Presented by: Sheila Finn, CPP, FPMAC

1. Creating An Effective Organization And A Winning Team At The University of Ottawa Presented by: Sheila Finn, CPP, FPMAC PMMS Consulting Group (North America) Inc.

2. Abder’s Dream How can we design a program that will put the procurement process at the heart of the University of Ottawa so that we can maximize its impact on the University’s performance? What does “best in class” look like?

3. Where Do We Start? We need to know: • What should a “best in class” procurement process • and function look like? • What steps need to be taken to become “best in class”? • What is the health, effectiveness and contribution of • procurement to our overall performance of the University? • How do we know whether our people have the right skill level for today and in the future? • How can progress towards our goals be measured? • How do you build sustainable competitive advantage • through strategic procurement?

4. Why Measure Purchasing Performance? • To demonstrate your contribution to the organization. ....the addedvalue of Purchasing • To monitor progress over time. • To identify areas for improvement and shape “going-forward” roadmap. • To help establish future goals and targets.

5. How Do You Measure ‘Performance’? The 3 ways of assessing purchasing performance: 1. Inputs - Manpower, transaction levels, costs (CAPS) 2. Outputs - Prices, quality, service levels • Process - Comparing how purchasing is undertaken versus best practice

6. How Do You Measure ‘Performance’? • Headcount per $ million of spend • Contracts handled per buyer per year • Cost of Function as % of spend • Time taken to satisfy a requisition Relatively easy to do but ….. • Tactical information • Focuses on operating cost…a very small proportion of total purchasing spend • Limited - emphasis on cost and efficiency not contribution • Often sponsored by those with little interest or insight into the strategic role of purchasing Purchasing seen as essentially a tactical /administrative activity with little or no real business contribution 1. Inputs

7. How Do You Measure ‘Performance’? • Savings/Cost Avoidance • Quality • Supplier service levels • Supply base reduction/rationalization Weakness: • “Rear view mirror” • Very limited in response to real business needs • Dilutes effort through unproductive time in justifying ‘our’ performance • Does not help identify opportunities Does not address: “How good are we?” and “How can we improve?” 2. Outputs

8. The Balanced Business Scorecard • Contribution to the organization 2. Key Supplier Management: 3. Supply Base Rationalization 4. Low Value Purchasing 5. Internal Client and/or Customer Satisfaction • Consistency of performance • Customer service levels • Responsiveness Balanced Scorecard’ approach emphasizes Procurement’s wider role:

9. How Do You Measure ‘Performance’? Emphasis on “How We Do Things”: • “World Class” Best Practice is defined and your performance • measured - Benchmarked - against it • Identifies opportunities - provides a forward road map • Underlying assumption is………. “If best purchasing practice is being adopted then the best possible results will be achieved” Purchasing Viewed As a Strategic Process 3: Process and Practice

10. PMMS Benchmarking Methodology • PMMS has realized through experience and extensive research • that: • no single company is “best in class” in every area of purchasing • our benchmarking compares purchasing performance with • world-wide “best practice” • it is based upon our “Purchasing Excellence Model” and our • “Best Practice Profile” of 120+ global and medium to large • size organizations. PMMS focus is “Process & Practice”

11. PMMS Purchasing Excellence Model Enabling Foundation Strategic Purchasing • Use of Advanced Technology 1. Contribution & Influence 7. Planning 10. Permanence of Change 2. Purchasing and AuditFramework 3.Organization & Internal Relationships 8. Action 6. Staff andTraining 4. Supplier Relationship Management 9. Results Integrated Change Management

12. 1. Contribution and Influence • Position and focus of purchasing in the organization • Extent of involvement in corporate strategy • Influence over all areas of expenditure • Extent of early involvement in purchasing cycle • Clarity and type of authorities • Extent and balance of performance measurement

13. 2. Purchasing and Audit Framework • Quality of vision, mission and role statements • Quality and coverage of policies and principles • Position on commercial ethics • Quality and coverage of procedural guidelines • Quality and coverage of own terms and conditions • Low value transaction processes • Supply base – records and management • Early recognition of commercial risk • Audit standards, coverage and responses

14. 3. Organization and Internal Relationship • Purchasing organizational relevance with the business • The attitude of Senior Administration towards procurement • Internal customer relationships • Quality of networking within the University • Extent of effective cross functional team-work

15. 4. Supplier Relationship Management • Understanding and exploitation of supplier relationship options. • Quality and application of supplier development process. • Understanding of supplier capabilities and business strategies. • Quality and effectiveness of supplier performance measurement process.

16. 5. Use of Advanced Technology • Effectiveness and utilization of systems • Quality of e-procurement strategy and effectiveness of implementation • Innovative exploitation of core software tools • Web exploitation for market and supplier information • Exploitation of Intranet technologies

17. 6. Staff and Training • Calibre of staff their experience and credentials. • Career development and succession planning • processes. • People mix. • Influencing capability. • Quality and extent of skills development programs. • Effectiveness and applicability of performance • measurements.

18. Strategic Purchasing Elements 7 to 10 (Planning, Action, Results and Permanence of Change) • Quality of strategy development process. • Understanding and application of core tools and techniques. • Quality and extent of market intelligence gathering. • Solidity and ambition of sourcing strategies. • Breadth of sourcing strategy implementation. • Extent of key stakeholder strategy buy-in.

19. STRATEGIC SECURITY Proprietary Software Radio Active compounds STRATEGIC CRITICAL Natural Gas Software License Insurance Food Services Market Difficulty R I S K Complexity Of Switching TACTICAL ACQUISTION Courier Services Compress. Gas Messenger Serv. TACTICAL PROFIT Scientific Sup. Custodial Sup. Computers Printing Furniture Off. Equipment/ Telecom Machines Travel Advertising Off. Sup. Audio Visual. Equip Scientific Eq. Business Impact $$$ Sample Supply Positioning Model at a University

20. How Benchmarking Works Pre-planning • ‘Diagonal slice’ • Procurement staff • Key internal clients • Selected suppliers Structured Interviews Data collection & analysis • Metrics • Processes • Relationships ‘Snapshot’ of today’s procurement operation Performance benchmarked using PMMS Best Practices Profile Interim Review Gap Analysis Recommendations & Action Plans Client Report Final Review

21. Organization Structure - realign the resources (skills) - additional resources - educational program - enhance the communication plan Strategic Direction - refine the role of Materials Management (clearly defines roles, responsibilities and accountabilities) Training - implement training - J.I.T. and practical Cost Reduction Opportunities - launched 3 initiatives using multi-functional teams Recommendations & Next Steps for University of Ottawa

22. Abder’s Dream ….. Is on the road to becoming a reality • Materials Management has visibility and leadership • support. • Key stakeholders are now getting involved in x-functional • team initiatives. • New procurement processes are being integrated throughout • the University. • Applied learning – tools and techniques are being applied into • real life situations. • New performance metrics will be linked to success of the University • of Ottawa. …. or is it a nightmare?

23. The Journey To World Class Accelerated Improvement 0 - 200 201 - 375 376 - 525 526 - 675 676 - 800 801 - 900 901 - 1000 Ignoring Exploring Installing Embedding Driving Integrating Sustaining IMPLEMENTING DEVELOPING WORLD CLASS ENABLERS LEADERSHIP STRATEGY & POLICY PEOPLE MANAGEMENT RESOURCES PROCESSES RESULTS CUSTOMER SATISFACTION PEOPLE SATISFACTION IMPACT ON SOCIETY BUSINESS RESULTS

24. What’s the Prize for the University of Ottawa? • Improved effectiveness of the procurement processes. • Improved supplier performances. • Highly skilled procurement personnel to maximize the opportunities for the University. • Finding new ways to improve efficiencies and decrease costs at the University.