It’s Not All About eProcurement

Catherine M. Colemire, CPPO, CPPB

Purchasing Agent

Western & Southern Financial Group

NAPP Conference

Marina Del Rey – February 2008

Agenda

• Corporate Overview

– W&SFG Procurement Group

• Where We Were & Why We Needed Change

– Project Differentiators

– Our Requirements

• Selection Process

• Challenges – Opportunities

– Changing Purchasing’s Role

• Results

– Benefits

– Lessons Learned

• Next Steps

• Questions & Answers

The Western & Southern Financial Group

Chairman, President & CEO John F. Barrett

Local employees: 1,810

Total employees: 4,519

Year established: 1888(The Western and Southern Life Insurance Company)

Number of local locations: 14

Number of worldwide locations: 189

Most current fiscal year revenue: $4.8 billion (2006)

The Western & Southern Financial Group

W&SFG Procurement Group

Annual Spend: $91 millionAnnual Spend: $91 millionWhat We Buy And Who We Buy For:Printing - paper, supplies, equipment

General Office Management - furniture, facilities management, MRO

Equipment - lease and purchase

Relocations

IT - hardware, software, services

Where We WereProblems we were facing

• Lack of efficient and appropriate checks & balances for purchasing, receiving and accounts payable

• No standards resulting in total misunderstanding of processes

Their impact

• Lost productivity with inefficient processes

• Lack of collective buying ability

Change was needed

• New Director of Purchasing brought to the attention of upper management the problems, their impact and the savings that were being lost with splintered buys, duplicate buying and duplicate contracts.

Project Differentiators

The project had its own characteristics:

Within the company

Purchasing & Inventory Management touched affiliates and every facet of the group.

Compared to companies

Critical to all the group’s distribution channels

If product could not get to our distribution channels in an timely, efficient and effective manner – result would be no sales.

Project was imperative to the integrity of our back office accounting:

» Purchasing

» Materials Management

» Accounts Payable

» Tax

Identifying Our RequirementsEveryone defines eProcurement differently

To us, eProcurement is part of the procurement process, not a total replacement, which is a common misperception.

We needed an eProcurement solution to provide:

• On-line catalogs, punch-outs, approval workflow

as well as general Procurement support:

• Ordering process, sourcing, contracting, receiving, settlement

and also Inventory and Asset Management

• Document management; uniforms, print-on-demand

and let’s not forget environmental considerations

• Reducing waste through reduced inventories (obsolete forms)

Selection Process• Defining the requirements

– Set up a cross functional team to identify critical paths

• Requirement must haves:

– Systematically able to open and close the purchasing circle with the appropriate checks and balances

– A total and autonomous audit trail within the system modules.

– Potential to expand/grow with the industry

– Adaptable with affiliates within our group

• Soliciting Initial Candidates

– Using a Request For Information (RFI) process, solicit suppliers who could provide a complete Procurement solution meeting the criteria as defined by members of the team

• Getting to the short list

• Final selection process

Overcoming Challenges

• Security

– Peace of mind of associates with the changes

– Common misperception was that the goal was to reduce FTE’s

– Educate the need to elevate employees to more productive and strategic roles

• Change

– Getting people to understand a new way of working

• Education

– Why the changes in people’s jobs were important

• Politics

– Enhancing company culture

Changing Purchasing’s Role

Corporate Strategy $

Zero line

ProfitCenter

Contracting

Supplier Management

SupplierPerformance

Supply

SupplyAssurance

Bid AnalysisRFQ’s

CostCenter

Procurement software provides buyers the

ability to move away fromroutine tasks and become

more strategic in their supplier management

Invoice Queries Confirmation Orders

Overdue orders

Arranging returns

Expediting

Processing paperwork

Creating Purchase Orders

The Results

• Accountability

– Checks and balances are much more advanced and clearly defined

• Productivity

– Processes are streamlined

– We even found some we didn’t know we had!

• Consolidation without total centralization

– Total view of corporate spend

– Standard practices throughout the organization

• For example, a unified invoice matching process

• Professionalism

– Purchasing has moved to a higher level from where we started

Benefits

• Significant reduction in duplication and potential areas of fraud

• Better invoice management - less errors, faster cycle times

• Requisitioners have their own one-stop shopping capability and the ability to systematically track their orders

• In turn, taking purchasing professionals out of routine processes to operate more strategically

– Utilize the procurement information the application provides

– Focus more on decision support and sourcing

– Take a longer view to supplier management and total value

Lessons LearnedTackle the project one step at a time

• Break down each module

• Simulate current processes with system processes

• Rework internal processes as needed

Recognize the role of users change with automation

Align your internal processes with the software

Put the software into your company . . .

. . . rather than put your company into the software

Doing Things Differently

If we had to do it again…

• Develop and follow a Project Plan

• Phase in the software modules

– Requisitions and approval workflows– Purchasing– Materials and Asset Management– Invoice Matching

• Watch for scope creep

– Follow the project plan– Stick to initial requirements, avoid customization

• Stay current

– Deploy software upgrades as they happen– Don’t apply multiple levels of upgrades at the same time

Next Steps

• Reach out & work closer with our internal customers– Subsidiary & Affiliate Companies– Related Business Units– Individual departments

• Cafeteria Services

• Corporate Graphics

• Printing Services

• Help our customers use the software solution more effectively

– Service Templates, Navigator+, Reporting

• Form strategic partnerships between the procurement group and the individual customer groups

It’s Not All About e-Procurement

Questions & Answers