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2007 Banking Colloquium
Workshop No. 2 Best Practices in Building Efficient Procurement Card Programs
VITAL STATISTICS
- Canadian Forces (Navy, Army and Air Force)
- 63,750 Full-time Military and a further 25,000 Part-time Reservists
(with anticipated growth)
- Supported by 25,000 Civilian Personnel
- Annual Budget of 17 Billion Can$
- 21 Major Locations across Canada
- 3,000 Deployed Military Forces operating in 12 countries around the World
PURCHASING ACTIVITY
- $7 Billion acquired in goods and services from over 25K vendors
- Processed approximately one million invoices – 93% were for under
$5K (80% of these were under $500)
- Current Acquisition card spend - $150 Million from 380K transactions
INITIAL DEPARTMENT OF NATIONAL DEFENCE EXPERIENCE
- Introduced in conjunction with decentralized procurement authority
- Perceived as:
- Purchasing tool versus a payment tool
- High risk of fraud and misuse
- More difficult to control and track purchasing activity
- Did not fit with traditional culture
VALUE REALIZATION PROGRAMME
- First detailed central analysis of procurement activity:
- Results matched accounts payable and acquisition card activity
- Confirmed monthly procurement patterns by major organization
- Watchlist results showed no significant misuse
- Acquisition card myths started to be dispelled
- Action plan developed
BENEFITS CONFIRMED
- Faster and easier than creating a purchase order
- Reconciliation process worked well and was not cumbersome
- Increased speed of delivery for goods and services
- Faster settlement of outstanding amounts to vendors
- Access to level three data possible
- Potential for increased rebates
KEY STEPS TO PROGRAM SUCCESS
- Senior Management support
- Implement controls at the card level
- Enhance training for users and managers
- Share best practices and vendor data
- Create a reference sheet for cardholders
- Develop an annual report card and monthly performance dashboard
RESULTS TO DATE
- 30% growth in spend, however, only 15% increase in card transactions
- Low dollar value invoices reduced by 7%
- Objective has been included in performance management agreements
- Topic included in all major financial presentations
- Revised card hierarchy implemented
- Detailed vendor opportunity reports developed for each major purchasing
organization
OBJECTIVE
- Reduce the number of eligible accounts payable that are under $5K
- Potential to eliminate 600K invoices and shift $250M in spend from invoices
to accounts payable
- Examine the option of mandating use of an acquisition card for low value
transactions
QUESTIONS?
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