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

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

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

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

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

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

8. It’s Not Hard To Find Job Training Education Affordable Housing
Ending Homelessness

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

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

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

12. Guardian and Processors Stage

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

14. Strategist Stage
XYZ Procurement Report – FY 2016

15. What could $7.1m buy?
Parks, books, miles of road, community centers, job centers, miles of road, lowered taxes, police cars, new computers, computers, job centers, teachers, rec centers?

16. 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.

17. Getting Finance Buy-In
Communicating Your Value
Getting Finance Buy-In
Using the Right Words
Types of Gains
Justifiable Values
Creative Stories
NIGP Measure

18. 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.

19. 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?

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

21. Using Consistent Words
Cash Releasing
Non-Cash Releasing

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

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

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

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

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

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

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

29. 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 The winning supplier’s price was $80 per chair. Saving/Gain = $6,000

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

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

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

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

34. Rebate
The procurement team puts a purchasing card program in place. During FY2016, the rebate to the organization nets $34,302.

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

36. Efficiency Gain Calculations
(Cost to process invoice manually – cost of pCard/eProcurement transactions) * number of transactions avoided

37. 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.

38. The key is finding out what they are most interested in.
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.

39. XYZ Procurement Report – FY 2016
$605 per person pear month
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.

40. 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 iPads to 18,756 students throughout the city. The graphic above is only 10% of that.
News Tribune Article

41. 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.
News Tribune Article

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

43. 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

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

45. 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 P2P Process
Purchasing Card Use

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

47. Demonstration

48. Measure Inputs

49. Measure Inputs

50. Measure Outputs

51. Measure Outputs

52. Measure Outputs

53. Registration
Electronic registration behind NIGP member wall
Up to 10 licenses per agency

54. 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.

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

56. Additional Resources
Forum 2014 Presentation and Materials:
Recorded Spend Analysis Education Webinars:
Measure Registration

57. 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