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State Purchasing Division

State Purchasing Division. Financial Benefits of Procurement Transformation May 1, 2007. Today’s Agenda. Procurement Transformation State Purchasing Organization Strategic Sourcing Process State Purchasing Initiatives Questions and Answers. Procurement Transformation.

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State Purchasing Division

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  1. State Purchasing Division Financial Benefits of Procurement Transformation May 1, 2007

  2. Today’s Agenda • Procurement Transformation • State Purchasing Organization • Strategic Sourcing Process • State Purchasing Initiatives • Questions and Answers

  3. Procurement Transformation

  4. “TRANSFORMING” State Purchasing (SPD) • The SPD Strategic Plan is based on the “Commission for a New Georgia” Taskforce’s findings and recommendations • Vision and Objectives • Capture savings through strategic sourcing of goods and services • Create a world class procurement organization to effectively manage State “SPEND” • Key elements in the strategic plan • Organization • Processes • Technology

  5. Past, Current & Future State • Transition from transaction-focused to knowledge-based team • Much collaboration and inclusiveness • Identify targets up front (suppliers, specs, price points, profit margins, negotiation zones) • Lack of systems support • Measure to continually improve • Provide freedoms when earned

  6. State Purchasing Organization

  7. Organizing SPD • Restructure SPD to reflect a “World Class” procurement organization (two operational units) • Strategic Sourcing (category of spend) • Knowledge Center (supports State Purchasing operations for SPD & Agencies) • This improved business architecture results in: • Flexibility in the State’s present environment • World class customer service • Direct and Indirect savings for the State of Georgia

  8. State Purchasing Organizational Structure Asst. CommissionerState Purchasing (Tim Gibney) Director, Strategic Sourcing (Vacant) Director, Knowledge Center (Kelly Loll-Jones) Director, Customer Advocacy (Vacant) IT/Telecom(Brian Wirpsa) Strategic Support (Vacant) Process Improvement (Donna File) Procurement Applications (Pat Gardner) Good & Supplies (Dennis King) Special Projects (Debra Blount) Cust./Vend. Satisfaction (Hugh Farley) Professional Development (Mirna Barker) P-card Manager (Donna Rayner) Energy, Infrastructure & Fleet (Darryl Mitchell)

  9. SPD Staffing Update • Build to 71 FTEs • Raised job qualifications • Retain and/or hire only qualified personnel • Closed the government/private sector compensation gap for the State • Current Focus for Next Hiring Wave: • Director – Strategic Sourcing • Director – Customer Advocacy • 9 Associate Category Mgrs. • 3 Category/Strategic Support Analysts • Training Managers • Marketing/Communications Director • 2nd & 3rd Process Improvement Teams

  10. Strategic SourcingProcess

  11. Strategic Sourcingis a systematic process to leverage an organization’s purchasing power to reduce the total costs of goods and services while maintaining or improving the level of quality/service A.T. Kearney’s 7- Step Strategic Sourcing Methodology • Profile the Sourcing Group ~ confirm user requirements; engage participation • Select Sourcing Strategy ~ where & how to buy what, while minimizing risk and costs • Generate Supplier Portfolio ~ identify qualified suppliers • Select Implementation Path ~ RFP, RFQ, eRFP, eRFQ • Select Competitive Supplier(s) ~ evaluation & negotiation • Operational Integration with Suppliers ~ implement transition to new suppliers • Continuous Benchmarking of Supply Market ~ track results and restart assessment

  12. To date, Strategic Sourcing has addressed over $200mm in spend and identified over $30 million in annualized contract savings • Additional benefits; enhanced reporting requirements, improved services levels and warranties • Admin fees applied to select contracts with potential for significant political subdivision spend

  13. Challenges to Overcome • Continuous spend data collection/spend analysis • Raising skill set & knowledge of all purchasing staff • Implementing systems, training programs, process improvements, communications and collaboration • Meeting savings goals • Sharing victories • Building trust & commitment • Maintaining customer service through transition period

  14. State Purchasing Initiatives

  15. Organizing SPD Training • Revamp Statewide Procurement Training – Mirna Barker, Ph.D., Chief Learning Officer and Team • Embed skill-set needed to implement best-in-class procurement • Provide training in the specific statutes, rules and policies that govern public purchasing; and use of technology • Increase motivation and incentive for career advancement and employee retention • Begin State Procurement Professional Certification • Goal is to certify 35% of State procurement personnel by end of 2009 • Audience • State Purchasing • Agencies and Universities • Other state personnel (i.e. Auditors, Program managers)

  16. SPD Procurement Processes • Establish effective Statewide procurement policies and standards • Improve the buying process • Implement A.T. Kearney’s Sourcing Strategies and its “Seven Step” Procurement Best Practices • Create cross-agency teams to provide a statewide view of needs • Initiate comprehensive procurement performance metrics and reporting • Introduce Statewide procurement compliance measures through Process Improvement reviews & collaboration

  17. SPD Procurement Technology • Use technology to simplify and accelerate the purchasing cycle • Planned new applications: • PeopleSoft Supplier Relationship Management (DOAS) • eProcurement • Strategic Sourcing • Catalog Management • Contract Administration • Supplier Rating System • eSupplier Connect

  18. Reason for Procurement Transformation Technology Project (PTTP) • 2004 –Procurement Transformation Initiative implemented • 2005 – 2006 - ATK performs spend analysis. Begins strategic sourcing. Technology analysis is performed • 2006 – State decides PeopleSoft Technology is needed to sustain the benefits/savings • 2007 –PeopleSoft Implementation Services solicitation timeframe – 8 months • 2007 - 2008 Project Implementation – 2 yrs

  19. Conceptual Project Time Frame • Stage I - Solicitation Timeframe – 9 months • Stage II - Project Implementation – 2 yrs • Stage III - System Support – 1 yr

  20. Procurement Technology Project Objectives • Create easy to use/intuitive eProcurement solutions to improve efficiencies and effectiveness of statewide procurement professionals • Incorporate best practices within the system design • Meet our user’s needs during system design and implementation • Executive level SPD engagement • Creation of the Director, Customer Advocacy to: • Work with SMEs representing a cross-section of State government • Report project progress to all levels • Plan rollout of new eProcurement system functionality to all state agencies, universities, & vendors • Train all Georgia purchasing staff and their clients on procurement tools and best practices

  21. Project Impact

  22. Resources: Six Modules – PS 9.0 eProcurement Example: web based, punchout to catalogs, populate requisition, workflow driven approvals integrated into PeopleSoft financials

  23. Overview of eQuote • Electronic sourcing and solicitation tool for simple quotes up to $49,999.99 • Enables buyers to evaluate and award electronically • Can decide posting duration of 2-20 business days • Able to add vendors to system-generated random vendor selection list • Statewide training and User’s Guides available on the State Purchasing website • Enhancements planned for late 2007 • To get access to eQuote or need assistance contact the Help Desk through equote@doas.ga.gov or 404-657-6000

  24. eQuote Enhancements

  25. eRFx (eBreviate until P-Soft for SPD) • Electronic solicitation process • Double-digit percentage reductions in cost • Standardized sourcing practices • Improved supplier and market access and knowledge • ASP based solution • Reduced number of days eRFX has to be posted • Allows for simultaneous review of financial and technical eRFPs

  26. Purchasing Card Optimization Study • Currently ~$350M in P-Card spend, long-term goal = $1 Billion • State saves $65 per transaction • Bank of American involved in optimization study • 6 agencies (DOT, DHR, DCH, DTAE, DOC, and DNR) participating • 4 Colleges (Kennesaw State, MCG, Georgia Southern, Univ. of West Georgia) participating • Goals • Consistent P-Card usage & policies • Expanded P-Card Usage • Comprehensive Communication & Training plan for all users • Better spend data, lower A/P costs and more efficiency

  27. Objective Improve communications with you DOAS programs (Fleet, Risk Management, Purchasing) All respective areas: training, statewide contracts, etc. How Director of Communications reporting to Commissioner Douglas Embedding communications professionals within work groups Close collaboration with Professional Development, Strategic Sourcing, Customer Satisfaction SPD Contact Hugh M. Farley, 404 656-0936 or hmfarley@doas.ga.gov DOAS Communications Plan

  28. Questions & Answers Get more information Go the State purchasing website – http://statepurchasing.doas.georgia.gov Click on Procurement Transformation Initiative

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