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Moving Sustainability to the Core of Strategic Sourcing

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The University of California System's Sustainability Policy says that "Environmentally Sustainable Purchasing underlies all other areas of sustainable practice..." Find out how UC's System-Wide Strategic Sourcing Organization is embedding sustainability into its business processes and helping the UC be a global leader in sustainability.

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Moving Sustainability to the Core of Strategic Sourcing

  1. 1. MOVING SUSTAINABILITY TO THE CORE OF STRATEGIC SOURCING
  2. 2. The Mission of UC Procurement is the Mission of the UC Expand opportunities for teaching, research and public service by delivering savings and efficient procurement services across the University of California Our Mission 7/23/2015 2
  3. 3. 1,993.1 953.7 324.8 287.2 236.0 228.6 209.0 368.0 419.0 68.2 82.9 278.1 411.3 563.2 634.7 Significant Opportunities in All Areas of Spend 7/23/2015 3Source: Spend Radar campus and US Bank PCard data Apr 2012 – Mar 2013 Health & Welfare Building & Construction Services Financial & Insurance Services Travel Healthcare Services Engineering Services Utilities Other (<$200M each) Unclassified Food & Dining Services Office Supplies, Express Package & Environments MRO/ Facilities IT & Telecom Professional Services Life Sciences Total $5B Annual Spend Total $2B Annual Spend “Non-Traditional” Categories “Traditional” Categories Actively managed by UC Procurement Services ~230 professionals at UCOP and 10 campuses UC Annualized Spend in Millions (Apr 2012 - Mar 2013) $7+ billion in addressable annual spend supporting all aspects of University operations, academia and research
  4. 4. 4 The story of strategic sourcing begins with a single item…
  5. 5. 5 Strategic Sourcing at the UC… Long before Critical Mass rides started in the early 1990s, an earlier wave of ecology-minded folks cycled en masse through the streets of Berkeley in an annual "Smog-Free Locomotion Day, this one held February 28, 1971. – Source: FoundSF.org
  6. 6. 6 Berkeley: 35+ Davis: 34 Irvine: 16 LA: 20 Merced: 6 Riverside: 5 San Diego: 30+ Santa Barbara: 35 Santa Cruz: 22 San Francisco: 1 Total: 204 The UC is home to over 200 Student Sustainability Organizations…
  7. 7. 7/23/2015 7
  8. 8. After Policy (2015) METRICS • 0.1 MW Renewable Energy • 1 LEED certification • Beg for $$ for energy efficiency Institutional Change • No discussion of GHGs • 1 sustainability FTE • No sustainability language in purchasing contracts METRICS • 17 MW Renewable Energy • 191 LEED certifications • Regents approved $240 million energy efficiency program; saved $140 million Institutional Change • ACUPCC Founding Signatories • 39 sustainability FTEs • Sustainability language/metrics in all RFPs/Contracts/Quarterly Reviews Before Policy (2004) Sustainability at the UC…
  9. 9. “Environmentally preferable purchasing underlies and enables all other areas of sustainable practice in this policy.” -University of California Policy on Sustainable Practices 9 Green Building Design Clean Energy Climate Protection Sustainable Transportation Sustainable Building Operations Recycling and Waste Management Sustainable Foodsevices Sustainable Water Systems
  10. 10. • Sustainability Purchasing Working Group – Created by the Sustainability Steering Committee – Proposes amendments to policy – Coordinates implementation of policy – Shares best practices and creates economies of scale for system-wide initiatives. • Global Climate Leadership Council – Created in 2014 to support Carbon Neutrality Initiative – Supports UC goal of achieving carbon neutrality by 2025 • Sustainable and Nutritious Food Procurement – Part of the operations committee of the Global Food Initiative – Supports the achievement of UC Sustainability goals for food services. – Promotes best practices across the UC and Higher Education. 10 Procurement and Sustainability are Natural Partners…
  11. 11. 11 Ideas often come to us as independent project ideas… These Stirling freezers use a lot less energy, can we get a system-wide agreement? What if we ONLY bought refillable pens? The heat pumps that we put on our modular buildings have gotten a lot more efficient – could we replace them? What if every vehicle we bought was alternative fuel? Hybrid? Electric? What if every employee could by a hybrid or electric at a discounted price? • How do we estimate the impact? • How do these align with our goals? • I’m working on all of these other projects and now you want me to work on this too? Aquaponics!
  12. 12. Process Standards ISO International Organization for Standardization 12 Leveraging processes and product standards allows high impact SCALABLE sustainable practice… • Sustainability in Building Construction • Earth Moving Machinery • Sustainability in Buildings and Civil Engineering Works • Event Sustainability and Management Systems • Social Responsibility • Information Technology Product Standards Accepted under the UC Sustainability Policy
  13. 13. 1. Be supplied by 100% Renewable Energy 2. Create Zero Waste 3. Sell products that sustain people and the environment 13 Wal-Mart has moved environmental sustainability to the core of it’s business… Source: corporate.Walmart.com
  14. 14. How can the UC Procurement put sustainability at the core of what it does? 14
  15. 15. 1. Aligning with the 3 key Presidential Sustainability Initiatives: – Zero Waste by 2020 – Carbon Neutrality by 2025 – Global Food Initiative 2. Embed sustainability into the core of our business process 3. Deliver results that allow us to purchase more sustainable products and services more sustainably 15 UC Procurement can put Sustainability at its core by…
  16. 16. 16 1. Align with 3 key Presidential Sustainability Initiatives… Zero Waste by 2020 Divert 95% of municipal solid waste from landfill by 2020 • Reduce consumption of goods. • Reduce packaging • Convert packaging to recyclable and reusable materials. • Reduce the cost of procuring recyclable and compostable products Carbon Neutrality by 2025 Make the UC the first major research University to achieve carbon neutrality. • Reduce the cost of renewable energy • Introduce products that reduce energy consumption and carbon emissions • Introduce supply chain practices that reduce the number vehicles traveling to and from our campuses. Global Food Initiative Improve food security, health and sustainability at UC – our campuses, medical centers and national labs – and through California, the U.S. and the world • Reduce the cost of sustainable food • Increase the transparency of our food supply chain • Share best practices within Higher Education and Industry
  17. 17. 17 2. Embed Sustainability Into Our Core Business Process The 7-step Strategic Sourcing Methodology consistently and efficiently guides high value procurement outcomes. •Supplier Evaluation Criteria Matrix •RFI (optional) •Fact Based Negotiation Package •Sourcing Award Recommendation •Updated Business Case 7.0 Implement New Agreement 6.0 Negotiate & Develop Strategic Sourcing Recommen- dation 5.0 Conduct Competitive Exercise 4.0 Identify Minimum Requirements & Evaluation Criteria 3.0 Develop Category/Sub- Category Strategy 2.0 Develop Category/Sub- Category Profile 1.0 Develop Strategic Sourcing Project Work Plan 1.1 Mobilize Project Team 1.2 Conduct Project Kick- Off 1.3 Finalize Project Plan 2.1 Conduct Internal Analysis 2.2 Conduct Industry Analysis 3.1 Develop Sub-Category Opportunity Baseline 3.2 Develop To-Be Process Flow 3.3 Develop & Summarize Category Strategy 2.3 Build TCO Model 4.1 Finalize Supplier Evaluation Criteria 4.2 Develop Scoring Document 4.3 Conduct Supplier Analysis 5.1 Develop Tender Document 5.2 Distribute Tender Document 6.1 Finalize Fact-Based Negotiation 6.2 Plan and Conduct Fact- Based Negotiation 6.3 Develop & Recommend Sourcing Decision 5.3 Evaluate & Score Tender Document 7.1 Develop Category Savings Summary 7.2 Develop Implementatio n Plan 7.3 Deploy Contract Campus-Wide •Internal Profile •TCO Model •Baseline TCO •As-Is Process Flow •External Profile •Cost Reduction Ideas •Preliminary Business Case •Sourcing Project Work Plan •Kick-Off Meeting & Presentation •Category/Sub -Category Strategy •Business Case •Market Solicitation Documents •Evaluated Responses •Short List of Top Suppliers •Implementation Plan •Communication Plan •Supplier Performance Management Approach KeyOutputs
  18. 18. 18 2. Embed Sustainability Into Our Core Business Process The 7-step Strategic Sourcing Methodology consistently and efficiently guides high value procurement outcomes. •Supplier Evaluation Criteria Matrix •RFI (optional) •Fact Based Negotiation Package •Sourcing Award Recommendation •Updated Business Case 7.0 Implement New Agreement 6.0 Negotiate & Develop Strategic Sourcing Recommen- dation 5.0 Conduct Competitive Exercise 4.0 Identify Minimum Requirements & Evaluation Criteria 3.0 Develop Category/Sub- Category Strategy 2.0 Develop Category/Sub- Category Profile 1.0 Develop Strategic Sourcing Project Work Plan 1.1 Mobilize Project Team 1.2 Conduct Project Kick- Off 1.3 Finalize Project Plan 2.1 Conduct Internal Analysis 2.2 Conduct Industry Analysis 3.1 Develop Sub-Category Opportunity Baseline 3.2 Develop To-Be Process Flow 3.3 Develop & Summarize Category Strategy 2.3 Build TCO Model 4.1 Finalize Supplier Evaluation Criteria 4.2 Develop Scoring Document 4.3 Conduct Supplier Analysis 5.1 Develop Tender Document 5.2 Distribute Tender Document 6.1 Finalize Fact-Based Negotiation 6.2 Plan and Conduct Fact- Based Negotiation 6.3 Develop & Recommend Sourcing Decision 5.3 Evaluate & Score Tender Document 7.1 Develop Category Savings Summary 7.2 Develop Implementatio n Plan 7.3 Deploy Contract Campus-Wide •Internal Profile •TCO Model •Baseline TCO •As-Is Process Flow •External Profile •Cost Reduction Ideas •Preliminary Business Case •Sourcing Project Work Plan •Kick-Off Meeting & Presentation •Category/Sub -Category Strategy •Business Case •Market Solicitation Documents •Evaluated Responses •Short List of Top Suppliers •Implementation Plan •Communication Plan •Supplier Performance Management Approach KeyOutputs Items in red require PLC approval
  19. 19. 19 2. Embed Sustainability Into Our Core Business Process The 7-step Strategic Sourcing Methodology consistently and efficiently guides high value procurement outcomes. •Supplier Evaluation Criteria Matrix •RFI (optional) •Fact Based Negotiation Package •Sourcing Award Recommendation •Updated Business Case 7.0 Implement New Agreement 6.0 Negotiate & Develop Strategic Sourcing Recommen- dation 5.0 Conduct Competitive Exercise 4.0 Identify Minimum Requirements & Evaluation Criteria 3.0 Develop Category/Sub- Category Strategy 2.0 Develop Category/Sub- Category Profile 1.0 Develop Strategic Sourcing Project Work Plan 1.1 Mobilize Project Team 1.2 Conduct Project Kick- Off 1.3 Finalize Project Plan 2.1 Conduct Internal Analysis 2.2 Conduct Industry Analysis 3.1 Develop Sub-Category Opportunity Baseline 3.2 Develop To-Be Process Flow 3.3 Develop & Summarize Category Strategy 2.3 Build TCO Model 4.1 Finalize Supplier Evaluation Criteria 4.2 Develop Scoring Document 4.3 Conduct Supplier Analysis 5.1 Develop Tender Document 5.2 Distribute Tender Document 6.1 Finalize Fact-Based Negotiation 6.2 Plan and Conduct Fact- Based Negotiation 6.3 Develop & Recommend Sourcing Decision 5.3 Evaluate & Score Tender Document 7.1 Develop Category Savings Summary 7.2 Develop Implementatio n Plan 7.3 Deploy Contract Campus-Wide •Internal Profile •TCO Model •Baseline TCO •As-Is Process Flow •External Profile •Cost Reduction Ideas •Preliminary Business Case •Sourcing Project Work Plan •Kick-Off Meeting & Presentation •Category/Sub -Category Strategy •Business Case •Market Solicitation Documents •Evaluated Responses •Short List of Top Suppliers •Implementation Plan •Communication Plan •Supplier Performance Management Approach KeyOutputs Items in red require PLC approval Working with campus procurement and sustainability experts to create a roster of sustainability subject matter experts for specific categories. Outcomes: • Ensures that sustainable expertise is available and incorporated into every initiative from the start. • Helps to identify sustainable products, and sustainable practices and how to evaluate them.
  20. 20. 20 2. Embed Sustainability Into Our Core Business Process The 7-step Strategic Sourcing Methodology consistently and efficiently guides high value procurement outcomes. •Supplier Evaluation Criteria Matrix •RFI (optional) •Fact Based Negotiation Package •Sourcing Award Recommendation •Updated Business Case 7.0 Implement New Agreement 6.0 Negotiate & Develop Strategic Sourcing Recommen- dation 5.0 Conduct Competitive Exercise 4.0 Identify Minimum Requirements & Evaluation Criteria 3.0 Develop Category/Sub- Category Strategy 2.0 Develop Category/Sub- Category Profile 1.0 Develop Strategic Sourcing Project Work Plan 1.1 Mobilize Project Team 1.2 Conduct Project Kick- Off 1.3 Finalize Project Plan 2.1 Conduct Internal Analysis 2.2 Conduct Industry Analysis 3.1 Develop Sub-Category Opportunity Baseline 3.2 Develop To-Be Process Flow 3.3 Develop & Summarize Category Strategy 2.3 Build TCO Model 4.1 Finalize Supplier Evaluation Criteria 4.2 Develop Scoring Document 4.3 Conduct Supplier Analysis 5.1 Develop Tender Document 5.2 Distribute Tender Document 6.1 Finalize Fact-Based Negotiation 6.2 Plan and Conduct Fact- Based Negotiation 6.3 Develop & Recommend Sourcing Decision 5.3 Evaluate & Score Tender Document 7.1 Develop Category Savings Summary 7.2 Develop Implementatio n Plan 7.3 Deploy Contract Campus-Wide •Internal Profile •TCO Model •Baseline TCO •As-Is Process Flow •External Profile •Cost Reduction Ideas •Preliminary Business Case •Sourcing Project Work Plan •Kick-Off Meeting & Presentation •Category/Sub -Category Strategy •Business Case •Market Solicitation Documents •Evaluated Responses •Short List of Top Suppliers •Implementation Plan •Communication Plan •Supplier Performance Management Approach KeyOutputs Address sustainability strategies in Business Decision documentation. Outcomes: • Ensures that we have explicitly considered, documented and discussed sustainability impacts in system-wide source decisions. • Allows us to consider multiple sustainability attributes beyond the selection of the specific product and its pricing.
  21. 21. 21 2. Embed Sustainability Into Our Core Business Process The 7-step Strategic Sourcing Methodology consistently and efficiently guides high value procurement outcomes. •Supplier Evaluation Criteria Matrix •RFI (optional) •Fact Based Negotiation Package •Sourcing Award Recommendation •Updated Business Case 7.0 Implement New Agreement 6.0 Negotiate & Develop Strategic Sourcing Recommen- dation 5.0 Conduct Competitive Exercise 4.0 Identify Minimum Requirements & Evaluation Criteria 3.0 Develop Category/Sub- Category Strategy 2.0 Develop Category/Sub- Category Profile 1.0 Develop Strategic Sourcing Project Work Plan 1.1 Mobilize Project Team 1.2 Conduct Project Kick- Off 1.3 Finalize Project Plan 2.1 Conduct Internal Analysis 2.2 Conduct Industry Analysis 3.1 Develop Sub-Category Opportunity Baseline 3.2 Develop To-Be Process Flow 3.3 Develop & Summarize Category Strategy 2.3 Build TCO Model 4.1 Finalize Supplier Evaluation Criteria 4.2 Develop Scoring Document 4.3 Conduct Supplier Analysis 5.1 Develop Tender Document 5.2 Distribute Tender Document 6.1 Finalize Fact-Based Negotiation 6.2 Plan and Conduct Fact- Based Negotiation 6.3 Develop & Recommend Sourcing Decision 5.3 Evaluate & Score Tender Document 7.1 Develop Category Savings Summary 7.2 Develop Implementatio n Plan 7.3 Deploy Contract Campus-Wide •Internal Profile •TCO Model •Baseline TCO •As-Is Process Flow •External Profile •Cost Reduction Ideas •Preliminary Business Case •Sourcing Project Work Plan •Kick-Off Meeting & Presentation •Category/Sub -Category Strategy •Business Case •Market Solicitation Documents •Evaluated Responses •Short List of Top Suppliers •Implementation Plan •Communication Plan •Supplier Performance Management Approach KeyOutputs Regularly consider sustainability in the supplier relationship by evaluating product offerings and business practices. Outcomes: • Create an environment where it easy to identify and purchase sustainable products. • Collaboration with suppliers and the stakeholders to continuously evaluate new sustainable products and practices for implementation.
  22. 22. 1. Carbon Neutrality by 2025 Jeremy Meadows Associate Director Strategic Sourcing Facilities & MRO 2. Global Food Initiative Eric Pollack Commodity Manager, Food Services 22 3. Deliver results that support more sustainable purchase more sustainably
  23. 23. CARBON NEUTRALITY: SOLAR ELECTRICAL GENERATION Jeremy Meadows, Associate Director Strategic Sourcing UC Procurement Case Study
  24. 24. University of California Power Program Overview – System-wide Solution for Direct Access Campuses – Energy Service Provider – Program complies with California Renewable Portfolio Standards (RPS) – Created to address UC’s system-wide climate neutral energy policy objectives 24
  25. 25. The Objective and Acquisition Profile • UCPP’s power supply portfolio and contribute to UC’s RPS obligations. – UCPP’s annual direct access energy use is in the range of 260,000 MW/h – Contract Length: 25 years – Approximate Contract Value: $350,000,000 (25 years x 14MM) – Projects located in CA – Project with 20MW or greater nameplate capacity – Minimum of 33% of our annual need 25
  26. 26. RFP Development/Timeline • RFP Timeline - RFP Open: July 18, 2014 4 PM - Pre-bid Conference: July 22, 2014 2 PM - Deadline to submit questions: July 24, 2014 2 PM - RFP Closing: July 31, 2014 4 PM - RFP Evaluation: July 31-Aug 9 - Apparent Awardee(s) Notification: August 13, 2014 • Contract – UC PPA (Based on PG&E RAM 5 PPA) – Industry recognized standard – Buyer friendly • Technology - Supplier Registration and Sourcing 26
  27. 27. Project Overview Five Points Solar Park Site Summary Size: 60 MWAC Location: Five Points, Fresno County, CA Solar Irradiance: 2,105 kWh/kW/year (3Tier) Point of Interconnection: On-Site/NP-15 Location Site Map Future Site of the 60MW Five Points Solar Park Five Points, CA 27
  28. 28. Project Overview Giffen Solar Park Site Summary Location Site Map Future Site of the 20MW Giffen Solar Park Cantua Creek, CA Size: 20 MWAC Location: Cantua Creek Fresno County, CA Solar Irradiance: 2,097 kWh/kW/year (3Tier) Point of Interconnection: Giffen Substation On-Site/NP-15 28
  29. 29. GLOBAL FOOD INITIATIVE: BUYING SUSTAINABLE AND NUTRITIOUS FOOD Eric Pollack, Commodity Manager for Food UC Procurement Case Study
  30. 30. Food Sustainability Is Expensive 30
  31. 31. Definitions of Sustainable Food & Non- Food Products • Organic Produce • Locally Grown Produce • Locally Farmed and Organic Dairy • Beef – Grass Fed and Locally Raised • Poultry & Eggs – Cage Free – Range Free- Antibiotic Free • All Natural - Groceries, Retail • Compostable- Utensils , Cups , Napkins, Plates • Recyclable Packaging 31
  32. 32. Past UC Dining Purchasing Practices • No collaboration between campuses • Each campus contract independently • Did not leverage their volumes 32
  33. 33. Current Purchasing Practices • Campus Dining Organization on 6 campuses participate in system-wide food procurement programs. • Consolidated and leveraging the UC & CSU purchasing volume of $75,000 million annually. • Awarded produce and master food distribution to a single regional vendor West Central Produce – S. Cal Trinity Produce – N. Cal Sysco -S. Cal PFG – N. Cal Elimination of additional trucks on campuses • More transparency to farmers and manufacturers • We now have the ability to negotiate and contract directly with local farmers, processors and national manufacturers for organic and all natural food and non- food products at lower costs 33
  34. 34. Supplier Transparency and Reporting • UC has total transparency & traceability to all growers • In the UC agreement we require monthly sustainability impact reports from our produce vendors. • We are working toward obtaining the same reports from our master distribution partners ( Sysco & Performance Food Group) • Reports are based on each campus definition of sustainable local and organic offering 34
  35. 35. Defining Locally Grown Produce Across the UC • University of California defines locally grown – 500 mile radius from farm to campus • UCSD – 250 miles radius - farm to campus • UCR – 500 mile radius - farm to campus • UCSB – 150 mile radius - farm to campus • UCSC – 250 mile radius • UC Merced – 250 mile radius • UC Berkeley – 250 mile radius – farm to distributor to campus 35
  36. 36. University of California Locally and Organically Grown CAMPUS Purchases of Locally & Organically Grown Produce UC San Diego 55.25% UC Riverside 38.85% UC Santa Cruz 40% UC Berkeley 35% UC Merced 39% UC Santa Barbra 54.8% 36
  37. 37. Annual Savings Due to UC & CSU Campuses Collaboration Programs Annual Savings S. California Produce $985,000 N. California Produce $400,000 Master Distribution ( Sysco & PFG) $700,000 Total Annual Savings $2,085,000 37
  38. 38. Additional Food Sustainability Projects • Dairy – Local dairy farms and processing • Local sustainable poultry - Mary’s • Other locally raised poultry • Fresh sustainable seafood – Sea to Table • Aquaponiclly grown produce – Viridis Aquaponics • Sustainable proteins – Beef & Pork 38
  39. 39. What’s in a Can of Pineapple Tidbits? 39 DW 6# Brix 15 Malaysia DW 6.25# Brix 15 Indonesia 1 ½ # More per case
  40. 40. More food in can = fewer cans bought and disposed of… Annual Canned (6/#10) Products Purchases of 2,000 cases Additional Can Wt. Benefit of Additional Wt. Avoided in Disposing of 12,000 cans .25 # 750 # 125 cans 20+ cases 40
  41. 41. Summary • Defining what foods are under sustainable category • Get your campuses to collaborate • Leverage your volume • Transparency • What’s in the can? Make sure that you get value 41
  42. 42. 1. Sustainability is at the core of UC Procurement’s Mission 2. UC Procurement is a vital partner in advancing the sustainability agenda and is an underlying component of any sustainability project. 3. The Strategic Sourcing Process provides a platform for participation and collaboration to help the UC achieve its mission and program goals. 42 In Conclusion…
  43. 43. “UC, like California, simply cannot afford to stand still. If you’re standing still in California, you’re falling behind. This is a dynamic institution, and a dynamic state, living together in a dynamic time.” Janet Napolitano University of California President 43

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