Police collar costs with e-procurement hub

Less than two years since going live, an electronic procurement hub developed by Tranzsoft for NZ Police is handling over 40% of the organisation's purchasing. As Air New Zealand, DX Mail and Holden join nine high volume suppliers already on board, police national procurement manager Stan Pope reckons excessive purchasing costs have been busted.
Stan Pope

When the government pulled the plug on the GoProcure electronic procurement project two years ago, New Zealand Police didn't waste any time in setting up an alternative system.

Out of a total annual budget of roughly $1billion, the force runs one of the public sector's largest accounts payable ledgers with purchases totaling around $200 million a year. The organisation had already identified around 410,000 transactions a year with high volume suppliers that could be managed by an end to end e-procurement solution. These included 131,000 fuel transactions a year and 40,000 stationery invoices a month through single suppliers. The business case for a system that could reduce administrative costs was therefore very compelling.

Tranzsoft implemented its Business Connector e-procurement hub between the Police's SAP ERP system and three high volume suppliers. These were Corporate Express for stationery, Serco Project Engineering Ltd (SPEL) for facilities management and warehousing, and BP for fuel. The original three were later joined by Smartpower, NZ Van Lines, Optim Group, On Line Security, Onesource, Spotless, and Custom Fleet.

Eighteen months later and Air New Zealand, courier company DX Mail and vehicle manufacturer Holden have joined the list.

National procurement manager Stan Pope says the benefits to police are less administration, fewer errors, less manual coding and less time and effort generally.

"The Business Connector hub makes it much easier for all concerned," he says.

Pope says the system has been particularly beneficial for ordering and receiving stationery. Previously the user would have to go through a goods receipting process, coding the supplier invoice and sending it to the police national accounts centre where it would be re-entered manually.

"Now purchasers select products online, usually getting automatic approval, and the order goes directly to Corporate Express, where it is despatched within an hour or two," says Pope.

"It's hugely more efficient. We are handling 35,000 stationery purchase orders and most of these are ‘rats and mice' invoices. and this system cuts out all of that manual re-coding.

Before the addition of the latest three suppliers, the hub was handling 300,000 transactions a year, worth $81 million dollars or roughly 40 percent of total police purchasing, and it has already helped to achieve a dramatic reduction in police purchasing costs. Before the police installed SAP in 1999 the organisation calculated each purchase order was costing $42.15 to process. The combination of SAP and the Tranzsoft hub has brought that down to $5.20.

Pope says suppliers are also benefiting from the hub.

"The supplier gets a lot more surety about payment. Instead of a shotgun of 35,000 invoices sent around the country all these transactions go through a single process and there are less errors as a result."

Pope says a couple more suppliers may join the hub in the next three to four months. "After that, there aren't a hell of a lot on the list to add, we are starting to fill out."

The same technology runs the Tranzsoft Gateway and Pacific Health Exchange here in New Zealand, and handles large volumes of supply chain transactions for scores of other Corporate, SME and Government users, connecting suppliers and customers on both buy and sell sides.

With the Pacific Health Exchange growing from the major Auckland Hospitals to include Capital & Coast in Wellington, Hawke's Bay DHB and 3 more ready to implement, connecting them to medical, wholesale and consumable suppliers, Tranzsoft's trading ‘community' is growing rapidly. This allows all users to connect to each other seamlessly with new and existing users finding many trading partners already connected.

Corporate Express for example uses Tranzsoft to reach customers such as NZ Defence Forces, Auckland District Health Board and Restaurant Brands (KFC, Pizza Hut & Starbucks), meaning other companies buying from or selling to these organisations can now engage knowing that the hub has critical mass and proven technology.

But the reach doesn't just stop with New Zealand. With Tranzsoft's integration with Australia's Pacific Health Exchange and Timber and Hardware Exchange the gateway now offers an Australasian-wide eProcurement hub.

Tranzsoft's Rod Hall also points out that "with the addition of our FlowBiz business automation, users are now able to leverage even more efficiency and cost savings with an automated electronic procurement cycle from product catalogue through requisition, on-line approvals to purchase order, advice notes and invoices."

It seems B2B e-commerce automation is alive, thriving and business as usual – at least for Tranzsoft Gateway users.

See the diagram below for an overview of how many major NZ organisations are using Tranzsoft's e-Procurement and B2B documentation gateway.

For more information on the Tranzsoft e-Procurement solutions contact
Rod Hall
64 9 448 2075