Moving Sustainability to the Core of Strategic Sourcing

MOVING SUSTAINABILITY TO THE CORE OF STRATEGIC SOURCING

The Mission of UC Procurement is the Mission of the UC

Expand opportunities for teaching, research and public service by delivering savings and efficient procurement services across the University of California

Our Mission

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1,993.1

953.7

324.8 287.2 236.0 228.6 209.0368.0 419.0

68.2 82.9278.1

411.3563.2 634.7

Significant Opportunities in All Areas of Spend

05/01/2023 3Source: Spend Radar campus and US Bank PCard data Apr 2012 – Mar 2013

Health & Welfare

Building & Construction

Services

Financial &Insurance Services

Travel HealthcareServices

EngineeringServices

Utilities Other (<$200M

each)

Unclassified Food & Dining

Services

Office Supplies, Express

Package & Environments

MRO/Facilities

IT & Telecom

Professional Services

Life Sciences

Total $5B Annual Spend Total $2B Annual Spend“Non-Traditional” Categories “Traditional” Categories

Actively managed by UC Procurement Services

~230 professionals atUCOP and 10 campuses

UC Annualized Spend in Millions(Apr 2012 - Mar 2013)

$7+ billion in addressable annual spend supporting all aspects of University operations, academia and research

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The story of strategic sourcing begins with a single item…

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Strategic Sourcing at the UC…

Long before Critical Mass rides started in the early 1990s, an earlier wave of ecology-minded folks cycled en masse through the streets of Berkeley in an annual "Smog-Free Locomotion Day, this one held February 28, 1971. – Source: FoundSF.org

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Berkeley: 35+Davis: 34Irvine: 16LA: 20Merced: 6Riverside: 5San Diego: 30+Santa Barbara: 35Santa Cruz: 22San Francisco: 1Total: 204

The UC is home to over 200 Student SustainabilityOrganizations…

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After Policy (2015)METRICS• 0.1 MW Renewable Energy• 1 LEED certification• Beg for $$ for energy

efficiency

Institutional Change• No discussion of GHGs• 1 sustainability FTE • No sustainability language in

purchasing contracts

METRICS• 17 MW Renewable Energy• 191 LEED certifications• Regents approved $240 million

energy efficiency program; saved $140 million

Institutional Change• ACUPCC Founding Signatories• 39 sustainability FTEs• Sustainability language/metrics in all

RFPs/Contracts/Quarterly Reviews

Before Policy (2004)

Sustainability at the UC…

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“Environmentally preferable purchasing underlies and enables all other areas of sustainable practice in this policy.”

-University of California Policy onSustainable Practices

Green Building DesignClean Energy

Climate ProtectionSustainable Transportation

Sustainable Building OperationsRecycling and Waste Management

Sustainable FoodsevicesSustainable Water Systems

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• Sustainability Purchasing Working Group– Created by the Sustainability Steering Committee– Proposes amendments to policy– Coordinates implementation of policy– Shares best practices and creates economies of scale for system-wide

initiatives.• Global Climate Leadership Council

– Created in 2014 to support Carbon Neutrality Initiative– Supports UC goal of achieving carbon neutrality by 2025

• Sustainable and Nutritious Food Procurement– Part of the operations committee of the Global Food Initiative– Supports the achievement of UC Sustainability goals for food services.– Promotes best practices across the UC and Higher Education.

Procurement and Sustainability are Natural Partners…

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Ideas often come to us as independent project ideas…

These Stirling freezers use a lot less energy, can we

get a system-wide agreement?

What if we ONLY bought refillable pens?

The heat pumps that we put on our modular

buildings have gotten a lot more efficient – could we

replace them?

What if every vehicle we bought was alternative fuel?

Hybrid? Electric? What if every employee could by a

hybrid or electric at a discounted price?

• How do we estimate the impact?• How do these align with our goals?

• I’m working on all of these other projects and now you want me to work on this too?

Aquaponics!

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Process StandardsISO

International Organization for Standardization

Leveraging processes and product standards allows high impact SCALABLE sustainable practice…

• Sustainability in Building Construction

• Earth Moving Machinery• Sustainability in Buildings and Civil

Engineering Works• Event Sustainability and

Management Systems• Social Responsibility

• Information Technology

Product StandardsAccepted under the UC Sustainability Policy

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1. Be supplied by 100% Renewable Energy

2. Create Zero Waste3. Sell products that sustain

people and the environment

Wal-Mart has moved environmental sustainability to the core of it’s business…

Source: corporate.Walmart.com

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How can the UC Procurement put sustainability at the core of what it does?

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1. Aligning with the 3 key Presidential Sustainability Initiatives:– Zero Waste by 2020– Carbon Neutrality by 2025– Global Food Initiative

2. Embed sustainability into the core of our business process

3. Deliver results that allow us to purchase more sustainable products and services more sustainably

UC Procurement can put Sustainability at its core by…

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1. Align with 3 key Presidential Sustainability Initiatives…Zero Waste by 2020Divert 95% of municipal solid waste from landfill by 2020

• Reduce consumption of goods.• Reduce packaging• Convert packaging to recyclable and

reusable materials.• Reduce the cost of procuring recyclable

and compostable products

Carbon Neutrality by 2025Make the UC the first major research University to achieve carbon neutrality.

• Reduce the cost of renewable energy• Introduce products that reduce energy

consumption and carbon emissions• Introduce supply chain practices that

reduce the number vehicles traveling to and from our campuses.

Global Food InitiativeImprove food security, health and sustainability at UC – our campuses, medical centers and national labs – and through California, the U.S. and the world

• Reduce the cost of sustainable food• Increase the transparency of our food

supply chain• Share best practices within Higher

Education and Industry

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2. Embed Sustainability Into Our Core Business ProcessThe 7-step Strategic Sourcing Methodology consistently and efficiently guides high value procurement outcomes.

•Supplier Evaluation Criteria Matrix

•RFI (optional)

•Fact Based Negotiation Package

•Sourcing Award Recommendation

•Updated Business Case

7.0 Implement New Agreement

6.0 Negotiate & Develop Strategic Sourcing

Recommen-dation

5.0 Conduct Competitive

Exercise

4.0 Identify Minimum

Requirements & Evaluation

Criteria

3.0 Develop Category/Sub-

Category Strategy


Category Profile

1.0 Develop Strategic Sourcing Project Work Plan

1.1 Mobilize Project Team

1.2 Conduct Project Kick-

Off

1.3 Finalize Project Plan

2.1 Conduct Internal Analysis

2.2 Conduct Industry Analysis

3.1 Develop Sub-Category Opportunity

Baseline

3.2 Develop To-Be Process

Flow

3.3 Develop & Summarize Category Strategy

2.3 Build TCO Model

4.1 Finalize Supplier

Evaluation Criteria

4.2 Develop Scoring

Document

4.3 Conduct Supplier Analysis

5.1 Develop Tender

Document

5.2 Distribute Tender

Document

6.1 Finalize Fact-Based Negotiation

6.2 Plan and Conduct Fact-

Based Negotiation

6.3 Develop & Recommend

Sourcing Decision

5.3 Evaluate & Score Tender

Document

7.1 Develop Category Savings

Summary

7.2 Develop Implementatio

n Plan

7.3 Deploy Contract

Campus-Wide

• Internal Profile•TCO Model•Baseline TCO•As-Is Process Flow •External Profile•Cost Reduction Ideas

•Preliminary Business Case

•Sourcing Project Work Plan

•Kick-Off Meeting & Presentation

•Category/Sub-Category Strategy

•Business Case

•Market Solicitation Documents

•Evaluated Responses

•Short List of Top Suppliers

• Implementation Plan

•Communication Plan

•Supplier Performance Management Approach

Key

Out

puts

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•RFI (optional)






Recommen-dation


Exercise



Criteria


Category Strategy


Category Profile




Off





Baseline


Flow


2.3 Build TCO Model


Evaluation Criteria

4.2 Develop Scoring

Document


5.1 Develop Tender

Document


Document



Based Negotiation


Sourcing Decision


Document


Summary


n Plan

7.3 Deploy Contract

Campus-Wide






•Business Case







Key

Out

puts

Items in red require PLC approval

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•RFI (optional)






Recommen-dation


Exercise



Criteria


Category Strategy


Category Profile




Off





Baseline


Flow


2.3 Build TCO Model


Evaluation Criteria

4.2 Develop Scoring

Document


5.1 Develop Tender

Document


Document



Based Negotiation


Sourcing Decision


Document


Summary


n Plan

7.3 Deploy Contract

Campus-Wide






•Business Case







Key

Out

puts

Items in red require PLC approval

Working with campus procurement and sustainability experts to create a roster of sustainability subject matter experts for specific categories.

Outcomes: • Ensures that sustainable expertise is available and

incorporated into every initiative from the start. • Helps to identify sustainable products, and sustainable

practices and how to evaluate them.

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•RFI (optional)






Recommen-dation


Exercise



Criteria


Category Strategy


Category Profile




Off





Baseline


Flow


2.3 Build TCO Model


Evaluation Criteria

4.2 Develop Scoring

Document


5.1 Develop Tender

Document


Document



Based Negotiation


Sourcing Decision


Document


Summary


n Plan

7.3 Deploy Contract

Campus-Wide






•Business Case







Key

Out

puts

Address sustainability strategies in Business Decision documentation.

Outcomes: • Ensures that we have explicitly considered, documented

and discussed sustainability impacts in system-wide source decisions.

• Allows us to consider multiple sustainability attributes beyond the selection of the specific product and its pricing.

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•RFI (optional)






Recommen-dation


Exercise



Criteria


Category Strategy


Category Profile




Off





Baseline


Flow


2.3 Build TCO Model


Evaluation Criteria

4.2 Develop Scoring

Document


5.1 Develop Tender

Document


Document



Based Negotiation


Sourcing Decision


Document


Summary


n Plan

7.3 Deploy Contract

Campus-Wide






•Business Case







Key

Out

puts

Regularly consider sustainability in the supplier relationship by evaluating product offerings and business practices.

Outcomes: • Create an environment where it easy to identify and

purchase sustainable products.• Collaboration with suppliers and the stakeholders to

continuously evaluate new sustainable products and practices for implementation.

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1. Carbon Neutrality by 2025 Jeremy MeadowsAssociate Director Strategic

SourcingFacilities & MRO

2. Global Food Initiative Eric PollackCommodity Manager, Food

Services

3. Deliver results that support more sustainable purchase more sustainably

CARBON NEUTRALITY:SOLAR ELECTRICAL GENERATION

Jeremy Meadows, Associate Director Strategic SourcingUC Procurement Case Study

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University of California Power Program Overview

– System-wide Solution for Direct Access Campuses

– Energy Service Provider

– Program complies with California Renewable Portfolio Standards (RPS)

– Created to address UC’s system-wide climate neutral energy policy objectives

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The Objective and Acquisition Profile• UCPP’s power supply portfolio and contribute to UC’s RPS obligations.

– UCPP’s annual direct access energy use is in the range of 260,000 MW/h– Contract Length: 25 years– Approximate Contract Value: $350,000,000 (25 years x 14MM)– Projects located in CA– Project with 20MW or greater nameplate capacity– Minimum of 33% of our annual need

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RFP Development/Timeline• RFP Timeline

- RFP Open: July 18, 2014 4 PM- Pre-bid Conference: July 22, 2014 2 PM- Deadline to submit questions: July 24, 2014 2 PM- RFP Closing: July 31, 2014 4 PM - RFP Evaluation: July 31-Aug 9- Apparent Awardee(s) Notification: August 13, 2014

• Contract – UC PPA (Based on PG&E RAM 5 PPA)– Industry recognized standard– Buyer friendly

• Technology - Supplier Registration and Sourcing

Project OverviewFive Points Solar Park

Site Summary

Size: 60 MWAC

Location: Five Points, Fresno County, CA

Solar Irradiance: 2,105 kWh/kW/year (3Tier)

Point of Interconnection: On-Site/NP-15

Location Site Map

Future Site of the 60MW Five Points Solar Park Five Points, CA

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Project OverviewGiffen Solar Park

Site Summary Location Site Map

Future Site of the 20MW Giffen Solar Park Cantua Creek, CA

Size: 20 MWAC

Location: Cantua Creek Fresno County, CA

Solar Irradiance: 2,097 kWh/kW/year (3Tier)

Point of Interconnection: Giffen Substation On-Site/NP-15

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GLOBAL FOOD INITIATIVE:BUYING SUSTAINABLE AND NUTRITIOUS FOOD

Eric Pollack, Commodity Manager for FoodUC Procurement Case Study

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Food Sustainability Is Expensive

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Definitions of Sustainable Food & Non- Food Products

• Organic Produce

• Locally Grown Produce

• Locally Farmed and Organic Dairy

• Beef – Grass Fed and Locally Raised

• Poultry & Eggs – Cage Free – Range Free- Antibiotic Free

• All Natural - Groceries, Retail

• Compostable- Utensils , Cups , Napkins, Plates

• Recyclable Packaging

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Past UC Dining Purchasing Practices

• No collaboration between campuses

• Each campus contract independently

• Did not leverage their volumes

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Current Purchasing Practices• Campus Dining Organization on 6 campuses participate in system-wide food

procurement programs.

• Consolidated and leveraging the UC & CSU purchasing volume of $75,000 million annually.

• Awarded produce and master food distribution to a single regional vendor West Central Produce – S. Cal Trinity Produce – N. Cal Sysco -S. Cal PFG – N. Cal Elimination of additional trucks on campuses

• More transparency to farmers and manufacturers

• We now have the ability to negotiate and contract directly with local farmers, processors and national manufacturers for organic and all natural food and non-food products at lower costs

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Supplier Transparency and Reporting

• UC has total transparency & traceability to all growers

• In the UC agreement we require monthly sustainability impact reports from our produce vendors.

• We are working toward obtaining the same reports from our master distribution partners ( Sysco & Performance Food Group)

• Reports are based on each campus definition of sustainable local and organic offering

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Defining Locally Grown Produce Across the UC

• University of California defines locally grown – 500 mile radius from farm to campus

• UCSD – 250 miles radius - farm to campus

• UCR – 500 mile radius - farm to campus

• UCSB – 150 mile radius - farm to campus

• UCSC – 250 mile radius

• UC Merced – 250 mile radius

• UC Berkeley – 250 mile radius – farm to distributor to campus

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University of California Locally and Organically Grown CAMPUS Purchases of Locally & Organically Grown Produce

UC San Diego 55.25%

UC Riverside 38.85%

UC Santa Cruz 40%

UC Berkeley 35%

UC Merced 39%

UC Santa Barbra 54.8%

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Annual Savings Due to UC & CSU Campuses Collaboration

Programs Annual Savings

S. California Produce $985,000

N. California Produce $400,000

Master Distribution ( Sysco & PFG) $700,000

Total Annual Savings $2,085,000

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Additional Food Sustainability Projects

• Dairy – Local dairy farms and processing

• Local sustainable poultry - Mary’s

• Other locally raised poultry

• Fresh sustainable seafood – Sea to Table

• Aquaponiclly grown produce – Viridis Aquaponics

• Sustainable proteins – Beef & Pork

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What’s in a Can of Pineapple Tidbits?

DW 6# Brix 15 MalaysiaDW 6.25# Brix 15 Indonesia 1 ½ # More per case

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More food in can = fewer cans bought and disposed of…

Annual Canned (6/#10) Products

Purchases of 2,000 cases

Additional Can Wt. Benefit of Additional Wt.

Avoided in Disposing of

12,000 cans .25 # 750 # 125 cans20+ cases

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Summary

• Defining what foods are under sustainable category

• Get your campuses to collaborate

• Leverage your volume

• Transparency

• What’s in the can? Make sure that you get value

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1. Sustainability is at the core of UC Procurement’s Mission

2. UC Procurement is a vital partner in advancing the sustainability agenda and is an underlying component of any sustainability project.

3. The Strategic Sourcing Process provides a platform for participation and collaboration to help the UC achieve its mission and program goals.

In Conclusion…

“UC, like California, simply cannot afford to stand still. If you’re standing still in California, you’re falling behind. This is a dynamic institution, and a dynamic state, living together in a dynamic time.”

Janet NapolitanoUniversity of California President

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