PNC Bank Card Services

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How to Buy _at_ Princeton A Strategic Pcard
Implementation

• PNC Bank Card Services
• 2004 User Group Meeting
• Union League Philadelphia, PA
• May 27, 2004

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- Presented by
Brian E. Rounsavill, CPM, APP Associate Director
of Purchasing brouns_at_princeton.edu Johnnie
Jones Director of Operations Support jjjones_at_princ
eton.edu For more information www.princeton.edu/
purchasing
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- What is Purchasing _at_ Princeton?

• Purchasing is responsible for managing the
  procurement process on a University-wide level,
  including orders, contracts and legal agreements
  associated with the acquisition of goods and
  services that support Princetons educational,
  research and community support initiatives.

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- Purchasings Responsibilities

• Things we continually strive for
• To obtain acceptable quality goods/service -
  at the right time - for the least total
  cost.
• To maintain an ethical competitive bidding
  process.
• To make the procurement process user-friendly.
• To protect the University.
• To ensure compliance with Federal, State and
  University procurement policies.
• To develop strategic vendor partnerships.

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- Strategic Solutions

• Purchasing has developed over 350 strategic
  supplier relationships that leverage the
  Universitys buying power and maximize key
  supplier competencies to obtain goods and
  services at the best value.
• Purchasing has utilized technology to streamline
  the purchasing/procurement process and maximize
  the value-added service provided to the campus
  community.

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- Purchasing Matrix
Overview of Purchasing Relationships
Purchasing
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- Purchasing Matrix
Purchasing collaborates with departments to
identify needs, train exchange information
Departments
Purchasing
Liaison Training / Information Exchange
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- Purchasing Matrix
Purchasing develops strategic supplier contracts
/ relationships to meet departmental needs
Departments
Vendors
Purchasing
Contracts / Strategic Supplier Relationships
Liaison Training / Information Exchange
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- Purchasing Matrix
Purchasing facilitates the procurement process
via the application of p-tools

• P-Tools
• PeopleSoft
• Credit Cards
• E-Commerce

Orders
Requisitions
Departments
Vendors
Purchasing
Contracts / Strategic Supplier Relationships
Liaison Training / Information Exchange
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- Purchasing Matrix
Purchasing achieves cost savings process
efficiencies, while maintaining control
ensuring compliance

• P-Tools
• PeopleSoft
• Credit Cards
• E-Commerce

Orders
Requisitions
Departments
Vendors
Purchasing
Contracts / Strategic Supplier Relationships
Liaison Training / Information Exchange
Cost Savings / Efficiencies / Controls /
Compliance
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- Princeton Facts

• Each year Purchasing manages
• Over 40,000 purchase orders over 80 million.
• Over 40,000 e-transactions over 5 million.
• Over 40,000 p-card transactions over 7
  million.
• Over 325 contracts over 2 million in cost
  savings.
• Over 8,000 capital assets tagged/tracked on
  campus.
• Over 18,000 items handled through the surplus.

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- Environment _at_ Princeton

• Decentralized Purchasing environment at
  Princeton.
• Campus community originates purchasing requests
  (requisitions), which are routed through the
  various systems via specific approval workflows
  that have the ability to distribute charges over
  multiple project grants.
• Integrated Purchasing tools
• Purchase orders PeopleSoft Financials.
• Credit Cards PNC Bank Visa Cards (w/ Works).
• E-commerce Vendor-specific B2B Applications.

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- Purchasing _at_ Princeton

• The four authorized methods for purchasing
• Purchase Orders - The primary purchasing tool,
  the PeopleSoft Financials system, for doing
  business with vendors. Purchase Orders must be
  used for high-dollar, high-volume purchases.
• E-Commerce Business-to-Business (B2B)
  relationships have been established with selected
  vendors in an effort to facilitate/streamline the
  ordering, invoicing and payment processes.

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- Purchasing _at_ Princeton

• Credit Cards Departmental credit cards are
  primarily used to purchase goods/services with a
  value under 1,000 and when the transaction is a
  one-time/exceptional purchase, the vendor does
  not accept purchase orders, or credit cards are
  the industry standard payment option.
• Reimbursements - Miscellaneous invoices are
  typically used in cases where it is necessary to
  reimburse an individual for approved departmental
  expenses when a purchase order, e-commerce vendor
  or departmental credit card cannot be used.

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- Credit Card Industry Trends

• With the advent of the Web and other integrated
  e-commerce technologies, the use of credit cards
  as a means for payment has been increasing
  steadily over the past decade.
• Purchasing card expenditures have grown from
  880 million in 1993 to over 80 billion per year
  in 2003 (an increase of over 9,900), with
  projections nearing 163 billion by 2007. 1
• 1 2003 Corporate Purchasing Card Benchmark
  Survey, RPMG Research Corporation.

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- Credit Cards _at_ Princeton

• Recognizing this trend, the University's
  departmental credit card program was established
  in 1997, with ONR approval. 1
• These cards were issued sparingly to departments
  and initially had 400 single transaction limits
  and very restricted allowable commodity codes.
• 1 The Office of Naval Research (ONR) is the
  Universitys cognizant oversight agency
  responsible for Federal Contractor Purchasing
  System Reviews (CPSR), which is an onsite review
  of an institution's purchasing system. The
  objective of a CPSR is to evaluate the efficiency
  and effectiveness with which the institution
  spends Government funds and complies with
  Government policies.

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- More Benchmarking

• In the summer 2002, a thorough benchmarking
  study was conducted against other University
  purchasing card policies in conjunction with the
  conversion to the new PNC Bank credit card
  software system. 1
• 1 The list included many of the Ivy League
  schools, plus Arizona State University,
  University of Arkansas, Vanderbilt University and
  the University of Maryland.

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- Princeton PNC Bank

• In August 2002, the Purchasing Department
  launched a new departmental credit card program
  that uses the Works Payment Manager software in
  conjunction with the new PNC Bank Visa cards to
  better manage and monitor departmental credit
  card transactions.

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- Works Benefits

• The Works Payment Manager system enables
• transactions to be charged to multiple accounts
• review of transactions before posting to GL as
  often as the individual requires
• the ability to pass Level 3 transaction data
  from the merchants through the system to the GL
• the capability for the cardholder and/or
  approver to supplement the transaction detail for
  reporting / tracking purposes when Level 3 Data
  is not provided by the merchant

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- Strategic Broadening of Card Use

• In April 2003, the departmental credit card
  program was expanded to include many more types
  of transactions, primarily addressing
• the increasing emphasis of buying on the Web
• subscriptions / professional memberships
• local hotels and restaurants
• training / travel
• University employees without PeopleSoft access
• These transactions were historically personal
  reimbursements and specific check requests.

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- Acceptable Uses of Credit Cards
Under no circumstance is the card used to buy
hazardous materials, capital equipment, or
non-expendable tangible items valued under 2,500.
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- Type of Cards _at_ Princeton

• There are two types of cards now in use _at_
  Princeton
• Base funds (30-day/single transaction limits)
  standard 30-day limit 5,000
• standard STL 1,000
• 2. Incremental funds / no base funds/cash advance
  these cards have been issued to all athletics
  coaches for use with team travel/each trip is put
  through as a fund request.

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- Credit Cards _at_ Princeton

• The departmental credit card program has been
  strategically designed to be a supplemental
  purchasing tool in instances where
• the transaction is for a lower dollar value (lt
  1,000)
• for a one-time/exceptional purchase
• the vendor does not accept purchase orders
• credit cards are the industry standard payment
  option for goods or services being acquired
  (i.e., Web/e-commerce)

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- Flexibility Control are Essential

• These categories have been authorized to provide
  departments with the opportunity to be flexible,
  and to exercise judgment on appropriate use.
• The expectation is that these transactions will
  primarily be for the purchase of low dollar items
  made locally.
• Where applicable, it is incumbent upon the
  department to review individual register receipts
  to validate transactions.

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- Specific Department/Vendor Relationships

• Departments have initiated credit card payments
  with vendors to address specific business needs
• Garage (auto parts)
• Lock Shop (supplies)
• Facilities (gas, diesel, heating oil)
• Development/Fund Raising (sponsored events)
• Athletics (team travel)
• Admissions (recruitment travel)

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- Credit Card Efficiencies

• The strategy for using departmental credit cards
  has been primarily to reduce the time/paperwork
  (i.e., cost), normally associated with the types
  of purchases where the Purchasing Department
  cannot add value.
• The overall goal of the credit card program is
  to provide operational efficiency without
  sacrificing cost or fiduciary control.
• As a result, departments recognize savings in
  both the administrative time and effort required
  to process such transactions.

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- Card Strategy

• The strategic integration of purchasing cards
  into the Universitys overall procurement program
  is a key component of the business model for the
  future.
• The success of the credit card program is
  however predicated on the establishment of the
  requisite controls that allow for the purchase of
  appropriate goods and services without the
  necessity for all of the transaction work that is
  part of the traditional requisitioning and
  purchase order system.

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- Princeton Transaction Data
The average departmental credit card transaction
_at_ Princeton was 146.93 for the period FY2000
FY2003. 1 1 In April 2004, the average
transaction has moved up to 197 due to some of
the strategic purchasing initiatives that have
been implemented as previously discussed (i.e.,
fuel oil and travel).
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- Industry Transaction Data
Industry studies estimate that the processing
cost for traditional payment transactions (i.e.,
check requests, POs, etc.) is roughly 91 per
transaction, 1 while the cost of processing a
purchase order ranges anywhere from 33.00 2 to
140.00 3 to 175.00 4 per order. 1 2003
Corporate Purchasing Card Benchmark Survey, RPMG
Research Corporation. 2 Strategic
Relationships The Key to ROI in E-Procurement
published by Summit Strategies, Inc., 2002. 3
Rensselaer Realizing Campus-wide Savings with
Higher Markets e-Procurement Solution published
by Higher Markets, Inc., 2001. 4 What are the
Benefits of Using e-Procurement published by
Higher Markets, Inc., 2001.
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- Industry Benchmark
Princeton participated in the CAPS (Center for
Advanced Purchasing Studies) 1999 Purchasing
Performance Benchmarks for Higher Education Study
that reported the average cost of a purchase
order to be 97 for existing suppliers and 147
for new suppliers at that time. 6 6 e-Buy
Center Its about Time published by NxTrend
Technology, Inc., 2002. Note that 147 in 1999 is
162 in 2003 based on standard CPI calculations.
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- Alignment
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- Alignment of the Numbers

• Princetons average credit card transaction is
  approximately equal to the cost of doing business
  with a new supplier (i.e., new/one-time suppliers
  are one of the main targets for credit card
  transactions).
• The alignment of these averages supports
  Princetons strategy to use credit cards for
  small dollar value transactions with one-time
  and/or new vendors.

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Princeton Spend History ( of Cards)
The of cards on campus has increased by 52
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Princeton Spend History ( of transactions)
The of credit card transactions has increased
by 172
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Princeton Spend History (Total Dollars)
The total dollars spent via credit card has
increased by 282
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- Satisfaction Survey
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- Satisfaction Survey Credit Card Results
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- Satisfaction Survey Overall Results
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- On-Line Purchasing Tools www.princeton.edu/purc
hasing

• Purchasing Wizard
• An interactive tutorial on the procurement
  process at Princeton. 
• Purchasing Basics
• A summary of important factors and policies to
  consider when making a purchase on behalf of the
  University.
•  How to Buy _at_ Princeton
• An interactive Web-based matrix of the vendors
  contracts, commodities and procurement methods.
•  Purchasing Policies
• An online resource for current information
  regarding University procurement policies and
  procedures.

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- Purchasing Wizard

• An interactive tutorial of the Purchasing
  process at Princeton.

Click on the answers and you will be guided
through the purchasing process...
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- Purchasing Wizard
Click on the answers and you will be guided
through the purchasing process...
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- Purchasing Wizard
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- How to Buy Training
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- How to Buy Online Matrix

• An interactive How to Buy matrix of
  commodities, vendors and buying methods is
  available online.

Click on Active Contracts...
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- How to Buy Online Matrix

• Search the contracts by description or vendor.

Choose the search method
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- How to Buy Online Matrix

• Or click on the commodity code to see all
  vendors.

Click on desired commodity...
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- How to Buy Online Matrix

• The list of all active contracts for the
  commodity is returned with a link to the
  preferred method for buying.

View contract details with web links...
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- How to Buy Online Matrix

• Each contract is associated with one of the four
  authorized methods for procuring and paying for
  goods and services at Princeton based on the most
  efficient means for placing orders with the
  designated vendor.

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- Purchasing Training Brochures

• Purchasing publishes the following two brochures
  for the campus community
• Purchasing Services An Overview
• How to Buy _at_ Princeton A Guide for Departments
• - Contact us for copies.

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- Purchasing Outreach Material

• How to Do Business with Princeton Brochure.
• Vendor Bidding System Users Manual on CD.

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- End User Training

• University Department End User Training.
• Accounts Payable Reconciliation.
• Works system features and reporting capabilities.

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- Questions Comments

• Thank you for your time.
• Opportunity for Questions Answers.