Saving Time Can Save You Money Some Tips for Improving the Efficiency & Effectiveness of Procurement October 27, 2011 VAGP Symposium Keith K. Glatz CPPO, FCPM
The Problem. . . • Spending a lot of time, and getting NOWHERE! • Reduced resources and heavier workload • Procedures and available technology hinder ability to get quality work done fast
Objectives • Problem/Solution Categories • Identify what needs to be looked at internally • Identify available tools to help move forward • Leveraging technology • Using a common sense approach to accomplish the above objectives
SOME THINGS you need to remember. . . • Before you can SAVE time, you need to SPEND some time studying where you are and where you need to be • Often, we save money on the back-end by making an investment at the front-end • There is NO silver bullet!
Time & Cost Issue Categorization Time and Cost Issues can be normally categorized AND addressed as follows: • Staffing • Process • Technology
staffing • Most difficult solution to justify • Difficult to obtain new staffing resources in today’s environment and economy • May be able to justify additional staffing IF that addition will SAVE you or your entity money in the long-run • May need to consider outsourcing
process • The “most likely culprit”. • You need to know what’s actually going on! • Map the process out! • Find the steps that add NO Value! • Find benchmarks for comparison • Determine the gap • Correct the issue
Technology • What existing technology do you have? • Review current technology available • Determine if you technology is current • Can technology fix the process? (It may be the solution to process problems!) • What can I get for little or no cost? • Is new technology cost effective? • Will new technology blend into my culture?
At the End of the Day . . . You should be able to save time and money by. . . • The most effective leveraging of staff resources • Identifying and correcting inefficiencies in your processes • Having a greater awareness of your obstacles to progress • Identifying and implementing cost-effective technology solutions that reduce redundant process steps and avoid errors
Staffing – Practical Tips • Make sure your job descriptions are clear and as flexible as possible • Make sure your staff has the proper training (including professional certifications) • Develop a cross-training program • Make sure your organization structure fits the job • If it’s cheaper for somebody else to do it better, seriously consider outsourcing it
Process – The problem What problem am I trying to solve? • Process takes too much time? • Process is too expensive? • IS the process even necessary? • Are there steps in the process that add no value? • Define the problem
Process Problem statement PROBLEM STATEMENT The purchase order development process currently takes an average of 10 days to complete. Using Departments constantly complain to Purchasing and upper level City Management about the process. The current process for ordering and payment for goods and services is not efficient or cost effective with the advancement of technology and current procurement best practices.
Process -- Problem Definition PROJECT DEFINED Implementation of streamlined process to shorten the overall processing time of purchasing requisitions. The goal is to shorten the time from an average of 10 days to an average of 3 days to complete. Review committee will include representatives from Purchasing, IT, Finance and two (2) large using departments.
Process – Project Process matrix Purchase Order Processing Time
How do we measure success? • Benchmarking against Other Entities and Standards • Collection of your own past data • Surveys of agencies in your area • Surveys conducted by your chapter • Established Best Practice Guidelines • Award programs • Benchmarking programs • Perform a GAP Analysis • The “GAP” between your process and established Best Practices
Some resources for BEST PRACTICEs • Review Requirements found in Agency Award Applications • Achievement of Excellence in Procurement (AEP) Award issued by the National Procurement Institute (NPI) https://www.npiconnection.org/aep/instructions.asp • Florida Association of Public Procurement Officials (FAPPO) Agency Achievement Award www.fappo.org • NIGP Outstanding Agency / Accreditation Award (OAP) and Pareto Award http://www.nigp.org/eweb/StartPage.aspx?Site=NIGP&webcode=cps_ps_acc • Other Best Practice Resources • NIGP Research – “The Vault” by the Aberdeen Group http://www.nigp.org/eweb/StartPage.aspx?Site=NIGP&webcode=ResLibSearch • Public Procurement Research Center (PPRC) at Florida Atlantic University • Journal of Public Procurement • Other scholarly publications • http://www.fau.edu/pprc/publications/JoPP.html
BENCHMARKING RESOURCES • Benchmarking • Take part in a Benchmarking Survey (or try to obtain results) • ICMA Purchasing Measures • CAPS Research http://www.capsresearch.org/ • The NIGP “VAULT” www.nigp.org • Other NIGP special surveys • Florida Benchmarking Consortium http://www.flbenchmark.org/ • Various Industry Surveys
Outside Assistance • NIGP Consultancy Program http://www.nigp.org/eweb/StartPage.aspx?Site=NIGP&webcode=cps_con • Procurement Agency Satisfaction Survey – Customers & Suppliers • Policies and Procedures Review • GAP analysis • Academic groups • Other outside consulting firms
The Actual Process Review • Map the process out so stakeholders can see it • Bring the stakeholders into one place • Use sticky notes on the wall, or a similar method to map the process. (Allows you easily add and remove steps) • Identify steps that duplicate effort • Document the “before” and the “after”
Desired results of A review • Agreement from stakeholders to eliminate steps that add no value to the process • Remove unnecessary review steps • A person should only have to review something one time in the process • Identification of opportunities for single-point data entry, and for methods to pull data from pre-established data bases to avoid error, and to reduce review time • Identification of technology or software that can resolve issues • Calculation of the time and cost savings by eliminating steps in a process, or an entire process
After the process review is done Use PDCA (Plan – Do – Check – Act) to implement new processes • Plan • Develop a plan to implement the new or revised process • Do • Execute the plan and begin using the process • Check • Analyze feedback, determine if the new process works • Determine lessons learned from implementing the process • ACT • Make adjustments as necessary • Document your time and cost savings • Share your success!
Leveraging technology • What problems and bottlenecks can be resolved through the introduction of technology? • Do you have hardware or software that can be utilized now? • Can you get what you need by installing off-the-shelf software? • Do you have staff capable of programming software to meet your needs? • Do you have an ERP system that can be interfaced with other software?
Some examples of leveraging technology • On-line Supplier Registration -- Saves paper & process time & reduces errors • On-line Solicitation Posting & Download Capability – Saves paper, staff time and postage. Can shorten solicitation cycle • On-line Plan holder Lists -- Saves process time with automatic updates & provides transparency • On-line posting of statutes, policies, procedures, vendor guides and standard bid and RFP terms & conditions on your web-site – allows 24/7/365 access
Some Examples of Leveraging technology -- continued • Electronic Catalogs – Internal and External Use (Web-based ordering) improves accuracy of pricing and promotes standardization • EFT/ACH Electronic Direct Deposit for suppliers – improves payment cycle time, saves paper, postage and staff time. • Spend Management Software – Helps you identify spend patterns, and concentrate on the most important commodities and services
Some Examples of Leveraging Technology – Continued • On-line Insurance Database – Saves cumbersome manual tracking & eliminates duplication of effort • On-line Surplus Auctions – Saves staff time, increases visibility & avoids live auction costs • Procurement Cards – Saves staff and process time. May also be used to pay invoices
What benefits Do These examples have in common? • Can often upload and download data directly from ERP or other data bases • Single point entry of information avoids errors in other points of the process • Provides for the use of drop-down menus instead of requiring manual data entry – less potential for errors • Many processes now “manage themselves”, allowing staff to concentrate on more important issues. Allows you to provide the same level of service when faced with staffing cuts with fewer errors • The same “message” can now be communicated to more people even quicker
Potential impediments to technology • New equipment may be required – initial acquisition costs • Software costs may be prohibitive • May be difficult to interface with ERP, or ERP provider may require you to pay for expensive upgrades or extra programming costs • Costs of maintenance and ability to maintain software or hardware (Can you internally support a new application?) • Onerous software licensing agreements • Internal cultural issues (Are you a “tech-savvy” organization or not?) • Technology may become obsolete • Need to use “common sense” when implementing technology
So, how should we leverage technology? • Prioritize your needs – What should be addressed to save the most time and money? • Reach for the “low-hanging fruit” – what can be done quickly with existing resources? • Look at best practices in other locations – what kinds of technology are being commonly used by your colleagues? • Check with your colleagues – are there software applications that they may have developed that they are willing to share at a relatively low cost with you? • NIGP for free resources – NIGP “Measure” helps you document savings http://www.nigp.org/eweb/StartPage.aspx?Site=NIGP&webcode=cps-meas_prog
What if you need a “major overhaul”? Conditions Requiring a Major Overhaul • You have very little automation • Your current technology is seriously outdated • You are unable to interface with your ERP, and require some level of “stand-alone” capability
Starting the Overhaul Process Steps to Take • Develop a Needs Assessment -- engage your stakeholders! • Build your business case and justification • Provide management with the potential for process improvement, including projected time and process cost savings • Explore the marketplace – just as you would for any other major acquisition • Develop your initial action and task plan • Develop your budget • Seek competition – prepare solicitation based on your needs assessment.
Starting the overhaul – continued Steps to Take – Continued • Evaluate solicitations – include your stakeholders • Negotiate Agreements – may require special legal assistance with firm familiar with software licensing • Install the technology • Test the technology – tie your payments to the success of the testing! • Train your users • Move forward!
Procurement cards • Consider using Procurement Cards instead of purchase orders or blanket requisitions • Eliminates staff time to prepare purchase orders and blankets and significantly cuts administrative costs • Eliminates the need to set-up special accounts and billing with suppliers • Empowers employees at lower levels of the organization to purchase items with fairly low dollar costs • Allows for greater transparency • Requires pro-active administration, well-written procedures, and good follow-up • May also be able to use procurement cards as PAYMENT CARDS to improve efficiency and speed-up the payment cycle
Some final thoughts. . . • Be sure you engage all of your stakeholders both inside and outside your organization • Be aware of your organizational culture • If the culture NEEDS to be changed, you need to subtly work from within to get buy-in -- don’t force a culture change without it! • Think before you act – Use your common sense!!! • GOOD LUCK!!!
QUESTIONS & COMMENTS? THANK YOU!!! Keith K. Glatz, CPPO, FCPM Purchasing & Contracts Manager City of Tamarac, FL 33321 (954) 597-3567 Keith.firstname.lastname@example.org