Cooperative procurement
Download
1 / 33

cooperative procurement - PowerPoint PPT Presentation


  • 186 Views
  • Updated On :

COOPERATIVE PROCUREMENT. Paul R. Higgins Procurement Manager DGS/DPS . The Rising Procurement Tide (1) New Inputs. Internet Connectivity Information Transparency Competitive Markets Enabling Technology. The Rising Procurement Tide (2) New Expectations.

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about ' cooperative procurement' - liam


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
Cooperative procurement l.jpg
COOPERATIVE PROCUREMENT

Paul R. Higgins

Procurement Manager

DGS/DPS


The rising procurement tide 1 new inputs l.jpg
The Rising Procurement Tide(1)New Inputs

  • Internet Connectivity

  • Information Transparency

  • Competitive Markets

  • Enabling Technology


The rising procurement tide 2 new expectations l.jpg
The Rising Procurement Tide (2)New Expectations

  • Higher Realized Savings

  • Improved Responsiveness

  • Better Supplier Relationships

  • More Efficient Processes

  • Faster – Better Decisions


Authority l.jpg
AUTHORITY

The Code of Virginia §2.2-4304 authorizes public bodies to utilize cooperative procurement to satisfy requirements for the purchase of goods and services. (See APSPM 3.7 for implementation guidelines.)


What is cp l.jpg
WHAT IS “CP”??

  • Collaboration of Business Interests

    Plus (+)

  • Aggregation of Spend Across Multiple Agencies

    Plus (+)

  • Leveraged Purchasing Power

    Equals (=)

    Cooperative Procurement


Opportunistic pro active l.jpg

Low Hanging Fruit

Individual Success

Agency Silos

One Hit Wonder

Stand Alone

Putting Down Roots

Group Success

Multi-Agency

Permanent Solution

Integrated Approach

OpportunisticPro-Active


Review of lpp process l.jpg
Review of LPP®Process

Answer: A structured approach to achieving the lowest price at the right quality and service levels via proper application of 6 primary external and internal savings levers:

Question: What is LPP®?


Slide8 l.jpg

LPP® Process

Understanding the Opportunity

Market Making

Structuring the Competitive Process

Conducting Initial Data Analysis

Follow-On Offers, Negotiations and Supplier Selection

Implementation, Monitoring and Tracking

1.

2.

3.

4.

5.

6.

Key

Activities

Deliverables


Slide9 l.jpg

Step 1: Understanding the Opportunity

OBJECTIVE: Select highest potential categories to address through detailed spend profiling effort

Determine

Addressable

Baseline

Benchmark

Pricing to

Assess

Opportunity

Evaluate Existing

Procurement

Process, Policies

And

Specifications

Opportunity

Assessment

Workshop and

Category Selection


Slide10 l.jpg

Understanding the Opportunity

A

B

C

D

Process For Understanding the Opportunity

Key Steps

A.

DetermineAddressableBaseline

B.

BenchmarkPricing to Assess Opportunity

C.

Evaluate Existing Procurement Process, Policies and Specifications

D.

OpportunityAssessment andCategory Selection

NOTE: “PXQ” = Price x Quantity


Slide11 l.jpg

Validate the Addressable Baseline

Understanding the Opportunity

A

B

C

D

Determine Addressable Baseline

Information Sources For Baseline Validation

Internal Request for Information (RFI) and Interviews

CARS, eVA, and Other Internal Systems

External Supplier

Request for Information (RFI)

Existing Contracts


Slide12 l.jpg

Understanding the Opportunity

A

B

C

D

Source 1: CARS, eVA Data and Other Internal Systems

CARS, eVA, and Other Internal Systems


Slide13 l.jpg

Understanding the Opportunity

A

B

C

D

Source 2: Internal Request for Information (RFI) and Interviews

Internal Request for Information (RFI) and Interviews


Slide14 l.jpg

Understanding the Opportunity

A

B

C

D

Internal RFI and Interview Analysis Questions


Slide15 l.jpg

Understanding the Opportunity

A

B

C

D

Source 3: External Supplier Request for Information (RFI)

External Supplier Request for Information (RFI)


Slide16 l.jpg

Understanding the Opportunity

A

B

C

D

Source 4: Existing Contracts

Existing Contracts


Slide17 l.jpg

Understanding the Opportunity

A

B

C

D

Comparison of Information Sources


Slide18 l.jpg

Understanding the Opportunity

A

B

C

D

Baselines are subject to change based on the following considerations.

Key Contributors to Addressable Baseline Changes

Contributor

Example

  • DOC accounts for 30% of the total spend in canned food purchases, but just subcontracted a food services vendor and will no longer purchase canned food; Must reduce addressable total baseline by 30%

Changes in Future Spending

  • VITA’s new contract with Hardware supplier X expires in 2005 with an onerous termination penalty that will delay the process and incur significant legal fees; Must consider eliminating VITA spend from baseline

Contractual Restrictions

  • JMU’s commercial print needs include very specific embossing that only one local supplier can provide; Since, no other vendor can provide the product, must reduce category total baseline by JMU’s spend

Lack of Substitute Products/Services

  • DGS negotiated a contract with pricing based on the CPI index in 2002; To project 2003 baseline spends, must adjust the projection to account for CPI changes

Volume and/or CPI Index Changes


Slide19 l.jpg

Comparing and rectifying the results of the four process steps will lead you to a validated and reliable addressable baseline.

1

2

Internal Request for Information (RFI) and Interviews

Internal System Data Collection

Existing Contracts

External Supplier Request for Information (RFI)

3

4


Slide20 l.jpg

Understanding the Opportunity steps will lead you to a validated and reliable addressable baseline.

A

B

C

D

Benchmark Pricing to Assess Opportunity

Benchmarking current pricing, specifications, and terms provides insight into potential savings opportunities for the Commonwealth.

Information Sources For Benchmarking


Slide21 l.jpg

Understanding the Opportunity steps will lead you to a validated and reliable addressable baseline.

A

B

C

D

Benchmarking Comparison

$300 or 20%

Savings

$400 or 27%

Savings


Slide22 l.jpg

Understanding the Opportunity steps will lead you to a validated and reliable addressable baseline.

A

B

C

D

Evaluate Existing Procurement Process, Policies and Specifications

Are internal processes aligned with price efficiency?


Slide23 l.jpg

Validate Baseline steps will lead you to a validated and reliable addressable baseline.

Calculate Savings

Prioritize Categories

Understanding the Opportunity

A

B

C

D

Opportunity Assessment Workshop and Category Selection


Slide24 l.jpg

Understanding the Opportunity steps will lead you to a validated and reliable addressable baseline.

A

B

C

D

Prioritize Spend Categories for LPP®

Using your detailed spend data, evaluate each potential category to determine the savings potential and timing for LPP®.

Selection Criteria

Categorization Matrix

Silver OakCategory Filter

Tier 2: “Big Impact/High Complexity”

Tier 1: “Quick Hits/Big Impact”

High

  • Large spending

  • Data takes longer to compile and validate

  • More fragmentation in category spend across the Commonwealth

  • High complexity in current VA – supplier relationships

  • Large spending

  • Available and complete data

  • Known and competitive supplier base

  • Centralization/concentration of Commonwealth spend

  • Standardized specifications

  • Experience in category

Savings Opportunity

Tier 4: “Low Impact/High Complexity”

Tier 3: “Medium Impact/Less Complexity”

  • Smaller spending

  • High fragmentation of spend

  • Difficulty in collecting data

  • High fragmentation of coverage by suppliers

  • Smaller spending

  • High fragmentation/decentralization of spend

  • Longer timeframe for collecting data

  • Less competition in supplier base

Low

High

Low

SourcingComplexity / Time Required


Slide25 l.jpg

Understanding the Opportunity steps will lead you to a validated and reliable addressable baseline.

A

B

C

D

Sample Category Evaluation

Below is an example of an evaluation template used during an opportunity assessment. The criteria and scoring range can be varied, but this is representative of the key criteria used to assess a category’s sourcing attractiveness. Aggressive data collection and analysis drives category scoring.

Illustrated Example: Category A

SavingsPotential

(Y Axis)

Speedto

AchieveSavings(X Axis)


Slide26 l.jpg

Baseline Spend Detail steps will lead you to a validated and reliable addressable baseline.

Spend By Supplier FY’03

$ Millions

Total Spend = $1.7 MM

$0.31

$0.26

$0.87

$0.14

$0.08

$0.08


Slide27 l.jpg

Step 2: Market Making steps will lead you to a validated and reliable addressable baseline.

OBJECTIVE: Define target supplier universe and identify potential savings levers

Potential Research Resources To Identify Supplier Qualifications


Slide28 l.jpg

Market Making steps will lead you to a validated and reliable addressable baseline.

A

B

C

D

Interview Process

All interviews require thoughtful preparation, execution, and follow-up.

5. Write Interview Notes

1. Plan the Interview

4. Conduct the Interview

2. SetUp the Interview

3. Write the Interview Script


Slide29 l.jpg

Market Making steps will lead you to a validated and reliable addressable baseline.

A

B

C

D

Internal RFI Questionnaire Sample


Slide30 l.jpg

Market Making steps will lead you to a validated and reliable addressable baseline.

A

B

C

D

For supplier-specific information, you can also use the yahoo finance website. There is an option to review competitor information, which will lead you to additional information on other suppliers in the market.

Competitor Information Link


Slide31 l.jpg

Market Making steps will lead you to a validated and reliable addressable baseline.

A

B

C

D

Hoovers.com is also a good resource for industry and supplier information.

Competitor Information Link

Supplier Profile


Slide32 l.jpg

Market Making steps will lead you to a validated and reliable addressable baseline.

A

B

C

D

The online search may yield familiar results. In this case, we are provided with 135,000 search results. Peruse the top 25 links for any useful information.

135,000 search results!


Slide33 l.jpg

LPP steps will lead you to a validated and reliable addressable baseline.® Process

Understanding the Opportunity

Market Making

Structuring the Competitive Process

Conducting Initial Data Analysis

Follow-On Offers, Negotiations and Supplier Selection

Implementation, Monitoring and Tracking

1.

2.

3.

4.

5.

6.

Key

Activities

Deliverables


ad