Press Information Bureau Government of India Ministry of Commerce & Industry

Government e-Marketplace

gem.gov.in

Procurement Made Smart

A.    Introduction:Public procurement forms a very important part of Government activity and reform in Public Procurement is one of the top priorities of the present Government. Government e-Marketplace (GeM) is a very bold step of the Government with the aim to transform the way in which procurement of goods and services is done by the Government Ministries/Departments, PSUs, autonomous bodies etc.

B.  Background:GeM owes its genesis to the recommendations of two Groups of Secretaries made to the Hon’ble PM in January 2016. They recommended setting up of a dedicated e-market for different goods & services procured/sold by Government/PSUs besides reforming DGS&D. Subsequently, the Hon’ble FM in his Budget speech for FY 2016-17, announced setting up of a technology driven platform to facilitate procurement of goods and services by various Ministries and agencies of the Government.

DGS&D with technical support of NeGD (MeitY) has developed GeM portal for procurement of both Products & Services. The portal was launched on 9^th August 2016 by the Hon’ble Commerce & Industry Minister. Procurement on GeM has been authorized by GFR by adding Rule 141A (DoE OM dated 3^rd May 2016). Presently more than 7400 products in about 150 product categories and hiring of transport service are available on GeM POC portal. Transactions for more than Rs 140 Crore have already been processed through GeM. GeM is a completely paperless, cashless and system driven e-market place that enables procurement of common use goods and services with minimal human interface.

C.    Benefits of GeM to the Government, Sellers and the Indian industry and economy

1.      Transparency: GeM eliminates human interface in vendor registration, order placement and payment processing, to a great extent. Being an open platform, GeM offers no entry barriers to bonafide suppliers who wish to do business with the Government. At every step, SMS and e-Mail notifications are sent to both buyer, his/her head of organization, paying authorities as well as sellers. Online, cashless and time bound payment on GeM is facilitated through integration with PFMS and State Bank Multi Option System (SBMOPS); web-services integration is being extended to payment systems of Railways, Defence, major PSUs and State Governments. Seamless processes and online time-bound payment, which is also mandated by the OM issued by Department of Expenditure, has given confidence to the vendors and reduced their ‘administrative’ cost involved in pursuing officers for timely payment. 

2.      Efficiency: Direct purchase on GeM can be done in a matter of minutes and the entire process in online, end to end integrated and with online tools for assessing price reasonability. For procurements of higher value, the bidding/RA facility on GeM is among the most transparent and efficient, in comparison to e-procurement systems in vogue within the Government sector. For creating a bid/RA, the buyer does not need to create his/her own technical specifications as they have been standardized on GeM. The bid/RA can be created in a matter of minutes and finalized within a minimum of 7 days.The bid/RA is notified via e-mail and SMS to all the eligible suppliers; new suppliers are also notified once they get themselves registered online on GeM and are determined as ‘eligible’ by the system. GeM bidding/RA therefore ensures competition, fair play, speed & efficiency and leads to proper price discovery. The reasonableness of the rates can also be confirmed through online comparison with market price on leading e-Commerce portals. Very soon, GeM will also start getting feeds from various other public procurement portals in order to ensure that the same item has not been procured at a lesser rate by any other Government agency, from the same or a different vendor.The reasonability of price would be further strengthened by way of integration with GSTN and ICEGATE that will enable the buyer to ascertain the price of an item when it exited the factory gate or when it got imported into the country.   These would make GeM an extremely powerful tool in the hands of Government organizations to plan and procure.

3.      Secure and safe: GeM is a completely secure platform and all the documents on GeM are e-Signed at various stages by the buyers and sellers. The antecedents of the suppliers are verified online and automatically through MCA21, Aadhar and PAN databases. In addition, SEBI empaneled credit rating agencies are also being used for conducting third-party assessment of suppliers. This would further strengthen due diligence about the veracity of suppliers wanting to do business on GeM.For high value bids/RA on GeM, an e-Bank Guarantee is also being introduced.

GeM is a far better system than the existing one which relies more on financial instruments (EMD in case of tenders for large procurements only) to guarantee good conduct by the suppliers. In the existing system, there is zero check on the antecedents of the suppliers for small value procurements (uptoRs 1 lakh) whose cumulative value is huge across the Government organizations. GeM does a 100% online verification of all vendors irrespective of the value of procurement.

4.      Potential to support Make in India:On GeM, the filters for selecting goods which are Preferential Market Access (PMA) compliant and those manufactured by Small Scale Industries(SSI), enables the Government buyers to procure Make in India and SSI goods very easily. Easily accessible MIS also enables the administrators and policy makers to easily and effectively enforce the Government regulations on PMA and SSI sourcing. After the launch of GeM it has been noticed that several leading computer manufacturers have placed PMA compliant products on GeM.

5.      Savings to the Government: The transparency, efficiency and ease of use of the GeM portal has resulted in a substantial reduction in prices on GeM, in comparison to the tender, Rate Contract and direct purchase rates. The average prices on GeM are lower by atleast 15-20%, and in some cases even upto 56%. GeM is also doing Demand Aggregation for items that are to be procured by various Central/State Government Departments. Demand Aggregation is expected to further drive the prices south, by way of standardization of specifications and economy of scale. Demand aggregation for most of the common use goods and services is estimated to result in annual savings to the tune ofRs 40,000 Crore per annum. If pursued to its logical conclusion, GeM would eventually emerge as the National Public Procurement Portal, keeping in tune with the Global best practices; most of the OECD countries, like USA, South Korea, UK, Singapore etc, have a single NPPP and as a result annual savings of billions of dollars are made in public procurement, besides giving a fillip to the domestic industry.

About e Government Marketplace ( GeM)

Based on recommendations of Group of Secretaries made to Hon’ble Prime Minister, the Government decided that DGS&D will create a one stop Government eMarketplace (GeM) to facilitate online procurement of common use Goods & Services required by various Government Departments / Organizations / PSUs. GeM aims to enhance transparency, efficiency and speed in public procurement. It provides the tools of e-bidding, reverse e-auction and demand aggregation to facilitate the government users achieve the best value for their money. DGS&D took appropriate actions to align the existing rules to cater to GeM including swift payment to Suppliers / Sellers after successful delivery of Goods & Services.

The purchases through GeM by Government users have been authorized and made mandatory by Ministry of Finance by adding a new Rule No. 149 in the General Financial Rules, 2017.

GEM ADVANTAGES FOR BUYERS

• Offers rich listing of products for individual categories of Goods/Services
• Makes available search, compare, select and buy facility
• Enables buying Goods and Services online, as and when required.
• Provides transparency and ease of buying
• Ensures continuous vendor rating system
• Up-to-date user-friendly dashboard for buying, monitoring supplies and payments
• Provision of easy return policy

GEM ADVANTAGES FOR SELLERs

• Direct access to all Government departments.
• One-stop shop for marketing with minimal efforts
• One-stop shop for bids / reverse auction on products / services
• New Product Suggestion facility available to Sellers
• Dynamic pricing: Price can be changed based on market conditions
• Seller friendly dashboard for selling, and monitoring of supplies and payments
• Consistent and uniform purchase procedures

CIL likely to offer about 138 mt of coal in various e-auctions in FY18

Kolkata: Coal India Ltd (CIL) is looking to offer tentatively close to 138 million tonnes (mt) of coal through various e-auction schemes in the current fiscal, according to miner's e-auction calendar fro 2017-18.

The e-auction schemes include spot, special forward for power and exclusive for non-power sector.

The miner's seven fully owned subsidiaries -- Eastern Coalfields Limited (ECL), Bharat Coking Coal Limited (BCCL), Central Coalfields Limited (CCL), Northern Coalfields Limited (NCL), Western Coalfields Ltd (WCL), South Eastern Coalfields Limited (SECL) and Mahanadi Coalfields Limited (MCL) -- have given their "tentative" and "provisional" offer for the schemes during the current financial year, which may be revised in accordance to the bidding of coal and as per demand.

Of the total tentative amount, SECL would likely offer close to 30 mt while CCL plans to offer around 46 mt.

Similarly, WCL is expected to offer around 19.54 mt, MCL to offer about 16.77 mt and NCL to 12.75 mt.

BCCL and ECL are expected to offer around 6.36 mt and 7.3 mt respectively.

SECL in its offer said that it had already offered 14.3 mt in the first quarter of FY 18 for various e-auction schemes. It also said out of the total offering in the year, it would likely to offer 18.3 mt for spot e-auction, 8.6 mt for special forward for power sector and 3.2 mt for exclusive e-auction for non-power sector.

Similarly, CCL said it would tentatively offer 16 mt for special forward, 10 mt for exclusive, 4 mt for special spot and 16 mt for spot e-auctions during August 2017 to March 2018 period.

 NewsletterA A

3 Reasons Why eSourcing Can Transform Your Manufacturing Business

In the world of manufacturing, a small incorrect or missing piece can turn into a big problem. At best, this can mean lost production time, at worst, it can mean faulty products. Despite the crucial role that the right products play, many manufacturers still live in the world of spreadsheets and email when it comes to their sourcing practices, both for vendor and internal communications. This creates inefficiencies — ranging from lost man hours to product issues to lost vendor savings — that drain money and waste time.

How can manufacturers flip this cycle to harness procurement’s potential business impact? The answer is in an eSourcing solution that helps teams make smarter decisions to drive savings and create stronger relationships. To this point, a new research paper from Harvard Business Review (HBR) in partnership with Scout RFP found that global insulation, roofing, and composite manufacturer Owens Corning was able to save millions of dollars through strategic eSourcing practices in 2016, which helped the company achieve “record levels of adjusted EBIT and free cash flow.”

Owens Corning isn’t the only manufacturer who has reported record results from focused procurement practices. As Australia-based manufacturer Bradken looked to identify areas to improve business outcomes, beyond relying on increased sales, procurement quickly came to the forefront of the conversation. “Sourcing is something that’s almost entirely within our control,” Bradken CEO Paul Zuckerman notes in the HBR research paper. “Not only are we delivering a prize in the form of substantial added value to the business, but we can chase that prize at our own pace. Inflection points don’t usually look inspirational at first glance, but leveraging the familiar is what we did to reinvent ourselves and it paid off.”

You too can leverage an eSourcing solution for improved procurement processes and bigger business impact. Here’s how:

Creating Efficiencies

Inefficient procurement processes cost businesses an estimated 32.2 million man hours a year. Trying to imagine how many dollars that translates to is enough to make anyone’s head spin. Strategic eSourcing can combat this loss through a focus not only on driving savings, but on driving savings faster through a more efficient approach to the entire process. These efficiencies can be enabled by a collaboration-focused solution that bridges the gap between stakeholders and suppliers, and automates previously manual processes like data and requirement input. The HBR research paper goes on to point out that “enterprises that implement strategic sourcing methods and processes can see returns of five to ten times their original investment. High-performing sourcing and procurement functions save $82 for every $8 in cost to procure, according to Accenture — effectively saving more than 10 times the cost of the procurement function.”

Incorporating Enterprise Perspective

In addition to creating efficiencies within a business’s procurement processes, strategic eSourcing can help make decisions that benefit the enterprise as a whole, rather than just one department or team. As procurement gets a deeper view into each sourcing project’s needs and requirements, they are primed to then encourage collaboration with similar sourcing projects. The result? Better utilized resources and better business outcomes.

“If we see one function undertaking a project, and a close parallel somewhere else in the company, we’re able to connect those dots, so that those stakeholders have visibility into what’s going on,” Levi Strauss & Co.’s VP of global strategic sourcing Dean Edwards points out in the research paper. This enterprise-wide view across the supply base is imperative to reaching procurement’s potential impact.

Encouraging Constructive Competition

For manufacturing businesses to stay at the top in the market, they must be able to generate vendor deals that meet all requirements at the most competitive price. Oftentimes, however, business-vendor relationships become stale. An eSourcing solution enables the procurement team to combat this by offering an objective point of view in vendor decisions — allowing the business to put vendor offerings side-by-side in order to establish more impactful vendor relationships and deals.

One way procurement teams can put this constructive competition into motion with eSourcing technology is through real-time reverse auctioning — where vendors compete to obtain business through optimized pricing and terms. In fact, according to the HBR research paper, financial software leader Intuit has seen millions of dollars in hard savings from reverse auctioning.

Procurement is manufacturing’s not-so-secret weapon — so why aren’t more companies prioritizing it? Whether you’re measuring in the currency of time or dollars, the savings from optimized procurement practices are nothing to scoff at. Take Bradken, for example: According to the research paper, the manufacturing company “is now generating impressive returns through its sourcing-improvement efforts, which have been well received by investors; Zuckerman says the company is realizing between AUD5 and AUD10 for every AUD1 that it’s spent on sourcing.” By practicing strategic sourcing with the help of an eSourcing solution, you too can quickly generate bottom line impact and transform your business without even increasing sales.

Andrew Durlak is Co-Founder and VP of Operations at Scout RFP.