Leveraging eProcurement Technologies and Strategic Purchasing Initiatives to Produce Return on Investment (ROI) - PowerPoint PPT Presentation


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Leveraging eProcurement Technologies and Strategic Purchasing Initiatives to Produce Return on Investment (ROI)


Critical Success Factors. Contact Information ... from 32 suppliers with Penn specific contract pricing to contain critical mass ... Critical Success Factors ... – PowerPoint PPT presentation

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Title: Leveraging eProcurement Technologies and Strategic Purchasing Initiatives to Produce Return on Investment (ROI)

Leveraging eProcurement Technologies and
Strategic Purchasing Initiatives to Produce
Return on Investment (ROI)
  • NAEB Annual Conference
  • May 6, 2003

Presentation Agenda
  • Purchasing Overview
  • Business Objectives
  • eProcurement Technologies
  • Strategic Purchasing Initiatives
  • Key Accomplishments
  • Performance Metrics
  • Critical Success Factors
  • Contact Information
  • Conclusion

Purchasing Overview
  • 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 lt5,000
    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

Business Objectives
  • Provide administrative excellence in support of
    Penns 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
  • 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 Universitys buying power

Oracle Purchasing System (BEN Buys)
  • Oracle Financials (Purchasing, Payables General
    Ledger) implemented in July 1996
  • Oracles 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

The Penn Marketplace
  • Penns 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 SKUs 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
  • Consistent content presentation across
    commodities and suppliers
  • Robust search tools enables customers to quickly
    and easily find desired products and services

Related eProcurement Technologies
  • Electronic Data Interchange (EDI) services
    provided by Global Exchange Services
  • Standard EDI for outbound purchase change
  • Standard EDI for inbound supplier invoices
  • Integrated document imaging system from 170
  • 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

Strategic Purchasing Initiatives
  • 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
  • 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

Strategic Purchasing Initiatives (cont)
  • Purchasing Cost Savings Program
  • Formal cost savings program launched in July 1996
    with implementation of Oracle Financials
  • Commodity teams established for large volume
  • Formal contracting effort for Penn Marketplace
    supplier recruitment
  • Transaction savings for purchases gt5,000
  • Cooperative Buying Initiative
  • Participate in Philadelphia Area Collegiate
    Cooperative (PACC) for regional group pricing
  • Conduct E I contract benchmarking study to
    utilize EI agreements where appropriate

Strategic Purchasing Initiatives (cont)
  • 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
  • Provide internal marketing opportunities for
    strategic suppliers and manufacturers that
    support Penns purchasing initiatives
  • New Supplier Promotion Module hosted by SciQuest
    and integrated into Penns BEN Buys purchasing
  • Generate awareness of purchasing department
    accomplishments throughout all levels of the

Key Accomplishments
  • 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 SKUs 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
    during 2002

Performance Metrics for ROI
  • Purchasing Activity utilization of approved
    buying tools and reduction in maverick buying
  • eProcurement Utilization campus-wide
    utilization of suppliers recruited for the Penn
  • 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

Critical Success Factors
  • 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
  • Support from key strategic suppliers

Contact Information
  • Ralph Maier
  • Associate Director, Purchasing Services
  • E-Mail maierr_at_pobox.upenn.edu
  • Vira Homick
  • eProcurement Manager, Purchasing Services
  • E-Mail homickv_at_pobox.upenn.edu
  • 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

  • Questions?
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