A Bulletproof Story with Creative Flourish From How

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A Bulletproof Story with Creative Flourish: From How Much You Cost to the Value A Bulletproof Story with Creative Flourish: From How Much You Cost to the Value You Create

How is your department measured by your boss/senior management/ at your organization today? For How is your department measured by your boss/senior management/ at your organization today? For most, it’s how much you cost…

It’s time to change the measurement to “How much value did you add? ” It’s time to change the measurement to “How much value did you add? ”

Who in this room records their savings and efficiencies today? Who in this room records their savings and efficiencies today?

It’s time to tell a strong story with the data to back it up. It’s time to tell a strong story with the data to back it up.

And to make the way that you present savings relevant and meaningful to your And to make the way that you present savings relevant and meaningful to your audience.

It’s Not Hard To Find Job Training Education Affordable Housing http: //mayor. dc. gov/biography/muriel-bowser It’s Not Hard To Find Job Training Education Affordable Housing http: //mayor. dc. gov/biography/muriel-bowser Ending Homelessness

The Evolution of Procurement Strategists Process and Speed KPIs How many POs did we The Evolution of Procurement Strategists Process and Speed KPIs How many POs did we cut? How quickly did we get our RFPs done? Did we add value? How much value did we add and how did we do it? Did we add more value than we cost? What’s our next priority? How can we improve the process? How can we add more value? Processors Guardians Few if Any KPIs How many RFPs did we run? Did we follow the law? No, you can’t do that!

Guardian & Processors Stage What did we do and who did it? When did Guardian & Processors Stage What did we do and who did it? When did we do it? Did we do it on time?

Guardian and Processors Stage XYZ Procurement Report – FY 2016 Guardian and Processors Stage XYZ Procurement Report – FY 2016

Guardian and Processors Stage Guardian and Processors Stage

Strategist Stage How much did we gain/save? How much did we cost? What was Strategist Stage How much did we gain/save? How much did we cost? What was the net result?

Strategist Stage XYZ Procurement Report – FY 2016 Strategist Stage XYZ Procurement Report – FY 2016

What could $7. 1 m buy? Parks, books, miles of road, community centers, job What could $7. 1 m buy? Parks, books, miles of road, community centers, job centers, miles of road, lowered taxes, police cars, new computers, job centers, teachers, rec centers?

XYZ Procurement Report – FY 2016 In FY 2016, the procurement team delivered $7, XYZ Procurement Report – FY 2016 In FY 2016, the procurement team delivered $7, 108, 656 net value to the city. This is the equivalent to the construction or renovation of 2. 85 new homeless shelters.

Communicating Your Value 1. Getting Finance Buy-In 2. Using the Right Words 3. Types Communicating Your Value 1. Getting Finance Buy-In 2. Using the Right Words 3. Types of Gains 4. Justifiable Values 5. Creative Stories 6. NIGP Measure

Getting Buy In From Finance If you’re going to record and report your value, Getting Buy In From Finance If you’re going to record and report your value, it’s worth your time and energy to get agreement from Finance up front.

Using the Right Words Does cost avoidance add value? Do you deliver revenue? Do Using the Right Words Does cost avoidance add value? Do you deliver revenue? Do you ever really save money if it just goes back into the pot to be spent on other things?

Using Consistent Words Gains Delta Efficiencies Savings Just Pick One and Stick To It Using Consistent Words Gains Delta Efficiencies Savings Just Pick One and Stick To It

Using Consistent Words Cash Releasing Non-Cash Releasing Using Consistent Words Cash Releasing Non-Cash Releasing

WA DOT Categories Spend Management • Contract savings or discounts • P-card rebates • WA DOT Categories Spend Management • Contract savings or discounts • P-card rebates • Settlements Demand Management • Duplex printing as default • Digitizing records vs printing reports • Reusing serviceable materials Supply Management • Property redistribution • Investment recovery – disposal • Supply chain management - VMI Process Management • P-card payments • Online ordering • Early influence on decision cycles

NIGP Measure Categories Added Value Cost Avoidance Sustainable Procurement Process Re-engineering Price Reduction Risk NIGP Measure Categories Added Value Cost Avoidance Sustainable Procurement Process Re-engineering Price Reduction Risk Reduction Revenue Generation

But how do you eat an elephant? Start with simple, easy to calculate and But how do you eat an elephant? Start with simple, easy to calculate and easily defensible savings/gains/efficiencies…

There Is No Definitive Guide Was Procurement involved? What would have happened otherwise? Is There Is No Definitive Guide Was Procurement involved? What would have happened otherwise? Is it consistent and will it stand up to review?

Start with… Cash Releasing RFPs, RFQs, Auctions, etc. Surplus Sale Programs Rebates Start with… Cash Releasing RFPs, RFQs, Auctions, etc. Surplus Sale Programs Rebates

Simple RFP Gain Calculation Average of all responsible responsive bids Bid accepted Simple RFP Gain Calculation Average of all responsible responsive bids Bid accepted

Alternative RFP Gain Calculation Budget – Bid Accepted Previous Price – Bid Accepted Market Alternative RFP Gain Calculation Budget – Bid Accepted Previous Price – Bid Accepted Market Rate – Bid Accepted – Negotiated BAFO

Savings/Gain Examples In January of 2010, the agency acquires a new building to use Savings/Gain Examples In January of 2010, the agency acquires a new building to use as a staff training and meeting facility. The fit out of the new facility requires 300 conference room style chairs. The price for a conference room chair is $100 per chair on their current contract, In February, the procurement team initiates and electronic bidding process to 300 conference room chairs for the new facility. The process ends, the supplier is chosen, and the chairs are purchased in March 2010. The winning supplier’s price was $80 per chair. Saving/Gain = $6, 000

Simple Surplus Gain Calculation Net revenue generated from sale of surplus Simple Surplus Gain Calculation Net revenue generated from sale of surplus

Alt. Surplus Gain Calculation Net Revenue – Staff Time Net Revenue – Staff & Alt. Surplus Gain Calculation Net Revenue – Staff Time Net Revenue – Staff & Scrap Value Net Revenue + Cost of Disposal – Staff

Sale of Surplus The procurement team at the county runs an online surplus auction Sale of Surplus The procurement team at the county runs an online surplus auction once per month. In January, the auction netted $9, 239.

Simple Rebate Gain Calculation Net revenue generated from rebate program Simple Rebate Gain Calculation Net revenue generated from rebate program

Rebate The procurement team puts a purchasing card program in place. During FY 2016, Rebate The procurement team puts a purchasing card program in place. During FY 2016, the rebate to the organization nets $34, 302.

The next bites… What else is pretty straightforward? The next bites… What else is pretty straightforward?

Efficiency Gain Calculations (Cost to process invoice manually – cost of p. Card/e. Procurement Efficiency Gain Calculations (Cost to process invoice manually – cost of p. Card/e. Procurement transactions) * number of transactions avoided

Cost Avoidance Calculations Value of goods that would have been purchased if procurement hadn’t Cost Avoidance Calculations Value of goods that would have been purchased if procurement hadn’t caught the order and coordinated delivery serviceable goods in inventory.

Storytelling Everything your organization’s department heads, managers and elected officials want has a cost. Storytelling Everything your organization’s department heads, managers and elected officials want has a cost. The key is finding out what they are most interested in.

XYZ Procurement Report – FY 2016 In FY 2016, the procurement team delivered $7, XYZ Procurement Report – FY 2016 In FY 2016, the procurement team delivered $7, 108, 656 net value to the city. This is the equivalent of providing supportive housing for 998 people for an entire year.

XYZ Procurement Report – FY 2016 In FY 2016, the procurement team delivered $7, XYZ Procurement Report – FY 2016 In FY 2016, the procurement team delivered $7, 108, 656 net value to the city. This is the equivalent of providing i. Pads to 18, 756 students throughout the city. The graphic above is only 10% of that.

XYZ Procurement Report – FY 2016 In FY 2016, the procurement team delivered $7, XYZ Procurement Report – FY 2016 In FY 2016, the procurement team delivered $7, 108, 656 net value to the city. This is the equivalent of providing 101, 552 new textbooks to students and schools throughout the city.

Storytelling Each of these things has a cost and you can collect that information Storytelling Each of these things has a cost and you can collect that information from internal sources or outside research.

NIGP Measure Online tools to record savings and produce reports in a standardized way. NIGP Measure Online tools to record savings and produce reports in a standardized way. Cloud based Easy Interface Scalable Standardized Free to NIGP National Agency Members

NIGP Measure Categories Added Value Cost Avoidance Sustainable Procurement Process Re-engineering Price Reduction Risk NIGP Measure Categories Added Value Cost Avoidance Sustainable Procurement Process Re-engineering Price Reduction Risk Reduction Revenue Generation

NIGP Measure Sub Categories Added Value • Additional Items/Services • Modifcation/Respecification • Alternative Solutions NIGP Measure Sub Categories Added Value • Additional Items/Services • Modifcation/Respecification • Alternative Solutions Cost Avoidance • Avoiding Price Increase During Existing Arrangement • Marketplace Awareness • Supplier Sponsorship/Income • Elimination of a Purchase Request Process Re-engineering • E-sourcing Toolset Use • Electronic P 2 P Process • Purchasing Card Use

Structure of Measure • Measure contains Projects and Efficiencies. • Multiple Efficiencies can fit Structure of Measure • Measure contains Projects and Efficiencies. • Multiple Efficiencies can fit under one Project. • Or you can use a 1 Project to 1 Efficiency approach. Projector RFP Cost Savings Added Value Process Savings

Demonstration Demonstration

Measure Inputs Measure Inputs

Measure Inputs Measure Inputs

Measure Outputs Measure Outputs

Measure Outputs Measure Outputs

Measure Outputs Measure Outputs

Registration • www. nigp. org/measure • Electronic registration behind NIGP member wall • Up Registration • www. nigp. org/measure • Electronic registration behind NIGP member wall • Up to 10 licenses per agency

Fighting the Time Battle • It takes time to measure the value you add Fighting the Time Battle • It takes time to measure the value you add • If you never find the time, you’re never going to raise the profile of procurement in your organization.

In Summary • • • How much value did you add? Tell a relevant In Summary • • • How much value did you add? Tell a relevant story. Get Finance buy-in. Be consistent. Find the time.

Additional Resources Forum 2014 Presentation and Materials: https: //multco. us/purchasing/news/multnomahcounty-presented-workshop-nigp-forum-2014 Recorded Spend Analysis Education Additional Resources Forum 2014 Presentation and Materials: https: //multco. us/purchasing/news/multnomahcounty-presented-workshop-nigp-forum-2014 Recorded Spend Analysis Education Webinars: http: //www. spikescavell. com/learning-about-spendanalysis/ Measure Registration http: //www. nigp. org/measure

For More Information For more information about Measure or how spend analytics can help For More Information For more information about Measure or how spend analytics can help your agency find savings, manage maverick buying & identify cooperative purchasing opportunities, please contact : Chris Frydrych or Colin Jones [email protected] com 571 -313 -5257




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