july 15 presentation to transition advisroy team on procurement
DESCRIPTION
TRANSCRIPT
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PRESENTATION TO LSU TRANSITION ADVISORY TEAM
JOINT MEETING OF ADMINISTRATIVE SERVICES, TECHNOLOGY, STREAMLINING TASK FORCES
Presented by Marie C Frank
LSU Office of Procurement Services
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Agenda1. Introduction2. LSU System Overview3. LSU Shared Services4. Procurement Evolution5. Subcommittee Recommendations:
1. Pilot Procurement Code and Structure2. eProcurement System3. Spend Analysis and Savings Opportunity in Procurement
6. Savings Examples
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Subcommittee Members Subcommittee members include the
following: Marie C Frank, Executive Director of
Procurement Services, LSU James Frazier, Associate Director of
Procurement Services, LSU Wendy Simoneaux, Assistant Vice President
for Budget & Finance, LSU System Monica Mougeot, Director of Fiscal
Operations, Pennington Biomedical Research Center
Larry Williams, Director of Purchasing, LSU Alexandria
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Subcommittee Members Subcommittee members include the
following: Donnie Thibodeaux, Assistant to the Vice
Chancellor for Business Services, LSU Eunice
Bill Wolfe, Director of Human Resource Management, LSU Shreveport
Jan Bernath, Director of Accounting Services, LSU Agriculture Center
Angela Neal, Acting Director of Purchasing and Materials Management, LSU HSC Shreveport
Rob Parker, Director of Purchasing, LSU HSC New Orleans
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Subcommittee Members Subcommittee members include the
following: Ben Lousteau, Fiscal Analyst, LSU HSC New
Orleans Glenn Ducote, Attorney at Law Vic Cleveland, Manager of Contracting &
Procurement, Shell Geismar LP Tony Calcagno, Procurement Director, CB&I Ron Krajewski, Specialty Underwriters
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LSU System Overview6
# of STAFF
REPORTS TO ANNUALSPEND
ANNUAL # OF PURCHASE ORDERS
# OFSOLICITATIONS
SYSTEM
LSU BR (1) 19 VC of Finance & Administration
$230 M 6,900 450 PRO
LSU AG (9) 2 Associate VC for Administration
$20 M 784 152 PRO
LSUE (6) 2 VC Business Affairs
$16.5 M 900 9 PRO
LSUA (2) 2 VC of Finance $4.5 M 1,075 35 PROPENNINGTON (3)
3 AED of Operations/Chief of Staff
$10 M 415 18 PRO
LSU LAW (8) 1 VC of Administrative & Finance
$3.8 M 59 10 PRO
LSU HSC NO 10 VC of Administration & Finance
$ 61.4 M 4,019 200 PEOPLESOFT
LSU HSC SHREV
PEOPLESOFT
LSUS ** 2 VC Business Affairs
$4.7 M 1,950 98 Integrow
Total 41 $350.9 M 16102 972
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LSU Shared Services7
Institution Formal
SolicitationsProfessional
Services
PROSystem Facilities
Property Management
Financial Accounting, Payroll, and
Benefit Administration
LaCarte Card
LSU Y Y Y Y Y Y Y
LSU Alexandria N N
Y N Y Y Y
LSU Eunice N N Y N Y Y Y
LSU Ag Center Y N Y Y/N Y Y Y
LSU Law Center Y N
Y N Y Y Y
PBRC Y N Y N N Y Y
LSU System Y Y Y Y Y Y Y
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Procurement Evolution
Administrative
Operational
Tactical
Strategic
Transaction Management Contract & Supplier Management
Low Performance Average Performance High Performance
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Pilot Procurement CodeSpend Analytics – eProcurement
Pilot Procurement
Code
eProcurementSpend Analytics
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RECOMMENDATIONS10
Pilot Procurement Code and Structure
eProcurement System
Spend Analysis and Savings Opportunity in Procurement
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#1 – Pilot Procurement Code and Structure
Recommendation: The Pilot Procurement Code being created for LSU should apply to all institutions under a “Shared Services” Model.
Challenge: Currently, LSU Shreveport, LSU HSC New Orleans and LSU HSC Shreveport do not currently operate under LSU’s Shared Services Model.
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UPPC Used in lieu of:
Louisiana Procurement Code for goods and services
Laws governing professional, personal, consulting and social services
Laws governing equipment and services governed by the Office of Information Technology
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#1 – Pilot Procurement Code and Structure
Where are we now? Received approval from the Board of
Regents Received approval from the LSU Board of
Supervisors Received approval from the DOA as the
“initial qualifying institution” subject to approval of the UPPC
Received approval of the UPPC from DOA Issued a Notice of Intent to begin
promulgation of the code into the Louisiana Administrative Code
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UPPC – What does it Do? Adopt a procurement code that is simple
– freedom from unnecessary bureaucratic processes
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UPPC – What does it Do? Ability to use more competitive
strategies – limits, electronic processes, selection… every method for determining low cost and best value
EXAMPLES: Increased Thresholds, Office Supplies, Reverse Auctions
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Office Max Analyzed spend of LSU and its Shared
Services Institutions to be $2 M per year Sought and received approval from the
DOA to issue an RFP (best value) as opposed to an ITB (lowest cost)
Current laws limited specifications to narrow terms and scoring/negotiation methods
Awarded to Office Max for a signing bonus, volume rebate and 25-55% discounts on all items.
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Reverse Auctions Very similar to eBay auctions where the
suppliers bid for the contract The ability for suppliers to participate is
minimal and entirely in an electronic environment
Louisiana Procurement Code passed recent law to allow the use of Reverse Auctions but only to be conducted by the Division of Administration
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UPPC – What does it Do? Ability to solicit/contract for the most
cost effective termEXAMPLE: Bus Transit
Use effective methods for public noticeEXAMPLE: Electronic notification of
solicitations Utilize new technology – eProcurement
and employ supplier technologyEXAMPLE: Cooperative Purchasing
Catalog Enablement's Apply commodity strategies
EXAMPLE: Scientific and IT supplies/equipment
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Pilot Procurement Code REMAINING STEPS TO
IMPLEMENT: Approval of the Joint Legislative
Committee on the Budget (JLCB) Development and approval of
Procurement Policies which are 60% complete
Final approval of the LSU Board of Supervisors
Execute Change Management within LSU
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#2 – eProcurement SystemRecommendation: LSU electronic procurement system (Sciquest) should be expanded and utilized by all institutions either under the Shared Services Model or through the use of acquired Business Units of Sciquest.Opportunity: The increase of electronic methods of procurement will increase efficiency and savings because it serves as the tool to bridge the flexibilities of the UPPC and the other institutions; however, the challenge is to dedicate resources necessary to implement across all institutions with various mainframe systems.
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eProcurement – July 22, 2013 launch
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eProcurement Electronic Public Notice Electronic Solicitation Electronic Signatures Reverse Auctions Strategic Sourcing Negotiated Hosted Catalogs Real-time Competition at Dollar 1
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#3 – Spend Analysis and Savings Opportunities in
Procurement24
Recommendation: Identify savings opportunities across all institutions through spend analysis and the utilization of strategic sourcing strategies to procure goods and services and revenue-generating opportunities through the optimal channels with the best suppliers.Challenge: The lack of tools, integration and disparate data sources; however, the opportunity exists for this recommendation to act as bridge for consolidating all the data across all the institutions to make better procurement decisions.
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FY 2012 – Spend Analysis Total Spend ≈ $252M
Breakdown by Institution:≈ $189M – LSU Main Campus≈ $25M – LSU Agricultural Center≈ $12M – Pennington Biomedical Research Center≈ $11M – LSU System Office≈ $6M – LSU Eunice≈ $5M – LSU Alexandria≈ $4M – Paul M. Hebert Law Center
Data from July 1, 2011 – June 30, 2012
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FY 2012 – Spend Analysis Total Transactions ≈ 181,698 Total Purchase Orders ≈ 16,102 Total LaCarte (Pcard) Transactions ≈
165,596 Breakdown by Threshold:
> $100,000 ≈ 3> $50,000 ≈ 23> $25,000 ≈ 77> $15,000 ≈ 110> $10,000 ≈ 98> $5,000 ≈ 522< $5,000 ≈ 164,763
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FY 2012 – Spend Analysis 27
Percent Spend by Payment Method
Percent Spend by # of Transactions
Percent Spend By Mechanism Percent Spend By # of Transactions0%10%20%30%40%50%60%70%80%90%
100%
$193,369,473
16,102
$58,369,473
165,596
PO LaCarte
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0%
500000000%
1000000000%
1500000000%
2000000000%
2500000000%
3000000000%
3500000000%
LSU Spend Detail (FY2012)$251.9M Spend Base
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Taxes / Permits /
FeesIT / AV PassthroughUtilities
Facilities & MaintenanceScientific
ScientificSupplies
&Equipment
Prof.Services –
General
FinancialServices
ITServices
State
LocalFederal
IT / AV - General
Software Licensing
AV Eqpt
Computers
General
Foundations
Other Universities
Electric
Gas
Telecom
WaterGeneral
Industrial Components
& Fabrication
(MRO)
Electrical
HVAC
LandscapingGeneral
Specialty Vendors
Building Systems
Professional Services
Other Vendors
ConstructionTravel
LibraryTransp.
MarineGases
Other Vendors
General
Gen. Contractors
Constr. Eqpt
Travel Agents
Hotel & Lodging
Commercial Airlines
Elevator MaintJan. LaborPlumbing
Jan. SuppliesPainting
Car Rental% of
Category
Spend ($M)
0 25025 50 75 100 125 150 175 200 225
Work In Process
31.7 21.7 20.9 20.2 19.3 18.3 14.7 14.5 14.2 13.5 8.3 8.1 7.5
Bldg Matls
• Medical• Athletics• Interiors• Prof. Associations• Food Services• General Retail• Logistics/Shipping
• Campus Svcs• Agriculture• Veterinary• Human Resources• Waste Mgmt.• Insurance• Dental
Other Categories
Bus T
rans
itVe
hicle
Acq
.Fu
elVe
hicle
Mai
nt.
Prin
ting
Gene
ral
Prom
otio
nal
Prod
ucts
Gene
ral O
ffice
Sup
plie
sCo
pier
s &
MFD
s
Comm /Mktg
% total spend
12.6% 8.6% 8.3% 8.0% 7.7% 7.3% 5.5% 5.7% 5.6% 5.4% 3.3%3.2% 3.0%
38.9
15.5%
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Savings Potential and Costs to Date
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Based on $252M annual spend for FY2012:
Savings Opportunities (Hard $)• Increase spend under contract
and reduce non-competitive spend
• Utilize Office Supplies contract flexibility
• Utilize Strategic Sourcing events (e.g., reverse auctions)Total Hard $ Savings
Opportunity
Savings Opportunities (Soft $)• Transaction processing costs
Total Soft $ Savings Opportunity
$1.29M$1.12M$2.77M
$5.18M
$1.00M$1.00M
$6.45M$3.63M
$13.85M
$23.93M
$5.00M$5.00M
5-Yr Value
Yr 1 Value
Total Hard Costs To Date $2.1M
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Savings Examples Several commonly used items
Lamps Scientific Gloves Lab Coats Towels Scouring Pads
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Procurement Evolution:Strategic Procurement
Pilot Procurement Code
Strategic Sourcing &
Spend Analytics
eProcurement
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QUESTIONS?38
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THANK YOU
MARIE C FRANK, MPA, CPPBLSU OFFICE OF PROCUREMENT SERVICES213 THOMAS BOYD HALLBATON ROUGE, LOUSIANA 70803(225) [email protected]