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Showing the Value of Procurement: The Sequel. Showing the Value of Procurement: The Sequel.

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Presentation on theme: "Showing the Value of Procurement: The Sequel. Showing the Value of Procurement: The Sequel."— Presentation transcript:

1 Showing the Value of Procurement: The Sequel

2 Showing the Value of Procurement: The Sequel

3 Showing the Value of Procurement: The Sequel

4 NIGP Research Purpose of Reporting Savings Communicate the Value of Procurement Evaluate Performance Justify Budget

5 What is Measured? Non-ROI ROI

6 New Trends in Non-ROI Spend

7 New Trends in Non-ROI Spend

8 New Trends in Non-ROI Spend

9 New Trends in Non-ROI Customer Focus

10 Showing Value - ROI Competitive Sealed Bidding Competitive Negotiations Revenue-Generating Contracts Other Activities

11 Budget - 45% Highest Bid - 36% Previous Price - 17% Average Bids - 31% GSA, etc. - 15%

12 Other Methods IFB Savings Award Price v. Retail or wholesale price Independent estimate Price submitted by requestor Price paid by other governments

13 Award Price v. Market Price Award Price v. Initial Proposed Price Added Value - i.e. Warranties

14 Recovery for Non-Performance Negotiating Contract Increases Specs / Scope Review Negotiating Non-Competitive Contracts Negotiating Renewals / Extensions

15 Recovery for Non-Performance Negotiating Contract Increases Specs / Scope Review Negotiating Non-Competitive Contracts Negotiating Renewals / Extensions

16 “The CFO’s View of Procurement” Aberdeen Group November 2007

17 “The CFO’s View of Procurement” Aberdeen Group November 2007

18 3 Tiers of Savings IDENTIFIED IMPLEMENTED BOOKED

19 11.9% 9.4% 3.2%

20 Collaboration Automation Spend data

21 Collaboration Automation Spend data

22 > 70% 30-70% < 30%

23 Best-in-Class - > 70% Industry Average % Laggard - Less than 30%

24 Best-in-Class Excellent process and Efficiency Superior process innovation aptitude Superior negotiation and contracting skills Superior general business acumen Superior supply market knowledge Strong technology acumen

25 Best-in-Class Excellent process and Efficiency Superior process innovation aptitude Superior negotiation and contracting skills Superior general business acumen Superior supply market knowledge Strong technology acumen

26 Top 10 Private Sector Procurement Measures

27

28 A Case Study

29

30 13 Agreed-Upon Measures 1.Additional Value Received 2.Improved Terms 3.Audit Savings 4.Price Reductions – Contract to Contract 5.Buyer Innovation / New Ideas 6.Price Reductions – Requisition to PO 7.Cost Avoidance – Contract CPI Increases

31 13 Agreed-Upon Measures 8.Revised Specification Initiatives 9.Elimination of Purchase Requests 10.Revenue Increases 11.Energy Contract Savings 12.Rebates Negotiated and Received 13.Improved Business Processes

32 $1,170,555

33 Action Steps


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