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ARIBA Commerce Summit
   November 8, 2012
An EPIC
       transformation
  of purchasing processes
            at the
   University of Manitoba
By: Paul Dugal, Manager, Purchasing Services
In Summary
Lessons Learned
• eProcurement is an essential tool to achieve
  purchasing excellence. It is not the only tool.
  An effective Purchasing Operating Model and
  Strategic Sourcing methodology are equally
  important
• Include all three areas in your business case
Lessons Learned
• eProcurement is not just a purchasing system.
  More importantly, it’s a Finance System
• Engage key stakeholders and potential users of
  the system, right from the beginning
   – and it begins before you decide to buy an
     eProcurement system
   – What’s wrong with the current purchasing
     processes?
   – What could make it better?
Lessons Learned
• Combine the operational effectiveness of both
  the Purchasing Services organization with the
  organization as a whole, to build your business
  case
• Your ROI will be much quicker and gain an
  easier buy-in from Senior Management
Lessons Learned
Investment:
  •   New Purchasing Operating Model and
      Strategic Sourcing (consulting and additional
      staffing costs)
  •   Current State / Future interviews (consulting)
  •   User Engagement costs (participants)
  •   The eProcurement Service costs
  •   Implementation Resources:15 FTE/yr x 2yrs
  •   Ongoing annual internal maintenance costs
Lessons Learned
Benefits:
  •   Prove the power of Strategic Sourcing
      Savings. U of M achieved $4.5 million (3%
      of addressable spend) prior to buying
      eProcurement
  •   Consider the redeployment of users’ time
      savings to more productive tasks
The Journey
How did we get here?

1. Reorganization of Purchasing Services
   (2010):
  • Category Management
  • Performance Management
2. Strategic Sourcing (2010-2011)
3. eProcurement implementation (2011-2013)
4. EPIC Launch (October 9, 2012)
How did we go about designing
  an eProcurement system for
            U of M?
• Engaged Faculty and Staff in Current State and
  Future State workshops
• Engaged them in RFP requirements
• Engaged them in supplier selection
• Engaged them in design stages
• Engaged them in testing
• Engaged them in Pilots
“Current State” & “Future State”
     Analysis Workshops

• 15 workshops over a 6 week period with 30
  participants from a range of faculties and
  departments
• Over 3,300 person-hours of analysis
What did we learn?

•   Too many ways to make purchases
•   Too many forms to chose from
•   Too many steps
•   Too time consuming of processes
•   Not enough departmental control
•   Ordering time too long
What did we learn?

•   Time consuming approval process
•   Difficult to track the approval process
•   Not aware of purchases until expensed
•   No commitments on low-dollar purchases
•   Difficult to obtain copies of low-dollar
    Requisitions and Invoices
What we didn’t hear
• We need help to save us money
• We need better consulting from Purchasing
  Services
• We need to standardize the variety of
  products/services we buy
• We need to consolidate our supplier base
Conclusions
• Need an easy electronic method to request
  goods/services, financially commit purchases,
  approve, order, invoice, receive, view and
  archive related documents
• Need a spend analytics tool
• Need to manage contracts
• Need to automate competitive tendering and
  evaluation process
• Need an eProcurement solution
Search for an eProcurement
        Service Provider
• Built the RFP requirements according to the
  As Is & To Be workshops and operational needs
• Engaged 155 faculty and staff from 79
  departments in top 3 supplier demonstrations
• 95% in favor, and we selected Ariba Inc.
Implementation

• Conducted a 54 week implementation process in
  Sept. 2011
• Implementation team of 15+ FTE
• Continued to engage stakeholders in the design
  work
• Did we build what you wanted?
• Did we hit the target?
Conference Room Pilots
Not a Bull's-eye, but we made
     improvements of EPIC
          proportions
• $250 million/annually – 100,000 transactions
• Variety of Goods/Services: live animals,
  scientific apparatus/chemicals, musical
  instruments, consulting services, IT hardware/
  software, construction, office furnishings,
  transportation services, etc.
EPIC Improvements
 One electronic procurement process
   • EPIC (Purchasing Card as a back-up)
 Fewer ways to buy
      • one Purchasing process
      • one Sourcing Request process
      • one Contract Request process
EPIC Improvements
Simplified, automated, faster procurement
 process with less steps
Under $2,500 ordering time reduced from 8
 days to less than 1
Departmental control on their purchases
Visibility of entire process
EPIC Improvements
 More efficient electronic approval process
 All related information available on-line & reports
 Upfront commitments on all purchases
 Paper(less). Some faxing of P.O.’s
 Requester driven (empowerment of Requestors)
 Purchasing Services assists when > $2,500/item
  or $25,000/order
EPIC Improvements
 Electronic Catalogue ordering (75% of orders)
  – On-line searching
 Electronic non-catalogue ordering
 On-line Receiving of higher valued orders
 Automated Budget checking
 On-line invoice variance reconciliations
EPIC Improvements
            Operationally
• eSourcing
• eContracts
• Enablement of suppliers to transact
  electronically
• Spend Analytics
   • Enhanced by use of Commodity Codes
EPIC Improvements
            Operationally
• Strategic Sourcing Savings
   • $4.5 million per year so far
   • Standardization of goods/services
   • Consolidation of suppliers
• Improved Services by Purchasing Services
• Purchasing Services is now being recognized
  for its strategic value and importance
Spend Analytics
   Example
Services




        IT                Construction




   Logistics

               Research
                  and
                Science




Total Spend by Category
Consolidation of Suppliers
Services Spend By Supplier
Exported Spend of All Services
          Suppliers
Consolidation of Suppliers
In Summary
Lessons Learned
• eProcurement is an essential tool to achieve
  purchasing excellence. It is not the only tool.
  An effective Purchasing Operating Model and
  Strategic Sourcing methodology are equally
  important
• Include all three areas in your business case
Lessons Learned
• eProcurement is not just a purchasing system.
  More importantly, it’s a Finance System
• Engage key stakeholders and potential users of
  the system, right from the beginning
   – and it begins before you decide to buy an
     eProcurement system
   – What’s wrong with the current purchasing
     processes?
   – What could make it better?
Lessons Learned
• Combine the operational effectiveness of both
  the Purchasing Services organization with the
  organization as a whole, to build your business
  case
• Your ROI will be much quicker and gain an
  easier buy-in from Senior Management
Lessons Learned
Investment:
  •   New Purchasing Operating Model and
      Strategic Sourcing (consulting and additional
      staffing costs)
  •   Current State / Future interviews (consulting)
  •   User Engagement costs (participants)
  •   The eProcurement Solution costs
  •   Implementation Resources:15 FTE/yr x 2yrs
  •   Ongoing annual internal maintenance costs
Lessons Learned
Benefits:
  •   Prove the power of Strategic Sourcing
      Savings. U of M achieved $4.5 million (3%
      of addressable spend) prior to buying
      eProcurement
  •   Consider the redeployment of users’ time
      savings to more productive tasks
It is EPIC!
It is Live!
Now
Playing
University of
 Manitoba
EPICquestions

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An EPIC Transformation of Purchasing Processes at the University of Manitoba

  • 1. ARIBA Commerce Summit November 8, 2012
  • 2. An EPIC transformation of purchasing processes at the University of Manitoba By: Paul Dugal, Manager, Purchasing Services
  • 4. Lessons Learned • eProcurement is an essential tool to achieve purchasing excellence. It is not the only tool. An effective Purchasing Operating Model and Strategic Sourcing methodology are equally important • Include all three areas in your business case
  • 5. Lessons Learned • eProcurement is not just a purchasing system. More importantly, it’s a Finance System • Engage key stakeholders and potential users of the system, right from the beginning – and it begins before you decide to buy an eProcurement system – What’s wrong with the current purchasing processes? – What could make it better?
  • 6. Lessons Learned • Combine the operational effectiveness of both the Purchasing Services organization with the organization as a whole, to build your business case • Your ROI will be much quicker and gain an easier buy-in from Senior Management
  • 7. Lessons Learned Investment: • New Purchasing Operating Model and Strategic Sourcing (consulting and additional staffing costs) • Current State / Future interviews (consulting) • User Engagement costs (participants) • The eProcurement Service costs • Implementation Resources:15 FTE/yr x 2yrs • Ongoing annual internal maintenance costs
  • 8. Lessons Learned Benefits: • Prove the power of Strategic Sourcing Savings. U of M achieved $4.5 million (3% of addressable spend) prior to buying eProcurement • Consider the redeployment of users’ time savings to more productive tasks
  • 10. How did we get here? 1. Reorganization of Purchasing Services (2010): • Category Management • Performance Management 2. Strategic Sourcing (2010-2011) 3. eProcurement implementation (2011-2013) 4. EPIC Launch (October 9, 2012)
  • 11. How did we go about designing an eProcurement system for U of M? • Engaged Faculty and Staff in Current State and Future State workshops • Engaged them in RFP requirements • Engaged them in supplier selection • Engaged them in design stages • Engaged them in testing • Engaged them in Pilots
  • 12. “Current State” & “Future State” Analysis Workshops • 15 workshops over a 6 week period with 30 participants from a range of faculties and departments • Over 3,300 person-hours of analysis
  • 13. What did we learn? • Too many ways to make purchases • Too many forms to chose from • Too many steps • Too time consuming of processes • Not enough departmental control • Ordering time too long
  • 14. What did we learn? • Time consuming approval process • Difficult to track the approval process • Not aware of purchases until expensed • No commitments on low-dollar purchases • Difficult to obtain copies of low-dollar Requisitions and Invoices
  • 15. What we didn’t hear • We need help to save us money • We need better consulting from Purchasing Services • We need to standardize the variety of products/services we buy • We need to consolidate our supplier base
  • 16. Conclusions • Need an easy electronic method to request goods/services, financially commit purchases, approve, order, invoice, receive, view and archive related documents • Need a spend analytics tool • Need to manage contracts • Need to automate competitive tendering and evaluation process • Need an eProcurement solution
  • 17. Search for an eProcurement Service Provider • Built the RFP requirements according to the As Is & To Be workshops and operational needs • Engaged 155 faculty and staff from 79 departments in top 3 supplier demonstrations • 95% in favor, and we selected Ariba Inc.
  • 18. Implementation • Conducted a 54 week implementation process in Sept. 2011 • Implementation team of 15+ FTE • Continued to engage stakeholders in the design work • Did we build what you wanted? • Did we hit the target?
  • 20. Not a Bull's-eye, but we made improvements of EPIC proportions • $250 million/annually – 100,000 transactions • Variety of Goods/Services: live animals, scientific apparatus/chemicals, musical instruments, consulting services, IT hardware/ software, construction, office furnishings, transportation services, etc.
  • 21. EPIC Improvements  One electronic procurement process • EPIC (Purchasing Card as a back-up)  Fewer ways to buy • one Purchasing process • one Sourcing Request process • one Contract Request process
  • 22. EPIC Improvements Simplified, automated, faster procurement process with less steps Under $2,500 ordering time reduced from 8 days to less than 1 Departmental control on their purchases Visibility of entire process
  • 23. EPIC Improvements  More efficient electronic approval process  All related information available on-line & reports  Upfront commitments on all purchases  Paper(less). Some faxing of P.O.’s  Requester driven (empowerment of Requestors)  Purchasing Services assists when > $2,500/item or $25,000/order
  • 24. EPIC Improvements  Electronic Catalogue ordering (75% of orders) – On-line searching  Electronic non-catalogue ordering  On-line Receiving of higher valued orders  Automated Budget checking  On-line invoice variance reconciliations
  • 25. EPIC Improvements Operationally • eSourcing • eContracts • Enablement of suppliers to transact electronically • Spend Analytics • Enhanced by use of Commodity Codes
  • 26. EPIC Improvements Operationally • Strategic Sourcing Savings • $4.5 million per year so far • Standardization of goods/services • Consolidation of suppliers • Improved Services by Purchasing Services • Purchasing Services is now being recognized for its strategic value and importance
  • 27. Spend Analytics Example
  • 28. Services IT Construction Logistics Research and Science Total Spend by Category
  • 30. Services Spend By Supplier
  • 31. Exported Spend of All Services Suppliers
  • 34. Lessons Learned • eProcurement is an essential tool to achieve purchasing excellence. It is not the only tool. An effective Purchasing Operating Model and Strategic Sourcing methodology are equally important • Include all three areas in your business case
  • 35. Lessons Learned • eProcurement is not just a purchasing system. More importantly, it’s a Finance System • Engage key stakeholders and potential users of the system, right from the beginning – and it begins before you decide to buy an eProcurement system – What’s wrong with the current purchasing processes? – What could make it better?
  • 36. Lessons Learned • Combine the operational effectiveness of both the Purchasing Services organization with the organization as a whole, to build your business case • Your ROI will be much quicker and gain an easier buy-in from Senior Management
  • 37. Lessons Learned Investment: • New Purchasing Operating Model and Strategic Sourcing (consulting and additional staffing costs) • Current State / Future interviews (consulting) • User Engagement costs (participants) • The eProcurement Solution costs • Implementation Resources:15 FTE/yr x 2yrs • Ongoing annual internal maintenance costs
  • 38. Lessons Learned Benefits: • Prove the power of Strategic Sourcing Savings. U of M achieved $4.5 million (3% of addressable spend) prior to buying eProcurement • Consider the redeployment of users’ time savings to more productive tasks