Session 4 Malaysia Azlan Zakaria Final 231111

Government of Malaysia
Using e-GP as Performance Tool to Improve Public Procurement at the Organisational Level
The Malaysian Experience
Asia and Pacific Regional Conference on Electronic Government Procurement (e-GP) 22-24 November 2011 Bali, Indonesia
Muhammad Azlan Zakaria Asia and Pacific Regional Conference on Electronic Government Procurement 2011 eProcurement Unit, Ministry of Finance Malaysia
Table of Contents 1 2 3 4 5
2
Introduction - The Malaysian Government Procurement Landscape The Malaysian Government Electronic Procurement System - ePerolehan ePerolehan as a Performance Tool ePerolehan Moving Forward as a Strategic e-GP System
Moving Forward
Asia and Pacific Regional Conference on Electronic Government Procurement 2011
3
Introduction - The Malaysian Government Procurement Landscape The Malaysian Government Electronic Procurement System - ePerolehan ePerolehan as a Performance Tool ePerolehan Moving Forward as a Strategic e-GP System
Moving Forward
Malaysian Government Procurement

Government procurement is an important sector of the economy and have significant impact to the countrys well-being
Contributes up to 15% of GDP
Operating Expenditure grew leap-folds from RM44b in 1997 to RM138b in 2010*
Reflects National Identity and Business Conditions Index
Demand for Good Governance and Best Practices
Growing Expectations for Fair, Openness and Faster Service Delivery
* Treasury Economic Report 2010/2011
The Government Procurement Regime

Public sector procurement is governed by the Ministry of Finance Malaysia under the Government Procurement Division and procurement activities are decentralised to each Federal Ministries
Government Procurement Division, MOF

Regulate Procurement Policies, rules and regulations Registration of suppliers Advisory and consultancy on procurement process Conduct procurement analysis
eProcurement Unit, MOF

Project management for the Government eProcurement system - ePerolehan Administer ePerolehan system development according to Government procurement policies and procedures Monitor progress and usage of ePerolehan Manage inter-dependencies of ePerolehan integration with other applications
All 25 Federal Ministries and Agencies

Manage respective budget spending and expenditures Rollout expenditure according to programmes Allocate budget according to respective procurement offices Conduct procurement processes and activities
The Government Procurement Regime

GP PRINCIPLES : 1) 2) 3) Public Accountability Transparency Value for Money 4) 5) Open & Fair Competition Fair Dealing
Below MYR50,000 Direct Purchase/ Supplies & Direct Appointment Services Electronic catalogue provided for sourcing of goods and services Fast purchase
Above MYR50,000 to MYR500,000 Quotation Supplies & Services By invitation at least 5 Suppliers. Also open to other interested and qualified Suppliers
Tender
Supplies & Services
Above MYR500,000 Open to all Detail specifications and requirements
Electronic Reverse Auction
Supplies & Services
Above MYR50,000
Open to all based on pre-qualification criteria

Minimal and standard specifications
7
Introduction - The Malaysian Government Procurement Landscape The Malaysian Government Electronic Procurement System - ePerolehan ePerolehan as a Procurement Performance Tool ePerolehan Moving Forward as a Strategic e-GP System
Moving Forward
Objectives
With electronic procurement, the Government aspires to reinvent the way in which it operates to be more responsive to the needs of the business community
Introduce e-commerce
Promote transparency and accountability
Reduce turnaround procurement cycle
Promote savings
ePerolehan Framework
ePerolehan caters for a secured end-to-end transaction from Buyer to Seller and finally linking to the Accountant Generals Office for Electronic Funds Transfer (EFT) Digital Certificate Authority
Government Agencies
Suppliers
eG*Net
Internet
EFT
Accountants General Office

9
Banking Institutions
Consultants
ePerolehan Generic Solutions

ePerolehan covers end-to-end strategic sourcing and procurement execution
Create & Approve Requisition Receive Electronic Invoice
Supplier Registration
Identify & Qualify Suppliers
Create Purchase Order (PO)
Pay Supplier (EFT)
Evaluation Process & Supplier Selection
Send Electronic PO to Supplier
Analyze Performance
Contract Award
Receive & Inspect Goods or Services
Review Contracts
Sourcing Strategy 10
Purchasing Execution
ePerolehan Modules
ePerolehan caters a comprehensive procurement modes under Supply and Services including Supplier Registration
Supplier Registration
Go Live October 2000
Central Contract
Go live October 2000
Direct Purchase
Go Live May 2002
Quotation
Go Live May 2003
Tender
Go Live May 2003
Ministry Contract
Go-Live May 2005
Electronic Reverse Auction

Go-Live February 2009
11
eP Community
ePerolehan is now firmly established as the primary public procurement platform, as shown by the rapid growth in transaction volume and users Cumulative Procurements ePerolehan Communities
Transacting Agencies Government Users eCommerceready Suppliers Active Registered Suppliers
Transaction Value Transaction Volume
eP is one of the most successful eGovernment project

12
Largest G2B eProcurement community in ASEAN
13
Introduction - The Malaysian Government Procurement Landscape The Malaysian Government Electronic Procurement System - ePerolehan ePerolehan as a Procurement Performance Tool ePerolehan Moving Towards as a Strategic e-GP System
Moving Forward
Performance improvements
Performance improvements from ePerolehan are apparent as compared to the previous manual procurement
Manual Procurement Longer manual procurement cycle time affects productivity and performance
Excessive resources focus on low-value activities Disproportionate acquisition cost to product value Non-leveraged spending across Agency High margin of human errors Inadequate audit and analysis on spending 14 Process automation reduce human errors Increased number of procurements conducted
ePerolehan
Faster procurement cycle time enhance transparency & productivity
Process is completed in less time Reduced cost of administration & purchasing Clarity in policies and procedures
Leveraging ePerolehan as a Performance Tool Operational Level

There are 4 main elements in ePerolehan that offers useful information that can be utilised to analyse performance aligned to the Government Procurement Principle Government Procurement Principles
Public Accountability Transparency Best Value for Money
Open Competition
Fair Dealing
Transactional Trends and Cost Savings

Monitor and analyse spending derived from the Costs of Goods, Procurement Processing Costs and Inventory
Efficiency & Effectiveness

Monitor end-to end procurement cycle time Monitor compliance to Policies and processes
Transparency
Security
Monitor supplier evaluation and selection criteria
Monitor and prevent unauthorised usage
15
Transactional Trends and Cost Savings

In principle, ePerolehan managed to register savings of approximately 10% - 30% cost saving achieved from reduction in cost of goods, processing cost and inventory management cost
Cost of Goods
Increase competition from a wider base of suppliers Broad selection of online catalogues (1.8m products and services) Electronic Reverse Auction module achieved 10-30% cost reduction in price of products & services tendered
Procurement Processing Costs

End-to-end online procurement process on a real time basis generates saving in administrative wastages i.e. paper, fax, telephone & logistic Spend analysis Online Sourcing Online Buying Online Approval
Inventory Costs
Spend Analysis features facilitate improved planning & control to the related inventory management Optimal Inventory level improve control of supply and demand Speed in fulfillment of supplies
16
Efficiency
Process efficiency can be analysed throughout end-to-end procurement through benchmarking against the set KPIs 1 2 3 4 5 6 Order
Supplier Management Requirement / Budget Definition Request Management Supplier Selection / Order Issuing Management / Invoicing / Payment Monitoring / Reporting
ePerolehan Components
Supplier Registration / Renewal Category Application Bumiputera Status Performance Management Reports / Statistics Procurement Budget Formulation Catalogue Search Requirement Definition Request Preparation Request Assessment Request Acceptance Procurement Channel Identification Contract Definition Payment Order Registration Order Registration, Formalisation Goods Receivable Invoice Entry Payment & Filing Periodic Reporting Payment History Monitoring, Assessment Analysis
Faster product search & leverage better spending
Goods Stockage
Payment less than 14 days
More timely report generated
Registration processing within 1- 7 days 17
Reduce use of paper & manual labour process
Competitive sourcing tools for price comparison
Efficiency (contd)
1 Supplier Management
Increase productivity level on number of Supplier approvals conducted per day from average 35 applications to 225 applications Registration approval shortened from 36 days to <7 days Registration backlog reduced from 1,151 to average 15 applications Eliminates number of missing of manual forms and documents from average 10% in 2000 to < 0.5% MOF Virtual certificate distribution to improve delivery and eliminate fraud 18
2 Requirement / budget Definition

Single catalogue system product search of > 1.8m products/services compared to limited manual catalogues Reduced advertising & marketing via e-Catalogue 100% error-free data entry through pre-formatted supplier search criteria and parameters
3 Request Management
Improved compliance to procurement procedures from 70% to 100% integrated & standardized procurement rules Pre-configured Approval and authorization procedures compared to Multiple processing at various levels Faster & efficient communication via electronic purchase inquiry and online prequalification from 2 days to real-time
Efficiency (contd)
4 Supplier Selection / Order Issuing
Reduced average tender procurement turnaround time from 3-6 months to < 23 days (sourcing through eP eBidding module) Shortened supplier selection process from 1 week (manual) to < 1 day (through online DP module)
5 Order Management / Invoicing / Payment

Reduced Payment period via EFT Payment from 30 days to < 14 days Automated Payment Matching process for the Purchase Order, Delivery Order, and Invoice. Reduced from 3 days (manual) to real-time Automated cross-Agency interfacing with AG (eSPKB) for budget verification, authorization and update
6 Monitoring / Reporting
Reduced percentage of lost/misplaced data/documentations through online archival
Speed in accessing procurement data (realtime & on demand)

Comprehensive data for spend analysis.
19
Efficiency (contd)
The automation features in Direct Purchase module has improved the average end-to-end cycle time within 20 days
Purchase Inquiry
Request Order
Purchase Order
Total Invoice
Payment
20 days
3 days
2 days
14 days
1 day
20
Efficiency (contd)
Direct Purchase Module conducted at selected Ministries
Ministry Ministry of Health Supply of Nursing equipments Supply and Install Pesonal Computers Supply of various medicines Supply of Uniforms Ministry of Home Affairs Rental of Photocopy machines Maintanence of Homedyalisis machines Supply of Petrol Ministry of Defence Supply of Bottled Water Supply of Food rations Supply of Vehicle Spare parts Ministry of Education Supply of various stationary and office equipments Food Catering services Maintainence of Air-Conditioning system Average Total Duration Total Cost (RM) Duration from Requisition until Pending Payment (No. of Days) 18 19 20 12 d d d d
35,000 18,300 22,000 16,000
5,800 16,230 4,300
19 d 27 d 21 d
4,000 12,500 14,800
19 d 20 d 26 d
9,000 8,200 5,000
25 d 18 d 25 d 20 days
Average Total Time spent via Direct Purchase module is 20 days

21
Efficiency (contd)
Quotation Module end-to-end process
Creation of Quotation
Committee Formation
Supplier Invitation & Publish
Quotation Closing
Less than 1 day
1 day
1 day
7 days
Quotation Consolidation
Finalisation
LOA Issuance
Total 22 days
11 days
1 day
1 day
22
Efficiency (contd)
Quotation Module conducted at selected Ministries
Ministry Ministry of Federal Territories Supply and Installiation of Personal Computers Rental of Personal Computers Ministry of Housing and Local Government 495,000 495,000 1d 1d 1d 1d 1d 1d 6.5 d 5d 9d 9d 1d 0.5 d 0.5 d 1d 20 d 19 d Quotation Estimation Price (RM)
Creation of Quotation Committee Formation Supplier Invitation & Publish Quotation Closing Quotation Consolida tion Finalisation LOI Issuanc e Total Days
Multimodal Transport Operator (MTO) Services

Prime Ministers Department Building Maintanence services
400,000
0.2 d
1d
2d
7d
8d
0.5 d
1.5 d
20 d
350,000
3d
1d
0.5 d
7d
11 d
1d
1d
25 d
Supply of various Office Furnitures & fixtures

Building Security services Ministry of Education Supply and Printing for Text Books
200,000
200,000
0.3 d
0.2 d
1d
0.3 d
0.3 d
0.2 d
7d
7d
10 d
8d
1d
1.3 d
1d
1.3 d
21 d
19 d
500,000
1d
0.3 d
0.5 d
7d
10
1d
1d
21 d
Average time spent
0.9 day
1 day
1 day
7 days
11 days
1 day
1 day
22 days
Average Total Time spent via Quotation module is 22 days

23
Efficiency (contd)
Tender Module end-to-end process
Creation of Tender
Committee Formation
Supplier Invitation & Publish
Tender Closing
Less than 1 day
1 day
1 day
21 days
Quotation Consolidation
Finalisation
LOA Issuance
Total 37 days
11 days
2 day
1 day
24
Efficiency (contd)
Tender Module conducted at selected Ministries
Ministry Ministry of Youth and Sports Rental of ICT Equipments Maintanence & Cleaning Services at various zon in Sabah Supply of various ICT hardware and software Ministry of Finance Supply and Installation for IT System Supply of leather goods for office attire Supply, Install and Maintanence of ICT hardware Building Cleaning & Maintanence Services Ministry of Defence Supply of Food Rations Laundry and Cleaning services Maintanence of Office Uniforms Supply of Uniform and other equipments Ministry of Agriculutre Supply of 2 Tanker Lorry Fertilisation Services Ministry of Internal Affairs Supply of Packed Foods Supply of Packed Foods and other rations Supply and Maintanence of ICT system and services Average duration Value (RM) 2,760,000 4,978,662 5,970,000 Duration from Tender Creation to LOI (no. of days) 38 d 27 d 30 d
6,000,000 3,240,000 3,100,000 850,000
41 d 23 d 40 d 36 d
2,300,000 1,850,000 745,430 1,001,520
31 d 26 d 42 d 40 d
1,001,300 2,366,800
38 d 41 d 39 d 27 d 32 d 36 d 37 days
1,387,000 3,650,000 2,500,000
Average Total Time spent via Tender module is 37 days

25
Transparency
ePerolehan provide tools in managing transactional and archival transparency
Transactional Transparency
Standardisation of procurement procedures and compliance through process automation Ease of conducting business by single entry for supplier registration & electronic procurement with the Government Enhanced transparency through fast registration approval & shorter procurement cycle
Archival Transparency
Improved accountability through digital signature technology Archival of all procurement data & process throughout the procurement cycle Speed in access to procurement activities (real-time) Comprehensive data for information, planning & control purposes Provides central online repository to Tender invitations from the Ministries 24x7 online access and downloadable Tender documents
Transparent qualification & selection criteria/process

Reduced face to face contacts & visits to Government offices
26
Security
ePerolehan can monitor and restrict usage based on user profiles embedded through Public Key Infrastructure (PKI) technology Controlled Access
Secured User Authentication & Verification via PKI to deter unethical behavior and unauthorised access The use of two-factor authentication for improved security
Data Integrity
PKI implementation covers digital signature & data encryption throughout procurement process
System Security
Secure Internet firewall & 100% hack-free 24-hours disaster recovery back-up and protection Strict adherence to procurement policies, process, regulations through process rules
100% data accuracy and completeness through system validation

Availability of audit trail on each activity
27
Leveraging ePerolehan as a Performance Tool Strategic Level

The use of ePerolehan for procurement under Supply and Services is mandatory for all Federal Government Ministries. ePerolehan is able to monitor compliance and other strategic policies set by the Government
Monitor Adoption and Transition to ePerolehan
Monitor Transaction and Usage
Monitor Supplier Records and Performance
Records of all Procurement Offices and user profiles are centralised in the system
Monitoring of all Ministry performance on using ePerolehan against their annual procurement budgets
Monitoring the Supplier growth level according to the national agenda
28
29
Moving Forward
The ePerolehan Journey

Over the last 10 years, ePerolehan has overcome many challenges throughout the transition from manual to electronic procurement
30
ePerolehan Aspirations towards a Strategic e-GP System

For ePerolehan to continue its impressive growth and deliver the next wave of benefits, we now need to drive forward to the next stage of eProcurement development
Strategic Procurement
Collaboration Supply Chain Optimization Procurement Plan and Spend Analysis
Operational Procurement
Focus and Guiding Principles
Tactical Buying Order Creation Complement Manual Process Limited Online Content
31
Institutional Framework Readiness

Malaysia has charted its future growth towards high income economy by year 2020. This led to series of key transformation initiatives which will translate our readiness towards moving into strategic procurement
GOVERNMENT DIRECTION MINISTRY OF FINANCE
Treasury Circulars and Instructions
1 Malaysia
ALL FEDERAL MINISTRIES

Ministry Key Result Areas (MKRA) Minister Key Performance Indicators (MKPI)
DEPARTMENT & AGENCIES

KRAs, Milestones and Performance Measures Service Delivery and Standards Reports and Financial Performance
MyProcurement Portal
VISION 2020
Government Transformation Programme
Procurement Integrity Pact Outcome Based Budgeting Ministry Annual Planning & Budget Cycle
Economic Transformation Programme
National e-Tendering Initiative Integrated Financial Management System
Inventory and Spent Management
10th Malaysia Plan
32
ePerolehan Approaches towards a Strategic Procurement System

eP system will provide a host of new cutting-edge features that will deliver world-class strategic procurement
Front-End
A ePerolehan eMall, with multiple value-add features providing clear advantage over offline procurement Intuitive and customizable Web 2.0-based personal portal Online Tender Scoring A B
Back-End
Interactive rule- and role-base workflow system Single user login to access all eP features, driven by central profile management Playbook, Templates and Directory standardisation
B C
Business Intelligence
A
B Customisable control panel for PTJs, with scorecards and dashboards, sophisticated reporting, advanced analysis and real-time information and alerts Best-in-class business intelligence features also available to the MoF for top-down view
33
Advanced Business Intelligence as a Strategic Procurement Tool Real-time business intelligence through a comprehensive control panel will give Agencies an end-to-end view of their operations Scorecards & Dashboards
Tracking performance vs. Supplier KPI targets
Advanced Analysis
PTJ Control Panel
Activity summary profiling with quick links to details from supplier database Monte Carlo scenario planning for future demand
Interactive drag-ndrop charts with data drill down
Reporting
1-click reporting from charts, by procurement category
Alerts & Notifications

Customisable price watch alerts
Historic trends & future projections by category
Supplier & order status notification through fixed & mobile internet
34
(Contd)
A customised control panel to achieve visibility and control over the 2,500 Procurement Offices Scorecards & Procurement Dashboards Plan
Procurement Offices share of activity tracking MoF Control Panel Top-down planning & budgeting based on Procurement Offices input reports Scenario-based macro analysis at national level
Overall Procurement Offices performance versus targets
Reporting
Customisable reports derived from chart based on MoF priorities
Alerts & Notifications

Customisable monitoring & escalation alerts
External data feeds to compare performance with benchmarks
Multi-platform notifications, including ePerolehan app
35
Adopting Best Practices in eProcurement System The new ePerolehan will be designed by adopting eProcurement best practices in order to achieve superior electronic procurement solutions
User Empowerment
1
Interactive
Advanced Intelligence
Public Procurement 7 Globalisation
Superior ePerolehan System
Seamless Integration
Robust
6 5
Cost Effective Maintenance Speed
36
37
Moving Forward
Moving Forward
Business Process Reengineering
Management of Change
Technology
Strengthening publicprivate collaborations Strengthening ownership through Train-thetrainer Linking performance with impact
Advanced business intelligence features Next generation mobile applications & channels
Identify & integrations with various Agencies and applications Process optimisation through best practices
Service-oriented system architecture (common front & back office service oriented layer)
Enhance infrastructure capacity & performance Digital soft certificate
Develop procurement professionals across government officers
38
Thank you
www.eperolehan.gov.my 39 www.treasury.gov.my

Session 4 Malaysia Azlan Zakaria Final 231111

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Session 4 Malaysia Azlan Zakaria Final 231111

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Government of Malaysia

Asia and Pacific Regional Conference on Electronic Government Procurement 2011

Asia and Pacific Regional Conference on Electronic Government Procurement 2011

Malaysian Government Procurement

Contributes up to 15% of GDP

Operating Expenditure grew leap-folds from RM44b in 1997 to RM138b in 2010*

Reflects National Identity and Business Conditions Index

Demand for Good Governance and Best Practices

Growing Expectations for Fair, Openness and Faster Service Delivery

* Treasury Economic Report 2010/2011

Asia and Pacific Regional Conference on Electronic Government Procurement 2011

The Government Procurement Regime

Government Procurement Division, MOF

eProcurement Unit, MOF

All 25 Federal Ministries and Agencies

Asia and Pacific Regional Conference on Electronic Government Procurement 2011

The Government Procurement Regime

Supplies & Services

Above MYR500,000 Open to all Detail specifications and requirements

Electronic Reverse Auction

Supplies & Services

Open to all based on pre-qualification criteria

Asia and Pacific Regional Conference on Electronic Government Procurement 2011

Asia and Pacific Regional Conference on Electronic Government Procurement 2011

Promote transparency and accountability

Reduce turnaround procurement cycle

Asia and Pacific Regional Conference on Electronic Government Procurement 2011

Accountants General Office

ePerolehan Generic Solutions

Identify & Qualify Suppliers

Create Purchase Order (PO)

Pay Supplier (EFT)

Evaluation Process & Supplier Selection

Send Electronic PO to Supplier

Receive & Inspect Goods or Services

Asia and Pacific Regional Conference on Electronic Government Procurement 2011

Electronic Reverse Auction

Asia and Pacific Regional Conference on Electronic Government Procurement 2011

Transaction Value Transaction Volume

eP is one of the most successful eGovernment project

Largest G2B eProcurement community in ASEAN

Asia and Pacific Regional Conference on Electronic Government Procurement 2011

Asia and Pacific Regional Conference on Electronic Government Procurement 2011

Asia and Pacific Regional Conference on Electronic Government Procurement 2011

Leveraging ePerolehan as a Performance Tool Operational Level

Transactional Trends and Cost Savings

Efficiency & Effectiveness

Monitor supplier evaluation and selection criteria

Monitor and prevent unauthorised usage

Asia and Pacific Regional Conference on Electronic Government Procurement 2011

Transactional Trends and Cost Savings

Procurement Processing Costs

Asia and Pacific Regional Conference on Electronic Government Procurement 2011

Faster product search & leverage better spending

Payment less than 14 days

More timely report generated

Registration processing within 1- 7 days 17

Reduce use of paper & manual labour process

Competitive sourcing tools for price comparison

Asia and Pacific Regional Conference on Electronic Government Procurement 2011

2 Requirement / budget Definition

5 Order Management / Invoicing / Payment

Speed in accessing procurement data (realtime & on demand)

Asia and Pacific Regional Conference on Electronic Government Procurement 2011