Procurement Contracts

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

Presented by:

        Gail Driskell
        Sr. Buyer, System Development
        City Utilities of Springfield, MO
Contents

   Company Overview
   Company Procurement Statistics
   Procurement Contracts
    –   Why we use Contracts
    –   Contract Types
    –   Contract Releases
   Favorite Modifications
   Questions
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
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
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
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
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)
Procurement Statistics

   Inventory Statistics
    –   35,245 active Inventory Items in the Master Item Table
    –   15 Inventory Business Units
    –   6 Inventory Storerooms
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.
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
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.
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
Contract Types

   City Utilities’ Contract Types
    – Fixed Item
            Inventory Replenishment Releases
    –   Open Item
    –   Agreement (also a Fixed Item)
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
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
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
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.
Custom Replenishment Report
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
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
No lines specified on the contract.
Enter requisition line – describing the good or service
being released, quantity and price.
Go into the Line Details page.
Line Details – Enter Vendor ID, Contract ID, and remove
RFQ Required flag.
Saved and submitted requisition then goes through normal
requisition approval workflow process.
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.
Favorite Modifications
   CU Contract Type
   Do Not Release Flag
   Contract Thresholds – Notify Person
   Release Comments
   Release Header Defaults
   Releases over Contract Maximum
   Contract Notifications
CU Contract Type
Do Not Release Flag
Do Not Release Flag
Contract Thresholds
   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.
Release Comments
Release Header Defaults
Release Header Defaults
Releases over Contract Max
Releases over Contract Max




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

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

   Problems we encountered . . .
    –   Requestors were not good at checking their worklist
    –   Notices did not indicate whether it was contract
        expiration or max amount notice.
    –   Notices were only sent to worklist one time
    –   Contracts were expiring before we had a chance to
        renew
    –   POs would error in PO auto sourcing process due to
        Contract Max being exceeded.
    –   Had to manipulate Contract Max amount and
        percentage for Agreement type contracts
Contract Notifications

   Our Solution . . .
    –   Changed notices from worklist entry to an email
    –   Process still runs weekly, but if the contract still
        meets the criteria the following week, then
        another email is sent -- the User quickly gets the
        picture to take action!
    –   Different emails are sent depending on:
            How close the contract is to the expiration date
            If the contract is nearing the maximum amount
            What type of contract
Contract Notifications

   Email notices
    –   90 Day Notification – email sent to Contract
        Requestor – all Contract Types
    –   30 Day Notification – email sent to Contract
        Requestor AND the Contract Buyer – all Contract
        Types
    –   Nearing Contract Maximum Amount – email sent to
        Contract Requestor – all Contract Types EXCEPT
        Agreement Contracts
    –   Nearing Contract Expiration and Contract
        Maximum Amount
Contract Notifications
 90 Day Notification
Contract Notifications
 30 Day Notification
Contract Notifications
 Nearing Contract Max
Contract Notifications
 Nearing Expiration and Contract Max
Contract Notifications

   When Buyer is contacted by the Requestor to
    take action to renew or rebid, Buyer will . . .
    –   Drop the notify days down to 1
Contract Notifications

   When Buyer is contacted by the Requestor to
    take action to renew or rebid, Buyer will . . .
    –   Drop the notify days down to 1
    –   Renew or Rebid the Contract
    –   After renewing the Contract, Buyer resets the
        notify days back to 90 days.
Summary

   Introduced City Utilities of Springfield, Missouri
   Why we use Procurement Contracts
   Contract Types
   Contract Release Process
   Some of our Favorite Modifications
Procurement Contracts



       Questions?
Contact Information
Gail Driskell
  Sr. Buyer, System Development
  City Utilities of Springfield, MO
  Email: gail.driskell@cityutilities.net

				
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