Procurement TransformationMaximizing the Potential of Procure-to-Pay Technology

Jack D. Zencheck, Chief Procurement Officer, Yeshiva University

• Celebrating its 125th year.• YU is the country’s oldest and most

comprehensive institution combining Jewish scholarship with academic excellence and achievement in the liberal arts and sciences, medicine, law, business, social work, psychology, Jewish studies, and education.

• Students: 7,232 • Annual sponsored research: $225 million• Operating Budget: ~$648 million • Campuses: Locations throughout New York

City and Israel

Yeshiva University (YU)

What is Procure-to-Pay?

• Strategic rather than tactical

• Acquiring best contract pricing and terms vs. just buying (Procure)

• Cost-effective methods of processing payments through technology. (Pay)

Why Procure-to-Pay?

• Executive Level Support• Strategy• Cost Benefit

• Risks• Separation of Duties• Controls

oManual vs Systematic• Governance

YU Procurement Services at a Glance

• Purchasing• 90,000 purchase orders processed

• 80% ≤ $2,000• 67,000 purchase orders processed electronically• $300,000,000 in spend

• Accounts Payable• 179,623 total invoices processed

• 116,182 on Purchase Orders• 27,364 not on Purchase Orders• 36,077 processed thru EDI

Procure-to-Pay - Table of Organization

OpenDirector, E-Commerce

(P Cards)(B2B)

A. Butta Administrator,E-Commerce

G. BraithwaiteSystems Analyst

A. MooreSustainabilityCoordinator

R. GandolfoContract Admin.

IT

Jack D. ZencheckChief Procurement

Officer

Tova Ackerman Director,

Purchasing

T. SinghAP

Supervisor

T. BrownContracts

Administrator

H. NonnonAcquisitions Clerk

A. VillamarBookkeeper

L. JamesBookkeeper

Michael WinklerDirector of Energy

Mgmt & Sustainability

G. GillottAssistant to

CPO

J. IuratoTravel &Expense

B. O’FarrellConstruction

Buyer

R. LabrewFreezer Program

Clerk

R. OsiContracts

Administrator

N. FrancoAcquisition

Clerk

H. MartinezBookkeeper

E. TeehanAP Clerk

K. NeufvilleAP Clerk

Thomas CannonDirector of

Accounts Payable

A. BasiloneReceptionist

Natalia VolodarskyPurchasing Manager,

Scientific

P-2-P

V. MewAsst. Contract

Adm, MRO

S. GonzalezAP Clerk

P-2-P System

• Banner for Higher Markets

• SciQuest Full Suite (Higher Markets)• Requisition Manager• Order Manager • Spend Director• A/P Director• Sourcing Manager• Contract Manager

P-2-P System

• JPMorgan PaymentNet System• P-Card

• Enzyme Freezer Program, Alcohol Ordering, Reporting and Inventory System

• A/P Director e-Invoicing and Digital Mailroom Automation System

P2P Process

2) A/P DIRECTOR3 WAY MATCH (5k+)2 WAY (<5K)

1B) SCAN & CONVERT TO DIGITAL FORMAT & IMPORT DIT DIGITAL MAILROOM

Accounts Payable Automation – E Invoicing

E-Invoice

SciQuest

3 Way Match

Banner

ACH

E-Invoice

Direct Data Extraction

Email

Fax Lock Box

CXML Conversion

SciQuest

3 Way Match

Banner

ACH

Accounts Payable Automation – E Invoicing

Outline• We hired E&I Consulting to

assess and recommend the following:• Technology Assessment• Organization & Operations• Marketing & Communications• Supplier Enablement

Procurement Transformation Project

• Performed a thorough evaluation of technology implementation• Banner and SciQuest full suite

• Identified post-implementation issues • system workflow (configuration and performance) • functionality deficiencies that impact

• performance • client satisfaction

• Documented and categorized appropriate solutions • Implemented recommended solutions • Documented and categorized outstanding Banner/SciQuest issues• Reinforced the values and benefits of compliance and utilization

Technology

• Completed process mapping of the procure-to-pay process • Validated each process step and decision point • Identified opportunities to:

• streamline workflow• reduce process time and effort for the campus users • maintain appropriate level of control and oversight

• Increase operational efficiencies by implementing reengineered processes resulting from the following mapping exercises:• Processing non-catalog small dollar purchases | Processing Requests greater

than $7,500• Processing Change Orders | Vendor Set Up• Remit-to-Addresses | Processing Invoices• Monitoring Sub-Recipient Process

Technology

• Conducted a formal organizational review to determine alignment with objectives of senior leadership and key internal business partners

• Determined need for more formalized strategic vision supported by senior leadership• Developed a 3-5 year strategic plan• Expressed to senior management the role of Procurement to:

• Project ROI• Address budget and staff requirements• Identify dependencies in order to achieve the strategy

• Recommended utilization of CPO’s skills to concentrate on:• Higher value• Strategic objectives

• Delegated appropriate contractual signing authority to:• Increase efficiencies• Minimize risks

Organization & Operations

• Established standard institutional procurement terms and conditions and a standard Master Supplier Agreement

• Obtained cooperation from the other internal stakeholders including:

• Human Resources• Business Affairs• Finance• Environmental Health and Safety• Insurance and Risk Management

• Established a formal Procure-to-Pay strategy and structure with shared ownership among:

• IT • Finance• Procurement

Organization & Operations

Organization & Operations

• Reviewed the skillsets and capabilities of Procurement staff and determine

• Skills and staffing levels were sufficient to meet goals and expectations

• Technology related skills were inadequate and needed improvement

• Performed a Procurement Customer Satisfaction Survey• determined current level of satisfaction• identified key areas of concerns

• Survey Results:• 82% satisfied with content and supplier enablements in

eMarketplace• 59% satisfied/very satisfied with service and support received

from the Procurement Services organization• 68% understand approval levels • 29% understand competitive bid threshold

Organization & Operations

• Performed supplier enablement to ensure successful hosted or punch-out catalog content for preferred contract suppliers.

• Enabled additional SciQuest science pack suppliers to further streamline ordering process for the campus community

• Initiated process change requiring suppliers to sign a written agreement to pay the 1.5% technology fee upfront vs. after the fact (current practice)

• Deactivated infrequently used suppliers to drive business to the preferred, contract and marketplace enabled suppliers

Supplier Enablement

• Developed a formal Marketing and Communications Plan (MCP) to communicate• Vision• Direction• Goals • Collaboration

• Invested in the redesign of the Procurement Services website to become the central repository of all procurement and disbursement related information

• customer support resources• policies & procedures• how-to-buy• commodity and supplier information• redesigned process documents

• Ensured regular communication and collaboration with key procurement stakeholders:• Human Resources• Controller Office• Risk Management • Finance• Environmental Health and Safety

Marketing & Communications

• Implemented new process to formally track and report all cost reduction accomplishments

• Developed and provided formal cost containment savings and criteria for tracking results• Developed formal and regular communications with senior leadership

and the campus community the monthly results of cost reduction initiatives

Supplier Enablement

Staff• Highly respected by peers in higher education • Skilled and motivated• Frustrated with pace of transition to more strategic and value-

added activities • Burdened by non-value duties and responsibilities• Would embrace and benefit from regular professional

development opportunities

General Observations

Impact of Procurement• Procurement function should be elevated to the highest levels

of the organization to support its the strategic objectives of the institution

• Designate Procurement as an institutional priority, because it:• Represents second largest percentage of annual operating budget• Interacts with and can positively impact operational efficiencies in

virtually every department• Can dramatically impact the Institution's bottom-line by reducing

costs and extending the value and potential of every dollar of available funding

• Procurement Services should be separated from non-core procurement activities

General Observations

• This all requires change management• “We can't solve problems by using the

same kind of thinking we used when we created them.”

- Albert Einstein

Internal Challenges & Solutions

Ralph Maier and Melánie LundE&I Consulting Group

(267) 207-9338rmaier@eandiconsulting.org

www.eandiconsulting.org

Acknowledgement

Conclusion