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Proving procurement’s worth with an in-house contract management solution

Part of: Breakfast session Procurement news Case study

Contract management systems can be a real challenge for procurement teams. Will they work well? How much will they cost? Will they really add value to procurement planning? A bespoke contract management database has helped the team at Fire and Emergency New Zealand (FENZ) show procurement’s value to the rest of the organisation.

Fire and Emergency New Zealand manage over 500 contracts, from fire engines to protective clothing and they have signed up for 18 All-of-Government contracts.

Darren Stafford, the National Funding and Procurement Manager, said when he took over four years ago FENZ held their contract data in a database which only provided the organisation with a limited view of what was happening with the contracts.

“All we had was a record of what had been done. Once the contract was signed, it effectively went in a drawer and everybody forgot what its value was and the milestones.”

So FENZ went about adding all upcoming procurement to the database. As well as having a live Annual Procurement Plan that could be prepared at any stage, the reporting from the database empowered the procurement team to work collaboratively with the business owner to plan ahead and think strategically. As a result, the Procurement team is well respected and people want to work with them.

Creating value by linking finance with procurement

But the real value to the organisation came when FENZ married up the finance system with the contract database. This was done using an in-house database expert who worked alongside Darren’s team for six months to enable the contract database access the financial data in real time.

“Now I have visibility. All of a sudden I can see that on a contract worth $70,000, we’re actually spending $2 million with that supplier. This is where we can see we need to spend some time managing this contract.”

This allows the Procurement team and the business to prioritise and work through the contracts in an informed and efficient way.

Lifting procurement up from the detail to the strategic level

Andrew Thrift, the New Zealand Government Procurement and Property Account Manager for FENZ, observes that it was at this point that the Procurement team began really adding value at a strategic level and the benefits and efficiencies began to be realised.

“This has taken procurement into the strategic phase. It’s where it needs to be, with the system now able to give their senior people the tools to make the decisions about investment choices and inform them about contract performance as well,” he said.

“Now they have visibility of our significant contracts and the biggest risks they face as an organisation. They’ve gone from a limited contract management view to strategic relationship management based on real insight.”

Jean Cresswell, one of the Senior Procurement Managers at FENZ, agrees. “Having this database just makes my job so much easier. All of a sudden, everything we’re talking with our colleagues about, our procurement plan for the next 12 months, is here at the press of a button. But the biggest benefit comes from the fact that people across the agency get what we do and want to work with us,” said Jean.

If you are a small agency and don’t have a contract management system in place. FENZ is happy to show you what they’ve done and the steps they took to get there. You can contact Darren on (04) 496 3649 or at darren.stafford@fireandemergency.nz.