Final deliverable presented by my project team to the UC Berkeley Business Services department, outlining key performance metrics for the ongoing procurement reform initiative.

1. UC Berkeley Procurement Services: Metrics, Recommendations, and Scorecard Project Manager Olivier Bouan Consultants Josh Feldman Diana Golduber Akshay Kumar SharvaniSrivastava Senior Advisors Nikita Maheshwari

2. Contents 2

3. Background and Framework

4. This presentation aims to add specificity to the selected metrics, as well as present our recommendations and the scorecard 4 Midterm Deliverable Final Deliverable During our midterm presentation we presented Our background research and initial takeaways Preliminary metrics, along with our reasoning and expected trends The next steps we would be taking before the final deliverable This final presentation will serve to present Updated information on data sourcing and metric calculation. Actionable recommendations for the advancement of the procurement initiative A dynamic one-page procurement performance scorecard

6. Variations5 The calculation boxes describe how to use the data pieces to determine the current value of the metric Boxes in yellow indicate relevant data pieces which should be considered when calculating the metrics Metric Calculation This section describes the reasoning behind the metric, its various uses, and its advantages This section highlights how and with whom the metric should be shared as well as any variations or adaptations of that metric

7. Effectiveness Metrics

9. This metric can be leveraged to justify the procurement effort as a whole by showing its ability to increase buying power through negotiated prices

10. Dissemination

11. Email CPO and stakeholders (campus administration & related) monthly with progress

12. Publish via scorecard and website

13. Variations

14. Cost Savings from UC system-wide Contracts

16. Email primary stakeholders (campus administration & related) monthly with progress

17. Publish via scorecard and website

18. Variations

19. Sourcing ROI: Individual sourcing manager cost savings divided by sourcing manager salaries

20. ROI provides a simple measure of how efficient and useful the procurement office is for Berkeley

21. Metrics such as ROI are particularly useful in justifying budgetary spending for the procurement office

23. As a percentage of total spend, Spend Under Management will not be skewed by inflation or increased total spend

24. Dissemination

25. Email to CPO with updated figures every month

26. Publish via scorecard and online

27. Variations

29. This metric will be most powerful in the beginning stages of the BearBuy rollout in defending the procurement initiative by showing its potential to generate cost savings in terms departments understand and care about

30. Dissemination

31. Email to individual departments and CPO with updated figures every month

32. Variations

35. Email to Senior Management, CPO, and P2P Champions

36. Publish via scorecard and website

37. Variations

38. Measured in terms of percentage of transactions and percentage of dollars processed electronically

39. Can be measured campus wide, by department, and by individual

40. Increases in Adoption Rate can reduce costs in terms of transactions

42. Published online and emailed to CPO, senior management, and end-users

43. Variations

44. Reconciliations

45. Rebates

46. User error

47. System malfunction

48. End-User trainings and regular BearBuy system updates can reduce TRPIA

50. Email to Senior Management, CPO, and P2P Champions (Department Liaisons)

51. Publish via scorecard and website

52. Variations

53. Requisition to voucher

54. Requisition to purchase order placement

55. Requisition to payment

56. However, requisitions may be difficult to track

57. BearBuy should decrease CTOT by eliminating inefficiencies caused by non-value adding activities

58. End-users will be more likely to use the new BearBuy if the approval and payment processes occur faster on the new system as compared to the current one

60. Increased end-user satisfaction implies that more end-users are using and are willing to use the new system

61. Perhaps offering incentives to fill out surveys will improve response rates

62. Procurement Services

63. Various end-users feel that Procurement services need to monitor more purchases and keep track of buyer data

64. Dissemination

65. Survey results should be emailed directly to BearBuy users, CPO, and senior management

66. Variations

67. Factor in response rates

68. Separate surveys for different kinds of users

70. However, the category of end-users, that should be surveyed, according to one surveyed end-user Barbara Lane, is much broader, including

71. Users who authorize expenses such as PIs, directors, and lab managers

72. Requisition creators who are purchasing professionals

73. Approvers with the financials knowledge

74. Two separate surveys should be designed: one that specifically targets the BearBuy system and another that addresses customer-service by the CPO so as to receive clearer results

75. Additionally, a clear distinction should be made between the campus-wide procurement team and department-specific procurement teams, according to Barbara Lane16

78. Turnaround time

79. Error Rates

80. Return Rates

81. According to the LDP report, vendors might be taking advantage of a disorganized system and not offering the best deals

82. We need to track suppliers’ performance and how much they are complying with buyers and the system

83. Buyers need to see vendor performance in order to alter purchasing habits

85. Email users with updated figures every month

86. Publish via scorecard and online

87. Variations

88. Number/Percent Local Suppliers: Tracks the number of suppliers that ship products from within 100 miles of Berkeley

89. Number/Percent Diversity Suppliers: Tracks the number of suppliers evaluated by Strategic Sourcing predominantly minority groups

90. Number of suppliers measures the flexibility of BearBuy in accommodating user desires

91. Number of suppliers can be leveraged to convince users that progress is being made to allow them to use their preferred vendors

93. Our research has led to several key recommendations for the future success of the Procurement Initiative at UC Berkeley 20

94. University of California, Berkeley | Procurement KPI Scorecard EFFECTIVENESS Effectiveness metrics at the top provide high level campus administrators with the indicators that affect the bottom line. They offer a measurements across time to track the success of the Procurement Initiative. This section of writing can be used to summarize results, or highlight key initiatives that have driven changes. EFFICIENCY Supplier Information 0% 50% Efficiency metrics below track how well the initiative has streamlined Procurement Services and increased the quality of services to end-users. Again, this section can be used to describe new developments from Procurement Services, such as new local contracts, end user concerns gathered from surveys, or the success of incentives increasing supplier performance. Local 12.5% 0% 30% Minority 22% GOAL CURRENT Supplier Performance 90% 100% Invoice Turnaround 100% 96% 80% 0% 10% Error Rate 3.5% 0% 10% Return Rate 0% 5.2% GOAL CURRENT 21 * Disclaimer: Data is arbitrary

95. Acknowledgements

96. Appendix

97. Metric Summary 24 Effectiveness Efficiency Total Cost Savings Return on Investment Spend Under Management Unrealized Cost Savings Adoption Rate Transaction Requiring Post-Issuance Activities Cycle Time of Transaction End User Satisfaction Supplier Performance Number of Suppliers

98. End-user customer satisfaction survey questions and results

99. Bibliography Leadership Development Program Report “Berkeley Buying Power: Driving Contract Spent to Savings.” Tipping Point Solutions, September 2010. The Hackett Group Report “2005 Performance Metrics and Practices of World-Class Procurement Organization.” The Hackett Group, 2005. Penn Procurement “Performance Metrics – Penn Purchasing Services.” University of Pennsylvania, accessed Feb 2011. <http://www.purchasing.upenn.edu/supply-chain/performance-metrics.php> Notre Dame Sustainability “Procurement Metrics – Office of Sustainability.” University of Notre Dame, accessed Feb 2011. <http://green.nd.edu/sustainability-at-nd/procurement/procurement-metrics/> Expert Sources Ralph Meier, Chief Procurement Officer at University of Pennsylvania Jim Hine, Executive Director of Procurement at University of California, San Francisco Erin Wixson, Co-Author of Berkeley Buying Power Report Andrea Rex, Co-Author of Berkeley Buying Power Report Heidi Hoffman, Operational Excellence Procurement Initiative Manager at University of California, Berkeley Barbara Lane, Assistant Dean, College Administration Shana Amenaghawon, Financial Services Director, College of Chemistry Karen Kato, Enterprise Data Warehouse & Database Manager , IST Rich Taylor, Director of Procurement Strategies