Procurement Contracts

1. Procurement Contracts Supplier Relationship Management Product User Group Conference San Antonio, TX February 24, 2009

2. Procurement Contracts Presented by: Gail Driskell Sr. Buyer, System Development City Utilities of Springfield, MO

3. Contents • Company Overview • Company Procurement Statistics • Procurement Contracts • Why we use Contracts • Contract Types • Contract Releases • Favorite Modifications • Questions

4. City Utilities of Springfield, MO • Municipal utility located in Springfield, MO • Provide electric, water, natural gas, transportation and telecommunications services • Serves 108,000 electric customers • Serves 82,000 gas customers • Serves 80,000 water customers • 1000 Employees • 2008 Operating Revenues of $393 million • Service area of 320 square miles

5. City Utilities and PeopleSoft • Financials • General Ledger • Asset Management • Project Costing • Accounts Payable • Implemented version 6.0 in 1997 • Upgraded to version 8.0 in 2003 • Upgraded to version 8.8 in 2005 • PeopleTools Version 8.49.10

6. City Utilities and PeopleSoft • HRMS • Base Benefits • Human Resources • Payroll for North America • FSA Administration • Implemented version 7.0 in 1998 • Upgraded to version 8.0 in 2001 • Updated version to 8.8 in 2008

7. City Utilities and PeopleSoft • Supplier Relationship Management • Purchasing • eProcurement • Strategic Sourcing • eSupplier Connection • Inventory • Implemented version 8.8 in 2006 • PeopleTools Version 8.49.10

8. Procurement Statistics • Centralized Purchasing Department • 7 Buyers • 3 Support Staff • 3 Management • 1 System Support • 790 active Contracts • 13,670 POs issued in 2008 • 5,970 regular POs (not contract releases) • 7,700 released POs (contract releases)

9. Procurement Statistics • Inventory Statistics • 35,245 active Inventory Items in the Master Item Table • 15 Inventory Business Units • 6 Inventory Storerooms

10. Why we use Contracts. . . • Already a part of our Business Process culture • Large number of repetitive purchases for inventory items • Saves time – eliminates the need to bid each time • Gives our end users flexibility to order items as they need them • Use contracts for inventory items, non-inventory items, services, maintenance agreements, etc.

11. Why we use Contracts. . . • Fixed pricing for specified time period with options to renew • Notification process to alert when nearing expiration • Notification process to alert when nearing contract maximum amount

12. Responsibilities • End user creates requisition for the goods or services they want on their contract • Purchasing responsible for bidding, setting up and awarding the contract • End user administers use of the contract by creating releases as needed. • End user receives contract notifications for expiration and maximum amount • Buyer makes any needed adjustments to contract -- price changes, renewals, maximum amount increases, etc.

13. Procurement Contracts • PeopleSoft Delivered Contract Process Options • General Contract • Prepaid Voucher • Prepaid Voucher w/ Advance PO • Purchase Order • Recurring PO Voucher • Recurring Voucher • Release to Single PO only

14. Contract Types • City Utilities’ Contract Types • Fixed Item • Inventory Replenishment Releases • Open Item • Agreement (also a Fixed Item)

15. Fixed Item Contracts • Contract contains specified line items • Contract is valid for a specified amount of time. • Our pricing for the line items is fixed for the length of the contract. • End user creates releases as needed • No additional approval step for releases • Scheduled PO Auto Sourcing process runs every 30 minutes to create the PO from staged releases • POs created in approved status • Scheduled PO Dispatch process runs every two hours

22. Inventory Item Releases • Two Options to create release for inventory items • Manually by releasing directly from the Contract • Automated via Replenishment, Req Loader and PO Auto Sourcing

23. Automated Inventory Item Releases • Replenishment is ran daily and suggests the inventory items that need to be re-ordered • Inventory personnel review the replenishment and make any needed adjustments to the suggested quantities • Neat customization we recently added was the ability to add an item to the replenishment

24. Automated Inventory Item Releases • Inventory Supervisor reviews the replenishment and approves it by running REQ Loader to create a requisition. • Inventory Supervisor runs PO Auto Sourcing • inventory items that are on a contract get automatically sourced to a PO – approved status. • Scheduled PO Dispatch runs and dispatches the created POs.

25. Custom Replenishment Report

26. Open Item Contracts • No line items listed on contract • Contract is valid for a specified amount of time • Pricing for goods and services is usually contained in separate rate sheet, a % discount pricing structure, etc. • End user enters a requisition describing the good/services they are releasing • Price entered on requisition line becomes the PO Price for that line • Requisition is linked to contract by Vendor ID, Contract ID

27. Open Item Contracts • Remove RFQ Required Flag • Requisition goes through normal workflow approval • Scheduled PO Auto Sourcing process runs every 30 minutes to create the PO from staged releases • POs created in approved status • Scheduled PO Dispatch process runs every two hours • Released amount goes against Contract Maximum Amount

28. No lines specified on the contract.

29. Enter requisition line – describing the good or service being released, quantity and price.

30. Go into the Line Details page.

31. Line Details – Enter Vendor ID, Contract ID, and remove RFQ Required flag.

32. Saved and submitted requisition then goes through normal requisition approval workflow process.

33. Agreement Contracts • One or more line items on the contract • Contract is valid for a specified amount of time • Use for contracts that are not conducive to multiple releases – i.e. software/hardware maintenance • Usually 1 LT or amount only type purchases • Buyer issues one release for full contract amount • The PO created from the release is used for processing one or more payments during the term of the contract • Advantage is receiving the Contract Expiration notice.

35. Favorite Modifications • CU Contract Type • Do Not Release Flag • Contract Thresholds – Notify Person • Release Comments • Release Header Defaults • Releases over Contract Maximum • Contract Notifications

36. CU Contract Type

37. Do Not Release Flag

38. Do Not Release Flag

39. Contract Thresholds

40. Release Comments Enter free-form text information about this release. These comments are used as release reminders and remain with the contract. They do not carry over to the PO. You can review and modify these comments on the Review Staged Releases page.

41. Release Comments

42. Release Header Defaults

43. Release Header Defaults

44. Releases over Contract Max

45. Releases over Contract Max Remember our remaining amount was $1031.18

46. Releases over Contract Max End User goes ahead and saves their staged release. We removed any validation against contract maximum and remaining amounts that was associated with the Save. Instead, we added some custom code in the PO Auto Sourcing process that compares the total release amount against the contract’s remaining amount.

47. Releases over Contract Max

48. Releases over Contract Max Email that is triggered . . .

49. Releases over Contract Max

50. Releases over Contract Max After making adjustment to the Contract Maximum Amount, the Buyer accesses the PO and unchecks the Hold Flag. PO is then eligible for PO Dispatch.