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

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


1
Leveraging eProcurement Technologies and
Strategic Purchasing Initiatives to Produce
Return on Investment (ROI)
  • NAEB Annual Conference
  • May 6, 2003

2
Presentation Agenda
  • Purchasing Overview
  • Business Objectives
  • eProcurement Technologies
  • Strategic Purchasing Initiatives
  • Key Accomplishments
  • Performance Metrics
  • Critical Success Factors
  • Contact Information
  • Conclusion

3
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

4
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

5
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

6
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
    suppliers
  • Consistent content presentation across
    commodities and suppliers
  • Robust search tools enables customers to quickly
    and easily find desired products and services

7
Related eProcurement Technologies
  • 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

8
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
    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

9
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
    commodities
  • 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
    agreements
  • Conduct E I contract benchmarking study to
    utilize EI agreements where appropriate

10
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
    initiatives
  • 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
    system
  • Generate awareness of purchasing department
    accomplishments throughout all levels of the
    institution

11
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

12
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
    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

13
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
    initiatives
  • Support from key strategic suppliers

14
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

15
Conclusion
  • Questions?
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