Welcome to eProcurement – It’s Good

For Business!

Welcome to eProcurement – It’s Good

For Business!Moderators

Dianne Lancaster: State of OregonJean Clark: State of Arizona

PanelKen McFarland, Periscope Holdings

Eric Zoetmulder, SciQuestDavid Ottenstein, MSC Industrial Supplies

Michael Muscara, Waxie Custodial SuppliesJim Chatfield, OfficeMax

Robert Calvert, Hewlett Packard

The State of Oregon’s eProcurement Solution

3

Phase IORPIN

Replacement

• Supplier Registration• User Registration• Posting and evaluation of

solicitation events• Contract Enablement

₋ Shopping Cart Experience

₋ Supplier Catalogs₋ Punch-Outs₋ Hosted Catalogs₋ Agency Managed

• Electronic POs and Invoicing

Phase IIStrategic Sourcing

• Data Driven Procurement Decisions

• Expand Functionality

Phase III“Pay” Solution

•Fully integrated procurement-to-pay solution

ORPIN 2.0 PHASES

4

A Growing System to Meet Your Needs

Supplier ManagementUser ManagementSolicit and AwardElectronic BiddingReverse Auction

Online Ordering“Shopping Cart” Experience

Credit Card PaymentElectronic PO and Invoice

Receiving2 and 3 way match

PO ClosureInterface to Accounting System

ProcureAZThe State of Arizona’s eProcurement & Sourcing Solution

For AZ Public Entities & Vendors

Arizona’s Need for eProcurement

BackgroundIn 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

The State saw a need to implement a solution that was easy to use and would:

• 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

Arizona’s Need for Change

Results

ProcureAZ Success

• 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

• 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

ProcureAZ Functionality

Select BuySpeed Clients

Arizona– 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

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

1. Supplier Business Relationship– Contract Manager– Day-to-Day management

2. eProcurement Relationship– Source to Settle Solution– Support SLA

3. Technology / Operational Support Relationship– On-line

sourcing/contracting– Catalog– PO Delivery– Invoice integration

SciQuest Supplier

12

3

State

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

• Connecting the touchpoints

Lead Generation

3rd PartyMarketplace

15

Sends PO

Delivers Goods/Services

Sends Invoice

Order Status

Advanced Ship Notice

CreditPayment

Buyers

Sourcing

Procurement

Treasury/APFinance

IT

Sales/Mktg.

Order Mgmt.

Sellers

IT

AR/FinanceSupport

Source

What is eProcurement?

• Reasons Suppliers support eProcurement

– “the customer made us”; “saves us time”; “competitive advantage”; “it’s strategic””

• Sourcing

– Not all products and services are sourced the same

– Invoicing impacts Source; Sourcing impacts Invoice

– Multi Contract support adds complexity to Public Sector

• Supplier Variances

– Supplier capabilities are a function of their history; Not all suppliers are equal

– Capabilities evolve from goods to services;

– Services are still immature offering.

Simple to Complex: Source to Invoice

Catalog/ Puncho

ut

Wizard/ Puncho

ut

eQuote Non Catalog

Schedule

Simple Goods

Configured Goods

Milestone Service

Metered Service

Monthly Service

Open Ended Service

• 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.

Bringing the sides together

• 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– Improved productivity, cut operating costs– Increased order accuracy, decreased returns– License to sell– Locked into procurement process

• E-Procurement Pitfalls– 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

MSC, Industrial Supply Co.

E-Commerce AdvantagesVendor Managed Systems-Full Catalog ContractsOrder 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 AdvantagesThird 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 vendor-customer 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!