Strategic Sourcing and Procurement Transformation Program Focus on procurement and logistics of goods

Transcription

1 Strategic Sourcing and Procurement Transformation Program Focus on procurement and logistics of goods Rosa Martelli PwC Government Advisory Srevices - Senior Consultant 1

2 AGENDA THE ROLE AND MISSION OF THE CENTRAL UNIT FOR PURCHASES Levers to obtain savings Role and mission of the CUP General CUP Procurement Process REENGINEERING OF PROCUREMENT PROCESSES AND PROCEDURES Procurement& Logistics for Printed Materials Product description and AS IS Analysis What the CUP decided to do? New Purchasing Model Central Contract and Demand Mgmt KPIs and Monitoring consumptions Reporting Procurement& Logistics for Stationery and Office Products Product description and AS IS Analysis What the CUP decided to do? New Purchasing Model Central Contract and Demand Mgmt KPIs and Monitoring consumptions Reporting 2

3 AGENDA THE ROLE AND MISSION OF THE CENTRAL UNIT FOR PURCHASES Levers to obtain savings Role and mission of the CUP General CUP Procurement Process REENGINEERING OF PROCUREMENT PROCESSES AND PROCEDURES 3

4 Role and Mission of Central Unit for Purchases Levers to obtain savings According to the Expenditure Rationalization Plan relevant savings can be reached pursuing: economies of scale (Purchases aggregation) a more effective demand management; an effective expenses monitoring system; e-purchasing - Rationalization Levers - - Benefits- Economies of scale/ Purchases aggregation Lower prices Product/services standardization SLA definition Demand Mgmt/ Expenditure monitoring Needs standardization and programming Consumption monitoring Central information collection Electronic operating system for purchases Full IT coverage of purchasing process E-procurement systems Savings for goods and services expenditure More trasparency and access to free mkt Increasing efficiency of purchasing procedures 4

5 The Central Unit for Purchases The Central Unit for Purchases plays a central role in the Rationalization Program implementation, owning the following competences: Buy centrally standardised common products and services Governance of the buying process, by: Purchases planning and needs programming; Monitoring the expenditure for goods and services; Ruling buying processes and supervising the procedures compliance ; Promoting e-procurement. Find out expenditure rationalization levers for non common (specialistic) goods and services purchases and supervise the related buying processes; Coordinate the local supervisors responsible for the local contract management. 5

6 The Central Unit for Purchases The Central Unit for Purchases centrally buys common products and services and is responsible for the governance of the full purchasing process, starting from the expenditure programming to the consumptions monitoring. National Purchasing Body Benchmarking Regional Purchasing Body Benchmarking Benchmarking Legal Dept. Legal Support - Bidding procedures Contracts Central Unit for Purchases Verifica disponibilità di budget Verifica e liquidazione fatture Economic Dept. Goods and services needs Suppliers Mgmt &monitoring Support in monitoring Expenditure levels Common goods and services purchasing Expenditure programming Expenditure monitoring Ruling purchasing processes Decentralized structures Central Depts 6

7 GENERAL CUP PROCUREMENT PROCESS Here follows the description of the general procurement process adopted since the CUP entered into force: Body Purchasing strategy - Contract mgmt Supply monitoring Expenditure monitoring CUP Goods and services needs analysis Buying strategy - Needs progamming Procurement procedures Contract /suppliers mgmt Penalties/ Invoices processing KPI Monitoring expenditure /cons. Dept.s and local structures Goods and services needs Support for technical requirements/ SLA Provision requests Products/SLA Conformity Monitoring support Legal Dept. Legal Support Economic Dept. SAP Suppliers payment The general model is a comprehensive and flexible framework that can be customized starting from the market characteristics, procurement needs and available resources. In the following slides practical examples of the model implementation are proposed, with a particular focus on logistics related aspects. 7

8 AGENDA THE ROLE AND MISSION OF THE CENTRAL UNIT FOR PURCHASES REENGINEERING OF PROCUREMENT PROCESSES AND PROCEDURES Procurement& Logistics for Printed Materials Product description and AS IS Analysis What the CUP decided to do? New Purchasing Model Central Contract and Demand Mgmt KPIs and Monitoring consumptions Reporting Procurement& Logistics for Stationery and Office Products Product description and AS IS Analysis What the CUP decided to do? New Purchasing Model Central Contract and Demand Mgmt KPIs and Monitoring consumptions Reporting 8

9 AGENDA THE ROLE AND MISSION OF THE CENTRAL UNIT FOR PURCHASES REENGINEERING OF PROCUREMENT PROCESSES AND PROCEDURES Procurement& Logistics for Printed Materials Product description and AS IS Analysis What the CUP decided to do? New Purchasing Model Central Contract and Demand Mgmt KPIs and Monitoring consumptions Reporting 9

10 PRINTED PRODUCTS PRODUCT DESCRIPTION and AS IS analysis Products description: certificates for citizens, internal forms, envelopes, headed paper, posters, fine certificates, depliant, printed poll materials (i.e. elections card), paper folders, etc. Main AS-IS evidences Expenditure level High expenditure level (about 5 mln in 2011); Decreasing trend thanks to standard cost methodology used for the allocation of economic resources in the balancesheet Buying procedures Lack of buying process governance ( unawareness about prices, delivery time, needs of the Depts and decentrated bodies, ) No IT coverage of processes Highly fragmented and diversified demand (no use of economies of scale) Mandatory involvement of external experts ( extra-costs) Lack of warehouse management ( lack of data about provisions, not clear inbound&outbound procedures and workflows) Needs analysis: Lack of knowledge about procured products ( no IT systems, no database, no data about demand and inbound/outbound flows) Unused and uneuseful procured products 10

11 PRINTED PRODUCTS What the CUP decided to do? The CUP decided to face the highlighted process and procedures inefficiencies, rationalizing: what to buy: cutting off obsolete products (i.e. old forms), dematerialization (e-certificates), aggregating products with same characteristics in one product category, analyze demand trends who can buy: procurement process has to be centrally managed by the CUP experts, who have to play managerial roles about BUY or NOT, HOW MUCH, WHEN, HOW TO DELIVER products, starting fromm the global demand; how to buy: designing new purchasing model able to enhance lower costs and more efficiency, demand managing and ruling the purchasing procedures when to buy: ruling the demand process, trying to aggregate as much as possible the same provisions demand, and scheduling provision requests The activities followed by the CUP to implement its strategy are here shortly represented: CUP full purchasing governance strategy for printed materials 1 Design and implementation of new purchasing model 2 Central contract and demand Management 3 KPIs and Monitoring consumptions Reporting 11

12 PRINTED PRODUCTS New Purchasing Model 1. Design and implementation of new purchasing model From more than 400 articles down to 280 Create a new list of products to be be procured: lower number of products with standardized characteristics; From more than 48 bodies allowed to buy, down to 1 From 5 mln, down to 3 mln Give only to the CUP the responsability to buy Contain costs and decrease the expenditure level thanks to economies of scale principles: asking suppliers to offer a fixed price per product category on the base of 4 quantity/price ranges NEW CENTRAL CALL FOR TENDER. Average discount made by 2 suppliers: 40 % 12

13 PRINTED MATERIALS Central demand/contract Management Central demand/contract Management (1/2) How it used to work 50 envelopes Reengineering processes Office # 1 Office # 2 Office # 3 Warehouse 20 envelopes Procurement Office 50 envelopes Supplier 50 envelopes 20 envelopes 20 envelopes 30 envelopes 30 envelopes 30 envelopes 100 envelopes 100 envelopes 100 envelopes Delivery point (Warehouse) 50 envelopes 20 envelopes 30 envelopes How it works now. Office # 1 50 envelopes Office # 2 20 envelopes Office # 3 30 envelopes CUP Supplier 1-100= unit price 0,10 > 101 = unit price 0,08 Average demand: envelopes 30 envelopes Warehouse Transform the Central Warehouse from a demand actor to a beneficiary actor, avoiding wastes and unuseful stocks and exploiting economies of scales principles! Rationalize demand workflows and logistics chain. 13

14 PRINTED MATERIALS Central demand/contract Management Central demand/contract Management (2/2)Information workflow How it used to work How it works now. CUP Procurement Process Governance Type of prod., quantity, time of delivery, point of delivery software Warehouuse Information Type of prod., quantity, time of delivery, point of delivery Buyig Order Type of prod., quantity, planned needs for 3 months MGMT Tools MGMT Tools Information Demand for provision Demand for provision Demand collection and analysis Buyig Order Total number of prod demanded, price, quantity razionalization, delivery points, stocks evaluation Xls Archibus Warehouse MGMT Stocks evaluation, inbound and outbound flows Xls Implementation of a comprehensive and integrated management e-tool: currently in the Testing phase 14

15 PRINTED MATERIALS KPIs and Monitoring consumptions Reporting KPIs and Monitoring consumptions Reporting As mentioned before, in the AS-IS assessment we found out a deep lack of data and informations about procured products, costs and stock quantity. By implementing e-tools of data collection and analysis, today the CUP is able to perfectly know in real time and extract reporting about: Info&Reporting KPI Contract consumption level and available funds; Quantity of product per person (i.e. business cards) Prices paid for each article; Procured quantity per products; Total amount of economic resources to assign to each Dept. (correct balancesheet) Procured products and related quantity per Dept/Office; Standard costs Standard Needs per person/office 15

16 AGENDA THE ROLE AND MISSION OF THE CENTRAL UNIT FOR PURCHASES REENGINEERING OF PROCUREMENT PROCESSES AND PROCEDURES Procurement& Logistics for Printed Materials Product description and AS IS Analysis What the CUP decided to do? New Purchasing Model Central Contract and Demand Mgmt KPIs and Monitoring consumptions Reporting Procurement& Logistics for Stationery and Office Products Product description and AS IS Analysis What the CUP decided to do? New Purchasing Model Central Contract and Demand Mgmt KPIs and Monitoring consumptions Reporting 16

17 STATIONERY AND OFFICE PRODUCTS EXPENDITURE The expenditure for stationery and office products in the period , shows a general strong decreasing trend (- 60%). Valori in 000 di The decreasing effect is due to: -21 % Standard cost methodology starting from 2011; % % % 756** Rationalization of needs and resources on the bases of the issues of the first centrally managed public tendering **Proposed resources for 2013 balancesheet. 17

18 STATIONERY AND OFFICE PRODUCTS PURCHASING MODEL AND AS-IS EVIDENCE As evidence of the AS IS Assessment the purchasing model for stationery and office products appeared to be extremely fragmented and decentralized. Purchasing model Stationery and Office Products Highly fragmented purchasing model (e-procurement and direct purchases) LOW Level of central HIGH Contract MGMT Purchasing method details MEPA Consip 31% Direct Purchases (Money) Non competitive tender Restricted competitive tender 41% 14% Stationery and Office Products purchasing are not realized by public tendering. They are fragmented into thousand small direct purchases. About 50% of purchasing procedures are made directly by public officers (at the closer local supplier) 14% 18

19 STATIONERY AND OFFICE PRODUCTS PURCHASING MODEL AND AS-IS EVIDENCE Disparities between paid prices by different Offices have been higlighted in the AS IS Assessment. Furthermore the paid prices were higher than the market average price up to + 50%. Office a Average paid price Office b Average MKT price Office c Office d % of savings based on the minimum paid price % of savings based on the averake MKT price 30-35% 15% 2, % 20% 35% 20% 1,50 1,60 1,45 1,23 1,20 1,20 1,20 1,04 1,29 1,05 25% 0,80 50% 21% 0,58 0,24 0,23 0,30 0,35 27% 0,60 0,50 0,45 0,36 0,25 0,48 59% 8% 0,09 0,15 0,14 0,15 0,10 0,04 0,06 Glue stick 40 gr Higlighter Paper scissors pen Fonte: Elaborazione PwC su contratti forniti dai singoli Municipi e Banca Dati PwC Prezzi forniture di beni e servizi Binder 19

20 STATIONERY AND OFFICE PRODUCTS What the CUP decided to do? The CUP decided to face the highlighted process and procedures inefficiencies, rationalizing: what to buy: standardized products who can buy: procurement process has to be centrally overviewed by CUP experts but has to be managed by each Office; how to buy: designing new purchasing model able to enhance lower costs and more efficiency through a web-based ordering system; The activities followed by the CUP to implement its strategy are here shortly represented: CUP full purchasing governance strategy for stationery and Office products 1 2 Design and implementation of new purchasing model Supervising the decentralized management system 3 KPIs and Monitoring consumptions Reporting 20

21 STATIONERY AND OFFICE PRODUCTS Design and implementation of new purchasing model Design and implementation of new purchasing model From more than 1200 articles down to 100 Create a new list of products to be be procured: lower number of products with standardized characteristics to buy on an electronic catalogue (web based ordering system). 48 bodies allowed to buy, central supervision Give each Office the responsability to buy with a specific owned budget. The CUP is responsible for monitoring quality standards compliance, thanks to specific competences owned by its experts. From 2 mln, down to 0,7 mln Contain costs and decrease the expenditure level thanks to economies of scale principles: asking suppliers to offer a fixed price for each standardized product part of the electronic catalogue NEW CENTRAL CALL FOR TENDER. Average discount made by the supplier: 50 % 21

22 STATIONERY AND OFFICE PRODUCTS Central demand/contract Management Central demand/contract Management (1/2) How it used to work Suppliers Reengineering processes Office # 1 Office # 2 Office # 3 50 pens 50 pens 20highlighter 20highlighter 30 scissors 30 scissors How it works now. CUP Procurement Process and Quality Governance Unic Supplier CUP Public tendering 1 awarded bidder Office # 1 Office # 2 Office # 3 50 pens 50 pens 20highlighter 20highlighter 30 scissors 30 scissors Demand management: assigned budget; Standardized buying procedures Rationalize demand workflows and logistics chain. 22

23 STATIONERY AND OFFICE PRODUCTS Central demand/contract Management Central demand/contract Management (2/2)Information workflow How it used to work How it works now. CUP Procurement Process Governance Type of prod., quantity, time of delivery, point of delivery E-proc Public tendering unique cataloqgue Information Type of prod., quantity, time of delivery, point of delivery Buyig Order or direct purchase Type of prod., quantity, planned budget per Office MGMT Tools MGMT Tools Information Provsions needs Demand for provision Available budget, type of prod., quantity, costs, delivery point, total expenditure E Cat. Archibus Supplier Reporting Available budget, per office, type of prod., quantity, costs, delivery point, total expenditure Reporting SAP Implementation of a comprehensive and integrated management e-tool: currently in the Testing phase 23

24 STATIONERY AND OFFICE PRODUCTS 3. KPIs and Monitoring consumptions Reporting KPIs and Monitoring consumptions Reporting As mentioned before, in the AS-IS assessment we found out a deep lack of data and informations about procured products, costs and stock quantity. By implementing e-tools of data collection and analysis and thanks to the E-catalogue reporting, today the CUP is able to perfectly know in real time and extract reporting about: Info&Reporting Contract consumption level and available funds; KPI Quantity of product per person (i.e. pen) Prices paid for each article; Total amount of economic resources to assign to each Dept. (correct balancesheet) Procured quantity per products; Standard Needs per person/office Procured products and related quantity per Dept/Office; Standard costs 24

25 THANK YOU FOR YOUR ATTENTION Rosa Martelli PwC Government Senior Consultant Direct: Mobile: PricewaterhouseCoopers Advisory SpA Largo Angelo Fochetti 29, Roma, Italy 25

26 ANY QUESTIONS? 2011 PwC. All rights reserved. Not for further distribution without the permission of PwC. PwC refers to the network of member fi rms of PricewaterhouseCoopers International Limited (PwCIL), or, as the context requires,individual member fi rms of the PwC network. Each member fi rm is a separate legal entity and does not act as agent of PwCIL or any other member fi rm. PwCIL does not provide any services to clients. PwCIL is not responsible or liable for the acts or omissions of any of its member fi rms nor can it control the exercise of their professional judgment or bind them in any way. No member fi rm is responsible or liable for the acts or omissions of any other member fi rm nor can it control the exercise of another member fi rm s professional judgment or bind another member fi rm or PwCIL in any way. 26