Efficient government spending of resources
Section 227 of the Constitution of Kenya provides for establishment of a system for procurement of goods and services that is fair, equitable, transparent, competitive and cost-effective. It also envisages an Act of Parliament that will prescribe a framework within which policies relating to procurement and asset disposal will be implemented.
The aim of IFMIS Procure to Pay (P2P) system is to develop an efficient and streamlined procurement and payment system by fully automating the procurement and payment process to increase control and visibility over the entire life-cycle of a procurement transaction, from procurement planning to payment. The end-to-end P2P automated process that starts at development of procurement plans, to the actual procurement of goods and services, to payment of suppliers for goods or services delivered.
The P2P implementation that is currently undergoing implementation covers the following 8 modules:
- Supplier Management;
- Requisition Management;
- Quotation Management;
- Contract Management;
- Purchase Order Management;
- Receipt Management;
- Invoicing and Payment Management; and
- Inventory Management.
Figure 4: Major processes involved in the P2P process
The following functionalities within the procurement life cycle have been identified for activation and/or roll out within the next five (5) years:
a. Procurement Planning
A procurement plan is used to provide information about the purchase of goods and services, how vendors will be chosen, what type of contract(s) will be used, how vendors will be managed and who will be involved at each stage of the process. This document will be approved by appropriate individuals before the actual procurement process begins. Developing this plan in the system will ensure that all procuring entities within government buy the right products and or services at the right prices. The plan will help procuring entities to;
- Define all procurement requirements;
- Identify all of the items to be procured in any financial period;
- Create a sound financial justification for procuring;
- Identify all the tasks involved in procuring products and schedule those tasks by allocating timeframes and resources; and
- Create a robust project procurement process for the Government.
The procurement plan will ensure that all procurement activities are planned for and are within the approved budget of the procuring entity. It will also help MDAs and Counties to forecast their needs for goods and services for the year and determine the appropriate procurement method depending on the selection criteria.
b. Supplier Management
Supplier management entails the process of registering suppliers, the goods and services they offer, qualification of the suppliers and managing this information throughout the procurement cycle. The supplier management module is an internet based portal (i-supplier management) that allow the following;
- Self-service registration of suppliers by departments (capturing of supplier information);
- Categorisation of suppliers based on goods and services offered;
- Online supplier approvals;
- Online generation of statistics reports on suppliers like quotations submitted and awarded LPOs/LSOs and their status;
- Self-service supplier details change update; and
- Online collaboration on supplier inquiries.
c. Requisition Management
This process entails creation of purchase requisitions, identification of goods and services to be procured based on the procurement plan created by the users in the departments and approval of these requisitions by the appropriate officers. The envisioned process will make requisitions more efficient and enforce control by ensuring requisitions are done based on the procurement plan. This will be achieved by allowing self-service requisitions, automated approvals and provision of a web-based shopping system that will allow Government employees to create, manage and track their own orders while the procurement department retains central control.
d. Quotation Management
The Quotation management module will enable efficient management of vendor responses to Request for Quotations (RFQs). This includes uploading and management of quotations, bid and tender documents and the tracking of the selection process in the system.
This module will require development and implementation of a Document Management System (DMS) and interfacing the DMS with the Procure to Pay system. The DMS will facilitate the scanning of paper forms, imaging and upload documents leading to effective content and document management. This will provide a solution to effectively track hard copies of documents including include tenders/bids, requests for proposals (RFPs) as well as vendor contracts and store them in electronic format. The DMS will also ensure proper controls are in place and that the Government exposure to risks associated with data entry and lost documents is minimised. In addition, the process will reduce the contracting period and ensure measuring of compliance.
e. Purchase Order (PO) Management
PO management will involve automating the process of raising Purchase Orders after supplier selection has been done and the approval of these purchase orders. After the LPOs have been approved, the supplier will be notified automatically through the i-supplier portal. The envisioned process will free procurement officers from raising POs and taking them round for approvals to focus on supplier relations and strategic sourcing.
f. Receipt Management
This process will automate all activities involved in receiving goods provided by the supplier, from the delivery and receipt of goods, inspection and acceptance process to recording the goods receipt in the system. It also supports the return of delivered goods to the supplier if they fail to meet the inspection criteria and specifications. The envisioned process will allow issuance of a temporary goods received note (GRN) for goods that have been received but have not yet been inspected and will only issue a receipt voucher (S13) for the goods once they have been inspected and accepted.
The envisioned module will support multiple deliveries against single LPO/LSO. After the goods have been successfully accepted in the store, the inventory levels will be updated in the system. Procured items coded as assets will be automatically updated in the fixed assets register. The supplier will then be automatically notified through the i-supplier portal to enable them to raise an invoice.
g. Invoicing and Payments Management
This process will focus on the matching of received invoices against Purchase Orders and processing of payments to suppliers. The envisioned process will allow paying officers to generate a payment schedule, which is a list of all suppliers to be paid, the amount and the payment method. This payment schedule will be transmitted to Central Bank where payments to suppliers will be effected. This will be achieved by integrating the core IFMIS system with the CBK T24 system. The module will allow for online approvals of the payment vouchers as well as tracking the examination and validation of the payment process.
The module will also allow inventory accounting and enable accounting entries associated with inventory items in real time as well as transfer of these entries to the General Ledger in both summary and detailed formats.
h. Inventory Management
Inventory management will involve the management of purchased goods once they have been accepted by the stores with an aim of improving inventory visibility, reducing inventory levels and controlling inventory operations.
The envisioned process will allow the following:
- Setting up and maintenance of item codes for all goods and services;
- Capturing of item prices per unit measure;
- Grouping of items into categories and sub-categories;
- Tracking of item issuance from the stores;
- Generation of ageing stock reports to track dead stock items; and
- Estimation of re-order levels to aid in future procurement planning.
i. Contract Management
The contract management module will facilitate the creation and negotiation of supplier contracts, formulation of service level agreements (SLAs) and a process of managing change to ensure that business rules are enforced and that the public entities get the best from the vendors in terms of rates and quality of service. The module will aim to simplify and streamline the management of vendor contracts and contract deliverables.
j. Reconciliations and Period End Close
This functionality will involve reconciliations and summary year reports related to P2P. The envisioned process will include all facets of reporting, classifying and managing financial transactions within IFMIS for month and year end close processes. It will involve finalising the accounting records for one fiscal year and preparing the accounting records for the upcoming fiscal year.
It will also allow spend analysis to provide increased visibility into the complete procure to pay process including:
- Comprehensive spend and procurement analysis;
- Employee expenses analysis;
- Supplier performance analysis, and
- Supplier payables analysis.