Advanced Data Concepts, LLC.ppt

1、Advanced Data Concepts, LLC,State of Wisconsin Procurement Analysis Project,Desired Future Situation & Detailed Recommendations January 2001,2,CONTENTS,INTRODUCTION RECOMMENDATIONS GAP ANALYSIS IMPERATIVES SYSTEM OPTIONS ORGANIZATIONAL & POLITICALCONSIDERATIONS IMPLEMENTATION GAME PLAN BEST PRACTICE

2、S PROCESS MAPS APPENDICES GLOSSARY CASE STUDIES E-PROCUREMENT VENDOR LISTING SUPPORTING CHARTS Data Warehouse Project - Development & Implementation,3,PROJECT OBJECTIVES, DEFINED BY THE INTERAGENCY GROUP, DROVE INTENSIVE SET OF INTERVIEWS AND ANALYSES,INTRODUCTION,OBJECTIVES,OBJECTIVES,DESIGN GUIDEL

3、INES,PHILOSOPHY,Identify and realize efficiencies from common business needs Reengineer procurement/purchasing processes and implement performance metrics Define and understand successful procurements,Make purchasing a strategic asset Provide quality goods and services for the best possible price En

4、courage participation of other units of government and vendors,Identify and accommodate different business requirements and needs Make it easy and timely Provide timely and accurate information to all participants Leverage the States scale and scope Use technology effectively throughout the procurem

5、ent cycle,4,ADVANCED DATA CONCEPTS COMPLETED AN INTENSIVE TEN WEEK EFFORT TO ANALYZE THE STATES PROCUREMENT OPERATIONS,INTRODUCTION,State of Wisconsin Management Team,Current Situation Analysis,Desired Future Situation Model,Detailed/Global Recommend.,State Agencies and UW Campuses,Data Collection I

6、nterviews (10 agencies) Surveys (all others) Document Process Systems Validate Best Practices,Reengineered Business Processes Performance Metrics Data Model Vendor Analysis,Detailed Requirements Data Schema Vendor Management Impact Cost Implementation time Politics,A D CS E R V I C E S,A D CS E R V

7、I C E S,5,In November 2000, ADC provided SBOP with a picture of the current procurement situation in the State of Wisconsin This document now answers the questions: What is the Desired Future State? How do we get there?,RECOMMENDATIONS TO FACILITATE WISCONSIN MOVING FROM ITS CURRENT STATE TO A DESIR

8、ED FUTURE STATE HAVE BEEN DEVELOPED,INTRODUCTION,6,Buyer/Supplier Management,Purchasing as a Strategic Asset,EMBRACING THE FOLLOWING STRATEGIC FRAMEWORK WILL DRIVE PROCUREMENT & OPERATIONAL EXCELLENCE,State of Wisconsin,Procurement & Operational Excellence,Strategic Planning Continuous Learning & In

9、novation Review Buying and Supplier Behavior Strategic Sourcing Key Performance Indicators,Technology Architecture Enterprise Application Solution E-Procurement Data Warehousing N-Tier / Client-Server Architecture,Business Process Re-Engineering Best Practices Imperatives Organization Impact Commodi

10、ty Code Standardization Human Capital Development,Vendor Management VendorNet E-Procurement Supplier Performance Measurement,INTRODUCTION,7,THIS PROJECT RESULTED IN SEVERAL MAJOR RECOMMENDATIONS,THE FOLLOWING IMPERATIVES MUST BE ADDRESSED TO REALIZE IMPROVEMENT OPPORTUNITIES IN THE PROCUREMENT CYCLE

11、.,INTRODUCTION,Leverage Large Volume Purchases - achieve maximum vendor discount Expand Use of Cross-Functional Teams - develop sourcing strategies for high volume and complex purchases Approval Process - decrease approvals to one per transaction (requisition and purchase order) Commodity Coding - s

12、tandardize on UN/SPSC naming convention Purchasing Card Reporting and Management - report on P-Card purchases by commodity and dollar amount Purchasing as a Strategic Asset establish purchasing as an integral part of the strategic planning process,8,THIS PROJECT RESULTED IN SEVERAL MAJOR RECOMMENDAT

13、IONS,KEY IMPERATIVES CONTINUED ,INTRODUCTION,Expand Training Program - provide a continuous improvement program for SBOP and agency procurement staff Standardization and Consolidation - institute a standardization program to achieve cost savings VendorNet Official State Bidders List - eliminate all

14、bidders list but VendorNet Vendor Data Rationalization - WISMART the only vendor table for State Key Performance Indicators - for Staff, Vendors and Customer Satisfaction Develop Data Warehouse - for the analysis of statewide purchasing activity and spend data,9,THIS PROJECT RESULTED IN SEVERAL MAJO

15、R RECOMMENDATIONS,SYSTEMS SOLUTIONS Near-Term, Immediate: Begin development of Data Warehouse to capture data for the analysis of statewide purchasing activity and spend data Also listed as an Imperative Conduct detailed feasibility study to determine best approach for dedicated statewide procuremen

16、t solution that automates the requisition to payment process Enhance in-house purchasing system (e.g., PurchasePlus) Purchase procurement software package (e.g. PurchasingNet, Compusearch Software Prism, Dynamic Software, MRO Software, ) Medium-Term: Utilize E-Procurement use reverse auctions and/or

17、 strategic sourcing for new purchases where feasible Chief Information Officer centralize technology initiatives under leadership statewide executive Long-Term: Adopt the implementation of an Enterprise Application System (EAS); also referred to as an Enterprise Resource Planning (ERP) System Includ

18、es consideration of upgrading WisMART (AMS Advantage 3.0 Software) and migrating all agencies to WisMART in conjunction with retaining newly deployed statewide procurement system,INTRODUCTION,10,WE HAVE TRIED TO ENSURE THAT RECOMMENDATIONS ARE CONSISTENT WITH THE INTERAGENCY GOALS,Please reference e

19、xhibit on the following page.,INTRODUCTION,RECOMMENDATIONS,GAP ANALYSIS,13,GAP ANALYSIS,ADC created 85 process maps that outline the current situation in ten agencies, including the University of WisconsinGap analysis charts, on the following pages, identify changes required to migrate current proce

20、sses to best practices,GAP ANALYSIS,14,GAP ANALYSIS P. CARD,GAP ANALYSIS,15,GAP ANALYSIS SIMPLIFIED BID,GAP ANALYSIS,16,GAP ANALYSIS SEALED BID,GAP ANALYSIS,17,GAP ANALYSIS DIRECT CHARGE,GAP ANALYSIS,18,GAP ANALYSIS REQUEST FOR PROPOSAL (RFP),GAP ANALYSIS,19,GAP ANALYSIS STATEWIDE RELEASE,GAP ANALYS

21、IS,20,GAP ANALYSIS ACCOUNTS PAYABLE,GAP ANALYSIS,21,GAP ANALYIS REQUEST FOR BID (SBOP),GAP ANALYSIS,22,GAP ANALYSIS - VENDOR NET (STATE BIDDRS LIST),GAP ANALYSIS,RECOMMENDATIONS,IMPERATIVES,24,IMPERATIVES REPRESENT FOUNDATIONAL RECOMMENDATIONS THAT MUST BE ADDRESSED BY THE STATE TO ENSURE SUCCESS,Le

22、verage Large Volume Purchases Cross-Functional Teams Approval Process Commodity Coding Purchasing Card Reporting and Management Purchasing as a Strategic Asset,Expand Training Program Standardization and Consolidation VendorNet State Bidders List Vendor Data Rationalization Key performance Indicator

23、s,Imperatives have been identified in the following areas:,IMPERATIVES,25,LEVERAGING LARGE VOLUME PURCHASES,Desired Future State Leverage large volume purchases to achieve maximum vendor discount,Business Case for Action Currently not all agencies consistently utilize statewide contracts therefore l

24、essening volumes Usage on statewide office supply contract $4 to $5 million UW utilizes different office supply contract; year to date expenditures approximately $5 million DWD did not utilize statewide office supply vendor for a three year period. Combination of this volume would result in the stat

25、e leveraging lower costs from the office supply vendor and insuring states customer service requirements would be met State has no official purchasing classification system and spend data cannot be aggregated for evaluation,IMPERATIVES,26,LEVERAGING LARGE VOLUME PURCHASES ,Recommendation(s) SBOP mus

26、t identify and manage classification system that would allow the aggregation of purchasing spend data by commodity Aggregated commodity spend data must be used to identify the largest volume commodities Items within the largest volume commodities must be standardized so that number of items is reduc

27、ed while item volume is increased SBOP must obtain data from municipalities and school districts that utilize their contract. This information must be included in quantity and spend estimates provided to vendors in solicitation Solicitations methods must require vendor to offer maximum cost saving a

28、nd customer services,Approach A standard commodity code must be adopted Baseline spend data must be gathered on all commodities purchased statewide Standards committees must be formed to consolidate items in commodities with multiple items purchased in large quantities As new leveraging opportunitie

29、s are uncovered, SBOP must determine the procurement method that will result in the highest savings. For example: Strategic Sourcing solicitations Reverse auctions Discounts based on quantity thresholds Rebates based on quantity thresholds Discounts in return for contract extensions,IMPERATIVES,27,U

30、SING STANDARDS COMMITTEES/ CROSS-FUNCTIONAL TEAMS,Desired Future State Standards Committees are used to leverage large volume purchases and to develop a sourcing strategy,Business Case for Action According to Purchasing Online, a supply chain magazine, the use of cross-functional teams is the best o

31、f the best practices in supply management In his book, Balanced Sourcing, Timothy Laseter indicates that using multi-functional teams is a winning sourcing strategy Wisconsin currently uses standard committees to develop RFB/RFPs Standards committees are not used consistently by agencies or SBOP sta

32、ff members,28,USING STANDARDS COMMITTEES/ CROSS-FUNCTIONAL TEAMS,Recommendation(s) SBOP should increase the use standards committees to develop RFB/RFPs SBOP should use cross-functional teams to develop sourcing strategies on all high-volume state-wide commodities. The strategy may include: Standard

33、ization E-commerce opportunities Strategic vendor partnering opportunities Volume discount sourcing These teams should set client goals and objectives and be held responsible for the success and/or failure of the initiative.,Approach Identify staff in agencies to participate in cross-functional team

34、s To ensure team success, they will need Organizational resource availability Supplier participation and involvement High level of internal and external decision-making authority Effective team leadership Performance evaluation and rewards,29,APPROVAL PROCESS,Desired Future State Approvals done on-l

35、ine via automated workflow: Requisition would be entered on-line by program end-users One approval for requisitions Purchase Orders would be created by copying information from requisition One approval for purchase orders One approval for releases against a master ageement,Business Case for Action F

36、ive of the nine agencies reviewed have manual requisitioning and purchase order processes Many departments require multiple approvals (manual or online) of requisitions and purchase orders Manual budget checking in non- automated agencies add to required approvals and slows processing Routing paper

37、requisitions and/or rekeying information into multiple systems increases processing time reduces customer satisfaction,IMPERATIVES,30,APPROVAL PROCESS ,Recommendation(s) Implement an automated purchasing system with online budget verification The automated purchasing system should accommodate decent

38、ralization to the end user level The system should maintain an online vendor file, accessible to all users System should have automated workflow,Approach Non-automated agencies should streamline paper process Non-automated agencies should implement an automated purchasing system Automated requisitio

39、ns include: commodity codes commodity description accounting string(s) - pre-encumbrance System creates purchase orders by copying requisition information, releasing pre-encumbrance and performing an encumbrance against accounting string(s),IMPERATIVES,31,COMMODITY CODING ,Desired Future State Creat

40、e a standardized naming convention that: Allows the standardized coding of purchases Allows the compilation of aggregate purchase information in a unified framework permitting search and analysis Integrates procurement card statement categories with all purchase transactional data,Business Case for

41、Action State Bureau of Procurement (SBOP) is required by statute to report on Purchases throughout the state No Statewide naming convention exists for purchasing data Base line spend data by purchase is necessary for: Standardization Workload management Performance measure development Strategic sour

42、cing E-Procurement Negotiating better pricing agreements with vendors Currently base line spend data cannot be produced on a timely and accurate basis,IMPERATIVES,32,COMMODITY CODING ,Recommendation(s) Select UN/SPSC classification system as States commodity coding system Code maintains good hierarc

43、hical groupings Allows reporting on a contractible group Identifies all buyable products and services and places them into a logical hierarchical classification Has a pilot commodity coding project with Visa Set SBOP staff as the state-wide mangers of the code Will determine code classifications Mak

44、e decisions about adding new code Liaison to code management company for developing new code when required,Approach SBOP should: Work with IT to determine most efficient way to disseminate code throughout enterprise Develop procedures for code application and maintenance Develop a cross functional g

45、roups to facilitate code implementation through all agencies Provide all changes to code Determine how items should be classified in response to agency question Develop a continuous training program on use and value of commodity code End user to add commodity code description to system requisition,I

46、MPERATIVES,33,PURCHASING CARD REPORTING AND MANAGEMENT,Desired Future State Report on P-Card purchases by commodity and dollar amount Maximize the utilization of P-Cards throughout state agencies Utilize P-Cards for ordering on statewide contracts,Business Case for Action Utilization of P-Cards for

47、low dollar hi-volume purchases is a best practice According to the study on corporate procurement practices conducted by the Hackett Group: P-Cards, when used with other best practices, can reduce the cost of a transaction from $9.50 to $1.87. P-Cards can reduce the cost of making a payment by 85%.

48、The state is expected to expend $50+million dollars using P-Cards this fiscal year however individual purchases cannot be identified or aggregated by commodity,IMPERATIVES,34,PURCHASING CARD REPORTING AND MANAGEMENT ,Business Case for Action Vendors that accept Visa report purchases using Merchant C

49、ategory Codes (MCCs) codes are tiered merchants that are coded at level two provide data on dollars spent via a general classification code merchants coded at level three can provide more itemized expenditure information and a commodity code can be added to each record Currently Visa has a pilot program with Dun & Bradstreet to utilize its UN/SPSC commodity code Identification of P-Card purchases will allow: Required oversight and reporting of state purchases Identification of commodities where volume discounts are likely Identification of commodities for E-Procurement initiatives,