Creative Solutions to Increase Utilization of Strategic Sourcing Agreements. 91 st Annual Meeting & Exposition April 1 4, 2012 Anaheim, California

Transcription

1 Creative Solutions to Increase Utilization of Strategic Sourcing Agreements Todd Adams Senior Manager UCSD Central Procurement Nicole Lamb Senior Manager UCSD Strategic Sourcing

2 Increase Utilization of Strategic Sourcing Agreements Session Overview Reassess your ecommerce Strategy Transform Buyers into Procurement Relationship Managers Focus Groups The NEW Business Review Smart Supplier Events

3 Increase Utilization of Strategic Sourcing Agreements Agreement Utilization 100% 80% 60% 40% 20% Transactional Compliance 0% Percentage 36% 37%

4 Reassess Your ecommerce Strategy The Launch of Marketplace Did not use Big Bang approach for ecommerce o Slow roll out department by department, convincing individuals Maintained four buying channels no mandate o Left all suppliers available in old legacy system o Buyers stopped requisitions, asked customers to order in Marketplace Let user adoption goals drive content decisions o Assumed more content the better little focus on pricing Restricted addition of new suppliers o Effort was not to allow direct competition to agreement suppliers o Limited functionality for complex buys/agreements in Marketplace

5 Reassess Your ecommerce Strategy Challenges to Overcome Too Much Content! overbearing search results o Duplication, poor descriptions, inconsistent pricing Oversold Comparison Shopping o True agreement products buried in search results o Generic catalog items and pricing were not controlled o Didn t account for customers special volume price quotes Limited Functionality to Add Complex Agreements Reliance on Legacy System and P-Card Inconsistent Strategy o Tried too hard to make everyone happy, reacted to exceptions

6 Reassess Your ecommerce Strategy Creative Solutions Took Maximum Advantage of New SciQuest Functionality o Focus on reducing procurement tools to two: ecommerce or PCard o Reposition ecommerce as full suite requisitioning tool o Creative content solutions for complex agreements Shifted Ownership of Content to Strategic Sourcing o Switch to prioritize search results by products, not suppliers o Simplifed supplier types agreement or no agreement, SBDE, CA New Content Strategy o Full enablements only for Agreement Suppliers o Removal of all non-contract content in search results o Use of new creative content solutions to fill commodity gaps

7 Organizational Favorites

8 Organizational Favorites

9 Ordering Instructions

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11 Increase Utilization of Strategic Sourcing Agreements Turning Buyers into PRMs

12 Increase Utilization of Strategic Sourcing Agreements Turning Buyers into PRMs

13 Historical Buyer Role Campus User Transactional Buyer Vendor

14 The PRM Concept Campus Users Strategic Sourcing PRM Internal Partners ecommerce Team Suppliers

15 Differences Between the Buyer and PRM Roles Buyer Role 1. Processes transactions 2. Represents the business requirements of a department per order 3. Negotiates based on the spend for an individual department 4. Occasionally provides feedback about ordering systems and Strategic Sourcing agreements 5. Meets with vendors with the interests of the department in mind 6. Uses some strategically sourced suppliers 7. Processes some ecommerce transactions PRM Role 1. Processes transactions with guidance to preferred suppliers and ordering methods 2. Represents the business requirements of the entire campus for a commodity area 3. Negotiates and looks for consolidation opportunities based on the spend of the Campus 4. Works closely with eprocurement team and Strategic Sourcing and influences decisions 5. Organizes joint meetings with suppliers, internal partners, customers, Strategic Sourcing, eprocurement and Disbursements to share data that helps suppliers be successful 6. Promotes strategically sourced suppliers and understands their value to the university 7. Promotes the use of eprocurement systems and understands its efficiencies

16 PRM s Innovative Projects Pipettor Conversion Project o Dispelled non-contract vendor s proprietary claim o Demo brands under agreement with customers o Partnered with agreement distributors to market Marketing to New Principal Investigators o Move requests correlated to new lab start ups o Agreement suppliers reps at other locations may also find out about moves in advance o Met with suppliers, agreed to share data o Letter from Director to new PIs to introduce agreements, special deals available and Marketplace system

17 Increase Utilization of Strategic Sourcing Agreements Focus Groups Focus Groups can help determine the root cause of seemingly unsubstantiated reasons for not using Agreement suppliers, especially in situations for which: 1-2 Non-Contract Vendors are Identifiable as the Main Issue There is a Correlation with Certain Subsets of Campus Customers Usual Outreach Efforts Not Working o Customers don t care that they re paying freight or higher prices o Efficiencies of Proper Channel is not compelling

18 Focus Groups MRO T&H Focus Group Mission: Understand and Address Non-Contract Spend with McMaster-Carr

19 Focus Groups Agreement MRO Suppliers in Marketplace Would the exercise and meetings increase awareness when ordering in the future? increase spend with Agreement Suppliers?

20 Focus Groups PROCESS OVERVIEW: October December 2010: Design process & criteria January 2011: Invited campus to participate February March 2011: Participants filled out worksheets regarding their experience with defined shopping exercises / added McMaster to our site April 2011: Held in person meetings with participants and agreement suppliers May 2011: Analyzed findings: Data & Behaviors June 2011: Participants received a feedback survey regarding their Focus Group experience

21 MRO Focus Group Timeline Example # Task 1/10 4/30 Notes Status Responsible 1 MRO FG Team Kick Off Meeting 1.1 Hold first MRO FG Team Kick Off Mtg Team Lead 1.2 Goal - Determine how to Reduce McMaster-Carr Spend and Increase Agreement Spend MRO FG Team 1.3 Determine "Success" and Capture Baseline Data to Measure MRO FG Team 2 Participant Access List 2.1 Draft Participant Access List Team Lead 2.2 Finalize Participant List & Split Up MRO FG Team 2.3 Run reports on power users Marketplace 3 Participant Form 3.1 Draft Participant Form 3.2 Focus Group Timeline & Close Out Date 3.3 Participant Requirements 3.4 MRO FG Team Requirements 3.5 Call and Invite Participants 3.6 Send Form to Participants 4 Order Scenario Worksheet 4.1 Draft Order Scenario Worksheet 4.2 Develop Instructions for Participants 4.3 Finalize Worksheets 4.4 Release Worksheets to Participants 4.5 Management of Participant List 4.6 Collect Worksheets from Participants 4.7 Compile & Categorize Information 4.8 Release Results to Suppliers 4.9 Release Top-Level Results to Participants with Recommended Mtgs 5 Supplier Focus Group Meetings 5.1 Develop Instructions for Suppliers (ground rules) 5.2 Coordinate Supplier Meetings 5.3 Hold Recommended Supplier Meetings (1 per wk) 6 Close-Out & Final Reports 6.1 Develop Feedback Survey 6.2 Send Thank You Note & FB Survey 6.3 Create Final Report 7 Action Items and Follow Up 7.1 Develop Improvement Action Items for Suppliers and MRO FG Team 7.2 Set Timelines and Follow Up Meetings 7.3 Monitor Success Data 7.4 Communicate Completed Improvements to Participants (& Campus)

22 Focus Groups Scenario and Form Examples

23 Focus Groups What Campus Wants Fast Delivery Refined Search Results Searching by Filters Detailed Product Info Assistance Specific Commodities and Applications Materials by Length Example: 750 ft. Cable: McMaster: $10.45/ft. ($7,838) Agreement: $8,553/1000ft $8.55/ft. ($6,414, 18% less per ft.?) Qualitative Results What McMaster Provides Same Day Delivery Intuitive and Relevant Search Results Easy to Use Filters Definitions and Practical Use Instructions of Categories and Parts Ability to Order Lengths As Needed

24 Focus Groups Campus Behaviors Time is of the essence as it directly effects productivity if end users have to wait for an item Many end users don t know EXACTLY what they need o Engineers, researchers and students want product help o Will use agreement suppliers only if part number is known Some end users hand their list of needs to department buyers who are not qualified to source Unique items are being ordered, out of 536 SKU s: o 501 SKU s were ordered only once in the quarter (93.5%) o 358 SKU s had quantities of 5 or less (67%) Ease of use (website) will determine who end users go to, price is not a strong determinant (researchers)

25 Increase Utilization of Strategic Sourcing Agreements The NEW Supplier Business Review Structured agendas set by Procurement & Contracts Both organizations provide smart data Continuous improvements tracked Attended by broad audience

26 Agenda Template I. Introductions/ UCSD Executive Updates II. UCSD Procurement & Contracts Data Set Sales By: order method, department, trends Market Share Intelligence, Disbursements, Supply Chain III. Internal Partner Channel Data Set/Updates (if applicable) IV. ecommerce System/Technology Updates V. Strategic Sourcing/Agreement Updates VI. Supplier Data Set/Updates Sales & Transactions/Commodity Breakdown (including alternate channels) Agreement KPIs delivery, sustainability, savings, supply chain Executive Updates organizational, systems, products, market, etc. VII. Action Item / Project Review VIII. New Collaboration Opportunities

27 Typical Supplier Business Review Data Market Share FY09-10 Q2 Supplier Competitor B Competitor D Competitor A Competitor C Competitor E Market Share FY10-11 Q2 Supplier Competitor B Competitor D Competitor A Competitor C Competitor E 10% 3% 2% 1% 15% 3% 2% 2% 9% 75% 23% 55%

28 Increase Utilization of Strategic Sourcing Agreements Smart Supplier Day Events Are Vendor Shows free for all parties or are they opportunities for end users to engage in meaningful discussions with Agreement Suppliers about how they can help them be successful? YOU DECIDE..

29 Smart Supplier Day Events UCSD Inaugural Supplier Day Mission: Determine most effective approach for supplier day shows. Use first event to test the theory of a targeted approach. Narrow Supplier List select categories with compliance issues Targeted Guest List customers buying from non-contract vendors Small Venue keep personal, reduce opportunity to grab and run Split Sessions not an all day event, provide breakfast and lunch Include Educational Sessions specific to audience invited Surveys send to attendees AND suppliers to gauge success Monitor Spend Trends different options Mix it Up or Comfortable Routine? try it out, just measure results

30 Smart Supplier Day Events Supplier Day Attendee Spend Data Internal Partner Agreement Supplier Non-contract Vendor 20% 21% 20% 19% 17% 15% 17% 16% 69% 67% 68% 67% 70% 70% 71% 71% 11% 12% 12% 14% 13% 15% 12% 13% July 11 Aug 11 Sept 11 Oct 11 Nov 11 Dec 11 Jan 12 Feb 12

31 Increase Utilization of Strategic Sourcing Agreements Agreement Utilization 100% 80% 60% 40% 20% Transactional Compliance 0% Q1-2 Percentage 36% 37% 49% 62%

32 Creative Solutions to Increase Utilization of Strategic Sourcing Agreements Thank you! Todd Adams Senior Manager UCSD Central Procurement Nicole Lamb Senior Manager UCSD Strategic Sourcing