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Showing the Value of Procurement: The Sequel

Showing the Value of Procurement: The Sequel. Showing the Value of Procurement: The Sequel. Showing the Value of Procurement: The Sequel. NIGP Research. Purpose of Reporting Savings Communicate the Value of Procurement Evaluate Performance Justify Budget. What is Measured?. Non-ROI

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Showing the Value of Procurement: The Sequel

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  1. Showing the Value of Procurement: The Sequel

  2. Showing the Value of Procurement: The Sequel

  3. Showing the Value of Procurement: The Sequel

  4. NIGP Research Purpose of Reporting Savings • Communicate the Value of Procurement • Evaluate Performance • Justify Budget

  5. What is Measured? Non-ROI ROI

  6. New Trends in Non-ROI Spend

  7. New Trends in Non-ROI Spend

  8. New Trends in Non-ROI Spend

  9. New Trends in Non-ROI Customer Focus

  10. Showing Value - ROI • Competitive Sealed Bidding • Competitive Negotiations • Revenue-Generating Contracts • Other Activities

  11. Budget - 45% Highest Bid - 36% Average Bids - 31% Previous Price - 17% GSA, etc. - 15%

  12. Other MethodsIFB Savings Award Price v. • Retail or wholesale price • Independent estimate • Price submitted by requestor • Price paid by other governments

  13. Award Price v. Market Price Added Value - i.e. Warranties Award Price v. Initial Proposed Price

  14. Recovery for Non-Performance Negotiating Contract Increases Specs / Scope Review Negotiating Non-Competitive Contracts Negotiating Renewals / Extensions

  15. Recovery for Non-Performance Negotiating Contract Increases Specs / Scope Review Negotiating Non-Competitive Contracts Negotiating Renewals / Extensions

  16. “The CFO’s View of Procurement” Aberdeen Group November 2007

  17. “The CFO’s View of Procurement” Aberdeen Group November 2007

  18. 3 Tiers of Savings • IDENTIFIED • IMPLEMENTED • BOOKED

  19. 11.9% 9.4% 3.2%

  20. Collaboration Automation Spend data

  21. Collaboration Automation Spend data

  22. > 70% 30-70% < 30%

  23. Best-in-Class - > 70% Industry Average - 30-70% Laggard - Less than 30%

  24. Best-in-Class • Excellent process and Efficiency • Superior process innovation aptitude • Superior negotiation and contracting skills • Superior general business acumen • Superior supply market knowledge • Strong technology acumen

  25. Best-in-Class • Excellent process and Efficiency • Superior process innovation aptitude • Superior negotiation and contracting skills • Superior general business acumen • Superior supply market knowledge • Strong technology acumen

  26. Top 10Private SectorProcurement Measures

  27. Top 10Private SectorProcurement Measures

  28. A Case Study

  29. A Case Study

  30. Additional Value Received Improved Terms Audit Savings Price Reductions – Contract to Contract Buyer Innovation / New Ideas Price Reductions – Requisition to PO Cost Avoidance – Contract CPI Increases 13 Agreed-Upon Measures

  31. 13 Agreed-Upon Measures • Revised Specification Initiatives • Elimination of Purchase Requests • Revenue Increases • Energy Contract Savings • Rebates Negotiated and Received • Improved Business Processes

  32. $1,170,555

  33. Action Steps

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