Technology as a Key Tool to Advance Mission and...

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Leveraging e-Procurement

Technology as a Key Tool to Advance Mission and Goals

Nathan Andridge, The Ohio State UniversityJill Schunk, Indiana UniversityMaggie Witt, University of Nebraska

© Copyright 2019. Authors’ permission required for reprint.

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First, why are we here?

Objective: We want to generate dialogue for procurement to facilitate positive incremental change. The evolution and value of Procurement and e-Procurement tools How this technology can:

empower your procurement and strategic sourcing teams, aid in better decision-making, and support effective supplier management strategies

Getting the most out of YOUR e-Procurement investment September 2019 | e-Commerce Technology © Copyright 2019. Authors’ permission required for reprint.

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Does Procurement technology look the same everywhere?

NebraskaOhio StateIndiana

A/P Jaggaer PeopleSoft SAP, JaggaerContract Management Jaggaer Ariba ionWave

E-Procurement Jaggaer Prodigo Jaggaer

E-Sourcing Jaggaer Ariba ionWave

P-Card US Bank/Chrome River PNC/PeopleSoft US Bank/

SAP/Concur

Spend Analysis Spend Radar (Jaggaer) Oracle Hyperion SAP/Tableau

Supplier Management Jaggaer PeopleSoft None

Travel & Expense Management Chrome River Concur Concur

September 2019 | e-Commerce Technology © Copyright 2019. Authors’ permission required for reprint.

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Procurement Trends in Higher Education 1

Transformation and benchmarking Enhancement of Procurement office / CPO role Customer/stakeholder engagement Procurement advisory boards, focus groups, etc. Supplier Relationship Management (SRM) Sustainability, Diversity and inclusion programs E-Procurement, E-Supplier Management and E-Settlement modules help buyers

strengthen supplier relationships, resulting in: 2

process efficiencies consistently competitive pricing dynamic, discount-based payment terms


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Manual Process• Carbon copy forms• Mail quotes and PO’s• Transaction Oriented• Manual change order• Depended on Phone and

US Post Office

1st Electronic Systems• Initial B2B / EDI systems• Still transaction based• Reactive vs Proactive

Analytics Development• Introduction to analytics• Electronic Order and

invoice transmissions • More Compliance

Drivers

Strategic Sourcing Introduced• Analytics and KPI’s • P2P or S2P introduced• Addressable Spend Focus

Strategic Sourcing on Steroids• Focus on identifying

relationships across the institution (CRM Use)

• Leverage existing and build new relationships

• Focus on areas of addressable and non addressable spend

1980’s 1990’s 2000 2010 2020


Procurement Evolution

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What does Value mean? Different things to different people…..

All aspects of SERVICE are critical to everyone for success

Most customers care about

speed and cost

Finance cares about cost,

revenue, risk and compliance


Faculty care about impact to research

and student engagement

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Finding Value in Procurement5…

Marrying Upstream and Downstream processes enables procurement teams to capture the value that has been created

Sourcing = Planning Buying = Executing


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E-Procurement…it’s NOT just about better pricing…

Eliminate paperwork, rework and errors Reduce costs – leverage every

taxpayer and tuition dollar expended, and is accountable

Mitigate risk with existing and established contracts

Visibility of spend – centralized tracking of all transactions enables KNOWING what you buy, and therefor better supplier contracts.

Leverage spend and structure supplier relationships

Unleash productivity – stakeholders self-service low-value transactions while Procurement staff focuses on strategic sourcing and improving supplier relationships

Ensure compliance and control –standardized approvals and workflow ensure appropriate authorization and spend is directed to draw off existing contracts


Procurement can be true VALUE CREATION

Harness technology to:

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Process & Technology Curve – where are YOU?

Paper Purchase Order

Punch‐Out Catalog

ERP Procurement Module

Contract Consolidation

Electronic Invoicing and Payments

Dashboards and Performance Metrics

Standardization and Functionally Equivalent Mandates

P‐Cards

Consortia Contracts

Category Managers

E‐Procurement

Price Benchmarking

Involvement in Non‐commodity SpendData

Analytics & Reporting

Supplier Relationship Management

Automating Processes and Consolidating

Contracts

Maximizing Data Analysis and Strategic Sourcing

Level of Soph

istication

TimeSeptember 2019 | e-Commerce Technology © Copyright 2019. Authors’ permission required for reprint.

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Organization Transformation: Nebraska

Past – 2010-15 Procurement Task Force

Executive sponsor

Implement E-Procurement technology

Committee evaluation

Present - 2019 Supply Chain Council

Strategic Procurement

SRM (supplier management)

Expanding technology use to more integrated modules

Evaluating to support P2P

Evolving Big data spend analysis

Category strategy development

Collaborative procurement and stakeholder engagement

Digital process optimization


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Innovative Outcome — Beyond Traditional Purchasing

2016 Imminent price increase of 10-15%,

potential impact of $150-225K Data analysis identified delivery issues,

patterns Highly inefficient, redundant, recurring

issues, safety concerns Benchmarked best practices, similar

customers High cost to serve for prime supplier

2018 Extracted order history and delivery

location patterns from e-SHOP system Data analysis led to recommendation for

new delivery model Pilot – 8 months New model (1 year) Schedule deliveries – consolidate by

location and building Order by 11:00 am previous workday Lowered cost to serve, no price increase

Case Study: Industrial Gases Est. Annual Spend: $1.5 million


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Supplier Relationship Management Spend analysis

Segmentation

Category management

Team review and Stakeholder engagement

GOALS:

Focus energy on Top Tier (Strategic and Core) suppliers

Find most efficient methods to procure from Basic suppliers


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Strategic Supplier Contracts

Why University-Wide Contracts? Better leverage ~$1.1 Bils. annual spend for supplies and services Buying together brings down prices (product/service standardization) Quality and service standards determined and implemented by university experts

Objectives Develop contracts that leverage spend across all units Provide highest quality/lowest cost goods and services to our customers Standardize products/services across campus

Process Include experts from across campus to develop contract specifications and requirements Work with suppliers to develop long-term strategic partnerships

(improved efficiencies/technology) Increase use of eProcurement and online supplier catalogs


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Supply Base Consolidation

Why Supplier Consolidation? Fewer suppliers -- allows you to manage each one more actively Better management of quality and service standards

Cost Consistency/Optimization Couldn’t leverage spend with >29,000 suppliers Different prices paid to same supplier for same service (Plumbing Services) Departments were paying different prices to different suppliers for same product (Janitorial Products) Allows suppliers to provide “best pricing”; long-term contracts with “more predictable spend”

Administrative Streamlining Opportunity for improved technology and ordering efficiencies

Improved procurement tools, training programs, and customer service Reduces the time it takes to procure goods and services


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eProcurement Optimization

Why use eProcurement? Online catalogs allow for “defined” measurement of products/services It helps answer the questions - “What did I buy? What size? How many? At what price?

Administrative Streamlining Reduce time it takes to procure goods and services

eProcurement transactions can be ordered and delivered within 24 hours Traditional purchase orders may take up to one week (or longer depending on approval levels)

Timely and accurate management of supplier catalogs (availability, offerings, price)

Data Analysis Improve efficiency and accuracy of tracking costs Better understanding of goods and services being procured Manage the supply chain to ensure best value pricing

Future Strategic Contracts eProcurement data help determine where and how to better develop content for future contracts


2020

Organization Transformation

Procurement Strategic Plan

Vision: To be recognized as a “Best in Class” Procurement Organization


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Technology Transformation

Travel and Expense System Implemented Chrome River – July 1, 2018

Big Bang Go Live Travel Reimbursements Pcard Reconciliation Updated Policy

New Procure 2 Pay solution implemented Jaggaer – July 1, 2019

Big Bang Go Live 8 full modules with entirely new tool sets Reduced policies from 35 to 17


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You don’t know what you don’t know until you don’t know it!

Supplier Self Service Portals are the right path, but can be difficult

Total Automation in Accounts Payable sounds easier than it is!

Analytic tools are very robust but, it’s hard to understand the analytics capabilities when there’s no real data in the system!

Some toolsets sound extremely beneficial (and are) but, don’t short sell the implementation needs.

Cloud Systems –the Good, the Bad and the Ugly


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Developing opportunitiesBEYOND COST SAVINGS ALONE


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Innovative Outcome—Revenue Initiatives? Beyond Traditional Purchasing

Revenue Growth

Brand Alignment

Collaboration

Relationship Development

Value-added Benefits for the IU Community

Advisory CommitteeChair, VP & Chief Financial Officer

Office of the President, Chief of Staff Executive VP for University Academic Affairs VP For Research Chief Executive Officer, IUAA VP & Director of Intercollegiate Athletics VP For Capital Planning & Facilities VP & General Counsel VP for Engagement VP For Information Technology & Chief Information Officer, and

VP for Communications & Marketing Associate Vice President for Procurement Services Executive Director of Corporate Relations for the VP of Research Director of Sponsorships, Licensing, & Trademarks


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Innovative Outcome—Revenue Initiatives? Beyond Traditional Purchasing

Identifying Priorities and Objectives:

Establishing a Statement of Work that includes objectives for:1. Procurement Outcomes2. Engagement with Academic

Programs, Alumni Relations, Athletics and Events

3. Innovative Research Programs

4. Philanthropy5. Creating a Talent Pipeline6. Community Engagement

Implementation: • Provide infrastructure to identify

and capitalize on areas where opportunities might exist

• Identify all touch points• Create a market basket• Understanding objectives and

expectations• RFP Proposal development• Stakeholder engagement• Be transparent on the costs to

execute• Time savings and ease of

transacting business


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Indiana University’s Official Cap & Gown Regalia PartnerProviding a world class graduation experience

• Exclusive Cap & Gown Regalia partner

• Discounts and fixed rates for students

• Coordinated Commencement campaigns across all campuses

• Support for Alumni, Athletics, Events, International Services, and Orientation

• Unique platforms to promote graduation and grad products


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Common themes…how did WE do it?

We had/have a seat at the table Our network—NAEP, BTAA, ISM, other professional associations

People Whitepapers

CBO awareness / support Business case development Technology investments Incremental change


“”

29September 2019 | e-Commerce Technology

The essence of strategy is choosing what NOT to do.

~ Michael E. Porter, Harvard Business School

© Copyright 2019. Authors’ permission required for reprint.

Technology as a Key Tool to Advance Mission and...

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