Implementing i Procurement: More Than Meets the “ i ”

Implementing iProcurement:More Than Meets the “i” OAUG – FALL 2002 San Diego, California Vira Homick Stuart Benoff

Presentation Agenda • Background • About Penn • Purchasing Overview • Business Objectives for iProcurement • Process improvements • Enhance the effectiveness of the purchasing organization

Presentation Agenda (continued) • Implementing iProcurement • The Penn Marketplace • Strategic Sourcing • Catalog Content Management • Product Demonstration • Future Directions/Conclusions • Questions?

About Penn • Nation’s first University founded in 1740 by Benjamin Franklin • 24,500 employees and 22,300 students • Major research institution • Annual operating budget of approximately $3.2 Billion • Pursuit of administrative excellence is administration’s top business objective

Purchasing Overview • Oracle Financials (Purchasing, Payables & GL) implemented in July 1996 • Upgraded to Release 11i in January 2002 • Introduced the Penn Marketplace, Penn’s private online exchange in January 2002 • First higher education institution to implement Oracle’s iProcurement application

Purchasing Overview - continued • Decentralized purchasing environment with final purchase approval <$5,000 delegated to the point-of-demand • 1600 end users across 12 schools and 20 business units • 150,000 annual PO transactions representing $525M in purchasing dollars

Business Objectives for iProcurement • Process improvement resulting from customer feedback • Reduce time and effort related to order creation • Provide easy access to supplier content for most commonly ordered items • Enhance the effectiveness of the purchasing organization • Focus on shifting purchasing volume to “preferred contract suppliers” • Consolidate supplier database • Reduce maverick buying • Identify new cost savings opportunities

Implementing iProcurement • Introduced to the campus community as part of the Upgrade to Oracle Financials Release 11i • Delegates the item shopping and requisition creation to the point-of-demand • Enables multi-supplier ordering in a single shopping session • Oracle workflow used for requisition routing and purchase order approval • Provides access to the Penn Marketplace

The Penn Marketplace • The Penn Marketplace • Private online exchange for most commonly ordered products and services • Contains over 500,000 products from 28 suppliers representing 2700 manufacturers and distributors with Penn specific contract pricing • Catalog content hosting and management services provided by Global Exchange Services (GXS) • Robust search tools with results displayed in a consistent format • Facilitates a seamless purchase-to-pay environment

The Penn Marketplace - continued • Supports strategic purchasing initiatives • Provide easy access to commonly ordered items • Provides enhanced purchasing data to support future contract negotiations • Focuses purchasing attention on strategic “preferred contract suppliers” • Finding the right item quickly and easily reduces maverick buying

Strategic Sourcing • Supplier recruitment • Three tiered approach for Marketplace suppliers • High volume transaction suppliers • School and Center specific suppliers • Targeted community/minority suppliers

Strategic Sourcing - continued • Contract negotiations • All participating suppliers had new or newly renegotiated pricing agreements • Supplier recruitment and contract negotiations resulted in approximately $4.2M in new product and service cost savings (as of 10/1/02) • Reduce maverick buying by channeling users to Penn Marketplace suppliers

Strategic Sourcing - continued • Supplier marketing opportunities • iProcurement provides direct access to faculty and staff via messages on thehomepage • Web hosting of electronic promotions provided by Penn Purchasing Services • Participation in Penn sponsored supplier trade shows

Strategic Sourcing - continued • Use of EDI to transmit purchase orders to Penn Marketplace suppliers and receive their invoices • Reduces process cycle time • Administrative cost savings for both supplier and Penn • Enhances matching of invoices to PO’s • Enables negotiations for prompt pay discounts

Catalog Content Management • Partnered with Global Exchange Services • Provides catalog management and hosting services • Transforms and standardizes supplier content • Provides supplier ramping services • Facilitates training of supplier representatives and purchasing staff • Provides online tools for managing catalog content

Catalog Content Management-cont’d • Approach to supplier content development • Based on Penn’s past purchase history • Based on other higher education and research institution’s purchase history • Optionally, load full supplier catalog • Regularly scheduled updates to maintain catalog “freshness” and accuracy • Verification of content • UNSPSC, hazardous material, and pricing

Demonstration

Future Directions • Global Exchange Services • Favorites List • Quick Order Capability for marketplace items • Oracle • Process improvement for products and services not in the marketplace • Oracle Exchange • Oracle’s Purchasing Intelligence

Conclusion • Current Status of the Penn Marketplace • As of October 1, 2002, 51% of all POs were created from the 28 marketplace suppliers • All participating suppliers have realized significant growth in business • iProcurement and Penn Marketplace addressed the major concerns • Enabled creation of a requisition at the point of demand • Enhanced our ability to manage our key suppliers and their catalog content • Streamlined the PO creation process

Thank You! Questions Vira Homick : homickv@pobox.upenn.edu Stuart Benoff: benoff@isc.upenn.edu

Implementing i Procurement: More Than Meets the “ i ”