“Saving Time Can Save You Money” – Some Tips for
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Transcript “Saving Time Can Save You Money” – Some Tips for
SAVING TIME CAN
SAVE YOU MONEY
Some Tips for Improving the Efficiency &
Effectiveness of Procurement
October 27, 2011
VAGP Symposium
Keith K. Glatz CPPO, FCPM
THE PROBLEM. . .
Spending a lot of time, and getting
NOWHERE!
Reduced resources and heavier workload
Procedures and available technology hinder
ability to get quality work done fast
OBJECTIVES
Problem/Solution Categories
Identify what needs to be looked at internally
Identify available tools to help move forward
Leveraging technology
Using a common sense approach to accomplish the
above objectives
SOME THINGS YOU NEED TO REMEMBER. . .
Before you can SAVE time, you need to SPEND
some time studying where you are and where you
need to be
Often, we save money on the back-end by making
an investment at the front-end
There is NO silver bullet!
TIME & COST ISSUE CATEGORIZATION
Time and Cost Issues can be normally
categorized AND addressed as follows:
Staffing
Process
Technology
STAFFING
Most difficult solution to justify
Difficult to obtain new staffing resources in
today’s environment and economy
May be able to justify additional staffing IF
that addition will SAVE you or your entity
money in the long-run
May need to consider outsourcing
PROCESS
The “most likely culprit”.
You need to know what’s actually going on!
Map the process out!
Find the steps that add NO Value!
Find benchmarks for comparison
Determine the gap
Correct the issue
TECHNOLOGY
What existing technology do you have?
Review current technology available
Determine if you technology is current
Can technology fix the process? (It may be the solution to
process problems!)
What can I get for little or no cost?
Is new technology cost effective?
Will new technology blend into my culture?
AT THE END OF THE DAY. . .
You should be able to save time and money by. . .
The most effective leveraging of staff resources
Identifying and correcting inefficiencies in your processes
Having a greater awareness of your obstacles to
progress
Identifying and implementing cost-effective technology
solutions that reduce redundant process steps and avoid
errors
STAFFING – PRACTICAL TIPS
Make sure your job descriptions are clear and as flexible as
possible
Make sure your staff has the proper training (including
professional certifications)
Develop a cross-training program
Make sure your organization structure fits the job
If it’s cheaper for somebody else to do it better, seriously
consider outsourcing it
PROCESS – THE PROBLEM
What problem am I trying to solve?
Process takes too much time?
Process is too expensive?
IS the process even necessary?
Are there steps in the process that add no
value?
Define the problem
PROCESS PROBLEM STATEMENT
PROBLEM STATEMENT
The purchase order development process currently takes an
average of 10 days to complete. Using Departments constantly
complain to Purchasing and upper level City Management about
the process. The current process for ordering and payment for
goods and services is not efficient or cost effective with the
advancement of technology and current procurement best
practices.
PROCESS -- PROBLEM DEFINITION
PROJECT DEFINED
Implementation of streamlined process to shorten the overall
processing time of purchasing requisitions. The goal is to shorten
the time from an average of 10 days to an average of 3 days to
complete. Review committee will include representatives from
Purchasing, IT, Finance and two (2) large using departments.
PROCESS – PROJECT PROCESS MATRIX
Purchase Order Processing Time
Current
Desired
Best In Class
10 Days Average
3 Days Average
1 Day Average
HOW DO WE MEASURE SUCCESS?
Benchmarking against Other Entities and Standards
Collection of your own past data
Surveys of agencies in your area
Surveys conducted by your chapter
Established Best Practice Guidelines
Award programs
Benchmarking programs
Perform a GAP Analysis
The “GAP” between your process and established Best
Practices
SOME RESOURCES FOR BEST PRACTICES
Review Requirements found in Agency Award Applications
Achievement of Excellence in Procurement (AEP) Award issued by the National
Procurement Institute (NPI) https://www.npiconnection.org/aep/instructions.asp
Florida Association of Public Procurement Officials (FAPPO) Agency Achievement Award
www.fappo.org
NIGP Outstanding Agency / Accreditation Award (OAP) and Pareto Award
http://www.nigp.org/eweb/StartPage.aspx?Site=NIGP&webcode=cps_ps_acc
Other Best Practice Resources
NIGP Research – “The Vault” by the Aberdeen Group
http://www.nigp.org/eweb/StartPage.aspx?Site=NIGP&webcode=ResLibSearch
Public Procurement Research Center (PPRC) at Florida Atlantic University
Journal of Public Procurement
Other scholarly publications
http://www.fau.edu/pprc/publications/JoPP.html
BENCHMARKING RESOURCES
Benchmarking
Take part in a Benchmarking Survey (or try to obtain results)
ICMA Purchasing Measures
CAPS Research http://www.capsresearch.org/
The NIGP “VAULT” www.nigp.org
Other NIGP special surveys
Florida Benchmarking Consortium http://www.flbenchmark.org/
Various Industry Surveys
OUTSIDE ASSISTANCE
NIGP Consultancy Program
http://www.nigp.org/eweb/StartPage.aspx?Site=NIGP&webcode=cps_con
Procurement Agency Satisfaction Survey – Customers & Suppliers
Policies and Procedures Review
GAP analysis
Academic groups
Other outside consulting firms
THE ACTUAL PROCESS REVIEW
Map the process out so stakeholders can see it
Bring the stakeholders into one place
Use sticky notes on the wall, or a similar method
to map the process. (Allows you easily add and
remove steps)
Identify steps that duplicate effort
Document the “before” and the “after”
DESIRED RESULTS OF A REVIEW
Agreement from stakeholders to eliminate steps that add no value to
the process
Remove unnecessary review steps
A person should only have to review something one time in the process
Identification of opportunities for single-point data entry, and for
methods to pull data from pre-established data bases to avoid error, and
to reduce review time
Identification of technology or software that can resolve issues
Calculation of the time and cost savings by eliminating steps in a
process, or an entire process
PROCESS MAP (FLOWCHART) ANALYSIS
PROCESS FISHBONE ANALYSIS
AFTER THE PROCESS REVIEW IS DONE
Use PDCA (Plan – Do – Check – Act) to implement new processes
Plan
Develop a plan to implement the new or revised process
Do
Execute the plan and begin using the process
Check
Analyze feedback, determine if the new process works
Determine lessons learned from implementing the process
ACT
Make adjustments as necessary
Document your time and cost savings
Share your success!
LEVERAGING TECHNOLOGY
What problems and bottlenecks can be resolved through the
introduction of technology?
Do you have hardware or software that can be utilized now?
Can you get what you need by installing off-the-shelf software?
Do you have staff capable of programming software to meet your
needs?
Do you have an ERP system that can be interfaced with other
software?
SOME EXAMPLES OF LEVERAGING
TECHNOLOGY
On-line Supplier Registration -- Saves paper & process time & reduces
errors
On-line Solicitation Posting & Download Capability – Saves paper, staff
time and postage. Can shorten solicitation cycle
On-line Plan holder Lists -- Saves process time with automatic updates
& provides transparency
On-line posting of statutes, policies, procedures, vendor guides and
standard bid and RFP terms & conditions on your web-site – allows
24/7/365 access
SOME EXAMPLES OF LEVERAGING TECHNOLOGY -CONTINUED
Electronic Catalogs – Internal and External Use (Web-based
ordering) improves accuracy of pricing and promotes
standardization
EFT/ACH Electronic Direct Deposit for suppliers –
improves payment cycle time, saves paper, postage and staff
time.
Spend Management Software – Helps you identify spend
patterns, and concentrate on the most important
commodities and services
SOME EXAMPLES OF LEVERAGING
TECHNOLOGY – CONTINUED
On-line Insurance Database – Saves cumbersome
manual tracking & eliminates duplication of effort
On-line Surplus Auctions – Saves staff time,
increases visibility & avoids live auction costs
Procurement Cards – Saves staff and process time.
May also be used to pay invoices
WHAT BENEFITS DO THESE EXAMPLES HAVE IN
COMMON?
Can often upload and download data directly from ERP or other data
bases
Single point entry of information avoids errors in other points of the
process
Provides for the use of drop-down menus instead of requiring manual
data entry – less potential for errors
Many processes now “manage themselves”, allowing staff to concentrate
on more important issues. Allows you to provide the same level of
service when faced with staffing cuts with fewer errors
The same “message” can now be communicated to more people even
quicker
POTENTIAL IMPEDIMENTS TO TECHNOLOGY
New equipment may be required – initial acquisition costs
Software costs may be prohibitive
May be difficult to interface with ERP, or ERP provider may require you
to pay for expensive upgrades or extra programming costs
Costs of maintenance and ability to maintain software or hardware
(Can you internally support a new application?)
Onerous software licensing agreements
Internal cultural issues (Are you a “tech-savvy” organization or not?)
Technology may become obsolete
Need to use “common sense” when implementing technology
SO, HOW SHOULD WE LEVERAGE
TECHNOLOGY?
Prioritize your needs – What should be addressed to save the most
time and money?
Reach for the “low-hanging fruit” – what can be done quickly with
existing resources?
Look at best practices in other locations – what kinds of technology are
being commonly used by your colleagues?
Check with your colleagues – are there software applications that they
may have developed that they are willing to share at a relatively low cost
with you?
NIGP for free resources – NIGP “Measure” helps you document savings
http://www.nigp.org/eweb/StartPage.aspx?Site=NIGP&webcode=cps-meas_prog
WHAT IF YOU NEED A “MAJOR OVERHAUL”?
Conditions Requiring a Major Overhaul
You have very little automation
Your current technology is seriously outdated
You are unable to interface with your ERP, and require
some level of “stand-alone” capability
STARTING THE OVERHAUL PROCESS
Steps to Take
Develop a Needs Assessment -- engage your stakeholders!
Build your business case and justification
Provide management with the potential for process improvement,
including projected time and process cost savings
Explore the marketplace – just as you would for any other major
acquisition
Develop your initial action and task plan
Develop your budget
Seek competition – prepare solicitation based on your needs
assessment.
STARTING THE OVERHAUL – CONTINUED
Steps to Take – Continued
Evaluate solicitations – include your stakeholders
Negotiate Agreements – may require special legal assistance with
firm familiar with software licensing
Install the technology
Test the technology – tie your payments to the success of the
testing!
Train your users
Move forward!
PROCUREMENT CARDS
Consider using Procurement Cards instead of purchase orders or
blanket requisitions
Eliminates staff time to prepare purchase orders and blankets and significantly cuts
administrative costs
Eliminates the need to set-up special accounts and billing with suppliers
Empowers employees at lower levels of the organization to purchase items with
fairly low dollar costs
Allows for greater transparency
Requires pro-active administration, well-written procedures, and good follow-up
May also be able to use procurement cards as PAYMENT CARDS to improve
efficiency and speed-up the payment cycle
SOME FINAL THOUGHTS. . .
Be sure you engage all of your stakeholders both inside and
outside your organization
Be aware of your organizational culture
If the culture NEEDS to be changed, you need to subtly
work from within to get buy-in -- don’t force a culture
change without it!
Think before you act – Use your common sense!!!
GOOD LUCK!!!
QUESTIONS & COMMENTS?
THANK YOU!!!
Keith K. Glatz, CPPO, FCPM
Purchasing & Contracts Manager
City of Tamarac, FL 33321
(954) 597-3567
[email protected]