Implementing iProcurement: More Than Meets the i

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Implementing iProcurementMore Than Meets the i

• OAUG FALL 2002
• San Diego, California
• Vira Homick
• Stuart Benoff

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Presentation Agenda

• Background
• About Penn
• Purchasing Overview
• Business Objectives for iProcurement
• Process improvements
• Enhance the effectiveness of the purchasing
  organization

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Presentation Agenda (continued)

• Implementing iProcurement
• The Penn Marketplace
• Strategic Sourcing
• Catalog Content Management
• Product Demonstration
• Future Directions/Conclusions
• Questions?

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About Penn

• Nations first University founded in 1740 by
  Benjamin Franklin
• 24,500 employees and 22,300 students
• Major research institution
• Annual operating budget of approximately 3.2
  Billion
• Pursuit of administrative excellence is
  administrations top business objective

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Purchasing Overview

• Oracle Financials (Purchasing, Payables GL)
  implemented in July 1996
• Upgraded to Release 11i in January 2002
• Introduced the Penn Marketplace, Penns private
  online exchange in January 2002
• First higher education institution to implement
  Oracles iProcurement application

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Purchasing Overview - continued

• Decentralized purchasing environment with final
  purchase approval lt5,000 delegated to the
  point-of-demand
• 1600 end users across 12 schools and 20 business
  units
• 150,000 annual PO transactions representing 525M
  in purchasing dollars

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Business Objectives for iProcurement

• Process improvement resulting from customer
  feedback
• Reduce time and effort related to order creation
• Provide easy access to supplier content for most
  commonly ordered items
• Enhance the effectiveness of the purchasing
  organization
• Focus on shifting purchasing volume to preferred
  contract suppliers
• Consolidate supplier database
• Reduce maverick buying
• Identify new cost savings opportunities

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Implementing iProcurement

• Introduced to the campus community as part of the
  Upgrade to Oracle Financials Release 11i
• Delegates the item shopping and requisition
  creation to the point-of-demand
• Enables multi-supplier ordering in a single
  shopping session
• Oracle workflow used for requisition routing and
  purchase order approval
• Provides access to the Penn Marketplace

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The Penn Marketplace

• The Penn Marketplace
• Private online exchange for most commonly ordered
  products and services
• Contains over 500,000 products from 28 suppliers
  representing 2700 manufacturers and distributors
  with Penn specific contract pricing
• Catalog content hosting and management services
  provided by Global Exchange Services (GXS)
• Robust search tools with results displayed in a
  consistent format
• Facilitates a seamless purchase-to-pay
  environment

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The Penn Marketplace - continued

• Supports strategic purchasing initiatives
• Provide easy access to commonly ordered items
• Provides enhanced purchasing data to support
  future contract negotiations
• Focuses purchasing attention on strategic
  preferred contract suppliers
• Finding the right item quickly and easily reduces
  maverick buying

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Strategic Sourcing

• Supplier recruitment
• Three tiered approach for Marketplace suppliers
• High volume transaction suppliers
• School and Center specific suppliers
• Targeted community/minority suppliers

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Strategic Sourcing - continued

• Contract negotiations
• All participating suppliers had new or newly
  renegotiated pricing agreements
• Supplier recruitment and contract negotiations
  resulted in approximately 4.2M in new product
  and service cost savings (as of 10/1/02)
• Reduce maverick buying by channeling users to
  Penn Marketplace suppliers

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Strategic Sourcing - continued

• Supplier marketing opportunities
• iProcurement provides direct access to faculty
  and staff via messages on the homepage
• Web hosting of electronic promotions provided by
  Penn Purchasing Services
• Participation in Penn sponsored supplier trade
  shows

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Strategic Sourcing - continued

• Use of EDI to transmit purchase orders to Penn
  Marketplace suppliers and receive their invoices
• Reduces process cycle time
• Administrative cost savings for both supplier and
  Penn
• Enhances matching of invoices to POs
• Enables negotiations for prompt pay discounts

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Catalog Content Management

• Partnered with Global Exchange Services
• Provides catalog management and hosting services
• Transforms and standardizes supplier content
• Provides supplier ramping services
• Facilitates training of supplier representatives
  and purchasing staff
• Provides online tools for managing catalog content

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Catalog Content Management-contd

• Approach to supplier content development
• Based on Penns past purchase history
• Based on other higher education and research
  institutions purchase history
• Optionally, load full supplier catalog
• Regularly scheduled updates to maintain catalog
  freshness and accuracy
• Verification of content
• UNSPSC, hazardous material, and pricing

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Demonstration
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Future Directions

• Global Exchange Services
• Favorites List
• Quick Order Capability for marketplace items
• Oracle
• Process improvement for products and services not
  in the marketplace
• Oracle Exchange
• Oracles Purchasing Intelligence

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Conclusion

• Current Status of the Penn Marketplace
• As of October 1, 2002, 51 of all POs were
  created from the 28 marketplace suppliers
• All participating suppliers have realized
  significant growth in business
• iProcurement and Penn Marketplace addressed the
  major concerns
• Enabled creation of a requisition at the point of
  demand
• Enhanced our ability to manage our key suppliers
  and their catalog content
• Streamlined the PO creation process

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Thank You!

• Questions
• Vira Homick homickv_at_pobox.upenn.edu
• Stuart Benoff benoff_at_isc.upenn.edu