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1
Using e-GP as Performance Tool toImprove Public Procurement at the
Organisational Level
Government of Malaysia
Muhammad Azlan ZakariaeProcurement Unit, Ministry of Finance Malaysia
The Malaysian Experience
22-24 November 2011Bali, Indonesia
Asia and Pacific Regional Conference on
Electronic Government Procurement (e-GP)
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Table of Contents
Introduction - The Malaysian Government
Procurement Landscape
1
2
3
4
5
The Malaysian Government ElectronicProcurement System - ePerolehan
ePerolehan as a Performance Tool
ePerolehan Moving Forward as a Strategice-GP System
Moving Forward
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Table of Contents
Introduction - The Malaysian Government
Procurement Landscape
1
2
3
4
5
The Malaysian Government ElectronicProcurement System - ePerolehan
ePerolehan as a Performance Tool
ePerolehan Moving Forward as a Strategice-GP System
Moving Forward
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Malaysian Government Procurement
* Treasury Economic Report 2010/2011
ReflectsNational
Identity and
BusinessConditions
Index
OperatingExpenditure
grew leap-foldsfrom RM44b in
1997 to
RM138b in2010*
Demand forGood
Governanceand
Best Practices
Government procurement is an important sector of the economy and havesignificant impact to the countrys well-being
Contributesup to 15% of
GDP
GrowingExpectations
for Fair,
Opennessand FasterServiceDelivery
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The Government Procurement Regime
Public sector procurement is governed by the Ministry of Finance Malaysiaunder the Government Procurement Division and procurement activities are
decentralised to each Federal Ministries
Regulate ProcurementPolicies, rules andregulations
Registration of suppliers Advisory and consultancy on
procurement process
Conduct procurementanalysis
GovernmentProcurement Division,
MOF
eProcurement Unit,MOF
Project management for theGovernment eProcurementsystem - ePerolehan
Administer ePerolehan systemdevelopment according toGovernment procurementpolicies and procedures
Monitor progress and usage ofePerolehan
Manage inter-dependencies ofePerolehan integration with otherapplications
All 25 Federal Ministries
and Agencies Manage respective budget
spending and expenditures Rollout expenditure according
to programmes Allocate budget according to
respective procurementoffices
Conduct procurementprocesses and activities
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GP PRINCIPLES :
1) Public Accountability 4) Open & Fair Competition
2) Transparency 5) Fair Dealing
3) Value for Money
Direct Purchase/Direct Appointment
Below MYR50,000
- Electronic catalogue provided for sourcing of goods and services
- Fast purchase
Supplies &Services
QuotationAbove MYR50,000 to MYR500,000- By invitation at least 5 Suppliers.
- Also open to other interested and qualified Suppliers
Supplies &
Services
TenderAbove MYR500,000
- Open to all
- Detail specifications and requirements
Supplies &Services
The Government Procurement Regime
Electronic
ReverseAuction
Above MYR50,000
- Open to all based on pre-qualification criteria
- Minimal and standard specifications
Supplies &
Services
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Table of Contents
Introduction - The Malaysian Government
Procurement Landscape1
2
3
4
5
The Malaysian Government ElectronicProcurement System - ePerolehan
ePerolehan as a Procurement Performance Tool
ePerolehan Moving Forward as a Strategice-GP System
Moving Forward
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Reduceturnaround
procurement cycle
Introducee-commerce
Promote
savings
Promotetransparency and
accountability
Objectives
With electronic procurement, the Government aspires to reinvent the way inwhich it operates to be more responsive to the needs of the businesscommunity
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ePerolehan Framework
ePerolehan caters for a secured end-to-end transaction from Buyer to Sellerand finally linking to the Accountant Generals Office for Electronic Funds
Transfer (EFT)
GovernmentAgencies
Suppliers
ConsultantsAccountantsGeneral Office Banking Institutions
InterneteG*Net
Digital Certificate Authority
EFT
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ePerolehan covers end-to-end strategic sourcing and procurementexecution
ePerolehan Generic Solutions
Send ElectronicPO to Supplier
Receive ElectronicInvoice
CreatePurchase Order (PO)
Identify & Qualify
Suppliers
Evaluation Process &
Supplier Selection
Create & ApproveRequisition
Pay Supplier(EFT)
Analyze
Performance
Receive & InspectGoods or Services
Contract Award Review Contracts
SourcingStrategy
PurchasingExecution
Supplier Registration
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ePerolehan Modules
ePerolehan caters a comprehensive procurement modes under Supply andServices including Supplier Registration
CentralContract
Go liveOctober 2000
SupplierRegistration
Go LiveOctober 2000
DirectPurchase
Go LiveMay 2002
Quotation
Go LiveMay 2003
Go-LiveFebruary 2009
ElectronicReverseAuction
Tender
Go LiveMay 2003
MinistryContract
Go-LiveMay 2005
P C i
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eP Community
ePerolehan is now firmly established as the primary public procurementplatform, as shown by the rapid growth in transaction volume and users
TransactingAgencies
GovernmentUsers
Active RegisteredSuppliers
eCommerce-ready Suppliers
Largest G2B eProcurementcommunity in ASEAN
Cumulative Procurements ePerolehan Communities
eP is one of the most successfuleGovernment project
TransactionValue
Transaction
Volume
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Table of Contents
Introduction - The Malaysian Government
Procurement Landscape1
2
3
4
5
The Malaysian Government ElectronicProcurement System - ePerolehan
ePerolehan as a Procurement Performance Tool
ePerolehan Moving Towards as a Strategice-GP System
Moving Forward
P f i
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Longer manual procurementcycle time affects productivity
and performance
ManualProcurement
ePerolehan
Excessive resources focus on low-valueactivities
Disproportionate acquisition cost toproduct value
Non-leveraged spending across Agency
High margin of human errors
Inadequate audit and analysis onspending
Process is completed in less time
Reduced cost of administration &purchasing
Clarity in policies and procedures
Process automation reduce humanerrors
Increased number of procurementsconducted
Faster procurement cycletime enhance transparency
& productivity
Performance improvements from ePerolehan are apparent as compared tothe previous manual procurement
Performance improvements
Leveraging ePerolehan as a Performance Tool
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Public Accountability Transparency Best Value for Money
Open Competition Fair Dealing
Government Procurement Principles
Transactional Trendsand Cost Savings
Efficiency &Effectiveness
Transparency Security
Leveraging ePerolehan as a Performance Tool Operational Level
Monitor and analyse
spending derivedfrom the Costs ofGoods, ProcurementProcessing Costsand Inventory
Monitor end-to endprocurement cycletime
Monitor complianceto Policies andprocesses
Monitor supplierevaluation andselection criteria
Monitor and prevent
unauthorised usage
There are 4 main elements in ePerolehan that offers useful information that can be utilised toanalyse performance aligned to the Government Procurement Principle
T ti l T d d C t S i
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Transactional Trends and Cost Savings
InventoryCosts
ProcurementProcessing Costs
Cost ofGoods
Increase competition from
a wider base of suppliers
Broad selection of online
catalogues (1.8m productsand services)
Electronic Reverse Auction
module achieved 10-30%cost reduction in price ofproducts & servicestendered
End-to-end online
procurement process ona real time basisgenerates saving in
administrative wastagesi.e. paper, fax, telephone& logistic
Spend analysis Online Sourcing Online Buying Online Approval
Spend Analysis features
facilitate improvedplanning & control to therelated inventorymanagement
Optimal Inventory levelimprove control of supplyand demand
Speed in fulfillment ofsupplies
In principle, ePerolehan managed to register savings of approximately10% - 30% cost saving achieved from reduction in cost of goods,processing cost and inventory management cost
Effi i
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SupplierManagement
Requirement/ BudgetDefinition
RequestManagement
SupplierSelection /Order Issuing
Order
Management/ Invoicing /Payment
Monitoring /Reporting
Supplier
Registration /Renewal
CategoryApplication
BumiputeraStatus
Performance
Management
Reports /Statistics
RequestPreparation
RequestAssessment
RequestAcceptance
Goods Stockage
ProcurementBudget
Formulation
CatalogueSearch
RequirementDefinition
ProcurementChannel
Identification
ContractDefinition
Payment Order
Registration
Order
Registration,Formalisation
GoodsReceivable
Invoice Entry
Payment &Filing
PeriodicReporting
Payment History
Monitoring,
AssessmentAnalysis
Process efficiency can be analysed throughout end-to-end procurement throughbenchmarking against the set KPIs
Registrationprocessing within
1- 7 days
Reduce use ofpaper & manuallabour process
Competitivesourcing tools forprice comparison
Faster productsearch &
leverage betterspending
Payment lessthan 14 days
ePerolehan Components
1 2 3 4 5 6
More timelyreport generated
Efficiency
Effi i ( td)
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Single catalogue systemproduct search of > 1.8mproducts/servicescompared to limited manualcatalogues
Reduced advertising &
marketing via e-Catalogue
100% error-free data entrythrough pre-formattedsupplier search criteria andparameters
Increase productivity level onnumber of Supplier approvalsconducted per day fromaverage 35 applications to225 applications
Registration approvalshortened from 36 days to
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SupplierSelection /
Order Issuing
Reduced Payment periodvia EFT Payment from 30days to < 14 days
Automated Payment
Matching process for thePurchase Order, DeliveryOrder, and Invoice.Reduced from 3 days(manual) to real-time
Automated cross-Agencyinterfacing with AG(eSPKB) for budgetverification, authorizationand update
Reduced average tenderprocurement turnaroundtime from 3-6 months to< 23 days (sourcingthrough eP eBidding
module)
Shortened supplierselection process from 1week (manual) to < 1 day(through online DPmodule)
Reduced percentage oflost/misplaceddata/documentationsthrough online archival
Speed in accessingprocurement data (real-time & on demand)
Comprehensive data forspend analysis.
Order Management /
Invoicing / Payment
Monitoring /
Reporting
4 5 6
Efficiency (contd)
Efficiency (contd)
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Purchase
Inquiry
Request
Order
Purchase
Order
Invoice Payment
3 days 2 days 14 days 1 day
20 days
Total
Efficiency (contd)
The automation features in Direct Purchase module has improved theaverage end-to-end cycle time within 20 days
Efficiency (contd)
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Efficiency (cont d)
MinistryTotal Cost
(RM)
Duration from
Requisition until
Pending Payment
(No. of Days)
Ministry of Health
Supply of Nursing equipments 35,000 18 d
Supply and Install Pesonal Computers 18,300 19 d
Supply of various medicines 22,000 20 d
Supply of Uniforms 16,000 12 d
Ministry of Home Affairs
Rental of Photocopy machines 5,800 19 d
Maintanence of Homedyalisis machines 16,230 27 d
Supply of Petrol 4,300 21 d
Ministry of Defence
Supply of Bottled Water 4,000 19 d
Supply of Food rations 12,500 20 d
Supply of Vehicle Spare parts 14,800 26 d
Ministry of Education
Supply of various stationary and office equipments 9,000 25 d
Food Catering services 8,200 18 d
Maintainence of Air-Conditioning system 5,000 25 d
Average Total Duration 20 days
Direct Purchase Module conducted at selected Ministries
Average Total Time spent via Direct Purchase module is 20 days
Efficiency (contd)
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Creation ofQuotation
CommitteeFormation
SupplierInvitation &
Publish
QuotationClosing
QuotationConsolidation
Finalisation LOAIssuance
Less than 1 day 1 day 1 day 7 days
11 days 1 day 1 day
22 days
Total
Efficiency (cont d)
Quotation Module end-to-end process
Efficiency (contd)
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Efficiency (cont d)
Quotation Module conducted at selected Ministries
Average Total Time spent via Quotation module is 22 days
MinistryQuotationEstimation
Price (RM)
Creation ofQuotation
CommitteeFormation
SupplierInvitation& Publish
QuotationClosing
QuotationConsolida
tionFinalisation
LOIIssuanc
e
TotalDays
Ministry of Federal Territories
Supply and Installiation of Personal Computers 495,000 1 d 1 d 1 d 6.5 d 9 d 1 d 0.5 d 20 d
Rental of Personal Computers 495,000 1 d 1 d 1 d 5 d 9 d 0.5 d 1 d 19 d
Ministry of Housing and Local Government
Multimodal Transport Operator (MTO) Services 400,000 0.2 d 1 d 2 d 7 d 8 d 0.5 d 1.5 d 20 d
Prime Ministers Department
Building Maintanence services 350,000 3 d 1 d 0.5 d 7 d 11 d 1 d 1 d 25 d
Supply of various Office Furnitures & fixtures 200,000 0.3 d 1 d 0.3 d 7 d 10 d 1 d 1 d 21 d
Building Security services 200,000 0.2 d 0.3 d 0.2 d 7 d 8 d 1.3 d 1.3 d 19 d
Ministry of Education
Supply and Printing for Text Books 500,000 1 d 0.3 d 0.5 d 7 d 10 1 d 1 d 21 d
Average time spent 0.9 day 1 day 1 day 7 days 11 days 1 day 1 day22
days
Efficiency (contd)
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Creation ofTender
CommitteeFormation
SupplierInvitation &
Publish
TenderClosing
QuotationConsolidation
Finalisation LOAIssuance
Less than 1 day 1 day 1 day 21 days
11 days 2 day 1 day
37 days
Total
Tender Module end-to-end process
Efficiency (cont d)
Efficiency (contd)
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Efficiency (cont d)
Tender Module conducted at selected Ministries
Average Total Time spent via Tender module is 37 days
MinistryValue
(RM)
Duration from Tender
Creation to LOI
(no. of days)
Ministry of Youth and Sports
Rental of ICT Equipments 2,760,000 38 d
Maintanence & Cleaning Services at various zon in Sabah 4,978,662 27 d
Supply of various ICT hardware and software 5,970,000 30 d
Ministry of Finance
Supply and Installation for IT System 6,000,000 41 d
Supply of leather goods for office attire 3,240,000 23 d
Supply, Install and Maintanence of ICT hardware 3,100,000 40 d
Building Cleaning & Maintanence Services 850,000 36 d
Ministry of Defence
Supply of Food Rations 2,300,000 31 d
Laundry and Cleaning services 1,850,000 26 d
Maintanence of Office Uniforms 745,430 42 d
Supply of Uniform and other equipments 1,001,520 40 d
Ministry of Agriculutre
Supply of 2 Tanker Lorry 1,001,300 38 d
Fertilisation Services 2,366,800 41 d
39 d
Ministry of Internal Affairs
Supply of Packed Foods 1,387,000 27 dSupply of Packed Foods and other rations 3,650,000 32 d
Supply and Maintanence of ICT system and services 2,500,000 36 d
Average duration 37 days
Transparency
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Transactional Transparency Archival Transparency
Standardisation of procurement proceduresand compliance through processautomation
Ease of conducting business by single
entry for supplier registration & electronicprocurement with the Government
Enhanced transparency through fastregistration approval & shorter procurementcycle
Transparent qualification & selectioncriteria/process
Reduced face to face contacts & visits toGovernment offices
Improved accountability through digitalsignature technology
Archival of all procurement data & processthroughout the procurement cycle
Speed in access to procurement activities(real-time)
Comprehensive data for information,planning & control purposes
Provides central online repository to Tenderinvitations from the Ministries
24x7 online access and downloadableTender documents
ePerolehan provide tools in managing transactional and archival transparency
Transparency
Security
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SystemSecurity
DataIntegrity
ControlledAccess
Secured UserAuthentication &
Verification via PKI todeter unethical behavior
and unauthorised access
The use of two-factorauthentication forimproved security
PKI implementationcovers digital signature &data encryptionthroughout procurement
process
100% data accuracy andcompleteness throughsystem validation
Availability of audit trail oneach activity
Secure Internet firewall &100% hack-free
24-hours disaster
recovery back-up andprotection
Strict adherence toprocurement policies,
process, regulationsthrough process rules
ePerolehan can monitor and restrict usage based on user profiles embedded throughPublic Key Infrastructure (PKI) technology
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The ePerolehan Journey
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Over the last 10 years, ePerolehan has overcome many challenges throughoutthe transition from manual to electronic procurement
ePerolehan Aspirations towards a Strategic e-GP System
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Strategic Procurement
Operational Procurement
Collaboration
Supply Chain Optimization Procurement Plan and Spend Analysis
Tactical Buying Order Creation Complement Manual Process Limited Online Content
Focusand GuidingPrinciples
For ePerolehan to continue its impressive growth and deliver the next wave ofbenefits, we now need to drive forward to the next stage of eProcurementdevelopment
Institutional Framework Readiness
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Malaysia has charted its future growth towards high income economy by year2020. This led to series of key transformation initiatives which will translate ourreadiness towards moving into strategic procurement
1 Malaysia
GovernmentTransformation
Programme
Economic Transformation
Programme
10th Malaysia Plan
GOVERNMENTDIRECTION
MINISTRYOF FINANCE
ALL FEDERALMINISTRIES
DEPARTMENT& AGENCIES
Outcome BasedBudgeting
MyProcurementPortal
ProcurementIntegrity Pact
Treasury Circularsand Instructions
Nationale-Tendering
Initiative
Integrated FinancialManagement
System
Ministry Key ResultAreas (MKRA)
Minister KeyPerformance
Indicators (MKPI)
Ministry AnnualPlanning & Budget
Cycle
KRAs, Milestonesand Performance
Measures
Service Delivery
and Standards
Reports andFinancial
Performance
Inventory andSpent
Management
VISION2020
ePerolehan Approaches towards a Strategic Procurement System
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A
B
A
B
C
A
B
ePerolehan eMall, with multiple value-addfeatures providing clear advantage overoffline procurement
Playbook, Templates and Directorystandardisation
Front-End Back-End
Business Intelligence
Best-in-class business intelligence features also available to the MoF for top-down view
Interactive rule- and role-base workflowsystem
Single user login to access all eP features,driven by central profile management
Customisable control panel for PTJs, with scorecards and dashboards, sophisticated reporting,advanced analysis and real-time information and alerts
C
Intuitive and customizable Web 2.0-based
personal portal
Online Tender Scoring
eP system will provide a host of new cutting-edge features that will deliverworld-class strategic procurement
Advanced Business Intelligence as a Strategic Procurement Tool
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PTJ Control PanelTrackingperformance vs.Supplier KPI targets
Interactive drag-n-
drop charts with data
drill down
1-click reporting fromcharts, by procurement
category
Historic trends & future
projections by category
Activity summaryprofiling with quick links
to details from supplierdatabase
Supplier & orderstatus notification
through fixed &mobile internet
Customisable
price watchalerts
Monte Carlo
scenario planning for
future demand
Scorecards &
Dashboards
Reporting
Advanced
Analysis
Alerts &Notifications
Real-time business intelligence through a comprehensive control panel willgive Agencies an end-to-end view of their operations
(Contd)
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External data feeds tocompare performance
with benchmarks
Procurement Offices
share of activitytracking
Overall ProcurementOffices performance
versus targets
Customisable reportsderived from chart based
on MoF priorities
Top-down planning &budgeting based on
Procurement Officesinput reports
Scenario-based
macro analysis at
national level
Customisablemonitoring &
escalation alerts
Multi-platformnotifications, including
ePerolehan app
Scorecards &
Dashboards
Reporting
Procurement
Plan
Alerts &Notifications
MoF Control Panel
A customised control panel to achieve visibility and control over the 2,500Procurement Offices
( )
Adopting Best Practices in eProcurement System
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The new ePerolehan will be designed by adopting eProcurement bestpractices in order to achieve superior electronic procurement solutions
User Empowerment
AdvancedIntelligence
SeamlessIntegration
Cost EffectiveMaintenance
Speed
Robust
Public ProcurementGlobalisation
Interactive
SuperiorePerolehan
System
1
2
3
4
5
6
7
8
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Moving Forward
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Management
of Change
TechnologyBusinessProcess
Reengineering
Identify & integrationswith various Agenciesand applications
Process optimisationthrough best practices
Advanced business intelligencefeatures
Next generation mobile applications& channels
Service-oriented systemarchitecture (common front & backoffice service oriented layer)
Enhance infrastructure capacity &performance
Digital soft certificate
Strengthening public-
private collaborations
Strengthening ownershipthrough Train-the-trainer
Linking performance withimpact
Develop procurementprofessionals acrossgovernment officers
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Thank you
www.eperolehan.gov.my
www.treasury.gov.my