Procurement Contracts

Procurement Contracts

San Antonio, TXFebruary 24, 2009

Supplier Relationship Management

Product User Group Conference

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


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


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


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.


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


Remember our remaining amount was $1031.18


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.



Email that is triggered . . .


Releases over Contract MaxAfter 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




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


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


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


90 Day Notification


30 Day Notification


Nearing Contract Max


Nearing Expiration and Contract Max


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

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


Questions?

Contact Information

Gail DriskellSr. Buyer, System Development


Email: [email protected]

Documents

Procurement Contracts