Benchmarking University Procurement Processes Eric Niemann – IBM Consulting Richard R. Young, Ph.D., C.P.M -- Penn State University National Association.

Benchmarking University Procurement Processes

Benchmarking University Procurement Processes

Eric Niemann – IBM ConsultingRichard R. Young, Ph.D., C.P.M -- Penn State University

National Association of Education Purchasers2009 Annual Meeting

Providence, RI

AgendaAgenda How this came about Pilot benchmarking experience

2006 – 2007 An understanding of spend Performance Measurement

What we propose Range of institution types Range of procurement environments Formal consortium

Questions

How this came aboutHow this came aboutHow this came aboutHow this came about

Research PartnershipResearch PartnershipResearch PartnershipResearch Partnership

SciQuest- Research concept- Innovators’ Circle Participants

IBM- Online data instrument- Higher Ed Consulting- Funding

Penn State- Neutral party- Reputation in supply chains- Renowned benchmarking methodology

Penn State’s Consortium Benchmarking Process

Penn State’s Consortium Benchmarking Process

Define process

parameters

Identifybroad topic

Conductpilot

Engageparticipants

Collectdata

Developdata collection

instrument

Debrieffindings

Fine tuneinstrument

Bestpractices

identification

Longitudinalanalysis

PublicationsPresentations

Analyzedata

Procurement ResponsibilitiesProcurement ResponsibilitiesCommodity Area Univ A Univ B Univ C Univ D Univ E Univ F Univ G Univ H

Travel Services

Facilities

Office Supplies

Classroom, Laboratory and Office Furniture

Residence and Dining Hall Furniture

Vehicle & Facilities Maint. Equipment

Design and Construction

Facilities Maintenance Services & Supplies

P-card Program

Laboratory Supplies

Maintenance Supplies

Educational Materials

IT Equipment

Telephone Services

Printing Services

Athletic Equipment

Food and Dining Goods and Services

Housekeeping and Janitorial Supplies

Utilities

Technology Profile

University Budget vs. SpendUniversity Budget vs. Spend

0

500

1000

1500

2000

2500

3000

3500

4000

4500

Univ A Univ B Univ C Univ D Univ E Univ F Univ G Univ H

$ millions

39.5 36.4 16.8 21.1 17.0 17.1 31.2 18.5 %

Spend Mean = 24.7%

Spend % of Budget

Pareto Analysis of Spend (% Suppliers = 80% of Spend)

Pareto Analysis of Spend (% Suppliers = 80% of Spend)

0

5

10

15

20

25


Implemented System FeaturesImplemented System Features

FullyImplemented Some None

NoCapability


Electronic Catalog

Electronic Requisitioning

Electronic Order Placement

Online access to supplier inventory information

Electronic Invoice Payment

Online Order Status

Range of Summary Reports

Links to ERP System

Disaster Backup

Cost of Procurement vs. Cost Per Transaction

Cost of Procurement vs. Cost Per Transaction

0

1

2

3

4

5

6


$ Millions

0

10

20

30

40

50

60

70

$/Transaction

Purch Budget Cost/ Trans

Performance Performance MeasurementMeasurementPerformance Performance MeasurementMeasurement

Focus of Supplier RelationshipFocus of Supplier Relationship

Criteria Univ A Univ B Univ C Univ D Univ E Univ F Univ G Univ H

Price

Delivery

Quality

Total Cost

Capability

Best Value

Frequency of Supplier ReviewsFrequency of Supplier Reviews


Annually

Quarterly

Sporadically

Sharing Data With SuppliersSharing Data With Suppliers


Supplier Quality

Innovation in Products and/or Services

Cost Reductions/ TCO

Responsiveness

Willingness/ability to provide collaborative technology

Innovation in Products/Services

Supplier PerformanceSupplier Performance


Avg. Supplier Lead Time

% On-time or Early Deliveries

Avg. Supplier Payment Time

Orders Rec’d Without Damage

Lines Items Rec’d Without Damage

Orders Rec’d Complete

Lines Items Rec’d Complete

Stated Performance MetricsStated Performance Metrics


Total $ Spend

$ Spend Through

P-Cards

$ Spend Through

Group Agreements

Cost Savings

Contract Utilization

Number of Suppliers

Supply Base Consolidation

Summary of FindingsSummary of Findings

Most discretionary spend flows thru procurement

eProcurement solutions ubiquitous for this population

Supplier measurement is suboptimal Procurement measurement needs

refocusing

Process ShortcomingsProcess Shortcomings

Small sample size No mechanism for revisions Participants used same IT application Needs long-term participation Needs discussion of best practices

What we proposeWhat we proposeWhat we proposeWhat we propose

Participation by a Range of Institution Types

Participation by a Range of Institution Types

Community colleges Research-focused universities Liberal arts colleges Engineering-focused institutions Teaching-focused schools Smaller private colleges

Participation by Schools with a Range of Procurement Environments

Participation by Schools with a Range of Procurement Environments

Single and multiple campuses Private and government controlled Formal and informal procedures eProcurement and traditional systems Strategic and transactional focuses High and low repeat buy operations

A Formal ConsortiumA Formal Consortium

Committed and ongoing membership Membership owns the process

Annual survey Input data secured and kept confidential

Group debrief session Identification of best practices Open forum for impending issues

Questions?

Contact info:

Eric Niemann [email protected]

Rich Young [email protected]

Benchmarking University Procurement Processes Eric Niemann – IBM Consulting Richard R. Young, Ph.D., C.P.M -- Penn State University National Association.

Documents

supplier lead time

damagelines items recd

dining goods

populationsupplier measurement

budget pareto analysis

office furnitureresidence

early deliveriesavg