Strategic Sourcing The Wave of the Future.ppt

StrategicSourcing CurrentTrendsinStateGovernment Moderatedby DianneLancaster ORPanelists CharlesCovington FLPaulHiggins VAMikeSmith IL GeneralOverview Whatisit Ask10differentpeople you lllikelyget10differentanswers TheMerriam Websterdictionarydoesn tevenhaveone Insteadtheyhavewordslikestereochemistriesandpsuedotuberculosis Welikethisdefinition StrategicSourcing thecollaborativeandstructuredprocessofcriticallyanalyzinganorganization sspendingandusingthisinformationtomakebusinessdecisionsaboutacquiringcommoditiesandservicesmoreeffectivelyandefficiently FederalOfficeofManagementandBudget BroadOverviewoftheProcess Investigation Examine collectdata establishbaselinesDefineneedsDevelopspecsandsourcingstrategySolicitation DeterminemethodologyEvaluatebidsContractnegotiationTotalcostofownershipVendorselectionImplementationVendormanagement contractadministrationPerformancemonitoringChangemanagement Florida MyFloridaMarketPlace eProcurement66 000RegisteredVendors21 000Minority WomenVendors194 000AnnualPurchaseOrders 1 3BillionAnnualSpend32ExecutiveAgenciesontheSystem FloridaOneInitiativeEquityinContractingEnvironmentalConsiderationsCertificationofDrugFreeWorkplaceRESPECTPRIDE 75 StateTermContractsMandatoryusebyExecutiveAgenciesOptionaluseforallothergovernmententities OEU s Eliminatedover100StateTermContractsApprovedCooperativeContractSources WSCA HIRE MMCAP USCommunities Other SpendManagementMFMP AnalysisToolStateAccountingSystemP CardVendorSalesInformationUserData OfficeConsumablesMaintenanceRepairandOperatingSuppliesWirelessVoiceCommunicationbackboneinfrastructureDry CellandRechargeableBatteriesOfficePaperGasoline otherfuelsMedical DentalSupplies CourierServicesOfficer sUniformsCanLinersAudioVisualEquipmentPestControlServicesHandHeld PowerToolsEnvelopesTissueandTowelsLawnCare 250MMinContractSavingsforWaves1and2 TelephoneSystemEquipmentLabSuppliesSecurityServicesJanitorialServices MailEquipmentOfficeEquipmentMaintenanceServicesMetalDetectionandScanningEquipment PotentialStrategicSourcingEventsforWave3 Virginia ProcurementScope StateGovernment171Agencies InstitutionsofHigherEducationCentraloversightofstatecontractsVarietyofsystems including44EnterpriseResourcePlanning Financial SystemsApproximately 5billionannualspend LocalGovernment350 Cities Counties TownsPlusPublicSchools Airports Districts AuthoritiesandCommissionsUsestatecontractsVarietyofsystemsApproximately 5billionannualspend Vendors20 30 000forstategovernmentMixoflocalvendorsversusstatewidevendors20 get80 oftheorders Approximately6 000 VirginiaequalsaFortune300Corporation ProfileSpend Baseline Facilities GeneralEquipment Consumables IndustrialEquipment Supplies Materials Technology IndustrialServices Logistics PersonnelServices ProfessionalServices Utilities Furniture FurnishingsOfficeEquipmentOfficeSupplies Packaging StorageMaterials Containers Corrugated Pallets Tape Paper Stationery BuildingMaintenanceEnvironmentalServicesEquipmentMaintenanceIndustrialCleaningServicesInfrastructureSupportSecurityGuardServicesWasteDisposalServices BenefitsContractLaborDomesticServicesRelocationTemporaryStaffingTrainingTravel Entertainment ElectricityTelecommunicationsUtilityBillingServices AccountingAdvertising MarketingCommercialPrintComputerServicesFleetManagementInsuranceITConsultingLegalRealEstate CargoTransport Air Rail Road Courier MessengerExpressDeliveryPostageWarehousing Storage HardwareSoftwareTelecomEquipment JanitorialSuppliesMROSuppliesSafetyEquipment SuppliesSecurityEquipmentSparePartsVehiclePartsandAccessories BuildingMaterialsHVACLighting Fixtures AccessoriesPipes Valves Fittings Goods Services Area Category SavingsResults 150MillioninContractSavingsCreated SelectedTargetCategoriesandPercentSavings ComputerHardware12 JanitorialSupplies11 LabSupplies13 OfficeSupplies Paper18 ComputerSoftware8 Off RoadEquipment6 EnterpriseStorageDevices15 TemporaryServices32 Uniforms17 Hotels31 HeavyTrucks20 StorageMedia30 SchoolBuses3 PrintersandAccessories15 Maintenance Repair andOperatingSupplies MRO 13 Ultimatelysavedover 150Min2separate waves ofstrategicsourcingLeveragedpurchasesacross200 stateagencies institutionsofhighereducationandotherpublicentities Illinois OrganizationChiefProcurementOfficersDept ofTransportation HighwayConstructionCapitalDevelopmentBoard CapitalProjectsHigherEducationSuppliesandServices Authority ApplicabilityIllinoisProcurementCodeAllstateagencies boardsandcommissionsCompetitiveselectiononallprocurementswithfewexceptionsPreferencesforsmallbusinessGoalsfordiversifiedbusinessesAgenciesrequiredtousemastercontractsContractsavailabletolocalgovernments JointPurchasingProgram CentralManagementServicesCenter leadsallSuppliesandServicesprocurementsManagesIllinoisProcurementBulletinCreatedcomprehensiveKnowledgeManagementsystem anelectronicreferencelibraryandcommunicationssystemProvidesaccessandcontractingopportunitiesforallvendors Transparency Accountability CostSavings 17billioninprocurablespend ILLINOISPROCUREMENTINITIATIVESTRATEGICSOURCINGAugust2003 Present GoalsSave 200 millionintwoyearsOrganizationaltransformationStandardize streamlineprocessesImprovetransparencyandincreasevendorparticipationBuildcapabilities knowledgemanagementsystem Results 27projects 216millionofValidatedSavings Examples ProjectStrategySavingsFoodProductsubstitution bulkpurchasing 6 3millioneliminationofunnecessaryitemsCanLinersChangeinspecifications renegotiation 737 000CleaningSuppliesCombinedmultiplecontracts extendedterm 182 000PC s Laptops MonitorsDemandmanagement 1 8millionEmissionsTestingRenegotiation 10 2millionUtilities ElectricityChangedrateplanstobestsuitstatefacilities 3 0millionconsumptionpatterns PaperandEnvelopesCombinedmultiplecontracts extendedterm 715 000FamilyCaseMgmntEnhancedfederalreimbursement 24 2million ILLINOISPROCUREMENTINITIATIVEACCOMPLISHMENTS 216millioninvalidatedsavingsCreatednewcenter ledorganizationtobettermanageprocurementsstatewideandidentifysourcingopportunitiesImplemented5 stepprocurementapproachStreamlinedprocesses eliminatedunnecessaryand orredundantstepsImplementedprocurementbusinesscasesystemtoensureallpurchasesarejustifiedandtoidentifyopportunitiesforsavingsImplementedatoll freecallcentertoassistagenciesandvendors ensuresconsistentresponsesandthatcallergetstoappropriatepersonCreatedcomprehensiveKnowledgeManagementsystem anelectronicreferencelibraryandcommunicationssystemGreatlyimprovedtransparencyintotheprocess moredetailedpublicationsofprocurementnotices supplierworkshops enhanceddocumentationofhowdecisionsaremade publishedprocurementopportunityreportsIncreasedopportunitiesforsmallanddiversebusinesses OregonSmartBuyProject CATEGORIZINGPURCHASEDEXPENSEFiscalYear2003Spending Billions GovernmentServicesInterest TheStatepurchased 1 62billionofgoodsandservicesfromvendorsinfiscalyear2003 1 35billionofwhichisonpurchasesthatarepotentially source able TheinitialOpportunityAssessment conductedinOctober December2003 evaluatedspendinginthelargestspendingcategorieswheretherewassignificantcross agencyleverage 65 oftheState sspendingiswithvendorswhoserveonlyoneagency Note PurchasedexpensesexcludeinteragencytransfersSource Statefinancialsystems SFMA ODOT Lottery Corrections p card SilverOakSolutionsanalysis KEYOBSERVATIONS PRIMARYSELECTIONCRITERIA CategorySelectionCriteriaByevaluatingtop spendingareaswithjointleverageopportunitiesinanumberofareas twowavesofspendingcategorieswereidentified SCREENINGMATRIX SavingsOpportunity High Low Low EaseofCapture High PCHardware Peripherals ITPS OfficeSupplies TCPERS TelecomLD Data ExpressMail Tires TelecomCellular Copiers Software LabSupplies HotMix Food JanitorialSupplies BladeServer Mainframes PostageMeters Emulsions HARDDOLLARIMPACT1BREAKDOWNByCompletedCategory Thousands Identifiedharddollarimpactisprojectedtobe 9 1millionperyear or18 ofbaselinespend andwillaccruetotheStateovermanyyears 1Includesspendreductionsavings rebatesandincreaseinVCAF VendorCollectedAdministrativeFee duetofeeincreaseinsomeSmartBuypriceagreements2Contractsvaryinlengthbycategoryfrom2 6years andsavingsareexpectedtoaccrueoverthelivesofthesecontracts3Definedas AnnualRun RateSavings AnnualSpend 4InformationgatheredasofFebruary2 2005 SOURCESOFSAVINGSANDSERVICEIMPROVEMENTSByCategory ImpactontheVendorCommunity Small MinorityandWomen OwnedBusinesses Policiestoincreaseopportunities i e utilizationplans Marketingefforts outreach Supplierdiversityprograms Monitoring trackingactivities requesting requiringmoreinformation Counter balancingactivities bu