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Transforming government - Achievements in E-government

Electronic shopping the Antarctic way

Australian Antarctic Division - www.aad.gov.au

Profile

The Australian Antarctic Division (AAD) administers Australia's wide-ranging activities in Antarctic and sub-Antarctic regions. It is based in Hobart and is the lead agency in the Australian Antarctic program.

The AAD aims to ensure Antarctica is valued, protected and understood. It conducts Antarctic research and other activities and administers and maintains a presence in Australian Antarctic and sub-Antarctic territories. The AAD manages Australian government activity in Antarctica, provides transport and logistic support, maintains the four permanent Australian research stations, and conducts and manages scientific research programs both on land and in the Southern Ocean.

Challenge

In April 2000, the Commonwealth Government set two goals for Commonwealth agencies:

• pay all suppliers electronically by the end of 2000; and
• provide simple procurement suppliers with the option of trading electronically, using open standards, by the end of 2001.

AAD recognised electronic fund transfer (EFT) would significantly reduce staff time spent in managing cheques - in fact it was fifteen times more expensive to generate a cheque than an electronic payment.

To achieve this goal, AAD had to overcome several hurdles. The purchasing profile presented key challenges. AAD purchases an enormous variety of goods and services from several key suppliers to support the Australian Antarctic Program. A simple analysis of purchase orders showed nearly one third of all purchase order lines were from just two suppliers (for food and medical supplies), but they amounted to less than two per cent of the total value of goods and services.

Solution

The overall approach was guided by asking: 'What is the simplest way to do this that will work?' This principle guided both use of technology and design of process and procedure around that technology.

The AAD recognised that enabling suppliers was critical to success. There was a need to generate awareness of e-commerce concepts and benefits among suppliers, especially small and medium scale enterprises.

Internal processes and issues at the AAD needed to be addressed, especially integration and update of legacy systems. In 1999, AAD had modified its Financial Management and Information System to record bank account details. Payment facilities within the System were already able to process direct payments.

Software was developed in-house to select EFT payments and produce a corresponding remittance advice. The remittance advice is sent to the supplier or staff member advising that payment has been made to their bank account. Staff receive the advice by email, while suppliers may choose email, fax or post.

AAD first ventured into e-procurement in 1999 with a trial arranged by the Tasmanian Electronic Commerce Centre. Another trial, with Tasmania Business Online began in 2001. It involved transmitting a purchase order through to the Tasmania Business Online electronic marketplace, where the order was picked up by the supplier and an acknowledgment sent to AAD. The trial was a success and AAD decided to proceed with Tasmania Business Online in developing an e-procurement system. Tasmania Business Online is based in Tasmania and aims to develop trading communities within the state. It understood the key to successful e-procurement was enabling suppliers, and so small to medium enterprises were targeted in invitations to join the trading communities.

In July 2001, AAD and Tasmania Business Online ran joint e-commerce awareness seminars for suppliers to spark interest in electronic trade and explain the benefits. More than 800 AAD suppliers were invited but despite intensive follow up by Tasmania Business Online, there was little interest. AAD is working with Tasmania Business Online and developing a proposal with the National Office for the Information Economy to enable more small to medium enterprises to take up e-procurement.

Program take-up

More than 12,000 EFT payments have been made since July 1999. Of these, 8,100 remittence advice slips have been sent automatically by fax, 3,700 by email and 450 by post.

In 2001-2002, more than 83.5 per cent of all payments to suppliers (92 per cent by value) were paid by EFT. This is a very good result considering the AAD deals with up to 1,000 suppliers per year. A significant number of suppliers are used only a few times. Rigorous follow-up of all cheque payments with requests for EFT bank details by AAD has ensured EFT payment levels have remained high. The AAD has made great gains towards the goal of paying all suppliers electronically.

The AAD sent the first live orders to a supplier through Tasmania Business Online in September 2001. About 130 purchase orders covering more than 1,400 order lines have been transmitted through Tasmania Business Online to date. About 12 AAD suppliers are now enabled for e-procurement through the Tasmania Business Online electronic market place.

Supplier acceptance has been good (more than 80 per cent) even among very large suppliers. The level of acceptance has been influenced by the quality of the remittance advice.

Benefits

Electronic payments are convenient for both suppliers and staff. Efficient delivery of remittance advice slips with each payment has brought client satisfaction and acceptance.

E-procurement for AAD has resulted in significant benefits, including:

• rationalisation of suppliers;
• reduced need for tendering and quoting;
• order aggregation;
• a reduction of 'maverick' spending;
• significant reduction in staff time spent on purchasing; and
• significant reduction in processing costs.

Future directions

Improvements in the implementation of e-procurement continue and there is still work to be done to extend the system to the rest of the supply chain.

Electronic payments have proved both effective and efficient. AAD is focusing on better ways to detect failures in the system and to improve monitoring scripts and email alerts to staff.

Further information is available from the Supply Chain Facilitator, Australian Antarctic Division Kingston, Tasmania, 7050. Phone: 03 6232 3130; Fax: 03 6220 5333;
Email: roger.knowles@aad.gov.au