Good procurement systems and analytics are the cornerstones of modern procurement. Procurement systems enable efficiency and control over the purchasing process, while good data provides valuable business intelligence and actionable insights.
Over the past 12 months, DTF has harnessed the developing analytical capability from the procurement spend data and analysis project to enable better data-driven procurement decision-making and supported projects to enhance procurement systems.
Under the oversight of the VGPB, DTF continues to lead two technology-related initiatives to improve procurement outcomes.
Improve procurement data and analysis
Procurement spend data and analysis project
The procurement spend data and analysis project, which began in 2020, is now well established, collecting, consolidating and classifying spend data from all departments, Victoria Police, Major Transport Infrastructure Authority (MTIA) and Cenitex.
A significant milestone was achieved this year with six years of data collected, classified and categorised across all departments and accredited agencies – that’s about 10.5 million transactions from 1 January 2016 to 31 March 2022.
Being able to visualise procurement data helps departments and accredited agencies make more informed decisions to deliver their services and achieve their organisational objectives.
With automated data collection now in place as a business-as-usual process, the next steps are to continue refining the procurement classification model to keep the data quality high, while also better harnessing and interrogating the data to gain deeper and more useful insights. These insights can be translated and added to the dashboards and reports used by departments to inform category strategies, drive savings and identify procurement trends.
Case study: New Mail and Delivery SPC
Analysis of spend data is helping to identify SPC opportunities and improve the management of existing SPCs, driving better procurement outcomes across government.
DTF’s category management team used data from the procurement spend data and analysis project to understand spend on mail and delivery services which is not currently captured in the existing . The analysis highlighted an opportunity to broaden the scope of the SPC to include courier services and to aggregate services through a select panel of suppliers.
The new Mail and Delivery SPC should be in place by the end of 2022. The increased scope of services translates to having greater spend ‘on-contract’ and the potential to create value across a larger spend profile. It offers all the benefits that come with directing more government spend through SPCs such as consistent governance and service levels, streamlined procurement, reduced risk and economies of scale.
The SPC sourcing and category management teams are using category data dashboards and analytics to draw out insights to improve SPC management from category planning and strategy to sourcing. For the first time, SPC category managers can compare data received from suppliers against data provided by departments. This helps cross-validate the data which improves reporting and can identify where departments and agencies are incorrectly buying goods and services outside of SPCs (known as contract leakage).
Contract leakage is a recognised challenge for many organisations. Analysis of potential SPC leakage has been shared with departments to ensure these contracts are appropriately managed and used to deliver the best value for money. The VGPB is collaborating with departmental CPOs to address and reduce SPC leakage.
Several new SPC options are already being explored based on data analytics, creating opportunities to leverage the government’s buying power and reduce process burden for government buyers and suppliers.
Experience, knowledge and information developed under the procurement spend data and analysis project have been shared with other Victorian Government technology-based project teams, in particular, how to classify spend data to inform systems development and future audits and reporting.
Victoria has also been providing advice on request to several other Australian state and territory governments and the New Zealand government, which are interested in following the progress and achievements in the data analytics space.
Case study: Data-driven category management
To maximise the many benefits of SPCs, buyers need to be aware of, and use what’s available. Thanks to the procurement spend data and analysis project, DTF now has the data to identify and mitigate SPC ‘leakage’.
Accounts payable data is collected and aggregated, and machine learning technologies classify data to United Nations Standard Products and Services Code (UNSPSC), enabling analysts to more readily identify where spend may be happening ‘off-contract’. DTF is creating customised dashboards and reports for SPC category managers showing category information and insights, including potential contract leakage.
With visibility of potential SPC leakage, category managers can proactively work with departments to understand why it is happening and look for ways to drive more spend through SPCs.
DTF is also sharing data with departmental CPOs to enable them to identify and address leakage in their departments and working with them to continuously improve the accuracy of data classification.
The procurement dashboards are supporting and enhancing efficiency across the category management lifecycle. Insights into an SPC’s spend profile enable category managers to establish a more effective sourcing strategy – from developing the scope to going to market and entering negotiations.
Deliver a single supplier portal
A pilot for the online supplier portal was completed in 2020–21. Over the past year, departments have been consulted to refine the portal requirements. A significant effort has been made to align the supplier portal with the broader plans for government procurement systems.
The portal will give suppliers doing business with the Victorian Government a better digital experience. Suppliers will have a single, central point to register their business details for use across government, instead of registering separately with every Victorian Government department or agency.
The portal will make it easier for suppliers to do business with government and improve visibility of the supplier base for government buyers.
Infographic for Priority 1
Infographic for Priority 1
for Priority 1
- 10.5 million government transactions collect, classified and categorised.
- New dashboards and analytics.
- Preparing supplier portal for launch.
Case study: Leveraging technology to streamline procurement processes
Across the Victorian Government, departments and agencies are implementing new procurement technologies to reduce costs, streamline and automate procurement processes, and reduce risk.
In 2021–22, the Department of Transport implemented the second phase of a new contract management system. More than 1,000 additional users began using the new contract management system in August 2021. The Department’s procurement team led the onboarding process, facilitating training and resolving queries to provide a smooth transition.
The Department is now reaping the benefits of this work, including a centralised repository of procurement information and reporting on a range of key data available at the touch of a button.
Reviewed 20 September 2022