More than a year has now passed since the introduction of the Nodo Smistamento Ordini (NSO) and the electronic purchase order. From February 1, 2020, the NSO has become mandatory for all entities belonging to the National Health System and their suppliers for the purchase of goods. Starting from January 1, the obligation has been extended to the purchase of services for these same entities.
As part of the digitization process initiated some time ago, the use of NSO and electronic ordering will be extended to all sectors of the Public Administration (and, therefore, to their suppliers) in the future. It’s a reminder that regulatory obligations do not always represent obstacles and barriers. On the contrary, they can also be drivers of development and opportunities. Let’s look at the first year of the NSO and why we can only hope that its use will spread as soon as possible to all sectors of the public administration and the market in general.
A quick recap: The Nodo Smistamento Ordini and the electronic order defined
While we have already written about the NSO and electronic purchase order extensively in a previous post, it is useful to provide some background information here.
The NSO and electronic orders were introduced by the 2018 Budget Law in response to the legislature’s desire to continue the process of fully digitizing the procurement cycle.
The Nodo Smistamento Ordini is a management system, made available and maintained by the State General Accounting Office, that enables the monitoring and validation of the electronic order processes. Receiving electronic orders from the entities in a transaction (i.e. the customer, the supplier, or their intermediaries), the NSO also serves as the “digital carrier,” delivering the order to the designated recipient after checking its correctness and validating it.
The NSO, of course, integrates with the Interchange System (SDI) within the wider information system that is APiR, the Public Purchasing Network System. APiR has the function of enabling communication among all systems and national databases that are involved in the various stages of the procurement processes, exploiting interoperability and ensuring the reuse of information in order to implement the fundamental once only principle.
The NSO involves the use of three standardized document types, namely the Order, the Response, and the Pre-agreed Order, which make it possible to carry out the necessary actions within a typical order cycle. For the sake of completeness, it is good to remember that the Order typology also includes a sub-type of document, called the Feedback Order, which can be used by the customer to propose changes to the order and initiate a new ordering process.
Why is digital procurement important?
Digital procurement is something we hear about more and more–but why? When we talk about procurement and public procurement specifically, we are referring to procurement processes that involve medium and large enterprises and public administrations. It’s easy to imagine the impact these processes have, especially from an economic point of view.
These are mechanisms that involve and connect multiple parties, creating transactions, value, data, and documents. This is why their digitization is capable of generating significant impacts and it is one of the main objectives of Italian and European policies in recent years.
In the same Budget Law we mentioned above, the legislator’s stated objective is to achieve high levels of efficiency and transparency through the electronic execution of procurement processes.
In fact, as happened with the introduction of the electronic invoice and as happens in general when processes are digitized and automated, the dematerialization of electronic ordering processes also enables a series of advantages that are possible, including:
- Transaction traceability, since all steps in the ordering process and any changes and variations are documented within a single workflow;
- Transparency, a direct consequence of the increased traceability of the process. Traceability and transparency must be understood both as a tool to ensure any controls by the relevant public authorities, and as an element that allows greater control of the company with respect to its internal processes in order to promptly identify any critical issues in the processes and trigger continuous improvement;
- Reduced errors, given the fact that manual data entry operations are drastically eliminated;
- Improved efficiency and reduced order processing times. Employees’ time can be used more profitably, relieving them of repetitive and time-consuming tasks and allowing them to focus on more complex and time-consuming activities. This element also ultimately enables the firm to offer its clients higher quality services;
- Automation: In this case, we are referring to the automation of the entire order cycle, including invoicing. In fact, the electronic order and the electronic invoice can be automatically and unambiguously linked thanks to the identification triplet, a set of three metadata consisting of the order number, the order date, and the buyer ID. In addition, remember that from January 1 this year, it is mandatory to indicate the details of the identification triplet on the invoice when dealing with the purchase of goods; otherwise the Public Administrations will not be authorized to proceed with settling the corresponding payment. From January 1, 2022, the obligation will also extend to orders involving services.
The balance sheet to date
This is why the introduction of the NSO and electronic ordering is of great importance, as it is set in the wider context of the digitization of all procurement processes.
Starting from the introduction of these processes and using the regulatory obligation linked to Public Administrations as a lever, it is possible to trigger digitalization and modernization mechanisms that progressively extend to an increasingly large number of operators, starting from the enterprise-level companies to small- and medium-sized enterprises.
Analyzing the numbers made available by the State General Accounting Office, we can observe some interesting elements. First of all, we can see that the amount of orders exchanged through the NSO is constantly growing. In March 2021 alone, more than 670,000 orders were exchanged, compared to about 535,000 exchanged in the same month last year. This is also thanks to the extension of the obligation to services.
In addition, the percentage of rejected orders has become increasingly lower. After February 2020 where the percentage of rejected orders was around 10%, there has been a rapid and progressive improvement. By March 2021, the percentage of rejected orders was around 1%, confirming that the tool is now widely established.
The staggered and progressive introduction of the regulation is thought to have contributed to building users’ familiarity with the new procedures over time, paving the way for expanding the use of the NSO and electronic orders to an increasing number of companies.
Prospects for the future from a national context…
Given the considerations made and the elements examined, we can only hope that the use of the NSO and electronic ordering will be extended to all sectors of the public administration and, consequently, to an increasing number of economic operators, companies, and suppliers as soon as possible.
Certainly, every company will have to face an initial effort in order to acquire the necessary tools for using the NSO and to become familiar with the procedures. But this is still a small effort compared to the benefits that can be obtained, as we have described in the previous paragraphs.
Before concluding this contribution, we must remember that the NSO electronic order, as it is structured, integrates in the context of the national eProcurement and it is also designed to respond to the interoperability and integration requirements for much larger contexts of use, both at the European and global level. In fact, the electronic order is based entirely on an XML UBL path, defined within the PEPPOL specifications.
…to the global scenario
The PEPPOL network (Pan European Public Procurement Online) aims to enable transactions and the exchange of data and documents between companies and public administrations residing in different countries, thus allowing the development of commercial transactions at an international level.
Although the PEPPOL network was created to facilitate exchanges and communications within the European Union, today, its use is becoming increasingly widespread, already including players operating in countries such as Singapore, the United States, Canada, New Zealand, Australia, and South Africa.
As of today, for Italian Public Administrations and their suppliers, it is therefore possible to carry out the electronic ordering process also using the PEPPOL infrastructure. In this case, the NSO system only serves to perform a validation function.
The use of the electronic order structured in this way and already natively integrated with the PEPPOL network allows the operators who use it to become familiar with tools, standards, and languages that are typical of a global market scenario and, in fact, serves as a prelude to the consolidation of an increasingly structured and interconnected international market that we are now approaching and which we cannot help but take into consideration.
