Welcome to eProcurement

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Welcome to eProcurement Its Good For Business!

• Moderators
• Dianne Lancaster State of Oregon
• Jean Clark State of Arizona
• Panel
• Ken McFarland, Periscope Holdings
• Eric Zoetmulder, SciQuest
• David Ottenstein, MSC Industrial Supplies
• Michael Muscara, Waxie Custodial Supplies
• Jim Chatfield, OfficeMax
• Robert Calvert, Hewlett Packard

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The State of Oregons eProcurement Solution
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ORPIN 2.0 PHASES

• Phase I
• ORPIN Replacement
• Supplier Registration
• User Registration
• Posting and evaluation of solicitation events
• Contract Enablement
• Shopping Cart Experience
• Supplier Catalogs
• Punch-Outs
• Hosted Catalogs
• Agency Managed
• Electronic POs and Invoicing

• Phase II
• Strategic Sourcing
• Data Driven Procurement Decisions
• Expand Functionality

• Phase III
• Pay Solution
• Fully integrated procurement-to-pay solution

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Supplier Management User Management Solicit and
Award Electronic Bidding Reverse Auction
Receiving 2 and 3 way match PO Closure Interface
to Accounting System
Online Ordering Shopping Cart Experience Credit
Card Payment Electronic PO and Invoice
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ProcureAZ The State of Arizonas eProcurement
Sourcing Solution For AZ Public Entities
Vendors
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Arizonas Need for eProcurement
Background

• In 2009, the State of Arizona realized the need
  for state procurement modernization. At the
  time, the State
• Faced a 1.4 billion dollar budget deficit
• Had zero statewide procurement unity
• Lacked ability to view purchasing activity across
  state agencies
• Had individual agencies manage purchasing
  manually or with agency specific systems
• Failed to track and analyze spend by vendor
• Lacked vendor performance history
• Offered minimal collaboration with local agencies

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Project Overview
Arizonas Need for Change

• The State saw a need to implement a solution that
  was easy to use and would
• Eliminate waste cut costs
• Exude transparency
• Increase productivity process efficiencies
• Decrease cycle time
• Create vendor competition
• Provide one-stop-shop for vendors to register and
  submit invoices
• Drive business to local AZ vendors
• Encourage contract spend and reduce maverick
  spend
• Track the results needed to make strategic
  purchasing decisions
• Make contracting with public entities easier
• Provide multi-agency access
• Needed 100 of spend in one solution

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ProcureAZ Success
Results

• Implemented ProcureAZ in two phases on-time and
  on-budget
• Eliminated manual vendor management system
• Increased vendor access over 23,000 vendors
  registered in system
• Increased local co-op participation by 51
• Sourcing completed in one system by soliciting,
  evaluating and awarding bids within ProcureAZ
• Reduced state spend on average 26 utilizing
  BuySpeed Sourcing
• Decreased average cycle times by nearly half
  went from 4 days to 2.3 days
• Conducted over 500 online solicitations

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ProcureAZ Functionality

• State Contract/Catalog Search Ordering
• Easy for statewide users to access
• Sourcing Solicitation
• Manage and award proposals in one online system
• Vendor Management
• One-stop-shop for vendors
• Contract Management
• Track and update contracts
• Reverse Auction
• Suppliers have visibility to offer lowest price
• Requisition Purchase Orders
• Streamline ordering
• Invoice 3 Way Match Receipt
• Speed-up payment approval
• Integration into Financial System
• Eliminates data entry and enhances budget
  controls
• Business Intelligence
• Enhances transparency
• Inventory

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Select BuySpeed Clients

• Arizona
• 96 state agencies
• 173 local governments
• Increased co-op participation 51
• 23,000 vendors
• Maryland
• 266 state departments local governments
• 21,000 vendors
• New Jersey
• 15 statewide departments

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Value For Vendors

• One-Stop-Shop for Vendors
• Vendor Management
• Registration
• Profile updates
• Licenses certificates
• Solicitations
• Contracts/Catalogs
• eInvoicing
• Contract Visibility
• Paperless Process
• Save time
• Save postage
• Save resources

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Supplier Enablement in the Source-to-Settle Cycle

• All phases need supplier enablement
• Different resources per phase
• Central point of contact for suppliers is
  important

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eProcurement Impacts the Buyer Supplier
Relationship

• 1. Supplier Business Relationship
• Contract Manager
• Day-to-Day management
• 2. eProcurement Relationship
• Source to Settle Solution
• Support SLA
• 3. Technology / Operational Support Relationship
• On-line sourcing/contracting
• Catalog
• PO Delivery
• Invoice integration

State
1
2
3
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Value of the supplier network

• Enabling suppliers is a team effort
• Technical side is typically not a core expertise
  for most customers
• Suppliers that have done it before enable
  faster
• eProcurement vendor needs to stay involved for
  best results

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What is eProcurement?

• Connecting the touchpoints

Source
Sends PO
Order Status
Advanced Ship Notice
Delivers Goods/Services
Sends Invoice
Credit
Payment
Support
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Simple to Complex Source to Invoice

• Reasons Suppliers support eProcurement
• the customer made us saves us time
  competitive advantage its strategic
• Sourcing
• Not all products and services are sourced the
  same
• Invoicing impacts Source Sourcing impacts
  Invoice
• Multi Contract support adds complexity to Public
  Sector
• Supplier Variances
• Supplier capabilities are a function of their
  history Not all suppliers are equal
• Capabilities evolve from goods to services
• Services are still immature offering.

Catalog/ Punchout Wizard/ Punchout eQuote Non Catalog Schedule
Simple Goods l l l l
Configured Goods l l l l l
Milestone Service l l l l
Metered Service l l l l l
Monthly Service l l l l l
Open Ended Service l l l l
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Bringing the sides together

• Its Important that

Sellers sell what they have Sellers
challenge themselves to grow and expand their
capabilities.
Buyers recognize that all Sellers dont have the
same flexibilities, the same speed to market, the
same objectives, the same capabilities.
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MSC, Industrial Supply Co.

• Premier distributor of MRO and MW Supplies
• 600,000 SKUs
• Same Day Shipping Guarantee
• 14 years of eCommerce experience
• MSCdirect.com
• Integrated Solutions CMI, VMI, Vending, etc.

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MSC, Industrial Supply Co.

• E-Procurement Benefits
• Improved productivity, cut operating costs
• Increased order accuracy, decreased returns
• License to sell
• Locked into procurement process
• E-Procurement Pitfalls
• Must be aligned on Scope of E-comm project
• Lack of E-pro compliance- Executive Sponsorship
• Utilizing Hosted Catalog Approach vs. Punch-out
• E-pro experience must be /gt traditional method

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E-Commerce Advantages

• Vendor Managed Systems-Full Catalog Contracts
• Order Process Cost Reduction
• Order Accuracy Increase-reducing back order
  fulfillment costs.
• Order size increases as accuracy is enhanced.
• Full access to contract cost reduction drivers
  and order size discounts.
• Ability to see live inventory.
• Immediate information on price adjustments. Ease
  of catalog price upload.

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E-Commerce Advantages

• Third Party or Customer Managed Systems
• Full catalog contracts
• Order Process Cost Reduction.
• Order Accuracy Increase-reducing back order
  fulfillment costs.
• More efficient proposal response and
  vendor-customer communication.
• Multiple vendor catalogs can be available for the
  same product groups.

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E-Commerce Pitfalls

• Third party and customer managed systems have
  lacked the flexibility to present contract
  programs accurately.
• Average Contract Order Size falls, increasing
  transits, and negatively impacting the
  environment. (Catalog Shopping)
• Away from procurement operational costs rise
  through increased orders, smaller order size,
  proliferation of unapproved products.
• Catalog pricing uploads are problematic for many
  systems that have not planned for their
  complexity. Causing expensive delays in price
  administration and poor procurement
  administrative decisions.
• Discounted Price Structure results in drastically
  higher overall product costs. Fixed catalog cost
  models should be preferred.
• Program discounts for volume, proximity, business
  practices and other contract enhancements are not
  typically shown.
• No value added programs are typically shown.
• Double order entry may be necessary for some
  customers, once into their system once into the
  e-commerce system.

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E-commerce Pitfalls

• Contract pricing configuration of contracted
  service provider must match contract pricing
  model or there is a large effort needed to fit
  the systems together if the environment is not
  punchout.
•   
• Customer Authentication at the ship to level must
  be considered for most vendor systems to
  seamlessly integrate with third party systems.
  Unless location addresses match exactly orders
  can be missed or miss directed. Some vendor
  system reporting capability will also be lost.
• Free form ship-to addresses must be valid
  physical delivery addresses .
• Address validation requirements on the customer
  side must be robust to prevent an employee from
  easily misdirecting a product shipment.

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OfficeMax Integration Opportunities

• Business Structure
• Coding Account 's and Consignees 's (ship-to)
• State of Oregon
• 533,102 transactions annually
• 402 accounts
• 15,001 ship-to codes
• Logistics warehouse order fulfillment, truck
  staging, next day deliveries and sustainable
  totes
• Customer Service PIN s
• Representative assignment
• Reporting to end-user level 875 generated
  monthly

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OfficeMax Integration Opportunities

• ePro Integration
• Pass account/ship-to information from OM Landing
  Page via cXML extrinsic coding
• Account/Ship-to codes assigned during on-boarding
  process
• Process to identify non-set up users for
  assignment of coding
• Opportunities
• NASPO Community Exposure
• Customer Savings, Initiatives and Excellent
  Service

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THANK YOU!