Procurement System Strategies: Driving Compliant Purchasing Through Use of ecommerce Technology

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2 Procurement System Strategies: Driving Compliant Purchasing Through Use of ecommerce Technology Breakout Session #: A05 Brianna Durkin, Contracts Specialist, Battelle Memorial Institute, PNWD (PNNL) Landon Hill, Procurement Team Lead, UT-Battelle (ORNL) Date: Monday, July 25, 2016 Time: 11:15am -12:30pm

3 Brianna Durkin Lead for Pacific Northwest National Laboratory s (PNNL) eprocurement Business-to-Business Program (B2B) Landon Hill Team Lead with primary focus on Oak Ridge National Lab s (ORNL) e-catalog program and strategic sourcing efforts 2

4 Overview What is ecommerce? Benefits Cost savings (direct and indirect) Compliance/risk mitigation Supplier customer service Challenges Examples of ecommerce Strategies 3

5 Why is this important? Top Procurement Pressures (respondents could list more than one) 4

6 What is ecommerce? Often called online shopping at online marketplaces, including business-to-business connections Includes vendor management, catalog management, electronic POs, Invoicing, Payment (PCard or Electronic Funds Transfer), and vendor contract management 5

7 Common Types of ecommerce 6

8 PNNL and ORNL 100% Paperless e-catalog systems for COTS Commodities: office, electrical, industrial, and lab supplies, computer hardware and software, pipe valves & fittings, janitorial supplies, and electronics PNNL Utilizes cxml within Oracle s PeopleSoft to implement punch-out catalogs $18M in acquisition volume with 18K transactions for FY users, 15 suppliers with >10 million items ORNL Utilizes SAP OCI for punch-out catalogs $45M in acquisition volume with 66K transactions for FY users, 30+ suppliers with >10 million items 7

9 Punch-out Catalogs 8

10 Punch-out Catalogs It s the ability to purchase from a supplier s website from within the buyer s own procurement application or hosted e-commerce system. 9

11 What does it look like? 10

12 Benefits Increase Cost Savings Direct - Negotiated price discounts and shipping fees Indirect more efficient and automated (i.e., fewer resources like purchasing, warehouse, etc.) Improved Compliance/Risk Mitigation Use your T&Cs versus vendor s (as with PCard) with custom catalogs Control listed items and electronic approvals (management, funds, etc.) Improved Supplier Customer Service In-house or contracted IT support services Dedicated sales representatives inside and out 11

13 Cost Savings Direct Negotiated discounts Use of strategic sourcing agreements (i.e., GSA, SEWP, ICPT, etc.) Freight costs included in price of items or waived Appropriate state sales tax application Indirect More efficient than p-card and manual PO process Users purchase directly without going through procurement staff No p-card reconciliation More automation for shipping/receiving process Same day delivery 12

14 Proven to save time Time Study per transaction e-catalog order 10 minutes Click and order P-Card order 52 minutes Click or call to order Reconciliation process (don t lose all that paper-work!) Manual PO (<$3k) 68 minutes PR entered Buyer processes **Additional time savings for program oversight and warehouse staff for reduced receiving processes 13

15 AND money Consider this against an average staff member s fully burdened rate 14

16 Improved Compliance/Risk Mitigation Shift away from P-Card (little control/high risk): Significantly reduced concern for supplier hacks/data breaches Controlled catalog content Organization directives/specifics Prohibited items (S/CI, QA, safety related purchases) Training required 15

17 Improved Compliance/Risk Mitigation Cont. Management pre-approval Organization s terms and conditions apply instead of the vendor s Funds checking and Invoice/PO two-way match 16

18 And more Compliance to organization objectives Sustainable Acquisitions requirements ( green purchasing ) Small Business Goals Computer Hardware standards 17

19 Improved Customer Service Suppliers selected have established reputations with staff, familiar websites and products In-house or contracted IT support services Dedicated sales representatives inside and out SLAs that are measurable and accountable 18

20 What about the challenges? Management not fully understanding savings potential Most organizations these days are operating on constrained budgets With less staff to: stand up and run the program develop and maintain catalog connections Lack of: understanding of benefits, resources and technologies available, networks to collaborate with 19

21 ecommerce Strategies P-card Approach Leveraged Spend and Collaboration Approach Integrated Contractor Procurement Team (DOE) Identify potential organizational partners Identify shared commodity spend Identify shared suppliers Leverage volume for shared contract terms, discounts, and rebates 20

22 Contact Information Brianna Durkin, GWCCM, Battelle Memorial Institute, PNWD (PNNL) (509) Landon Hill, UT-Battelle (ORNL) (865)