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© 2000 Advanced Data Concepts. All rights reserved.
PROCUREMENT ANALYSIS PROJECTCurrent Situation Analysis
November 30, 2000
Advanced Data Concepts LLC
2© 2000 Advanced Data Concepts. All rights reserved.
Agenda
Project History Solicitation Process Deliverable One Common Themes and Important
Findings Best Practice - No change
Recommended Best Practice - Improvement
Recommended Areas Requiring Change/Benefits Overview of Deliverables II & III
3© 2000 Advanced Data Concepts. All rights reserved.
Deliverable One
State of Wisconsin Management Team
Current Situation Analysis
State Agencies and UW Campuses
• Data Collection• Interviews
•130 staff• 4 vendors
• Maps•Process•Systems
• Validate• Best Practices
ADC
SERVICES
ADC
SERVICES
4© 2000 Advanced Data Concepts. All rights reserved.
Common Themes & Important Findings
Purchasing Process– The creation, routing and approval of requisitions and
purchase orders is largely a manual process– The mix of manual and automated purchasing and
financial systems result in redundant processes and non-value added tasks
– Multiple levels of approval add time and complexity to informal purchasing process
– Lack of standardization and consolidation of commodities is costing the State money
5© 2000 Advanced Data Concepts. All rights reserved.
Common Themes & Important Findings
Data Management– WisMart currently does not adequately support the
procurement and related functions– Lack of standard commodity coding system inhibits
accurate reporting of purchases– No Data Warehouse to capture purchasing spend data
Professional Development– Procurement staff are not in a continuous improvement
program– Cross-training does not exist
6© 2000 Advanced Data Concepts. All rights reserved.
Common Themes & Important Findings
Six Purchasing Systems: – PurchasePlus– TIPs– Rapids– Proteus– WisMart– PeopleSoft
Six Accounting Systems:– FARs– EAPS– FOS– FMS– PeopleSoft– WisMart
Existing Automated Systems
7© 2000 Advanced Data Concepts. All rights reserved.
Common Themes & Important FindingsTotal Spend,
fiscal year 2000
# of Purchasing
Directors/
Managers/
Directors
# of Purchasing
Agents, etc.
Annual man
hours (@ 2000
hrs. per man)
Database
maintained that
details
purchasing
information?
# of vendors
Sta
te A
gen
cy
2 PA's (@ 90%); 1 printing PA (@ 70%)Commerce $4.6M 1 (@ 10%-15%) 5,200 to 5,300No. WISMART used
for encumbrances
VendorNet file (1,680 vendors) is used, and other sources (research, Program
Area suggestions, etc.)
DATCP $7.6M1 staff acting as both manager
and PA6,500 to 8,000 No, only WISMART
VendorNet file (1,680 vendors) is used; PO's in fiscal '00:665 '99:1,178
'98:1,827
DHFS $219.1M1 Director; 1
Supervisor26,000 No, only WISMART
12,358 vendors, most used within the past year
DNR $32.6M 1 24,000 to 26,000No. Encumbrance
reporting with detailsWISMART vendor file is
used
DOA $84.3M 2 14,000 Yes150,000 vendors in vendor file 1,746 vendors used in
fiscal year 2000
DOC $291.9M1 Purchasing
Manager
Central Office Penal institutions Community Corrections Juvenile Justice Badger Corrections Bureau of Tech Mgmt
5 PA's 1 PA for each 3 PA's; 1 PC 3 PA's 2 PA's 1 IT person
60,000 No
18,000 vendors in FMS vendor file, which includes many duplicates, payments
to employees (travel expenses), and interagency
procurements
DOT $112.1M 1 23,000 Yes: TIPS24,000 vendors in vendor file, approximately 5,000
used per year
DWD $66.9M 1 12,000 Yes: RAPIDS5,000 vendors in vendor file (non-grant), approximately
67% used per year
SBOP n/a 3 (@ 50%) 30,000 Not since July 19991,680 vendors on the
VendorNet system
UW Madison $186M
1 Associate Director; 1 Director; 2
Supervisors
38,000
Yes, the Shared Financial System
tracks expenditures for given time periods;
however, not by commodity code
40,000 vendors in the vendor base, each campus
has a unique vendor file
UW System (as a whole)
$276.5M15 Purchasing
Directors; 3 Supervisors
85,950
Yes, the Shared Financial System
tracks expenditures for given time periods;
however, not by commodity code
40,000 vendors in the vendor base, each campus
has a unique vendor file
2 Administrators; 3 Bid Processors; 3 Requisition Entry & Vendor Files staff; 7
Purchasing Agents
28 Purchasing Agents
Sta
te A
gen
cy
2 PA's (@ 90%); 1 printing PA (@ 70%)
15 PAL's (@ 15% to 20%)
7 PA-Senior's; 5 PA-Obj's
8 PA's; 3 Purch. Asst/ Admin. (2 @ 100%, 1 @ 50%)
5 PA's
3 PA's; 2 Acquisition Specialists
6 Central PA's; 7 Regional PA's (2 @ 50%, 5 @ 80%-100%)
9 Procurement Specialists; 1 Contract Specialist; 2 IS Comprehensive Consultants
8© 2000 Advanced Data Concepts. All rights reserved.
Common Themes & Important FindingsS
tate
Ag
enc
y
Commerce Manual WISMART Manual Manual Manual WISMART WISMART N
DATCP Manual WISMART Manual Manual Manual WISMART WISMART N1
DHFS Manual Manual / FMS5 Manual Manual Manual WISMART FMS Y
DNR Manual WISMART Manual Manual Manual WISMART WISMART N2
DOA PurchasePlus WISMART Manual4 Manual4 Manual WISMART WISMART N3
DOCManual /
PROTEUSManual / FMS5
PROTEUSManual Manual Manual WISMART FMS Y
DOT TIPS TIPS TIPS TIPS TIPS WISMART EAPS/FOS Y
DWD RAPIDS RAPIDS RAPIDS RAPIDS RAPIDS WISMART FARS Y
SBOP PurchasePlus WISMART Manual4 Manual4 Manual WISMART WISMART N3
UW System PeopleSoft PeopleSoft PeopleSoft PeopleSoft PeopleSoft PeopleSoft PeopleSoft Y
Sta
te A
gen
cy
Notes:1. DATCP has developed a set of VisualBasic macros that allows the mass uploading of certain transaction types from Excel to WISMART that are processed through the interface system.2. DNR has a Grants subsystem that generates recurring payment and liquidation transactions that are uploaded to WISMART and processed through the interface system.3. DOA has developed a web-based application, PurchasePlus, for Requistion creation, tracking and approval, which in turn generates PO transactions which are uploaded to WISMART and processed through the interface system.4. Phase 3 of the PurchasePlus implementation will address Invoicing and Receiving.5. PO information is manually entered into FMS from the hardcopy purchase order to maintain encumbrance balances.
9© 2000 Advanced Data Concepts. All rights reserved.
Common Themes & Important FindingsBEST PRACTICES SUMMARY
Leadership/ComplianceBest Practices Process High Moderate Low
1. Centralization vs. Decentralization X2. Cross Functional Sourcing X3. Dollar Thresholds & Solicitation Types X4. Informal Bid X5. Formal Bid X6. Printing X7. Statewide Contracts (Leveraging Volume) X8. Intergovernmental Procurement X9. Procurement Audits X10. Purchasing Transactions (PO’s and Req.’s) X11. P-Card X12. Vendor Payment X13. Vendor Management (Vendor Net) X14. Measure Supplier Performance X15. Minority Business Development X16. Reporting X17. Automated Systems X18. IT Organization X19. Systems Architecture X20. Data Management X21. Business Intelligence X22. Training X
10© 2000 Advanced Data Concepts. All rights reserved.
Best Practice - No Change Recommended
Organization of State Procurement– Best Practice is a combination of centralized and decentralized
models
Dollar Thresholds– Best Practice is to delegate low volume purchases to the end-user
P-Card– Best Practice is to use P-cards
Vendor Payment– Best Practice is instituting a prompt payment act
11© 2000 Advanced Data Concepts. All rights reserved.
Best Practice - Improvement Recommended
Informal & Formal Bid Leveraging Purchasing Volumes Procurement Audits VendorNet Minority Business Program
12© 2000 Advanced Data Concepts. All rights reserved.
Best Practice - Improvement Recommended
Informal and Formal Bid– Best Practices:
• conduct an informal bid within one to five days• use formal bid for high dollar, high volume
purchases• automated workflow
– one approval per transaction
– Multiple approvals negate the benefit of informal purchases and slows the formal process
– State should consider:• Reducing the number of approvals per transaction
13© 2000 Advanced Data Concepts. All rights reserved.
Best Practice - Improvement Recommended
Leveraging Purchasing Volumes– Best Practice is to use statewide contracts and
intergovernmental procurements– SBOP has no data on how often or how many
of the municipalities and school districts use statewide contracts
– State should consider:• Use cross functional teams to increase participation
in statewide contracts• Capturing the volume from other municipalities and
school districts for statewide contracts
14© 2000 Advanced Data Concepts. All rights reserved.
Best Practice - Improvement Recommended
Procurement Audits– Best practice suggests the elimination of all
tasks that are not core competencies – Audits are not core competencies nor value
added services State should consider:
– Outsourcing– Spot checks– Roundtables or procurement groups
15© 2000 Advanced Data Concepts. All rights reserved.
Best Practice - Improvement Recommended
VendorNet– Best Practice is to have an automated bidders
list & electronic notification– State’s official bidder’s list - 1,600+ vendors– Non-VendorNet vendors routinely receive bid
notification– State should consider:
• free registration• fee for automated services (may want to lower to
under a $100)• Charge more for multiple commodity codes & out-
of-state vendors
16© 2000 Advanced Data Concepts. All rights reserved.
Best Practice - Improvement Recommended
Best Practices include:– formal policy– support from highest
level– program coordinator– performance ratings of
purchasing staff– targeted solicitations– training– monthly and annual
reports
State should consider:– holding all procurement
staff accountable for reaching a 5% goal
– innovative programs, such as:
• Identify the number of solicitations to MBEs by dollar volume.
• Target Market Program. Bidding is limited to certified MBEs.
Minority Business Program
17© 2000 Advanced Data Concepts. All rights reserved.
Areas Requiring Change/Benefits of Change
Paper or standalone purchasing systems Commodity Codes Standardization and Consolidation Move Procurement from an ordering function to a
strategic asset function
18© 2000 Advanced Data Concepts. All rights reserved.
Areas Requiring Change/Benefits of Change Paper or standalone purchasing systems
Best practices:– Automate purchase requisition to end user– Automated Workflow – One approval signature for requisition and purchase order– A more synergistic approach would offer operational
efficiencies and cost savings Current Situation
– Six independent purchasing systems – Existing systems environment include mainframe, client-
server and web-based– Database environment is just as diverse, which includes
DB2, IMS, VSAM, Oracle and SQLServer
19© 2000 Advanced Data Concepts. All rights reserved.
Areas Requiring Change/Benefits of Change Paper or standalone purchasing systems
Problems created by current situation– Significant re-keying of information to various systems – Time consuming manual routing of documents to
multiple layers of management staff– Minimal data integration and standardization across
platforms, systems and databases– Increased staffing requirements due to maintenance
and support of multiple platforms, systems and databases.
20© 2000 Advanced Data Concepts. All rights reserved.
Areas Requiring Change/Benefits of Change Paper or standalone purchasing systems
Change– Automation of
purchasing function
Benefit– Real time procurement
information to all system users
– Manual requisition budget checking eliminated
– Elimination of duplicative data entry
– Reduction in transaction process time
21© 2000 Advanced Data Concepts. All rights reserved.
Areas Requiring Change/Benefits of Change Paper or standalone purchasing systems
Change– Standardization of
platforms, systems and databases
Benefit– Reduction of cost of system
maintenance– Seamless integration of
business & system processes is key to E-procurement initiatives
– Standardized data management with decentralized stewardship facilitates accurate reporting
22© 2000 Advanced Data Concepts. All rights reserved.
Areas Requiring Change/Benefits of Change Commodity Codes
Best Practice:– A single product classification system to provide a uniform view of the
State’s spend data• Helps to identify true volumes of commodities allowing for vendor volume
discount
Current Situation– State uses two commodity code schemes– Maintenance is handled by all agencies
Problems created by current situation– The state cannot generate enterprise-wide reports on its purchases and
their cost– SBOP is unable to comply with statutory requirements for managing and
reporting purchases– Lack of information inhibits agencies’ ability to manage procurement
function
23© 2000 Advanced Data Concepts. All rights reserved.
Areas Requiring Change/Benefits of Change Commodity Codes
Benefits of Change– Allow SBOP to create required reports using accurate
data– Improve agencies’ ability to manage purchases and
budgets– Facilitate cooperative purchasing efforts across
agencies and other municipalities
24© 2000 Advanced Data Concepts. All rights reserved.
Areas Requiring Change/Benefits of ChangeStandardization and Consolidation
Best Practice:– Develop Standardization and Consolidation
Program• Establish a standard quality for needed items• Leverage economies of scale (large volume for
lower cost)• Fewer items to service• Increased purchasing efficiency (fewer orders to
place) • Position State to begin e-commerce and strategic
sourcing programs
25© 2000 Advanced Data Concepts. All rights reserved.
Areas Requiring Change/Benefits of Change Standardization and Consolidation
Current Situation– Inconsistent use of standards committees
• No clearly defined goals for successful procurement
– Lower quantities of many items– Inability to identify commodities purchased
Problems created by current situation – Cost savings missed
• statewide contracts provide a laundry list of agencies needs instead of a consolidated standards list
• Agencies failing to participate in statewide contracts that have consolidated purchases
– Spend data not reliable
26© 2000 Advanced Data Concepts. All rights reserved.
Areas Requiring Change/Benefits of Change Standardization and Consolidation
Benefits of Change– Reduce cost of goods by obtaining best pricing on high
volume items– Positions agencies to receive “preferred customer”
status from vendors– Simplify the preparation of bid documents– Simplify inventory and storeroom management – Facilitate the use of strategic sourcing methodologies
27© 2000 Advanced Data Concepts. All rights reserved.
Areas Requiring Change/Benefits of Change Strategic Asset Function
Best Practice– Move Purchasing from an ordering function to a strategic asset function
Current Situation– Emphasis on processing transactions rather than improving processes – No accurate spend data
Problems Created by Current Situation– Unreliable historic spend data
• Management strategies cannot be developed• Value added purchasing techniques cannot be planned• Discounts and preferred pricing cannot be negotiated
– Vendor performance cannot be monitored without performance measurement requirements
28© 2000 Advanced Data Concepts. All rights reserved.
Areas Requiring Change/Benefits of Change Strategic Asset Function
Change:– Standardize on a commodity code– All bidders should reside on VendorNet– Maintain one vendor table– Automate purchasing reporting activity– Increase use of the Standards Committees– Improve the mission of the Standards Committees– Use cross-functional teams– Develop measurable performance standards for all contracts– Implement a training program for SBOP and agency
procurement staff– Automate all manual purchasing activity– Initiate e-procurement solutions
29© 2000 Advanced Data Concepts. All rights reserved.
Areas Requiring Change/Benefits of Change
Strategic Asset Function
Benefits of Strategic Asset Purchasing– Provides accurate information for management
and taxpayers– reduces costs– obtains discounts or rebates– meets end users quality requirements– meets end users delivery requirements– insures procurement process legality and
integrity – minimizes delays and paperwork
30© 2000 Advanced Data Concepts. All rights reserved.
Overview of Deliverables II & III
31© 2000 Advanced Data Concepts. All rights reserved.
Approach
State of Wisconsin Management Team
Desired Future SituationModel
Detailed/Global Recommend.
State Agencies and UW Campuses
• Reengineered Business Processes
• Performance Metrics• Data Model• Vendor Analysis
• Detailed Requirements
• Data Schema• Vendor
Management• Impact• Cost• Implementation
time• Politics
ADC
SERVICES
ADC
SERVICES
32© 2000 Advanced Data Concepts. All rights reserved.
Process Recommendations – Sample Format
Conduct Process Reengineering that: Utilizes cross-functional teams comprised of end-users,
buyers, procurement support personnel and management Finalizes a new “To-Be” process design, which streamlines
non-value added tasks Facilitates utilization of Internet based Purchasing solutions Calibrates appropriate authority levels Maximizes efficiency and serves the end-user Facilitates a refocusing of time to strategic purchasing
activities
Purpose
A reengineering team will validate “As-Is” process maps and work to refine the “To-Be” process maps which identify the steps that should be streamlined, eliminated, reorganized, or reallocated to achieve maximum performance improvement. This new process design will be coordinated with the introduction of internet based enabling technology that will allow CPS to utilize automated controls and supplier catalogs when possible to replace outdated inefficient manual, paper based procedures.
Approach Create cross-functional teams comprised of end-users,
buyers, procurement support personnel and management
Run workshops to create CPS ownership for the “As- Is” and “To-Be” process
Agree the most effective use of internet based technology and where changes in organizational structure can be utilized to streamline or eliminate certain manual tasks
Develop a risk management strategy Determine where certain forms or procedures can be
standardized to attain maximum efficiency Test the implementation of the streamlined process and
refine as necessary
Benefits Quicker response time to all aspects of the requisition to
payment process Elimination of low or non-value added tasks Increase in efficiency of CPS projects Improved supplier communication and satisfaction Reduction in overall processing time delivers significant
process savings Improved vendor qualification and vendor management
process Improved electronic tracking of procurement
transactions throughout the process Facilitates better assessment of supplier performance Frees up time of buyers to focus on large spend items
Sample Template
33© 2000 Advanced Data Concepts. All rights reserved.
Question & Answer Session
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