Welcome to eProcurement –
It’s Good For Business!
Moderators
Dianne Lancaster: State of Oregon
Jean Clark: State of Arizona
Panel
Ken McFarland, Periscope Holdings
Eric Zoetmulder, SciQuest
David Ottenstein, MSC Industrial Supplies
Michael Muscara, Waxie Custodial Supplies
Jim Chatfield, OfficeMax
Robert Calvert, Hewlett Packard
The State of Oregon’s eProcurement Solution
ORPIN 2.0 PHASES
Phase I
ORPIN Replacement
• Supplier Registration
• User Registration
• Posting and evaluation of
solicitation events
• Contract Enablement
₋ Shopping Cart
Experience
₋ Supplier Catalogs
₋
Punch-Outs
₋
Hosted Catalogs
₋
Agency Managed
Phase II
Strategic
Sourcing
• Data Driven
Procurement Decisions
• Expand Functionality
Phase III
“Pay” Solution
• Fully integrated
procurement-to-pay
solution
• Electronic POs and Invoicing
3
A Growing System to Meet Your Needs
Source
Supplier Management
User Management
Solicit and Award
Electronic Bidding
Reverse Auction
Shop
Online Ordering
“Shopping Cart” Experience
Credit Card Payment
Electronic PO and Invoice
Settle
Receiving
2 and 3 way match
PO Closure
Interface to Accounting System
4
ProcureAZ
The State of Arizona’s eProcurement & Sourcing Solution
For AZ Public Entities & Vendors
Arizona’s Need for eProcurement
Background
In 2009, the State of Arizona realized the need for state
procurement modernization. At the time, the State:
•
Faced a $1.4 billion dollar budget deficit
•
Had zero statewide procurement unity
•
Lacked ability to view purchasing activity across
state agencies
•
Had individual agencies manage purchasing
manually or with agency specific systems
•
Failed to track and analyze spend by vendor
•
Lacked vendor performance history
•
Offered minimal collaboration with local
agencies
Project Overview
Arizona’s Need for Change
The State saw a need to implement a solution that was easy to use and
would:
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Eliminate waste & cut costs
•
Exude transparency
•
Increase productivity & process efficiencies
•
Decrease cycle time
•
Create vendor competition
•
Provide one-stop-shop for vendors to register and submit invoices
•
Drive business to local AZ vendors
•
Encourage contract spend and reduce maverick spend
•
Track the results needed to make strategic purchasing decisions
•
Make contracting with public entities easier
•
Provide multi-agency access
•
Needed 100% of spend in one solution
ProcureAZ Success
Results
• Implemented ProcureAZ in two phases on-time and on-budget
• Eliminated manual vendor management system
• Increased vendor access – over 23,000 vendors registered in system
• Increased local co-op participation by 51%
• Sourcing completed in one system by soliciting, evaluating and awarding bids
within ProcureAZ
• Reduced state spend on average 26% utilizing BuySpeed Sourcing
• Decreased average cycle times by nearly half – went from 4 days to 2.3 days
• Conducted over 500 online solicitations
ProcureAZ Functionality
•
State Contract/Catalog Search & Ordering
– Easy for statewide users to access
•
Sourcing & Solicitation
– Manage and award proposals in one online system
•
Vendor Management
– One-stop-shop for vendors
•
Contract Management
– Track and update contracts
•
Reverse Auction
– Suppliers have visibility to offer lowest price
•
Requisition & Purchase Orders
– Streamline ordering
•
Invoice & 3 Way Match Receipt
– Speed-up payment approval
•
Integration into Financial System
– Eliminates data entry and enhances budget controls
•
Business Intelligence
– Enhances transparency
•
Inventory
– Replenish stock directly within system
Select BuySpeed Clients
 Arizona
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–
–
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96 state agencies
173 local governments
Increased co-op participation 51%
23,000+ vendors
 Maryland
– 266 state departments & local
governments
– 21,000+ vendors
 New Jersey
– 15 statewide departments
Value For Vendors
 One-Stop-Shop for Vendors
– Vendor Management
•
•
•
Registration
Profile updates
Licenses & certificates
– Solicitations
– Contracts/Catalogs
– eInvoicing
 Contract Visibility
 Paperless Process
– Save time
– Save postage
– Save resources
Vendor
Contract
Visibility
Increased
Contract
Usage
Supplier Enablement in the Source-to-Settle Cycle
• All phases need
supplier enablement
• Different resources
per phase
• Central point of
contact for suppliers
is important
eProcurement Impacts the Buyer Supplier Relationship
State
2
1
1. Supplier Business Relationship
– Contract Manager
– Day-to-Day management
2. eProcurement Relationship
– Source to Settle Solution
– Support SLA
3. Technology / Operational
Support Relationship
Supplier
SciQuest
3
–
–
–
–
On-line sourcing/contracting
Catalog
PO Delivery
Invoice integration
Value of the supplier network
• Enabling suppliers is a
team effort
• Technical side is typically
not a core expertise for
most customers
• Suppliers that ‘have done
it before’ enable faster
• eProcurement vendor
needs to stay involved for
best results
What is eProcurement?
• Connecting the touchpoints
Buyers
Sourcing
Procurement
Treasury/AP
Finance
1
5
IT
3rd
Party
Marketplace
Lead Generation
Source
Sends PO
Order Status
Advanced Ship Notice
Delivers Goods/Services
Sends Invoice
Credit
Payment
Support
Sellers
Sales/Mktg.
Order Mgmt.
AR/Finance
IT
Simple to Complex: Source to Invoice
•
Reasons Suppliers support eProcurement
– “the customer made us”; “saves us time”;
“competitive advantage”; “it’s strategic””
Catalog/
Punchout
Simple
Goods
l
Configure
d Goods
l
Milestone
Service
Wizard/
Punchou
t
eQuote
Non
Catalog
Schedule
l
l
l
l
l
l
l
l
l
l
l
•
Sourcing
– Not all products and services are sourced the
same
– Invoicing impacts Source; Sourcing impacts
Invoice
– Multi Contract support adds complexity to
Public Sector
Metered
Service
l
l
l
l
l
Monthly
Service
l
l
l
l
l
– Supplier capabilities are a function of their
history; Not all suppliers are equal
l
l
l
l
– Capabilities evolve from goods to services;
Open
Ended
Service
•
Supplier Variances
– Services are still immature offering.
Bringing the sides together
• It’s Important that
Sellers sell what they
have
Sellers challenge
themselves to grow and
expand their capabilities.
Buyers recognize that
all Sellers don’t have
the same flexibilities,
the same speed to
market, the same
objectives, the same
capabilities.
MSC, Industrial Supply Co.
•
•
•
•
•
•
Premier distributor of MRO and MW Supplies
600,000+ SKU’s
Same Day Shipping Guarantee
14+ years of eCommerce experience
MSCdirect.com
Integrated Solutions: CMI, VMI, Vending, etc.
MSC, Industrial Supply Co.
• E-Procurement Benefits
–
–
–
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Improved productivity, cut operating costs
Increased order accuracy, decreased returns
License to sell
Locked into procurement process
• E-Procurement Pitfalls
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–
–
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Must be aligned on Scope of E-comm project
Lack of E-pro compliance- Executive Sponsorship
Utilizing Hosted Catalog Approach vs. Punch-out
E-pro experience must be =/> traditional method
E-Commerce Advantages
Vendor Managed Systems-Full Catalog Contracts
Order Process Cost Reduction
Order Accuracy Increase-reducing back order
fulfillment costs.
Order size increases as accuracy is enhanced.
Full access to contract cost reduction drivers and
order size discounts.
Ability to see live inventory.
Immediate information on price adjustments.
Ease of catalog price upload.
E-Commerce Advantages
Third Party or Customer Managed
Systems
Full catalog contracts:
Order Process Cost Reduction.
Order Accuracy Increase-reducing back order
fulfillment costs.
More efficient proposal response and vendorcustomer communication.
Multiple vendor catalogs can be available for
the same product groups.
E-Commerce Pitfalls
•
•
•
•
•
•
•
•
Third party and customer managed systems have lacked the
flexibility to present contract programs accurately.
Average Contract Order Size falls, increasing transits, and negatively
impacting the environment. (Catalog Shopping)
Away from procurement operational costs rise through increased
orders, smaller order size, proliferation of unapproved products.
Catalog pricing uploads are problematic for many systems that have
not planned for their complexity. Causing expensive delays in price
administration and poor procurement administrative decisions.
Discounted Price Structure results in drastically higher overall
product costs. Fixed catalog cost models should be preferred.
Program discounts for volume, proximity, business practices and
other contract enhancements are not typically shown.
No value added programs are typically shown.
Double order entry may be necessary for some customers, once into
their system once into the e-commerce system.
E-commerce Pitfalls
•Contract pricing configuration of contracted service provider must
match contract pricing model or there is a large effort needed to “fit” the
systems together if the environment is not punchout.
•Customer Authentication at the ship to level must be considered for most
vendor systems to seamlessly integrate with third party systems. Unless
location addresses match exactly orders can be missed or miss directed.
Some vendor system reporting capability will also be lost.
•Free form ship-to addresses must be valid physical delivery addresses .
•Address validation requirements on the customer side must be robust to
prevent an employee from easily misdirecting a product shipment.
OfficeMax:
Integration & Opportunities
• Business Structure:
– Coding: Account #'s and Consignees #'s (ship-to)
– State of Oregon:
• 533,102 transactions annually
• 402 accounts
• 15,001 ship-to codes
– Logistics: warehouse order fulfillment, truck staging,
next day deliveries and sustainable totes
– Customer Service: PIN #’s
– Representative assignment
– Reporting to end-user level : 875 generated monthly
OfficeMax:
Integration & Opportunities
• ePro Integration:
– Pass account/ship-to information from OM Landing Page via
cXML extrinsic coding
– Account/Ship-to codes assigned during on-boarding process
– Process to identify non-set up users for assignment of coding
• Opportunities:
– NASPO Community Exposure
– Customer: Savings, Initiatives and Excellent Service
THANK YOU!