78% 0.81% 0.47% 0.37% 0.83% 0.83% 3.12% 3.58% 1.30% 1.88% 0.37% 0.28% 0.72% 1.98% 0.34% 0.31% 0.71% 0.87% 4.30% 3.65% 0.37% 0.34% 0.07% 0.07% 0.23% 0.20% 9.09% 9.30% 10.12% 9.78% 0.85% 0.88% 2.44% 0.26% 1.01% 2.67% 0.93% 3.85% 0.13% 1.52% 6.35% 5.99% 19.46% 16.59% 0.06% 0.14% 1.79% 1.48% 1.83% 2.55% 1.57% 1.65% 2.45% 2.31% 0.31% 0.49% 0.51% 0.50% 1.52% 1.58% 24.22% 21.69% 0.28% 0.26% 1.46% 1.36%
Auto Rental Automotive Fuel Books and Periodicals Building Materials Building Services Business Clothing and Footwear Catering and Catering Supplies Cleaning Services and Supplies Clubs / Associations / Organisations Computer Equipment and Services Estate and Garden Services Financial Services Freight and Storage General Retail and Wholesale Hotels and Accommodation Leisure Activities Mail Order and Courier Services Mail Order Medical Supplies and Services Miscellaneous Misc Industrial / Commercial Supplies Ofﬁce Stationery Equipment and Supplies Personal Services7 Print and Advertising Professional Services Restaurants Staff – Temporary Recruitment Statutory Bodies Telecommunication Services Training and Educational Travel Utilities and Non-Automotive Fuel Vehicles Servicing and Spares
2005 2006 2005 2006 2005 2006 2005 2006 2005 2006 2005 2006 2005 2006 2005 2006 2005 2006 2005 2006 2005 2006 2005 2006 2005 2006 2005 2006 2005 2006 2005 2006 2005 2006 2005 2006 2005 2006 2005 2006 2005 2006 2005 2006 2005 2006 2005 2006 2005 2006 2005 2006 2005 2006 2005 2006 2005 2006 2005 2006 2005 2006 2005 2006 2005 2006
0.80% 0.82% 0.48% 0.36% 0.78% 0.72% 2.89% 3.20% 0.50% 1.96% 0.37% 0.31% 0.51% 1.38% 0.34% 0.29% 0.43% 0.46% 4.15% 3.43% 0.37% 0.38% 0.07% 0.06% 0.23% 0.23% 8.90% 9.42% 10.29% 10.47% 0.86% 0.91% 2.40% 0.24% 1.03% 2.73% 0.78% 0.67% 0.11% 1.03% 6.43% 6.40% 20.43% 18.66% 0.06% 0.07% 1.85% 1.43% 1.86% 2.81% 1.56% 1.73% 2.63% 2.29% 0.27% 0.36% 0.51% 0.51% 1.51% 1.54% 24.92% 23.33% 0.28% 0.28% 1.40% 1.51%
0.42% 0.66% 0.33% 0.27% 0.80% 0.97% 8.33% 3.06% 19.13% 1.31% 0.37% 0.18% 5.27% 5.78% 0.41% 0.48% 6.03% 3.17% 5.18% 3.66% 0.36% 0.25% 0.06% 0.08% 0.09% 0.07% 11.99% 7.84% 5.53% 4.51% 0.65% 0.71% 1.67% 0.27% 0.72% 1.70% 3.56% 24.76% 0.76% 2.36% 5.55% 4.17% 5.35% 9.70% 0.07% 0.58% 0.64% 1.27% 0.99% 1.66% 1.43% 1.14% 0.05% 3.79% 0.44% 1.08% 0.48% 0.53% 0.77% 1.75% 9.12% 11.35% 0.47% 0.13% 3.00% 0.78%
0.23% 0.29% 1.56% 0.61% 1.72% 1.12% 0.17% 10.55% 0.12% 2.94% 0.00% 0.24% 0.50% 2.13% 0.24% 0.33% 0.83% 0.48% 14.50% 5.23% 0.16% 0.15% 0.88% 0.11% 0.01% 0.09% 11.12% 10.32% 14.52% 10.61% 1.00% 0.50% 1.14% 0.26% 0.32% 2.70% 0.38% 0.16% 0.13% 6.50% 1.80% 4.82% 1.88% 9.56% 0.01% 0.07% 1.16% 2.33% 0.66% 1.16% 5.38% 1.10% 0.00% 0.46% 0.34% 0.55% 0.31% 0.31% 0.65% 0.61% 36.90% 22.38% 0.08% 0.28% 1.29% 1.03%
Table 6 (p13): Supplier category group spend as a percentage of the GPC Visa annual spend for each sector. These ﬁgures have been compiled from the data available at the time of going to press. The ﬁgures should not be taken as a deﬁnitive breakdown of the GPC annual spend 2006. Personal Services cover services such as counselling, childcare, investigative services and funeral and crematorium services.
Number of supplier outlets where buyers can use GPC Visa.
Case Study: Department for Constitutional Affairs8 14—15
In 2006, the Department of Constitutional Affairs (DCA) was responsible for dealing with over 6.5m cases in the courts and tribunals service alone. It is a large department with the need to purchase a large amount of goods and services to ensure the smooth delivery of its responsibilities. The department’s purchasing requirements and processes are overseen by a central procurement division. GPC Visa was implemented by the DCA in April 2001 as part of the drive to increase efﬁciency within the purchasing process. Since its introduction to the department, GPC Visa has seen rapid growth in its adoption and usage by purchasers. Joanne Burtenshaw, DCA National Card Administrator, sees the beneﬁts of employing an easy to use technology. According to Joanne, “purchasers enjoy having the ability to control the purchase of goods as and when they need them. Any doubts purchasers have about the advantages of using GPC Visa are dispelled after their ﬁrst purchase.” GPC Visa users within the department are now using it to pay for the majority of low value, high volume purchases. A total of 106,164 transactions were placed using GPC Visa in 2005–2006, which resulted in value for money savings of £3 million. The DCA anticipates savings of over £4 million in the 2006–2007 ﬁnancial year. Purchasers are encouraged to use GPC Visa in particular for all goods and services which are intended to be consumed at the point of purchase or delivery. It is also used extensively for travel and accommodation purchases as well as ‘one off’ spot purchases. Stakeholder feedback was, and still is, an important feature of the scheme, helping to continuously deﬁne and improve the programme processes and guidance. The procurement division has found supplier adoption to be straightforward due to the signiﬁcant number of suppliers that accept Visa. The unit is so sure of the advantages of using GPC Visa both to the department and their suppliers that acceptance of GPC Visa is now part of the department’s standard contract terms and conditions. A particular advantage of GPC Visa to the department has been the ease with which it has been possible to extend the scheme and train new purchasers. Since its inception, the department has grown in size as its responsibilities have increased. The creation of HM Courts Service in 2004 as an agency of the department meant that responsibility for the running of all the courts in England and Wales came under the department’s remit. Additionally, in 2006 the Tribunal Service was created as an agency of the department to provide common administrative support for the main central government tribunals. The nature of GPC Visa meant that extending the scheme to accommodate these new responsibilities and agencies was straightforward for the procurement division. There are now over 2,500 GPC Visa users across the department and its agencies. New users are easily adopted onto the scheme due to a combination of simple purchasing processes, knowledge sharing by existing users and dedicated support from the procurement division. At present, the department is very satisfied with GPC Visa usage but is ambitious to extend the scheme into new areas. The next challenge for the procurement division is to improve their management information systems to enable effective strategic spend analysis at Corporate and Agency level. Contributor: Joanne Burtenshaw, Department of Constitutional Affairs
The Department of Constitutional Affairs became a part of The Ministry of Justice on the 9th May 2007.
GPC Visa: Innovation and Opportunity
GPC Visa has witnessed a wide range of innovations from public sector bodies in their use of the programme. Each GPC Visa implementation is different, with organisations using their GPC Visa scheme to overcome speciﬁc challenges to become more efﬁcient, more effective and able to deliver improved services to the citizen. The supplier category data (see page 12) shows that GPC Visa is being used to purchase a wide range of goods and services. Access to suppliers is critical for procurement technologies, and the value of GPC Visa lies in the variety and number of suppliers that will accept GPC Visa and in the different ways that GPC Visa can be used with those suppliers. As well as purchasing stationery, travel, hotel accommodation and IT consumables over the internet, GPC Visa has also been used to purchase urgent social care needs by allowing social workers to make spot purchases. GPC Visa has been integrated with e-marketplaces and other e-procurement solutions (see page 19) to ease supplier adoption for catalogue-based purchasing systems. The constant innovation by GPC Visa customers demonstrates that the tool is a highly ﬂexible and scalable solution, capable of creating efﬁciency savings from the smallest public sector organisation through to the largest central government department. The GPC Visa programme has adapted to meet the needs of the public sector. OGCbuying.solutions continues to develop the programme to help public sector bodies to make best use of the GPC Visa solution. Outlined below are just some of the additional support services available to organisations with GPC Visa schemes. GPC eSolutions GPC eSolutions is a suite of internet-based management information solutions (MIS). GPC eSolutions gives managers the ability to track, report and extract data on the activity within a GPC Visa scheme. Using GPC eSolutions gives GPC Visa scheme managers high quality information on the users, departments and suppliers engaged in the scheme. This critical information can be used to validate the introduction of GPC Visa, to control the activity of buyers and to expand a GPC Visa deployment. GPC eSolutions provides spend analysis data that can be used to help procurement staff to monitor supplier performance and to negotiate improved contract terms from suppliers, whilst also providing transaction data required for audit. A customer can select from three different levels of GPC eSolutions according to the organisation’s needs and the scale of its programme. The GPC eSolutions basic option is free to all organisations with a GPC Visa scheme, and other options are available at a cost. For further details on GPC eSolutions, please visit www.purchasingcard.info. The ofﬁcial GPC Visa website www.purchasingcard.info offers a comprehensive source of information as well as a benchmarking tool to help procurement managers and suppliers to develop a business case for GPC Visa. The site offers best practice guidance, implementation case studies and the latest press releases, as well as previous annual reports. The website also provides access to a database of suppliers who supply Summary tax data and Line Item Detail (LID, see glossary) transaction data. It is possible to search the database to see whether suppliers can offer VAT accredited evidence data on the transactions that are made using GPC Visa. Last year, the benchmarking site received over 600,000 hits from 55 different countries. Supplier Matching Service The supplier matching service is made available to GPC Visa customers via their issuing bank. The service allows GPC Visa customers to submit their own list of suppliers to be analysed and to identify which suppliers accept payment using Visa. Where a supplier accepts Visa, the level of transactional data they are able to supply, e.g. Level 1, Summary tax data or LID, will also be identiﬁed. This information is invaluable both to organisations investigating the option to use GPC Visa and to organisations seeking to expand an existing scheme. If you are a GPC Visa customer and require further details, please contact your issuing bank. For organisations who are not yet GPC Visa customers, any of the issuing banks will be able to help you apply for this service. Contact details for the issuing banks can be found on page 33. User Groups and Conferences OGCbuying.solutions facilitates GPC Visa user groups to provide users with an opportunity to share their experiences, discuss best practices and raise any issues they may have. A national user group and three regional user groups are planned in 2007, in order to support GPC Visa users with implementing, improving and extending their GPC Visa schemes.
22% OF GPC VISA SPEND IS ON TRAVEL
22% of spend through GPC Visa is on travel by rail, road and air
39 MILLION SHEETS OF A4 PAPER 149 TONNES OF CARBON SAVINGS
GPC Visa: Innovation and Opportunity
In October 2006, the ﬁrst GPC Visa Annual Conference was held in London. The conference was attended by existing GPC Visa customers, prospective customers and industry experts. Presentations were given throughout the day on topics ranging from innovative uses of GPC Visa through to integration with ﬁnancial management systems. The day provided an opportunity for networking within the GPC Visa community, and the feedback from the delegates demonstrated the value of such events. The 2007 GPC Visa Conference will be held in the autumn and will be free to attend for all GPC Visa customers. Materials from the 2006 GPC Annual Conference and dates of upcoming User Group meetings and the next GPC Visa Annual Conference can be found at www.purchasingcard.info. Zanzibar Managed Service Zanzibar is a web-enabled purchase to pay system and e-marketplace available to all public sector organisations in England, Wales and Northern Ireland under an OGCbuying.solutions framework agreement. The system enables public sector buyers and their suppliers to link up over the internet and transact end-to-end requisitions, orders and invoices. Zanzibar has been successfully integrated with GPC Visa and provides a simple solution for automating the purchase to pay process for any supplier. Zanzibar allows users to embed one or more GPC Visa cards to pay for items ordered through the marketplace. This allows Zanzibar customers to easily adopt any of the 820,000 Visa-capable suppliers in the UK to the Zanzibar service.
GPC Visa, a sustainable solution
Case Study: Durham County Council
Durham County Council’s Service Direct Department carries out essential services that require specialist knowledge and skills. Services provided by the department include building services, catering, cleaning and ﬂeet management. Building services covers the upkeep of all council-owned properties from schools to care homes. In order to satisfy the needs of their clients, the Buildings Maintenance Division has a rapid response team of tradesmen to carry out essential maintenance promptly and efﬁciently. The stated aim of the rapid response team is “to provide clients with a service where one visit satisﬁes their requirements”. Whilst the tradesmen carry a number of supplies with them, it is not always possible to anticipate the exact requirements for each job prior to visiting the site. Depending on the location, this could result in the tradesmen making a lengthy trip back to the stores to pick up a part. The previous paper-based process required tradesmen to handwrite every purchase order in triplicate. These forms then had to be ﬁled correctly by the tradesmen. Not only was this process detracting from their primary work of maintaining the council’s properties, but it also created work for the back ofﬁce. The clerical team would have to process all the paper orders raised by the tradesmen, which could be as many as 1000 orders per month. Additionally, it is estimated that a signiﬁcant number of order notes were being lost and that many of the orders which were ﬁled contained errors that required resolution. The council implemented GPC Visa with Deecal’s management information software. Employing a strict policy for using the cards, the council has allowed the tradesmen to use the cards to purchase the parts and tools they require for their rapid response work. Using GPC Visa has resolved many of the procedural problems that were occurring under the old system. GPC Visa enables the tradesmen to assess the job ﬁrst, and if they need to purchase additional supplies to complete the job, they can do so locally without having to complete forms in triplicate. GPC Visa therefore enables the tradesmen to deliver a more efﬁcient, higher quality service and helps them to meet their goals. To control spend, tradesmen are limited to using their cards with preferred suppliers. Each of these suppliers has the capability to provide Line Item Detail data for all the transactions they process. The council now receives an electronic record of every item purchased using the cards, including the VAT that has been paid on each item. Using LID-capable suppliers means that the data can be automatically uploaded to the council’s ﬁnancial management system and that maverick spend can be easily monitored. In addition, the council has developed an in-house system so that the data can automatically be integrated with the job costings system to provide accurate up-to-date job information and expenditure, improving budgetary controls. The use of GPC Visa has resulted in back ofﬁce time-savings equivalent to almost one full-time staff member and this time is now being used to deliver improved frontline services. GPC Visa has provided a simple method to automate a time-consuming process. The Buildings Maintenance Division now has a new purchasing process that provides signiﬁcantly better information while using fewer resources to deliver the same outcome. Contributor: Chris McEleavey, Durham County Council
300% INCREASE IN LOCAL GOVERNMENT TRANSACTIONS
161,382 transactions in 2005
689,195 transactions in 2006
£676 MILLION SPEND £665 MILLION TARGET
The annual spend target for GPC Visa in 2006 was £665m, this target was exceeded by over £10m (£676,052,175)
Advice for Programme Managers
Following a consultation in 2006 with industry experts with a proven history of implementing GPC Visa schemes, the following provides some best-practice advice to consider when implementing or expanding a GPC Visa programme. Step: Building the business case Guidance: It will be necessary to undertake detailed analysis of spend and processes in order to build a strong business case that will generate savings for the organisation. Where organisations are able to commit resources to spend and process analysis, they are likely to beneﬁt in the long term, as they will have a better understanding of their current purchasing costs and the savings that can be achieved using GPC Visa. An introduction to process mapping analysis can be found on page 25. For more information on the business case for GPC Visa, a benchmarking tool can be found at www.purchasingcard.info. Step: Spend controls Guidance: Schemes implementing strict supplier category controls (see page 12) on their cards at implementation have often resulted in buyers being unable to use their cards in a number of important suppliers. In this case, the controls that have been put in place can act to restrict the effectiveness of the scheme and be counter productive. Therefore, the scheme manager is usually required to review the use of controls in order to identify which controls should be removed. Using the management information available to scheme managers, it is possible to track cardholders’ compliance with procurement policies on a regular basis and identify off-contract spend. Taking this approach to controlling spend will mean that cardholders are not restricted from making legitimate purchases. To discuss GPC Visa security and control features, please speak to an issuing bank. Contact details can be found on page 33. Step: Management information Guidance: Management information will allow you to analyse buying activity and efﬁciency, but this information needs to be prepared in advance, so it is important to know what information is likely to be needed before an implementation. Agree what information needs be gathered with procurement staff and ﬁnance staff to establish the organisation’s reporting requirements. For example if the organisation plans to measure contract compliance, then it will be necessary to establish a reporting procedure that includes details of the items bought from contracted suppliers. Preparation for reporting is important because reporting on spend categories and budget allocations will affect the design of cardholder procedures and transaction logs. Step: Planning for reconciliation Guidance: In many public sector organisations, ﬁnance teams are updating systems and procedures in order to establish commitment accounting. This is a process whereby at any given moment the ﬁnance director can report on the organisation’s ﬁnancial status. This requires the organisation to record all purchases at order stage in the ﬁnance system. GPC Visa transactions may not be recorded in the organisation’s ﬁnance system until the bank ﬁle is sent to the organisation, which usually happens on a monthly basis. To use GPC Visa in line with the requirements of commitment accounting, it is possible to establish a process to provide commitment-accounting data by using cardholders’ transaction logs. Each time a cardholder makes a purchase using GPC Visa, they can be required to complete a transaction log with details of the purchase. This data can be integrated with the organisation’s ﬁnance system to record the purchase at the time of the order. This will allow GPC Visa to provide the ﬁnancial transparency and rigour favoured by ﬁnancial managers. Step: Resourcing a card scheme Guidance: It is essential to consider the work required to maintain a scheme after an implementation. Therefore it is necessary to build into the business case the need to monitor and maintain the scheme after implementation. A well-managed scheme will enable the delivery of the efﬁciencies needed to justify this use of resource. The OGC has published guidance on the scope of the work required to implement and manage a GPC Visa scheme. More information on scoping a GPC Visa scheme can be found in the paper ‘GPC Scope of Work’ at www.ogc.gov.uk. Step: Preparing for implementation Guidance: For an implementation to work successfully it is important to document the key variables in the implementation before the implementation commences. Ensure that all the appropriate procedures for using the card are in place prior to implementation. This should include details of cardholders, planned card limits and details of approved suppliers.
Advice for Programme Managers
Step: Supplier engagement Guidance: Working with suppliers to engage them in a scheme is essential. Making acceptance of GPC Visa one of the organisation’s standard contract terms and conditions will help suppliers understand how important it is to be able to accept payment by Visa and will ensure that all new suppliers used by the organisation will ﬁt in with the organisation’s procurement processes. To assist with supplier engagement, GPC Visa users can use the supplier matching service to identify which of their regular suppliers already accept payment using Visa. For more information on the supplier matching service see page 16. Step: Set up and rollout Guidance: GPC Visa is an established procurement tool that has been thoroughly tested by over 750 different public sector bodies processing 13.4m transactions in nine years. Choosing to opt for a ‘pilot’ implementation with no plans to expand the scheme can hamper a scheme and cause it to lose impetus. Instead, draw up plans for a phased implementation that encompasses the full scope of the proposed rollout. Case studies and information on the numerous successful schemes in operation can be found at www.purchasingcard.info. Step: Managing and monitoring Guidance: Any monitoring activity should reference the business case to assess progress against the intended aims for the project. Step: Securing compliance Guidance: Compliance to contracts is critical to secure the cost savings from contracts with suppliers. GPC Visa provides organisations with the information to monitor contract compliance. It is essential that GPC Visa data is regularly monitored to identify maverick spend. Monitoring GPC Visa data is more effective if an MIS solution is used. For more information on management information services (MIS) see GPC eSolutions on page 16. Step: Recovering beneﬁts Guidance: If an organisation wants to recover the time savings created through the use of GPC Visa, it should be prepared to carry out the business process mapping analysis (see page 24) in order to benchmark the current processes so that improvements to any process are suitably documented.
Good Practice: Process Mapping
What is process mapping? Process mapping is a technique that can be used for any form of process redesign, but it is particularly valuable for managers working with GPC Visa. It allows managers to document how the existing processes work, helping them to visualise the ﬂow of data and to redesign that ﬂow to be more efﬁcient. Process maps can be used to demonstrate how efﬁcient a process is and how GPC Visa can streamline a process and eradicate inefﬁciency. This means that a process map can be a crucial tool for working with other staff, either to gain ﬁnancial support for modernising the organisation with GPC Visa, or to gain departmental support for changing an inefﬁcient process. Why is process mapping important? GPC Visa can help improve the efﬁciency of a wide range of transactions, but in order to maximise the efﬁciencies from using GPC Visa, it is necessary to understand what can be achieved using GPC Visa and then to adopt a structured, methodical approach to recovering those efﬁciencies. Process mapping records how a purchasing process is currently undertaken and highlights the inefﬁciencies in the process. The map can then be used to help redesign the process using GPC Visa. By making a visual representation of a purchasing process and highlighting any inefﬁciencies, staff can be clear about what needs to change and about how much time can really be saved by using GPC Visa. Mapping the process also isolates the most inefﬁcient steps in a process and will help managers to understand the scope and to prepare for a change management project. Process mapping is appropriate to all GPC Visa customers, including those with existing schemes. New suppliers, new systems and new procedures can all provide opportunities for greater efﬁciency. Process mapping allows GPC Visa users both to compile data on their purchasing processes in a manner that identiﬁes opportunities for streamlining processes and to assess the likely savings from the new process. How to get started In all but the smallest organisations, there will be a number of ways to make a purchase, and therefore the process to conduct a cash purchase will be different from the process to purchase a laptop. As well as organisation-wide procedures, such as the need for quotes once a purchase reaches a certain value, individual departments will have their own very speciﬁc purchasing procedures. Whilst it is possible to get a broad view of how purchasing might work from a corporate perspective, in order to get a detailed understanding of the steps in a process it is necessary to work directly with those staff in departments who are responsible for completing the work. Working by department, staff will be able to trace the ﬂow of purchasing information through the department, through to reconciliation and payment in the ﬁnance department, recording each step in the process. For example, a cash purchase will usually require a staff member to document the request for cash and to complete an expenses form, both of which will need to be approved by another member of staff before the cash can be released. Therefore, this process requires at least ﬁve steps before the buyer even visits the supplier. Whatever the form of purchase, each of the steps required to complete a purchase in the department should be documented and drafted into a ﬂow diagram. As well as recording each step, it is important to make a note of some additional information for each step: the more information that can be recovered, the easier it will be to identify the steps that need to be streamlined using GPC Visa. The data to gather could include the following: — — — — The nature of the work undertaken (e.g. handwrite a requisition using an order pad) The time taken to complete each step Whether the step uses paper or electronic data The department within which the work is undertaken
By mapping out the steps in a graphical way (see overleaf) it is possible to identify how data moves through the organisation as the process progresses, thus making it easier to identify common blockages or under-resourcing as well as unnecessary and inefﬁcient steps in a process. Identifying the inefﬁciencies To identify whether a process is truly inefﬁcient, it is important to know not just whether the process can be improved but also how often the process is undertaken, as a minor inefﬁciency in a frequently repeated task is more likely to generate savings than a major inefﬁciency in an infrequent task. Therefore, it will be necessary to identify the likely volumes for each process. Once the key information about the purchasing processes has been documented, it is possible to use the time and frequency data to assess how efﬁcient a process is. By using average valuations for staff time, it is also possible to evaluate the cost of each process. This information can be used to isolate the most inefﬁcient processes and the most inefﬁcient steps within those processes. These are the processes and steps that the organisation must focus on to make efﬁciency gains. Once these inefﬁciencies have been identiﬁed, it will be possible to investigate how these processes and steps can be streamlined using GPC Visa.
60 MINUTES 01 09 09 17 22
9 8 Receive details of work to be completed Travel to the site Assess the problem and record any requirements to complete the job Time: 0 Format: Paper Travel to the authority Complete order form in triplicate
Process map for a paper based transaction undertaken by a tradesman working in a building services department
32 MINUTES 01 09 09 17 17
9 Receive details of work to be completed Travel to the site Assess the problem and record any requirements to complete the job Time: 0 minutes Format: Paper Travel to the supplier Complete the work
Process map for a GPC Visa transaction undertaken by a tradesman working in a building services department
37 35 34 26 24
Make purchase on account Give the supplier the second copy of the order form Travel to the supplier File one copy of the order form Approve the order form
Time: 1 Format: Paper
Time: 8 Format: —
Time: 8 Format: —
Time: 5 Format: Paper
32 30 22 22 18
9 9 Complete transaction log online Travel to the authority Travel to the site Make purchase using GPC Visa Give the supplier the second copy of the job requirements form Time: 1 minute Format: Paper
Time: 1 minute Format: Paper
Time: 8 min utes Format: —
Time: 8 minutes Format: —
Time: 0 minute Format: —
45 45 53 54 55
9 Travel to the site Complete the work Travel to the authority Attach the receipt for the purchase to the third copy of the order form Time:1 Format: Paper
Time: 2 Format: —
Time: 1 Format: Paper
Time: 8 Format: —
Time: 2 Format: Paper
Time: 2 Format: Paper
Send the receipt and order form to the ﬁnance department Time: 1 Format: Paper
Total time (minutes)
Time: 2 minutes Format: Manual electronic
Time: 8 minutes Format: —
Time: 0 minutes Format: —
Time: 4 minutes Format: Automatic
60 60 59 58 56
9 Payment made via BACS Payment approved Payment information keyed into the ﬁnance system Invoice matched with order and receipt Finance receives the supplier’s invoice
Time: 8 Format: —
Time: 0 Format: —
Time: 8 Format: —
Total time (minutes)
Time: 0 Format: Automatic
Time: 1 Format: Manual electronic
Time: 1 Format: Manual electronic
Time: 2 Format: Paper
Time: 1 Format: Paper
The timings for the assessment of work and the completion have been given a null value, as they will not be affected by the purchasing process used.
Good Practice: Process Mapping
Using the map to design the new process Redesigning a process is a simple matter of investigating how a purchase might be completed using GPC Visa. Therefore, in the case of the cash transaction that required ﬁve steps before the staff member could visit the supplier, when this transaction is redesigned, then all of these preparatory steps can be eliminated, because a GPC Visa cardholder can visit the supplier directly. The new process halves the number of steps for each purchase, and the time taken to complete the transaction is reduced by 53%. If this process is being completed by three staff members in a department only six times a week, using GPC Visa can save the department over eleven hours per staff member each month. Over a year the department will save 403 staff hours per annum. If each of these staff has a total resourcing cost of £30,000 per annum, modernising will generate a time saving valued at minimum of £8,396. Given that this estimate takes no account of the additional savings such as reduced petrol consumption, error reductions or time saved in accounts payable, it is easy to see that GPC Visa can create signiﬁcant value for an organisation. GPC Visa is a ﬂexible tool that can be used in a number of ways and is not reliant on point of sale transactions, where a cardholder visits a supplier. Online transactions, lodge cards and telephone transactions can all be used. When redesigning a process, it is important to take an open-minded, problem solving approach that uses the full range of functions available to GPC Visa users.
£109 MILLION OF EFFICIENCY SAVINGS IN 2006
£108,600,464 of savings calculated using the National Audit Ofﬁce (NAO) approved ﬁgure of £28 per transaction
Benchmarking Benchmarking is the process of assessing your current position. Prior to changing processes, it is good practice to qualify the current position. This not only encourages proper process analysis in advance of making any change, but also provides a position with which to compare the new process after change. The comparison between the “before” and “after” demonstrates how efﬁcient the new process is in comparison with the old process. Beneﬁts realisation Beneﬁts realisation describes the actions taken to identify where beneﬁts should come from, assessing whether beneﬁts are being achieved and taking steps to ensure that cashable and non-cashable beneﬁts are achieved. Business case A business case is used to obtain management commitment and approval for investment in business change. The business case provides a framework for planning and management of this change and ongoing identiﬁcation of risks. The viability of any project will be judged on the contents of the business case. Commitment accounting Commitment accounting means running accounts in a way that makes it possible to see how much money has been committed against the budget, as well as how much of it has actually been spent. Corporate contract A corporate contract is a formal agreement with a supplier that is used by all departments and services in the organisation for the purchase of particular goods or services. e-marketplace An e-marketplace is a procurement solution that enables buyers from different organisations to access online catalogues of approved suppliers and view the goods and services available to them. Embedded card The embedded card functions in a similar way to a physical card, except that the account details are stored electronically and so there is no need for the physical card. These are also known as virtual cards or lodge cards. Framework agreement A framework agreement is a general term for agreements with providers that sets out terms and conditions under which speciﬁc purchases (call-offs) can be made throughout the term of the agreement. Full-time equivalent (FTE) Full-time equivalent is a term used to describe the amount of work (usually measured in hours) that a full-time staff member undertakes. The term is used to quantify the amount of work required for a particular task, process or position. For example, if a task is deemed to require two FTEs to complete, this means that the completion of the task will require the equivalent of two members of staff working full time on it for the duration of the task. Issuing bank This is the bank that provides an organisation’s GPC Visa scheme. The GPC Visa-issuing banks are listed in the contacts section, on page 33. Level 1 data Standard transaction data which does not include descriptive details of goods or services purchased, tax information or references. Data provided for each transaction includes cardholder details, supplier name, date and total transaction value. Level 2 data See ‘Summary Tax Data’. Level 3 data See ‘Line Item Detail Data’. Line item detail (LID) data Enhanced transaction data that includes descriptive details of each good or service purchased in a transaction. LID data includes deﬁned tax infomation that can be used as VAT evidence and a customer deﬁned reference. LID data also deﬁnes goods or services by means of commodity codes. Lodge cards See “Embedded cards”.
Maverick spend Maverick spend refers to any transactions undertaken without authority or with unapproved suppliers. A supplier may be unapproved because the goods or services they provide are already covered by a corporate contract with another supplier and can usually be bought at a lower price. Alternatively, it may be because the supplier cannot meet certain criteria that the organisation speciﬁes for all its suppliers to meet, e.g. environmental policy. Management information software (MIS) Management information software (e.g. GPC eSolutions) provides tools that allow GPC Visa users to work with the transaction data provided by the bank as part of their scheme. MIS software will usually include basic reporting tools that allow GPC Visa users to investigate the bank data, such as the transaction frequency on each supplier. MIS tools can also be used to facilitate the upload of the electronic bank data ﬁle into an organisation’s ﬁnancial management system. The software also enables a user to easily analyse the data through the use of reports. Process efﬁciencies A process efﬁciency is achieved as a direct result of changing a process. The efﬁciency may, for example, be a saving of resource due to automation of a process. Process mapping Process mapping involves identifying and analysing all the separate tasks that combine to complete one process. Through mapping the individual tasks, it is possible to identify how processes can be made more efﬁcient. (See page 24) Purchase to pay process The complete process required to make a purchase from identifying need through to paying the supplier and logging that payment in the ﬁnance system. Reconciliation Reconciliation is the act of matching the electronic data received from the bank with the organisation’s ﬁnancial system. Summary tax data Enhanced transaction data that includes information that can be used as VAT evidence in some circumstances. Summary tax data includes, limited information on the goods or services purchased; deﬁned tax information on the purchase and a customer deﬁned reference. Summary tax data also deﬁnes goods or services by means of commodity codes. Supplier The organisation from which goods or services are purchased. Supplier adoption Supplier adoption refers to any activity that encourages a supplier to transact with the organisation in the way that the organisation wishes to transact. In the case of GPC Visa, this covers activities as varied as informing an already capable supplier that they will now be paid by Visa to helping a supplier become able to accept Visa. Supplier categories A supplier category applies to a particular group of goods or services. Categorising goods and services enables transactions to be sorted according to type of purchase. Each supplier who becomes a Visa acceptance supplier is able to categorise their business according to a given supplier category. GPC Visa cards can also be restricted so that certain categories of goods or service cannot be purchased by that card. For a breakdown of the spend in each supplier category, see page 13.
£376 MILLION CUMULATIVE SAVINGS SINCE 1997
Barclaycard Business Dept. CJ 1234 Pavilion Drive Northampton NN4 7SG Contact: Terry Noble 01604 254 661 email@example.com The Co-Operative Bank PLC P.O. Box 101 1 Balloon Street Manchester M60 4EP Contact: Steve McMylor 07710 865 239 firstname.lastname@example.org Lloyds TSB Bank PLC Great Surrey House 203 Blackfriars Road London SE1 8NH Contact: Chris Townend 07725 425 678 email@example.com NatWest Commercial Cards 7th Floor 2 1⁄2 Devonshire Street London EC2M 4BA Contact: Steve Pratt 07770 736 630 firstname.lastname@example.org Royal Bank of Scotland Group Commercial Cards 7th Floor 2 1⁄2 Devonshire Street London EC2M 4BA Contact: Steve Pratt 07770 736 630 email@example.com
Ulster Bank Limited Ulster Bank–Commercial Cards 11–16 Donegall Square East Belfast BT1 5UB Contact: David Holmes 0845 3660666 firstname.lastname@example.org OGCbuying.solutions 5th Floor Royal Liver Building Pier Head Liverpool L3 1PE Contact: Customer Services 0845 410 2222 www.ogcbuyingsolutions.gov.uk Visa Europe Government Services Team Visa Commercial PO Box 39662 London W2 6WH Contact: David Harrison 020 7795 5085 email@example.com Contact: Jonny Holden 020 7297 1050 firstname.lastname@example.org General Enquiries email@example.com Ticon UK Limited 146 Strand London WC2R 1JD Contact: Ian Makgill 020 7836 1999 firstname.lastname@example.org
The data used to compile this report was provided by various departments and banks and has not been audited by Ticon. Ticon UK Ltd accepts no responsibility for the accuracy of this data. This report has been printed on paper produced from sustainable, managed forests. This report was written and produced by Ticon UK Limited. www.ticon.uk.com Designed by BB/Saunders
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