PRESENTATION TO LSU TRANSITION ADVISORY TEAM

JOINT MEETING OF ADMINISTRATIVE SERVICES, TECHNOLOGY, STREAMLINING TASK FORCES

Presented by Marie C Frank

LSU Office of Procurement Services

Agenda1. Introduction2. LSU System Overview3. LSU Shared Services4. Procurement Evolution5. Subcommittee Recommendations:

1. Pilot Procurement Code and Structure2. eProcurement System3. Spend Analysis and Savings Opportunity in Procurement

6. Savings Examples

2

Subcommittee Members Subcommittee members include the

following: Marie C Frank, Executive Director of

Procurement Services, LSU James Frazier, Associate Director of

Procurement Services, LSU Wendy Simoneaux, Assistant Vice President

for Budget & Finance, LSU System Monica Mougeot, Director of Fiscal

Operations, Pennington Biomedical Research Center

Larry Williams, Director of Purchasing, LSU Alexandria

3

Subcommittee Members Subcommittee members include the

following: Donnie Thibodeaux, Assistant to the Vice

Chancellor for Business Services, LSU Eunice

Bill Wolfe, Director of Human Resource Management, LSU Shreveport

Jan Bernath, Director of Accounting Services, LSU Agriculture Center

Angela Neal, Acting Director of Purchasing and Materials Management, LSU HSC Shreveport

Rob Parker, Director of Purchasing, LSU HSC New Orleans

4

Subcommittee Members Subcommittee members include the

following: Ben Lousteau, Fiscal Analyst, LSU HSC New

Orleans Glenn Ducote, Attorney at Law Vic Cleveland, Manager of Contracting &

Procurement, Shell Geismar LP Tony Calcagno, Procurement Director, CB&I Ron Krajewski, Specialty Underwriters

5

LSU System Overview6

  # of STAFF

REPORTS TO ANNUALSPEND

ANNUAL # OF PURCHASE ORDERS

# OFSOLICITATIONS

SYSTEM

LSU BR (1) 19 VC of Finance & Administration

$230 M 6,900  450 PRO

LSU AG (9) 2 Associate VC for Administration

 $20 M  784  152 PRO

LSUE (6) 2 VC Business Affairs

 $16.5 M  900  9 PRO

LSUA (2) 2 VC of Finance $4.5 M 1,075 35  PROPENNINGTON (3)

3 AED of Operations/Chief of Staff

 $10 M  415  18 PRO

LSU LAW (8) 1 VC of Administrative & Finance

 $3.8 M  59  10 PRO

LSU HSC NO 10 VC of Administration & Finance

$ 61.4 M  4,019  200 PEOPLESOFT

LSU HSC SHREV

           PEOPLESOFT

LSUS ** 2 VC Business Affairs

 $4.7 M 1,950  98  Integrow

Total 41 $350.9 M 16102 972

LSU Shared Services7

Institution Formal

SolicitationsProfessional

Services

   

PROSystem Facilities

Property Management

Financial Accounting, Payroll, and

Benefit Administration

LaCarte Card

LSU Y Y Y Y Y Y Y

LSU Alexandria N N

 Y N Y Y Y

LSU Eunice N N Y N Y Y Y

LSU Ag Center Y N Y Y/N Y Y Y

LSU Law Center Y N

 Y N Y Y Y

PBRC Y N Y N N Y Y

LSU System Y Y Y Y Y Y Y

Procurement Evolution

Administrative

Operational

Tactical

Strategic

Transaction Management Contract & Supplier Management

Low Performance Average Performance High Performance

8

Pilot Procurement CodeSpend Analytics – eProcurement

Pilot Procurement

Code

eProcurementSpend Analytics

RECOMMENDATIONS10

Pilot Procurement Code and Structure

eProcurement System

Spend Analysis and Savings Opportunity in Procurement

#1 – Pilot Procurement Code and Structure

Recommendation: The Pilot Procurement Code being created for LSU should apply to all institutions under a “Shared Services” Model.

Challenge: Currently, LSU Shreveport, LSU HSC New Orleans and LSU HSC Shreveport do not currently operate under LSU’s Shared Services Model.

11

UPPC Used in lieu of:

Louisiana Procurement Code for goods and services

Laws governing professional, personal, consulting and social services

Laws governing equipment and services governed by the Office of Information Technology

12

#1 – Pilot Procurement Code and Structure

Where are we now? Received approval from the Board of

Regents Received approval from the LSU Board of

Supervisors Received approval from the DOA as the

“initial qualifying institution” subject to approval of the UPPC

Received approval of the UPPC from DOA Issued a Notice of Intent to begin

promulgation of the code into the Louisiana Administrative Code

13

UPPC – What does it Do? Adopt a procurement code that is simple

– freedom from unnecessary bureaucratic processes

14

UPPC – What does it Do? Ability to use more competitive

strategies – limits, electronic processes, selection… every method for determining low cost and best value

EXAMPLES: Increased Thresholds, Office Supplies, Reverse Auctions

16

Office Max Analyzed spend of LSU and its Shared

Services Institutions to be $2 M per year Sought and received approval from the

DOA to issue an RFP (best value) as opposed to an ITB (lowest cost)

Current laws limited specifications to narrow terms and scoring/negotiation methods

Awarded to Office Max for a signing bonus, volume rebate and 25-55% discounts on all items.

17

Reverse Auctions Very similar to eBay auctions where the

suppliers bid for the contract The ability for suppliers to participate is

minimal and entirely in an electronic environment

Louisiana Procurement Code passed recent law to allow the use of Reverse Auctions but only to be conducted by the Division of Administration

18

UPPC – What does it Do? Ability to solicit/contract for the most

cost effective termEXAMPLE: Bus Transit

Use effective methods for public noticeEXAMPLE: Electronic notification of

solicitations Utilize new technology – eProcurement

and employ supplier technologyEXAMPLE: Cooperative Purchasing

Catalog Enablement's Apply commodity strategies

EXAMPLE: Scientific and IT supplies/equipment

19

Pilot Procurement Code REMAINING STEPS TO

IMPLEMENT: Approval of the Joint Legislative

Committee on the Budget (JLCB) Development and approval of

Procurement Policies which are 60% complete

Final approval of the LSU Board of Supervisors

Execute Change Management within LSU

20

#2 – eProcurement SystemRecommendation: LSU electronic procurement system (Sciquest) should be expanded and utilized by all institutions either under the Shared Services Model or through the use of acquired Business Units of Sciquest.Opportunity: The increase of electronic methods of procurement will increase efficiency and savings because it serves as the tool to bridge the flexibilities of the UPPC and the other institutions; however, the challenge is to dedicate resources necessary to implement across all institutions with various mainframe systems.

21

eProcurement – July 22, 2013 launch

22

eProcurement Electronic Public Notice Electronic Solicitation Electronic Signatures Reverse Auctions Strategic Sourcing Negotiated Hosted Catalogs Real-time Competition at Dollar 1

23

#3 – Spend Analysis and Savings Opportunities in

Procurement24

Recommendation: Identify savings opportunities across all institutions through spend analysis and the utilization of strategic sourcing strategies to procure goods and services and revenue-generating opportunities through the optimal channels with the best suppliers.Challenge: The lack of tools, integration and disparate data sources; however, the opportunity exists for this recommendation to act as bridge for consolidating all the data across all the institutions to make better procurement decisions.

FY 2012 – Spend Analysis Total Spend ≈ $252M

Breakdown by Institution:≈ $189M – LSU Main Campus≈ $25M – LSU Agricultural Center≈ $12M – Pennington Biomedical Research Center≈ $11M – LSU System Office≈ $6M – LSU Eunice≈ $5M – LSU Alexandria≈ $4M – Paul M. Hebert Law Center

Data from July 1, 2011 – June 30, 2012

25

FY 2012 – Spend Analysis Total Transactions ≈ 181,698 Total Purchase Orders ≈ 16,102 Total LaCarte (Pcard) Transactions ≈

165,596 Breakdown by Threshold:

> $100,000 ≈ 3> $50,000 ≈ 23> $25,000 ≈ 77> $15,000 ≈ 110> $10,000 ≈ 98> $5,000 ≈ 522< $5,000 ≈ 164,763

26

FY 2012 – Spend Analysis 27

Percent Spend by Payment Method

Percent Spend by # of Transactions

Percent Spend By Mechanism Percent Spend By # of Transactions0%10%20%30%40%50%60%70%80%90%

100%

$193,369,473

16,102

$58,369,473

165,596

PO LaCarte

0%

500000000%

1000000000%

1500000000%

2000000000%

2500000000%

3000000000%

3500000000%

LSU Spend Detail (FY2012)$251.9M Spend Base

28

Taxes / Permits /

FeesIT / AV PassthroughUtilities

Facilities & MaintenanceScientific

ScientificSupplies

&Equipment

Prof.Services –

General

FinancialServices

ITServices

State

LocalFederal

IT / AV - General

Software Licensing

AV Eqpt

Computers

General

Foundations

Other Universities

Electric

Gas

Telecom

WaterGeneral

Industrial Components

& Fabrication

(MRO)

Electrical

HVAC

LandscapingGeneral

Specialty Vendors

Building Systems

Professional Services

Other Vendors

ConstructionTravel

LibraryTransp.

MarineGases

Other Vendors

General

Gen. Contractors

Constr. Eqpt

Travel Agents

Hotel & Lodging

Commercial Airlines

Elevator MaintJan. LaborPlumbing

Jan. SuppliesPainting

Car Rental% of

Category

Spend ($M)

0 25025 50 75 100 125 150 175 200 225

Work In Process

31.7 21.7 20.9 20.2 19.3 18.3 14.7 14.5 14.2 13.5 8.3 8.1 7.5

Bldg Matls

• Medical• Athletics• Interiors• Prof. Associations• Food Services• General Retail• Logistics/Shipping

• Campus Svcs• Agriculture• Veterinary• Human Resources• Waste Mgmt.• Insurance• Dental

Other Categories

Bus T

rans

itVe

hicle

Acq

.Fu

elVe

hicle

Mai

nt.

Prin

ting

Gene

ral

Prom

otio

nal

Prod

ucts

Gene

ral O

ffice

Sup

plie

sCo

pier

s &

MFD

s

Comm /Mktg

% total spend

12.6% 8.6% 8.3% 8.0% 7.7% 7.3% 5.5% 5.7% 5.6% 5.4% 3.3%3.2% 3.0%

38.9

15.5%

Savings Potential and Costs to Date

29

Based on $252M annual spend for FY2012:

Savings Opportunities (Hard $)• Increase spend under contract

and reduce non-competitive spend

• Utilize Office Supplies contract flexibility

• Utilize Strategic Sourcing events (e.g., reverse auctions)Total Hard $ Savings

Opportunity

Savings Opportunities (Soft $)• Transaction processing costs

Total Soft $ Savings Opportunity

$1.29M$1.12M$2.77M

$5.18M

$1.00M$1.00M

$6.45M$3.63M

$13.85M

$23.93M

$5.00M$5.00M

5-Yr Value

Yr 1 Value

Total Hard Costs To Date $2.1M

Savings Examples Several commonly used items

Lamps Scientific Gloves Lab Coats Towels Scouring Pads

30

Procurement Evolution:Strategic Procurement

Pilot Procurement Code

Strategic Sourcing &

Spend Analytics

eProcurement

QUESTIONS?38

THANK YOU

MARIE C FRANK, MPA, CPPBLSU OFFICE OF PROCUREMENT SERVICES213 THOMAS BOYD HALLBATON ROUGE, LOUSIANA 70803(225) 578-2307MFRANK@LSU.EDU