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e-Business: 

Contents | Foreword | Introduction | The Law | Document Management | PKI & ES | DECS
e-Purchasing | Collaborative Working | e-Tendering | Reverse Auction
Government Procurement Card | The e-Business Revolution | Conditions & Guidance
Contact Details | Glossary of Terms | Acknowledgements

Section Links:

What is this Chapter about?
Key points
The Detail
What is P2P?
How will this affect those involved in purchasing?

What is the impact on Industry?
Costs to TPs
Summary
Who should I contact if I want to find out more?
Are there any background documents?

What is this Chapter about?

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This Chapter explains how the Ministry of Defence is introducing electronic purchasing via its Purchase to Payment (P2P) project, and outlines the effects upon Industrial relationships. Unlike some other chapters, where the solutions are perhaps more varied, this chapter is focussed around a real MOD project, deliverable a specific capability and is therefore more practically based.

Key points

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• P2P enables electronic ordering, receipting and invoicing;

• P2P is intended to be an MOD-wide system, but initially will be implemented in the Defence Logistics Organisation (DLO);

• Electronic purchasing can provide improved cash flow predictability;

• P2P provides improved linkage of purchasing to financial management;

• MOD can utilise P2P to identify purchasing trends and better management information.

The Detail

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P2P utilises an Oracle system based on standard commercial practice, which will allow the MOD initially to trade electronically with its Industrial partners via the Defence Electronic Commerce Service (DECS). It will ensure a timelier and more cost effective procurement process, and will be used for the purchase and payment of services and goods (inventory and non-inventory). The intention is that P2P will become the electronic purchasing system for the whole of the MOD.

How will this affect those involved in purchasing?

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The P2P initiative will enable:

• An electronic order for goods and services to be sent to a Trading Partner;

• An electronic receipt to be held and linked to the order for goods and services;

• An electronic invoice to be sent to the MOD;

• The order, receipt and invoice to be matched on-line generating an electronic message authorising the DBA to process the payment to the Trading Partner;

• The Defence Financial Management System (DFMS) to be updated with the necessary information.

When P2P is deployed those involved in purchasing on behalf of the MOD will assume new roles and responsibilities, for which they will receive training. For example, the Defence Bills Agency will perform the Accounts Payable function in lieu of their current price-matching responsibilities, which will now be performed by P2P.

What is the impact on Industry?

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There are a number of benefits to Industry in the P2P initiative, the main ones being: -

• The commercial processes employed should enable Industry (described on P2P as Trading Partners, or TPs) to work with MOD in a similar manner to their other customers, i.e. they will no longer have to configure their business processes and information systems to work in a MOD-specific manner.

• The automation of processes should speed up doing business with the MOD.

• TPs should find improvements to cash-flow predictability.

Costs to TPs

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. As originally envisaged, TPs would have been charged for access to the DECS-hosted purchasing service. However, in the better interests of Industrial partners, the MOD has decided to bear these costs itself. As well as demonstrating the Department’s commitment to e-Commerce, this should also encourage all of the MOD’s Industrial partners over time to use the facility.

Whilst there are to be no joining or transaction costs to the TP, enabling connection to DECS may incur ‘back office’ costs. These will be the responsibility of the TP.

Finally, dependant upon the connectivity option chosen, there may be some associated costs to TPs. The following diagram gives an indication of what these costs might be, although it should be borne in mind that they could be more or less than those illustrated and there may be additional options to fulfil these requirements.

TP Take-on Process. Cap Gemini Ernst & Young (CGEY), the DECS service provider, is responsible for engaging Industry in the P2P take on process, in line with MOD instructions.

Existing contractual arrangements will need to be migrated to the new business process. This can only be achieved, by agreement with Industry, through the amendment of the contracts. All Industrial partners identified for possible migration to P2P should therefore expect to receive a letter, either from MOD or from CGEY acting on MOD’s behalf, giving them reasonable notice of the department’s intent to migrate business to P2P. This will be followed up by further information and communications events. Note, however, that as the take on of TPs must align with the roll out of P2P within the department not all Industrial partners will receive letters immediately.

Summary

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P2P will revolutionise the way that the MOD conducts purchasing. By taking this step MOD has enabled business to be conducted in the electronic environment. Benefits to MOD and Industry alike include a reduction in the current large amounts of paperwork, a decrease in the purchasing cycle time-scale through increasing automation of the process, and improved certainty of cash-flow.

Who should I contact if I want to find out more?

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DECS Service Desk (DECS & the registration process);
Tel: 0870 241 3569
e-mail: decs.servicedesk@cgey.com

Further advice on MOD’s commercial policy on P2P:
Gwen Beale, Principal Directorate Commercial, DLO
Tel: (01225) 467530
e-mail: pdc-comm@a.dii.mod.uk

Are there any background documents?

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General Information on DECS and P2P - DECS website www.d2btrade.com

DCTM 17/2002 – Electronic Purchasing for the Defence Logistics Organisation

DLO/DECS Purchase to Payment intranet site (only accessible from within the MOD)
www.p2p.dii.r.mil.uk

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