UC Berkeley Procurement Services: Metrics, Recommendations, and Scorecard<br />Project Manager<br />Olivier Bouan<br />Con...
Contents<br />2<br />
Background and Framework<br />
This presentation aims to add specificity to the selected metrics, as well as present our recommendations and the scorecar...
Dissemination and Variations<br />Importance of Metric<br />The framework below is designed to cover all pertinent informa...
Variations</li></ul>5<br />The calculation boxes describe<br />how to use the data pieces to<br />determine the current va...
Effectiveness Metrics<br />
7<br />Additional Notes<br />Dissemination and Variations<br />Importance of Total Cost Savings<br />Total Cost Savings is...
This metric can be leveraged to justify the procurement effort as a whole by showing its ability to increase buying power ...
Dissemination
Email CPO and stakeholders (campus administration & related) monthly with progress
Publish via scorecard and website
Variations
Cost Savings from UC system-wide Contracts
Cost Savings from Campus Local contracts</li></li></ul><li>Importance of Return on Investment<br />Additional Notes<br />D...
Email primary stakeholders (campus administration & related) monthly with progress
Publish via scorecard and website
Variations
Sourcing ROI: Individual sourcing manager cost savings divided by sourcing manager salaries
ROI provides a simple measure of how efficient and useful the procurement office is for Berkeley
Metrics such as ROI are particularly useful in justifying budgetary spending for the procurement office
ROI also provides a good measure of the monetary impact of procurement reform</li></li></ul><li>Additional Notes<br />Impo...
As a percentage of total spend, Spend Under Management will not be skewed by inflation or increased total spend
Dissemination
Email to CPO with updated figures every month
Publish via scorecard and online
Variations
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UC Berkeley Final Deliverable

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Final deliverable presented by my project team to the UC Berkeley Business Services department, outlining key performance metrics for the ongoing procurement reform initiative.

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  • Olivier
  • Akshay
  • Akshay
  • Akshay
  • Josh
  • JoshJust remembered what Karen Kato said about this metric. It might be negative! That’s not good and should be mentioned by whoever presents this slide. Unrealized Cost Savings is measured as the sum of the difference between the price actually paid for a good and the price of a comparable good from a supplier under a contract negotiated by the OP
  • Diana
  • DianaWe were told this might be hard to measure. It’s ok to admit that and say that if it does turn out to be measurable, we think it would be very valuable.
  • DianaRemember to discuss the limitations of CTOT due to SciQuest. i.e. we don’t know when Requisitions are placed, only when Placement Order is put out.
  • Sharvani
  • Sharvani
  • SharvaniYou can mention that Supplier Performance is made up of these types of metrics, and that a combination could easily be devised to make one consolidated score (i.e. just sum them all?)
  • SharvaniSustainability= Buying local. Could discuss how the other option is to measure supplies like paper and see how much of that is “green”.
  • Josh
  • Olivier
  • Olivier
  • UC Berkeley Final Deliverable

    1. 1. UC Berkeley Procurement Services: Metrics, Recommendations, and Scorecard<br />Project Manager<br />Olivier Bouan<br />Consultants<br />Josh Feldman<br />Diana Golduber<br />Akshay Kumar<br />SharvaniSrivastava<br />Senior Advisors<br />Nikita Maheshwari<br />
    2. 2. Contents<br />2<br />
    3. 3. Background and Framework<br />
    4. 4. This presentation aims to add specificity to the selected metrics, as well as present our recommendations and the scorecard<br />4<br />Midterm Deliverable<br />Final Deliverable<br />During our midterm presentation we presented <br />Our background research and initial takeaways<br />Preliminary metrics, along with our reasoning and expected trends<br />The next steps we would be taking before the final deliverable<br />This final presentation will serve to present<br />Updated information on data sourcing and metric calculation.<br />Actionable recommendations for the advancement of the procurement initiative<br />A dynamic one-page procurement performance scorecard<br />
    5. 5. Dissemination and Variations<br />Importance of Metric<br />The framework below is designed to cover all pertinent information regarding a metric, while addressing concerns raised during the first deliverable<br />Purchase Order & Invoice<br />Payment<br />Central Procurement Office<br />Strategic Sourcing<br />PO/ Invoice Date<br />Date<br />Product Item Number<br />Vendors Under Contract<br />Budgetary Information<br />Manual Adjustments<br />Data Sourcing<br /># of Returns<br />Number of POs<br />Vendor Names<br />Product Subtotal<br />Items Under Contract<br /># of BearBuy Vendors<br /># Non-filled Orders<br />Match Errors<br />Aggregate Total<br />Vendor Zip Code<br />Sourcing Manager Info<br />Satisfaction Survey<br /><ul><li>Dissemination
    6. 6. Variations</li></ul>5<br />The calculation boxes describe<br />how to use the data pieces to<br />determine the current value of the <br />metric<br />Boxes in yellow indicate relevant <br />data pieces which should be <br />considered when calculating the<br />metrics <br />Metric Calculation<br />This section describes the reasoning<br />behind the metric, its various uses, and <br />its advantages<br />This section highlights how and<br />with whom the metric should be <br />shared as well as any variations or<br />adaptations of that metric<br />
    7. 7. Effectiveness Metrics<br />
    8. 8. 7<br />Additional Notes<br />Dissemination and Variations<br />Importance of Total Cost Savings<br />Total Cost Savings is the total dollar amount saved through collective buying practices<br />Purchase Order / Invoice<br />Payment<br />Central Procurement Office<br />Strategic Sourcing<br />PO / Invoice Date<br />Date<br />Product Item Number<br />Vendors Under Contract<br />Budgetary Information<br />Manual Adjustments<br /># of Returns<br />Number of POs<br />Vendor Names<br />Product Subtotal<br />Items Under Contract<br /># of BearBuy Vendors<br /># Non-filled Orders<br />Match Errors<br />Aggregate Total<br />Vendor Zip Code<br />Sourcing Manager Info<br />Satisfaction Survey<br />*At the discretion of sourcing managers and approved by CPO <br /><ul><li>Total Cost Savings measures how successful the OP is in saving money in buying goods and services
    9. 9. This metric can be leveraged to justify the procurement effort as a whole by showing its ability to increase buying power through negotiated prices
    10. 10. Dissemination
    11. 11. Email CPO and stakeholders (campus administration & related) monthly with progress
    12. 12. Publish via scorecard and website
    13. 13. Variations
    14. 14. Cost Savings from UC system-wide Contracts
    15. 15. Cost Savings from Campus Local contracts</li></li></ul><li>Importance of Return on Investment<br />Additional Notes<br />Dissemination and Variations<br />Return on Investment (ROI) captures the overall monetary impact of procurement reform<br />Purchase Order / Invoice<br />Payment<br />Central Procurement Office<br />Strategic Sourcing<br />8<br />PO / Invoice Date<br />Date<br />Product Item Number<br />Vendors Under Contract<br />Budgetary Information<br />Manual Adjustments<br /># of Returns<br />Number of POs<br />Vendor Names<br />Product Subtotal<br />Items Under Contract<br /># of BearBuy Vendors<br /># Non-filled Orders<br />Match Errors<br />Aggregate Total<br />Vendor Zip Code<br />Sourcing Manager Info<br />Satisfaction Survey<br /><ul><li>Dissemination
    16. 16. Email primary stakeholders (campus administration & related) monthly with progress
    17. 17. Publish via scorecard and website
    18. 18. Variations
    19. 19. Sourcing ROI: Individual sourcing manager cost savings divided by sourcing manager salaries
    20. 20. ROI provides a simple measure of how efficient and useful the procurement office is for Berkeley
    21. 21. Metrics such as ROI are particularly useful in justifying budgetary spending for the procurement office
    22. 22. ROI also provides a good measure of the monetary impact of procurement reform</li></li></ul><li>Additional Notes<br />Importance of Spend Under Management<br />Spend Under Management is the percentage of total spend that flows through and is contracted by the Office of Procurement<br />9<br />Dissemination and Variations<br />Purchase Order / Invoice<br />Payment<br />Central Procurement Office<br />Strategic Sourcing<br />PO / Invoice Date<br />Date<br />Product Item Number<br />Vendors Under Contract<br />Budgetary Information<br />Manual Adjustments<br /># of Returns<br />Number of POs<br />Vendor Names<br />Product Subtotal<br />Items Under Contract<br /># of BearBuy Vendors<br /># Non-filled Orders<br />Match Errors<br />Aggregate Total<br />Vendor Zip Code<br />Sourcing Manager Info<br />Satisfaction Survey<br /><ul><li>Spend Under Management will indicate how much end-users are taking advantage of collective buying contracts rather than buying though individual off-contract vendors
    23. 23. As a percentage of total spend, Spend Under Management will not be skewed by inflation or increased total spend
    24. 24. Dissemination
    25. 25. Email to CPO with updated figures every month
    26. 26. Publish via scorecard and online
    27. 27. Variations
    28. 28. Spend under management can be measured by department and by specific individuals within that department:</li></li></ul><li>Additional Notes<br />Dissemination and Variations<br />Importance of Unrealized Cost Savings<br />Unrealized Cost Savings measures how much more could have been saved had every end-users taken advantage of collective buying contracts<br />10<br />Purchase Order / Invoice<br />Payment<br />Central Procurement Office<br />Strategic Sourcing<br />PO / Invoice Date<br />Date<br />Product Item Number<br />Vendors Under Contract<br />Budgetary Information<br />Manual Adjustments<br /># of Returns<br />Number of POs<br />Vendor Names<br />Product Subtotal<br />Items Under Contract<br /># of BearBuy Vendors<br /># Non-filled Orders<br />Match Errors<br />Aggregate Total<br />Vendor Zip Code<br />Sourcing Manager Info<br />Satisfaction Survey<br /><ul><li>Unrealized Cost Savings measures how much more departments and schools could have saved had they completely taken advantage of collective buying
    29. 29. This metric will be most powerful in the beginning stages of the BearBuy rollout in defending the procurement initiative by showing its potential to generate cost savings in terms departments understand and care about
    30. 30. Dissemination
    31. 31. Email to individual departments and CPO with updated figures every month
    32. 32. Variations
    33. 33. Unrealized cost savings can be measured more specifically by department and by particular individual within that department</li></li></ul><li>Efficiency Metrics<br />
    34. 34. Dissemination and Variations<br />Importance of Adoption Rate<br />Additional Notes<br />Adoption Rate measures end-user usage of the new BearBuy system as compared to non-electronic means<br />12<br />Purchase Order / Invoice<br />Payment<br />Central Procurement Office<br />Strategic Sourcing<br />PO / Invoice Date<br />Date<br />Product Item Number<br />Vendors Under Contract<br />Budgetary Information<br />Manual Adjustments<br /># of Returns<br />Number of POs<br />Vendor Names<br />Product Subtotal<br />Items Under Contract<br /># of BearBuy Vendors<br /># Non-filled Orders<br />Match Errors<br />Aggregate Total<br />Vendor Zip Code<br />Sourcing Manager Info<br />Satisfaction Survey<br />𝐴𝑔𝑔𝑟𝑒𝑔𝑎𝑡𝑒 𝑇𝑜𝑡𝑎𝑙 𝑆𝑝𝑒𝑛𝑑 𝑖𝑛 𝐵𝑒𝑎𝑟𝐵𝑢𝑦𝑇𝑜𝑡𝑎𝑙 𝑆𝑝𝑒𝑛𝑑 𝑓𝑟𝑜𝑚 𝐵𝑢𝑑𝑔𝑒𝑡𝑠<br /> <br />𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑃𝑂𝑠 𝑜𝑛 𝐵𝑒𝑎𝑟𝐵𝑢𝑦𝑇𝑜𝑡𝑎𝑙 𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑃𝑂𝑠 𝑓𝑟𝑜𝑚 𝐵𝑢𝑑𝑔𝑒𝑡𝑠<br /> <br /><ul><li>Dissemination
    35. 35. Email to Senior Management, CPO, and P2P Champions
    36. 36. Publish via scorecard and website
    37. 37. Variations
    38. 38. Measured in terms of percentage of transactions and percentage of dollars processed electronically
    39. 39. Can be measured campus wide, by department, and by individual
    40. 40. Increases in Adoption Rate can reduce costs in terms of transactions
    41. 41. The CPO can use these differences in Adoption Rate to identify high or low performing departments and create competition to incentivize departments to use BearBuy and increase their Adoption Rates </li></li></ul><li>Additional Notes<br />Importance of TRPIA<br />Transactions Requiring Post-Issuance Activities (TRPIA) measures the remaining inefficiencies in the procurement process<br />13<br />Dissemination and Variations<br />Purchase Order / Invoice<br />Payment<br />Central Procurement Office<br />Strategic Sourcing<br />PO / Invoice Date<br />Date<br />Product Item Number<br />Vendors Under Contract<br />Budgetary Information<br />Manual Adjustments<br /># of Returns<br />Number of POs<br />Vendor Names<br />Product Subtotal<br />Items Under Contract<br /># of BearBuy Vendors<br /># Non-filled Orders<br />Match Errors<br />Aggregate Total<br />Vendor Zip Code<br />Sourcing Manager Info<br />Satisfaction Survey<br /><ul><li>Dissemination
    42. 42. Published online and emailed to CPO, senior management, and end-users
    43. 43. Variations
    44. 44. Reconciliations
    45. 45. Rebates
    46. 46. User error
    47. 47. System malfunction
    48. 48. End-User trainings and regular BearBuy system updates can reduce TRPIA
    49. 49. As TRPIA decreases, procurement will become more efficient and additional costs can be avoided</li></li></ul><li>Additional Notes<br />Dissemination and Variations<br />Importance of CTOC<br />Cycle Time of Transaction (CTOT) measures the efficiency of the BearBuy system by targeting the cost of non-value adding activities <br />14<br />Purchase Order / Invoice<br />Payment<br />Central Procurement Office<br />Strategic Sourcing<br />PO / Invoice Date<br />Date<br />Product Item Number<br />Vendors Under Contract<br />Budgetary Information<br />Manual Adjustments<br /># of Returns<br />Number of POs<br />Vendor Names<br />Product Subtotal<br />Items Under Contract<br /># of BearBuy Vendors<br /># Non-filled Orders<br />Match Errors<br />Aggregate Total<br />Vendor Zip Code<br />Sourcing Manager Info<br />Satisfaction Survey<br />(𝑃𝑎𝑦𝑚𝑒𝑛𝑡 𝐷𝑎𝑡𝑒 −𝑃𝑂 𝐷𝑎𝑡𝑒)𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑃𝑂𝑠<br /> <br /><ul><li>Dissemination
    50. 50. Email to Senior Management, CPO, and P2P Champions (Department Liaisons)
    51. 51. Publish via scorecard and website
    52. 52. Variations
    53. 53. Requisition to voucher
    54. 54. Requisition to purchase order placement
    55. 55. Requisition to payment
    56. 56. However, requisitions may be difficult to track
    57. 57. BearBuy should decrease CTOT by eliminating inefficiencies caused by non-value adding activities
    58. 58. End-users will be more likely to use the new BearBuy if the approval and payment processes occur faster on the new system as compared to the current one
    59. 59. According to Barbara Lane, end-users are simply concerned with the timely arrival of their goods; a decreasing CTOT will decrease approval time and, thus, allow goods to arrive earlier</li></li></ul><li>Additional Notes<br />Dissemination and Variations<br />Importance of Customer Satisfaction<br />15<br />End-User Satisfaction measures end-users’ satisfaction with BearBuy and Procurement Services through surveys<br />Purchase Order / Invoice<br />Payment<br />Central Procurement Office<br />Strategic Sourcing<br />PO / Invoice Date<br />Date<br />Product Item Number<br />Vendors Under Contract<br />Budgetary Information<br />Manual Adjustments<br /># of Returns<br />Number of POs<br />Vendor Names<br />Product Subtotal<br />Items Under Contract<br /># of BearBuy Vendors<br /># Non-filled Orders<br />Match Errors<br />Aggregate Total<br />Vendor Zip Code<br />Sourcing Manager Info<br />Satisfaction Survey<br /><ul><li>E-Pro system
    60. 60. Increased end-user satisfaction implies that more end-users are using and are willing to use the new system
    61. 61. Perhaps offering incentives to fill out surveys will improve response rates
    62. 62. Procurement Services
    63. 63. Various end-users feel that Procurement services need to monitor more purchases and keep track of buyer data
    64. 64. Dissemination
    65. 65. Survey results should be emailed directly to BearBuy users, CPO, and senior management
    66. 66. Variations
    67. 67. Factor in response rates
    68. 68. Separate surveys for different kinds of users
    69. 69. Separate questions for BearBuy vs. Procurement Services</li></li></ul><li>End-User Satisfaction Surveys were designed to measure the End-User Satisfaction metric; however, many groups of End-Users in addition to shoppers must be taken into account<br />Limitations<br />End-User Satisfaction Survey<br />Methodology<br />End-User Targets<br />CPO versus BearBuy<br /><ul><li>The survey currently only targets the shoppers, any employee (faculty and staff) and student with an appropriate affiliate ID
    70. 70. However, the category of end-users, that should be surveyed, according to one surveyed end-user Barbara Lane, is much broader, including
    71. 71. Users who authorize expenses such as PIs, directors, and lab managers
    72. 72. Requisition creators who are purchasing professionals
    73. 73. Approvers with the financials knowledge
    74. 74. Two separate surveys should be designed: one that specifically targets the BearBuy system and another that addresses customer-service by the CPO so as to receive clearer results
    75. 75. Additionally, a clear distinction should be made between the campus-wide procurement team and department-specific procurement teams, according to Barbara Lane</li></ul>16<br />
    76. 76. Additional Notes<br />Dissemination and Variations<br />Importance of Supplier Performance <br />17<br />Supplier Performance levels can be tracked via error, turnaround time, and return rates <br />Purchase Order / Invoice<br />Payment<br />Central Procurement Office<br />Strategic Sourcing<br />PO / Invoice Date<br />Date<br />Product Item Number<br />Vendors Under Contract<br />Budgetary Information<br />Manual Adjustments<br /># of Returns<br />Number of POs<br />Vendor Names<br />Product Subtotal<br />Items Under Contract<br /># of BearBuy Vendors<br /># Non-filled Orders<br />Match Errors<br />Aggregate Total<br />Vendor Zip Code<br />Sourcing Manager Info<br />Satisfaction Survey<br />Barbara Lane: “End users care about their purchases arriving on time, not how it works.”<br /><ul><li>Dissemination
    77. 77. Send out performance level reports monthly to</li></ul> end users and CPO<br /><ul><li>Variations
    78. 78. Turnaround time
    79. 79. Error Rates
    80. 80. Return Rates
    81. 81. According to the LDP report, vendors might be taking advantage of a disorganized system and not offering the best deals
    82. 82. We need to track suppliers’ performance and how much they are complying with buyers and the system
    83. 83. Buyers need to see vendor performance in order to alter purchasing habits
    84. 84. If not meeting criteria, vendors may be subject to consequences to be determined by UCB </li></li></ul><li>Importance of Number of Suppliers<br />Additional Notes<br />Dissemination and Variations<br />Number of Suppliers on BearBuy measures the amount of flexibility afforded to procurement users<br />18<br />Purchase Order / Invoice<br />Payment<br />Central Procurement Office<br />Strategic Sourcing<br />PO / Invoice Date<br />Date<br />Product Item Number<br />Vendors Under Contract<br />Budgetary Information<br />Manual Adjustments<br /># of Returns<br />Number of POs<br />Vendor Names<br />Product Subtotal<br />Items Under Contract<br /># of BearBuy Vendors<br /># Non-filled Orders<br />Match Errors<br />Aggregate Total<br />Vendor Zip Code<br />Sourcing Manager Info<br />Satisfaction Survey<br /><ul><li>Dissemination
    85. 85. Email users with updated figures every month
    86. 86. Publish via scorecard and online
    87. 87. Variations
    88. 88. Number/Percent Local Suppliers: Tracks the number of suppliers that ship products from within 100 miles of Berkeley
    89. 89. Number/Percent Diversity Suppliers: Tracks the number of suppliers evaluated by Strategic Sourcing predominantly minority groups
    90. 90. Number of suppliers measures the flexibility of BearBuy in accommodating user desires
    91. 91. Number of suppliers can be leveraged to convince users that progress is being made to allow them to use their preferred vendors
    92. 92. Variations of number of suppliers provide measures of sustainability and diversity</li></li></ul><li>Recommendations and Scorecard<br />
    93. 93. Our research has led to several key recommendations for the future success of the Procurement Initiative at UC Berkeley<br />20<br />
    94. 94. University of California, Berkeley | Procurement KPI Scorecard<br />EFFECTIVENESS<br />Effectiveness metrics at the top provide high level campus administrators with the indicators that affect the bottom line. They offer a measurements across time to track the success of the Procurement Initiative.<br />This section of writing can be used to summarize results, or highlight key initiatives that have driven changes.<br />EFFICIENCY<br />Supplier Information<br />0%<br />50%<br />Efficiency metrics below track how well the initiative has streamlined Procurement Services and increased the quality of services to end-users.<br />Again, this section can be used to describe new developments from Procurement Services, such as new local contracts, end user concerns gathered from surveys, or the success of incentives increasing supplier performance.<br />Local<br />12.5%<br />0%<br />30%<br />Minority<br />22%<br />GOAL<br />CURRENT<br />Supplier Performance<br />90%<br />100%<br />Invoice Turnaround<br />100%<br />96%<br />80%<br />0%<br />10%<br />Error Rate<br />3.5%<br />0%<br />10%<br />Return Rate<br />0%<br />5.2%<br />GOAL<br />CURRENT<br />21<br />* Disclaimer: Data is arbitrary <br />
    95. 95. Acknowledgements <br />
    96. 96. Appendix<br />
    97. 97. Metric Summary<br />24<br />Effectiveness<br />Efficiency<br />Total Cost Savings<br />Return on Investment<br />Spend Under Management<br />Unrealized Cost Savings<br />Adoption Rate<br />Transaction Requiring Post-Issuance Activities<br />Cycle Time of Transaction<br />End User Satisfaction<br />Supplier Performance<br />Number of Suppliers<br />
    98. 98. End-user customer satisfaction survey questions and results <br />
    99. 99. Bibliography<br />Leadership Development Program Report “Berkeley Buying Power: Driving Contract Spent to Savings.” Tipping Point Solutions, September 2010.<br />The Hackett Group Report “2005 Performance Metrics and Practices of World-Class Procurement Organization.” The Hackett Group, 2005.<br />Penn Procurement “Performance Metrics – Penn Purchasing Services.” University of Pennsylvania, accessed Feb 2011. <http://www.purchasing.upenn.edu/supply-chain/performance-metrics.php><br />Notre Dame Sustainability “Procurement Metrics – Office of Sustainability.” University of Notre Dame, accessed Feb 2011. <http://green.nd.edu/sustainability-at-nd/procurement/procurement-metrics/><br />Expert Sources<br />Ralph Meier, Chief Procurement Officer at University of Pennsylvania<br />Jim Hine, Executive Director of Procurement at University of California, San Francisco<br />Erin Wixson, Co-Author of Berkeley Buying Power Report<br />Andrea Rex, Co-Author of Berkeley Buying Power Report<br />Heidi Hoffman, Operational Excellence Procurement Initiative Manager at University of California, Berkeley<br />Barbara Lane, Assistant Dean, College Administration<br />Shana Amenaghawon, Financial Services Director, College of Chemistry<br />Karen Kato, Enterprise Data Warehouse & Database Manager , IST<br />Rich Taylor, Director of Procurement Strategies<br />

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