Procurement Transformation Maximizing the Potential of Procure-to-Pay Technology Jack D. Zencheck, Chief Procurement Officer, Yeshiva University

Yeshiva University (YU) Celebrating its 125th year. YU is the country’s oldest and most comprehensive institution combining Jewish scholarship with academic excellence and achievement in the liberal arts and sciences, medicine, law, business, social work, psychology, Jewish studies, and education. Students: 7,232  Annual sponsored research: $225 million Operating Budget: ~$648 million Campuses: Locations throughout New York City and Israel

What is Procure-to-Pay? Strategic rather than tactical Acquiring best contract pricing and terms vs. just buying (Procure) Cost-effective methods of processing payments through technology. (Pay)

Why Procure-to-Pay? Executive Level Support Strategy Cost Benefit Risks Separation of Duties Controls Manual vs Systematic Governance

YU Procurement Services at a Glance Purchasing 90,000 purchase orders processed 80% ≤ $2,000 67,000 purchase orders processed electronically $300,000,000 in spend Accounts Payable 179,623 total invoices processed 116,182 on Purchase Orders 27,364 not on Purchase Orders 36,077 processed thru EDI

Procure-to-Pay - Table of Organization A. Basilone Receptionist Jack D. Zencheck Chief Procurement Officer G. Gillott Assistant to CPO Open Director, E-Commerce (P Cards)(B2B) Tova Ackerman Director, Purchasing Natalia Volodarsky Purchasing Manager, Scientific Thomas Cannon Director of Accounts Payable Michael Winkler Director of Energy Mgmt & Sustainability T. Singh AP Supervisor A. Butta Administrator, E-Commerce B. O’Farrell Construction Buyer R. Labrew Freezer Program Clerk A. Moore Sustainability Coordinator J. Iurato Travel & Expense L. James Bookkeeper G. Braithwaite Systems Analyst T. Brown Contracts Administrator N. Franco Acquisition Clerk E. Teehan AP Clerk H. Nonnon Acquisitions Clerk R. Osi Contracts Administrator K. Neufville AP Clerk R. Gandolfo Contract Admin. IT A. Villamar Bookkeeper V. Mew Asst. Contract Adm, MRO H. Martinez Bookkeeper P-2-P S. Gonzalez AP Clerk

P-2-P System Banner for Higher Markets SciQuest Full Suite (Higher Markets) Requisition Manager Order Manager Spend Director A/P Director Sourcing Manager Contract Manager

P-2-P System JPMorgan PaymentNet System P-Card Enzyme Freezer Program, Alcohol Ordering, Reporting and Inventory System A/P Director e-Invoicing and Digital Mailroom Automation System

P2P Process 2) A/P DIRECTOR 1B) SCAN & 3 WAY MATCH (5k+) 2 WAY (<5K) 1B) SCAN & CONVERT TO DIGITAL FORMAT & IMPORT DIT DIGITAL MAILROOM

Accounts Payable Automation – E Invoicing E-Invoice Banner SciQuest ACH 3 Way Match

Accounts Payable Automation – E Invoicing E-Invoice SciQuest Banner Direct Data Extraction CXML Conversion ACH 3 Way Match Email Lock Box Fax

Procurement Transformation Project Outline We hired E&I Consulting to assess and recommend the following: Technology Assessment Organization & Operations Marketing & Communications Supplier Enablement

Technology Performed a thorough evaluation of technology implementation Banner and SciQuest full suite Identified post-implementation issues system workflow (configuration and performance) functionality deficiencies that impact performance client satisfaction Documented and categorized appropriate solutions Implemented recommended solutions Documented and categorized outstanding Banner/SciQuest issues Reinforced the values and benefits of compliance and utilization

Technology Completed process mapping of the procure-to-pay process Validated each process step and decision point Identified opportunities to: streamline workflow reduce process time and effort for the campus users maintain appropriate level of control and oversight Increase operational efficiencies by implementing reengineered processes resulting from the following mapping exercises: Processing non-catalog small dollar purchases | Processing Requests greater than $7,500 Processing Change Orders | Vendor Set Up Remit-to-Addresses | Processing Invoices Monitoring Sub-Recipient Process

Organization & Operations Conducted a formal organizational review to determine alignment with objectives of senior leadership and key internal business partners Determined need for more formalized strategic vision supported by senior leadership Developed a 3-5 year strategic plan Expressed to senior management the role of Procurement to: Project ROI Address budget and staff requirements Identify dependencies in order to achieve the strategy Recommended utilization of CPO’s skills to concentrate on: Higher value Strategic objectives Delegated appropriate contractual signing authority to: Increase efficiencies Minimize risks

Organization & Operations Established standard institutional procurement terms and conditions and a standard Master Supplier Agreement Obtained cooperation from the other internal stakeholders including: Human Resources Business Affairs Finance Environmental Health and Safety Insurance and Risk Management Established a formal Procure-to-Pay strategy and structure with shared ownership among: IT Procurement

Organization & Operations Reviewed the skillsets and capabilities of Procurement staff and determine Skills and staffing levels were sufficient to meet goals and expectations Technology related skills were inadequate and needed improvement

Organization & Operations Performed a Procurement Customer Satisfaction Survey determined current level of satisfaction identified key areas of concerns Survey Results: 82% satisfied with content and supplier enablements in eMarketplace 59% satisfied/very satisfied with service and support received from the Procurement Services organization 68% understand approval levels 29% understand competitive bid threshold

Supplier Enablement Performed supplier enablement to ensure successful hosted or punch-out catalog content for preferred contract suppliers. Enabled additional SciQuest science pack suppliers to further streamline ordering process for the campus community Initiated process change requiring suppliers to sign a written agreement to pay the 1.5% technology fee upfront vs. after the fact (current practice) Deactivated infrequently used suppliers to drive business to the preferred, contract and marketplace enabled suppliers

Marketing & Communications Developed a formal Marketing and Communications Plan (MCP) to communicate Vision Direction Goals Collaboration Invested in the redesign of the Procurement Services website to become the central repository of all procurement and disbursement related information customer support resources policies & procedures how-to-buy commodity and supplier information redesigned process documents Ensured regular communication and collaboration with key procurement stakeholders: Human Resources Controller Office Risk Management Finance Environmental Health and Safety

Supplier Enablement Implemented new process to formally track and report all cost reduction accomplishments Developed and provided formal cost containment savings and criteria for tracking results Developed formal and regular communications with senior leadership and the campus community the monthly results of cost reduction initiatives

General Observations Staff Highly respected by peers in higher education Skilled and motivated Frustrated with pace of transition to more strategic and value-added activities Burdened by non-value duties and responsibilities Would embrace and benefit from regular professional development opportunities

General Observations Impact of Procurement Procurement function should be elevated to the highest levels of the organization to support its the strategic objectives of the institution Designate Procurement as an institutional priority, because it: Represents second largest percentage of annual operating budget Interacts with and can positively impact operational efficiencies in virtually every department Can dramatically impact the Institution's bottom-line by reducing costs and extending the value and potential of every dollar of available funding Procurement Services should be separated from non-core procurement activities

Internal Challenges & Solutions This all requires change management “We can't solve problems by using the same kind of thinking we used when we created them.” - Albert Einstein

Ralph Maier and Melánie Lund Acknowledgement Ralph Maier and Melánie Lund E&I Consulting Group (267) 207-9338 rmaier@eandiconsulting.org www.eandiconsulting.org

Conclusion