Are we taking advantage of strategic sourcing opportunities?

1. Are we taking advantage of strategic sourcing opportunities? • Ontario Education Collaborative Marketplace- Stephen Whittaker • Regroupement des gestionnaires d’approvisionnement des universités québecoises- Denys Bussières • Interuniversity Services Inc.- Julie Nielsen

2. Canadian Association of University Business OfficersJune 17, 2008Stephen Whittaker, Chief Operating Officer

3. Current State of Strategic Sourcing • Within institutions • Distributed vs. centralized control • Academic freedom • strategic vs. non-strategic? • “Broad-brush” application? • Among institutions • Many examples of success: • Universities: OUPMA, UPG, ++ • Colleges: Over 10 regional buying groups in Ontario • School Boards: Catholic School Board Services Association • Utilities, Employee Benefits, IT, Financial Services, ++ for up to 50 School Boards

4. What’s needed… • Expand upon the successful collaborative work that’s being done • More spend categories • More participants • Leverage category expertise to drive greater value • Make it easy for users to access contracts • Measure performance – demonstrate the value to all constituencies, foster support and increased participation

5. Potential Benefits… • Better deals on more products and services • Higher quality, better service • More savings realized thru more users using contracts • Contained supplier base – reduced supplier proliferation • eProcurement – automation of procure-to-pay processes • Granular reporting – who is spending on what, with whom?

6. Spend Analysis – 9 of 116 Ontario Institutions (representing about 25% of $4.4 billion sector) Total Purchased Expense Unaddressable Expense1 Total Addressable Purchased Expense Potentially Addressable Expenses Highest-Potential Expense Categories Annual Purchased Expenses FY05 $ Millions • 7 categories such as Building Construction, etc. • 53 other sourceable categories $1,443 $375 • 12 highest-potential categories: • Purchased by all institutions • Large savings potential • Commonly sourced • Relatively easy to capture savings $1,068 $675 $393 1Includes Building Construction, Engineering/Architectural Services, Facilities – Alteration/Capital Improvement, Facilities – Space, Facilities – Utilities, Government General Equipment & Supplies, and Other Personal Expenses 6

7. Normalized to remove non-recurring expenses resulted in Total Baseline Spend Opportunity of $351M … Adjusted Baseline Spending and Savings Estimates . . . With a Potential Savings Range of $35-56M Note: Projected savings may vary for each institution; projected savings are estimated over the 5 year implementation period of OECM when all suggested contracts have been normalized and standardized 7

8. Extrapolation… • Using a more conservative 4-12% savings range applied to: • 65 spend categories • 116 institutions across Ontario • Potential annual savings = $132 to $396 million per year • OECM Target = $375 million over 5 years

9. Strategic Sourcing Savings to the Sector*all $ figures in Millions 9

10. OECM Strategic Sourcing Mission • Generate measurable business value by creating an accessible centre-led professional services organization that maximizes financial and non-financial benefits from third party relationships • Establish a “trusted advisor” relationship with Institutions based on transparencyandby consistently working collaboratively to deliver measurable results • 3. Provide support, training and assistance to Institutions seeking to “up-skill” internal Sourcing and Procurement resources 10

11. Service LinesCompelling Value Propositions Access to previously unavailable, traceable, fact-based purchasing business intelligence …for participating Institutions as a whole, a sub-sector, a group of Institutions and individual Institutions… to support business management decisions and vendor negotiations; our scale and leverage will let us afford analytical services no Institution will want to afford on their own A no annual fee, no usage fee, no maintenance fee offering providing unparalleled access to suppliers, best-of-breed capabilities, purchasing / receiving / payment efficiencies, and lower prices (from improved supplier efficiencies and increased competition) An in-sector, sector-designed, sector-governed, sector-sensitive set of service offerings putting Institution & sector interests unquestionably first 11

12. Service Lines Rollout OECM Service Lines Rollout Strategy 12

13. Strategic Sourcing Deployment Staring in May 2008, OECM’s strategic sourcing team began creating shared contracts for the eMarketplace and coordinating sector-wide or multi-Institutional sourcing projects A collaborative decision-making process is used to achieve supplier selection in order to improve the quality of goods and services while optimizing value for money Over the first five years of operation, the strategic sourcing team will work with sector procurement professionals to develop over 100 shared contracts. Institutions and OECM will share savings gained from strategic sourcing; Institutions will reap 75% of the savings and 25% will return to OECM Suppliers will capture OECM’s portion of the savings by applying a premium on the Institutions’ pricing and remit as a rebate.

14. Challenges… • Establishing baselines to measure incremental economic benefit • Human resources • Change management • SCU resistance • Limited ability to influence user adoption • Seeing beyond low-hanging fruit • Suppliers • Many have benefited from fragmentation • Fear of losing out to the big players • Need reassurance: • Supplier selection is a local decision • Market expansion opportunities within and beyond SCU • eRFx processes will lead to more bid opportunities • Greater transparency in contract awards • In other jurisdictions SMEs are proven winners – benefits exceed costs

15. OECM Next steps • Strategic Sourcing: • Pilot Project charter Developed • Consultations with SCU’s and others underway • Launch Initial Pilot by August • Next commodities “on the runway” for September • Recruitment underway • eMarketplace: • Commence build in July 2008 • Deploy and Operate • Model Office by January 2009 • 10 SCUs by June 2009 • 32 SCUs by June 2010 • Pause, earn, restart deployment to balance of sector

16. OECM Board of Directors Independents: • Georgina Steinsky-Schwartz (President & CEO, Imagine Canada) • Lawrence Loop (VP Global Sourcing, Manulife Financial) Ontario Ministries: • Nancy Naylor (ADM MEdu) • Janet Mason (ADM MTCU) • Dan Wright (ADM OntarioBuys Secretariat MFin) Universities: • Gary Brewer (VP Finance & Administration, York U) • Victor Simon (VP Resources, uOttawa) School Boards: • John Sabo (Associate Director Corporate Services and Treasurer, York Catholic DSB) • Carol McAulay (Superintendent of Business Services & IT, Simcoe County DSB) Colleges: • Rani Dhaliwal (VP Finance and Administrative Services, Humber College) • Brandon Lander (VP Administration, Georgian College)

17. Thank you! Stephen Whittaker Stephen.whittaker@oecm.ca www.oecm.ca

18. Regroupement des gestionnaires d’approvisionnement des universités québecoises (RGAUQ) Denys Bussières

19. RGAUQ(2006-2007)

20. RGAUQ Established in 1978 Representing 20 institutions of higher learning in Quebec Meeting on a quarterly basis Conference for all procurement personnal every two years

21. Purpose • Benefit from combined purchasing power. • Share procurement practices and unify them wherever possible • Represent the procurement function of the Quebec Universities to different economic players on a provincial and national basis

22. Action strategies Regular meeting of purchasing managers Setting up group buying for various categories of goods and services; Maintaining a database of specifications, calls to tender and contracts; Holding meetings on specific subjects; Staging occasional conference for procurement officiers; Producing an RGAUQ annual report; Joining with purchasing group, eg. Caubo, OUPMA, etc.

23. Action strategies Representing RGAUQ to government agencies Establishing standard group procurement processes; Maintaining common contract conditions applicable to all institutions and discussing other processeds for possible standardization.

24. RGAUQ Figures 24 contracts Volume of transactions: 17 millons $ Estimate of savings: 3.3 millons $ Percentage of savings: 19 %

25. Challenge for the future • Work done by volunteers • Budget cuts • Rotation of personnal • Regionalization of the purchasing groups

26. Questions

27. Interuniversity Services Inc.

28. www.interuniversity.ns.ca • ISI was incorporated in 1984 by four Halifax Universities. • Member institutions now number 19 and are located in all four Atlantic provinces. • ISI’s CEO reports to a Board of Directors. • The Board of Directors includes one representative of each member institution, usually a Senior Administrative Officer.

29. www.interuniversity.ns.ca Vision To be a model for university cooperation.

30. www.interuniversity.ns.ca Mission To identify and promote opportunities for members to acquire goods and services with enhanced value and reduced costs.

31. www.interuniversity.ns.ca Core Business Activity The core business activity of ISI is supply and services management, including contracting, consulting, risk management, technical servicing and facilitating.

32. www.interuniversity.ns.ca • Contract & Project Management Services • Risk Management • Technical Services • Training • Facilitation • Administration

33. www.interuniversity.ns.ca Contract & Project Management Services: • Coordinate contracts for materials & services. • Contract administrators for 50(+/-) agreements. • Coordinates Supply Management Committee activities. • Participates as a member of CAUBO’s National Procurement Committee. • Chair, CAUBO’s Customs Task Force. • Contract administration services for CAUBO’s Moving & Relocation Contracts. • Consulting.

34. www.interuniversity.ns.ca Risk Management • Annual risk management workshop • Liaison with CURIE • Bishop Phillips risk software • Member of various risk management groups and associations.

35. www.interuniversity.ns.ca Technical Services • Provides full-time professional scientific equipment repair and maintenance service. • Customers include member institutions, hospitals, National Research Council, private and corporate clients.

36. www.interuniversity.ns.ca Training/Facilitation • Supply Management • Risk Management • HR Conferences • Certificate in Management Skills Development for University/College Professionals • Chair development.

37. www.interuniversity.ns.ca Administration Services • List serves for procurement, HR, risk, facilities • Meeting/conference arrangements • Minutes • Financial recording, analysis, reporting.

38. www.interuniversity.ns.ca Contract & Project Management Services Prime activities: • Write documents: RFQ/Q, RFI, RFP, RFEI, Tenders • Negotiate contracts, SLA’s, MOU’s • Consult on policies, process evaluations, debriefings • Research • Network with other institutions across Canada.

39. www.interuniversity.ns.ca Frequent Users: • Procurement & Supply Management Personnel • Supply Management Committee (SMC) • Facilities • Fuel Users Group • Libraries • Council of Atlantic University Libraries (CAUL) • Novanet

40. www.interuniversity.ns.ca National Procurement Committee • CAUBO National Agreements- Car Rentals, Courier, Customs, D & B, Hotels, Moving, Tattletapes • CAUBO Conference • Contribute to University Manager magazine • Customs Task Force working in a partnership with KPMG on a Customs Users Guide • Consult with CFI on grant policies.

41. www.interuniversity.ns.ca Academics & Researchers: • Volume buying opportunities • Document templates and obtaining current documents from other institutions • Consulting on evaluation and debriefing.

42. www.interuniversity.ns.ca Facilities/Operations/Administration: • Existing agreements • Document templates & obtaining documents from other institutions • Supplier presentations • Consulting.

43. www.interuniversity.ns.ca Procurement: • Supply Management Committee • CAUBO National Procurement Committee • Customs Partnerships • Agreements- Volume Buying • Policies • Document Templates • Consulting.

44. Interuniversity Services Inc. Cooperation Works!