Transcript Avoid Holding Patterns: Hold Resolution Utilizing Imaging

Leveraging eProcurement Technologies and
Strategic Purchasing Initiatives to Produce
Return on Investment (ROI)
NAEB Annual Conference
May 6, 2003
Presentation Agenda
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Purchasing Overview
Business Objectives
eProcurement Technologies
Strategic Purchasing Initiatives
Key Accomplishments
Performance Metrics
Critical Success Factors
Contact Information
Conclusion
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Purchasing Overview
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Decentralized purchasing environment with
purchase requisition creation delegated to the
point-of-demand in offices and laboratories
Over 1,800 purchasing system users in 12 schools
and 20 business centers
Over 1,400 MasterCard P-Card cardholders
Purchase order approval for transactions <$5,000
delegated to authorized purchasing system users
in the schools and centers
Fiscal year 2002 purchase activity:
– 155,000 purchase transactions for $505M
– 105,000 P-Card transactions for $20M
Purchasing staff consists of 10 professional and 2
non-professional positions
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Business Objectives
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Provide administrative excellence in support of
Penn’s educational and research mission
– Make purchasing easy
– Reduce time & effort related to order creation
– Provide online access to most commonly
ordered products and services
– Reduce order creation & approval cycle time
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Enhance the value of the purchasing organization
– Maximize potential of purchasing data and
systems
– Increase purchases from “contract suppliers”
– Increase compliance & reduce maverick buying
– Manage purchasing system supplier database
– Leverage the University’s buying power
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Oracle Purchasing System (BEN Buys)
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Oracle Financials (Purchasing, Payables & General
Ledger) implemented in July 1996
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Oracle’s iProcurement electronic requisition and the
Penn Marketplace introduced to the campus in
January 2002 as part of upgrade to Oracle
Financials Release 11i
– Provides integration with the Penn Marketplace
– Enables item shopping and requisition creation
at the point-of-demand
– Enables multi-supplier and multi-commodity
ordering using a single electronic requisition
– Oracle workflow used for requisition routing,
encumbrance, regulatory requirements, and
purchase order approval
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The Penn Marketplace
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Penn’s private online supplier exchange for most
commonly ordered products and services
Catalog content hosting and management services
provided by Global Exchange Services (GXS)
SciQuest provided additional content services to
GXS/Penn to cleanse, enrich, categorize, & format a
number of scientific supplier catalogs utilized within
the Penn Marketplace
Contains 550,000 SKU’s from 32 suppliers with Penn
specific contract pricing to contain critical mass
Supports strategic purchasing initiatives by making
it easier to order from preferred contract suppliers
Consistent content presentation across commodities
and suppliers
Robust search tools enables customers to quickly 6
and easily find desired products and services
Related eProcurement Technologies
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Electronic Data Interchange (EDI) services
provided by Global Exchange Services
– Standard EDI for outbound purchase & change
orders
– Standard EDI for inbound supplier invoices
Integrated document imaging system from 170
Systems
– EDI invoices are imaged electronically
– Paper invoices are imaged upon receipt in
Accounts Payable
Procuri, Inc provides an online competitive bidding
tool to enable reverse auction events
– Used for competitive bidding of Penn and local
cooperative buying group initiatives
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Strategic Purchasing Initiatives
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Supply Chain Management Objectives
– Focus marketing effort on acceptance of
strategic suppliers and business relationships
– Expand use of long term and sole source
supplier contracts whenever possible
– Recruit suppliers and manufacturers for the
Penn Marketplace
– Rationalize supplier database and multiple
sources for products where appropriate
– Streamline distribution channels to maximize
University buying power
– Enforce financial policies, use of approved
buying tools and suppliers to reduce maverick
buying
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Strategic Purchasing Initiatives (cont)
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Purchasing Cost Savings Program
– Formal cost savings program launched in July
1996 with implementation of Oracle Financials
– Commodity teams established for large volume
commodities
– Formal contracting effort for Penn Marketplace
supplier recruitment
– Transaction savings for purchases >$5,000
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Cooperative Buying Initiative
– Participate in Philadelphia Area Collegiate
Cooperative (PACC) for regional group pricing
agreements
– Conduct E & I contract benchmarking study to9
utilize E&I agreements where appropriate
Strategic Purchasing Initiatives (cont)
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Strategic Marketing Program
– Promote benefits of business initiatives and
key supplier relationships to faculty and staff
– Promote value of and create support from
senior management for new strategic
purchasing initiatives
– Provide internal marketing opportunities for
strategic suppliers and manufacturers that
support Penn’s purchasing initiatives
– New Supplier Promotion Module hosted by
SciQuest and integrated into Penn’s BEN Buys
purchasing system
– Generate awareness of purchasing department
accomplishments throughout all levels of the
institution
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Key Accomplishments
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Campus wide utilization of a fully integrated
paperless electronic purchase-to-pay system
Reduced order creation and approval cycle time
resulting in 92% of all orders created, approved
and transmitted to suppliers in less than 1 hour
550,000 SKU’s in the Penn Marketplace exceeds
project goal of 400,000
54.5% of all purchase orders created in 2003 were
issued to the 32 Penn Marketplace suppliers
(52.9% in 2002) exceeding project goal of 40%
New business opportunities for preferred contract
suppliers resulting from the deactivation of 217
suppliers in 2002
Penn Marketplace suppliers realized a 16 to 42%
increase in business during 2002
$64.9M in documented hard dollar cost savings
45% of supplier invoices were processed via EDI 11
during 2002
Performance Metrics for ROI
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Purchasing Activity: utilization of approved buying
tools and reduction in maverick buying
eProcurement Utilization: campus-wide utilization
of suppliers recruited for the Penn Marketplace
Transaction Audits: compliance with use of
appropriate buying tools
Supplier Management: management of the
Purchasing System supplier database
Transaction Efficiencies: third party purchasing
initiative w/Fisher Scientific resulting in elimination
of paper invoices & checks
Cost Savings: documented hard dollar product
and service cost savings
Supplier Diversity: purchases from community
based and MBE/WBE suppliers
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Critical Success Factors
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Consistent and on-going senior management
support for business initiatives and technology
projects
Collaboration between central administration and
Schools and Centers
Faculty and staff involvement in focus groups,
commodity teams, and IT project teams
Strong internal IT support for the development,
implementation and on-going maintenance of new
purchasing technologies
Staff buy-in to changing role of purchasing
Training of faculty and staff on new technologies
Internal marketing of the value and benefits of new
technology investments and purchasing initiatives
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Support from key strategic suppliers
Contact Information
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Ralph Maier
Associate Director, Purchasing Services
E-Mail:
[email protected]
Vira Homick
eProcurement Manager, Purchasing Services
E-Mail:
[email protected]
Penn Purchasing Services
www.purchasing.upenn.edu
What We Do
www.purchasing.upenn.edu/about/what_we_do.php
Performance Metrics
www.purchasing.upenn.edu/about/performance.php
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Conclusion
Questions?
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