Procure-to-Pay%20Process%20Enhancement%20Project

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Procure-to-Pay Process Enhancement Project

• March 15, 2006

2
Purchasing Services

• Whats New in Purchasing?
• New Sourcing Managers
• Contract Suppliers
• Penn Marketplace Suppliers
• Spend Analysis Initiative
• Equipment Maintenance Program
• Online Competitive Bidding
• Purchasing related news and announcements are
  listed at http//www.purchasing.upenn.edu/news/

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New Sourcing Team

• Jim Graham Associate Director
• Professional Services
• Colleen Reardon Sourcing Manager
• Facilities Operations
• David Staskin Sourcing Manager
• Technology
• Tom Cantiello Sourcing Manager
• Research
• http//www.purchasing.upenn.edu/about/staff.php

4
Contract Marketplace Suppliers

• Preferred contract suppliers provide the most
  commonly ordered products and services at least
  total cost
• The Penn Marketplace provides product visibility
  and easy ordering from the Universitys most
  commonly used suppliers
• Supplier information is available on the web at
• http//www.purchasing.upenn.edu/buyinfo/suppliers
  /

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Spend Analysis Initiative

• A formal review of School or Center purchasing
  activity across all buying methods
• Purchase Order
• Purchasing/Fleet Card
• C-Form
• The business objectives include streamlining the
  buying process, increasing compliance with
  approved methods and suppliers, reducing the cost
  of required products and services, and reducing
  risk for the institution
• http//www.purchasing.upenn.edu/about/spend_analys
  is.php

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Equipment Maintenance Program

• An innovative alternative to traditional
  "Original Equipment Maintenance (OEM)" annual
  equipment maintenance agreements
• Offers a significant cost savings opportunity to
  departments without negatively affecting the
  service provider or the quality and timeliness of
  equipment repair and service.
• A wide range of equipment is eligible under this
  program, including research, technology, office,
  facilities and operations, and security related
  equipment (excluding copiers)
• Equipment can be added or deleted from this
  equipment service program as needed throughout
  the fiscal year.
• http//www.purchasing.upenn.edu/buyinfo/emp.php

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Online Competitive Bidding

• eBay in reverse goal is to drive down the cost
  of products and services
• Reverse auction is an online competitive bidding
  tool that creates competitive pricing pressure
  between bidders
• Utilizes traditional supplier selection process,
  RFP requirements, and supplier bid evaluation
• Bidding tool can be used for most product and
  service requirements
• http//www.purchasing.upenn.edu/about/bidding.php

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Procure-to-Pay Process Overview
An Effective and Efficient Process Requires a
Great Deal of Coordination Between Suppliers,
Purchasing, Schools/Centers and Accounts Payable
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Procure-to-Pay Process Overview-Volumes
1,700 Requisitioners
900 PO Managers
15 AP Reps
Efficient and Timely Processing of These
Transaction Volumes Requires Teamwork and Full
Compliance with Process Steps and Policies
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Our Business ProblemSuppliers Are Not Paid
Within Terms
FY 2006 YTD July Jan FY 2006 YTD July Jan FY 2006 YTD July Jan FY 2006 YTD July Jan FY 2006 YTD July Jan
Non-EDI PO Invoice Payment Supplier Terms 30 Days Non-EDI PO Invoice Payment Supplier Terms 30 Days Non-EDI PO Invoice Payment Supplier Terms 30 Days Non-EDI PO Invoice Payment Supplier Terms 30 Days Non-EDI PO Invoice Payment Supplier Terms 30 Days
Aging Invoice Count of Total Invoice Dollars of Total
Total 91,882 100.00 302,379,178 100.00
30 Days or Less 55,124 60.00 116,821,973 38.64
31 to 60 Days 25,794 28.07 121,821,809 40.29
61 to 90 Days 5,282 5.75 41,344,833 13.67
Over 90 Days 5,682 6.18 22,390,563 7.40

• YTD approximately 40 PO invoices or were not
  paid within supplier terms
• 88 of PO invoices were paid within 60 days

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Process Exceptions

• Our initial review has identified these key
  reasons for late payments
• PO Invoice Holds
• PO Invoices Not Received in AP
• POs Created After Invoices Are Received
• PO Invoice Rejections
• Use of C Forms Versus POs

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Process Exception Statistics

• Statistics for February 2006
• 911 (42) PO invoices on hold greater than 30
  days
• 2,848 or 21 of total PO invoices processed not
  were not received and entered in BEN Financials
  within 30 days of the supplier invoice date
• 2,222 or 16 of total PO invoices processed where
  POs were approved after the invoices were
  received
• 950 PO Invoice Rejections
• C Forms still represent approximately 30 of
  transactions processed in AP

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Process Improvement Goals Actions

• Develop baseline measurements for process
  exceptions
• Invoice Matching Holds on hold for more than 30
  days
• PO Invoices not entered into BEN Financials
  within 30 days of the supplier invoice date
• POs created or approved after the supplier
  invoice date
• Work with Schools/Centers to identify Buyers with
  significant exceptions and work with them to
  reduce the exceptions
• Partner with 2 to 3 Schools or Centers to perform
  an end-to-end P2P process review
• Communicate lessons learned to all schools and
  centers
• Continue to develop measurements for invoice
  rejections and C forms
• Communicate progress on improvement metrics to
  Schools, Centers and Executive Management

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Process Improvement Goals Actions

• Process Improvement Goals
• Invoice Matching Holds on hold for more than 30
  days
• Clear all holds gt30 days by June 1, 2006
• PO Invoices not entered into BEN Financials
  within 30 days of the supplier invoice date
• Reduce Avg. Monthly FY05 Exceptions by 50 with
  June 2006 PO invoices
• POs created or approved after the supplier
  invoice date
• Reduce Avg. Monthly FY05 Exceptions by 50 with
  June 2006 PO invoices
• Schools/Centers
• Run detail reports for their Org codes and
  identify PO Managers with significant exceptions
• Work with PO Managers to reduce exceptions
• Communicate
• Supplier or purchasing issues
• AP processing issues
• Other business issues causing exceptions