CIP Routine/Small Purchasing Team Close-out

Transcription

1 CIP Routine/Small Purchasing Team Close-out Define Ken Koebel Control Measure January 26, 2011 Improve Analyze

2 Cross Functional Team 2

3 Charter / Business Case Define Measure Routine purchasing (orders of $25,000 and less) is a key process that has the ability to better support and enable BNL employees, users and visitors to perform and support world class science. Customer service level is below the level needed to support the BNL research mission. This is clearly illustrated by the Customer Satisfaction Survey. The current routine small purchasing system is not capable of supporting BNL s goal of increasing research in essence doubling the volume over the next ten years. There is an opportunity to significantly reduce the cost associated with routine small purchases by shifting the volume to the less costly eprocurement alternative. The shift to eprocurement and web requisitions from credit cards also provides another significant benefit. A reduction of credit card usage will reduce BNL risk. 3

4 Charter / Business Case Define Measure Approach Reduce Web Requisition lead time from the ~24 days and reduce eprocurement lead time from the ~9.5 days. Work with the Budget Office to get a reduced eprocurement burden rate. This streamlining of the routine small purchasing will result in a shift of purchases to the eprocurement and Web Requisition over time reducing purchasing cost, reducing BNL risk exposure and increasing customer satisfaction. 4

5 Metric System Define Measure Supporting BNL SFA: -Operational Excellence Customer Satisfaction Survey Reducing the Cost of Doing Business Risk Reduction Key Goals % of eprocurement Orders % of Web Requisition Orders % of Credit Card Orders Shift of % of orders from Credit Cards to eprocurement and Web Requisition Project Focus Burdened Cost on eprocurement Lead time for eprocurement Orders Lead time for Web Requisition Orders 5

6 Baseline of Metric System Measure Supporting BNL SFA: -Operational Excellence Customer Satisfaction Survey No robust survey Reducing the Cost of Doing Business $159/transaction Risk Reduction 74.5% credit card use Key Goals % of eprocurement Orders 7.7% % of Web Requisition Orders 17.8% % of Credit Card Orders 74.5% $93/transaction $131/transaction $173/transaction Project Focus Burdened Cost on eprocurement 6% Lead time for eprocurement Orders 9.5 days Lead time for Web Requisition Orders 23.5 days 6

7 Initial State Measure Analyze Green = value added Yellow = non- value added, but necessary Red = non-value added 7

8 Improvement Plan Phase I & II Improve Area Improvement # of Tasks/ Actions KPI Impacted 1 Department Accountability 7 Customer Satisfaction; reduced lead time for web req. & eprocurement 2 PPM Accountability 3 Customer Satisfaction; 3 Vendor Accountability 2 Customer Satisfaction; 4 Receiving Accountability 3 Reduced lead time for both web req. & eprocurement 5 Training 3 Customer Satisfaction; 6 eprocurement Enhancements 7 Customer Satisfaction; reduced lead time for eprocurement 7 eprocurement Incentives 3 Reduce risks 8 Management Control System 3 ALL TOTAL 31

9 Sample of Major Improvements Improve Enhanced eprocurement Enhanced the search mechanism, gained access to more catalogs, developed a reduced burden to entice more usage and reduce credit card risks Streamlined Process Eliminated manual non-value added steps Removed some audit controls by holding previous handoff group accountable Accountability through Institutional Controls Constant evaluation of performance Customer Satisfaction Survey

10 Comparison of Flowcharts Green = 26% Yellow = 56% Red = 18% Improve Blue = 7% Green = 40% Yellow = 53% Red = 0% 10

11 Impacts Elimination of 71 non-value steps Reductions of lead-time for both web requisition and eprocurement Volume increased by 7% with no additional resources Shift in orders from credit cards to eprocurement cost avoidance Development of institutional control and customer satisfaction survey for continuous improvements Incentive program for eprocurement usage reduced material burden rate Estimated cost avoidance is $500,000 with a potential of $2,000,000+ if credit cards are eliminated altogether 11

12 Improvement Improve Supporting BNL SFA: -Operational Excellence -Modernizing Lab Infrastructure Customer Satisfaction Survey No survey / eproc poor WebReq average Reducing the Cost of Doing Business $159/transaction / $145/transaction Risk Reduction 74 % / 53% credit card use Key Goals % of eprocurement Orders 8% / 21% % of Web Requisition Orders 18% / 26% % of Credit Card Orders 74% / 53% $93/transaction $131/transaction $173/transaction Project Focus Burdened Cost on eprocurement 6% / 3% Lead time for eprocurement Orders 9.5 / 7.5 days * Lead time for Web Requisition Orders 23.5 / 18.5 days Improvement is from the top vendors in initial stage 12

13 Trends for Web Req. & eprocurement Oct Dec Web Req. Lead time Feb Apr June Aug Oct Dec Feb Apr Jun Aug Oct Dec FY 09 FY 10 FY eprocurement Lead time Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan FY 09 FY 10 FY 11 # of Transactions eprocurement Credit Card Web Req 0 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan FY 09 FY 10 FY 11 13

14 Institutional Control System Control 14

15 Transition Plan Control Monitored by ALD for Business Operations Review of Management Control Report monthly Ensures accountability at each level - Departments - PPM - Receiving Additional Report/Tool - Business Operation Manager Report (not developed) - PPM Report Training Procurement Departmental Specialists - PPM Working Group - Enhancements to the existing System Procurement Community - Notification documents like the lessons learned or s about enhancements should continue 15

16 Questions 16

17 Original State - Department Measure Analyze 17

18 Original State - PPM Measure Analyze 18

19 Original State - Receiving Measure Analyze 19

20 Original State - Statistics Measure Receiving PPM Department Dept PPM Receiving Mean Lead Time 2.7 Days 4.1 Days 17.7 Days Std Deviation 6.1 Days 6.5 Days 23.0 Days Coefficient of Variation 6.1/ /4.1 23/

21 Current State - Statistics Improve 1, Receiving PPM Department Dept PPM Receiving Mean Lead Time 2.43 Days 2.81 Days Days Std Deviation 6.98 Days 3.43 Days Days Coefficient of Variation 6.98/ / /

22 Improved Metrics Hierarchy of Metrics Improve Average delivery for Web Requisitions Original State Present State Expected Future State 24.5 days 18.5 days Less than 16 days Average delivery for eprocurement 9.4 days 9.5 days Less than 7 days % of eprocurement orders 7.7% 20%+ 50% Average per transaction costs $ $ $

23 Improve Green = value added Yellow = non- value added, but necessary Red = non-value added 23

24 Improve Blue = future barcode scanning Green = value added Yellow = non- value added, but necessary Red = non-value added 24