Procurement Strategic Planning Process Transformation

1. Procurement Strategic Planning Process Transformation • Procurement Risks and Opportunities • Procurement Process Capabilities & Interdependencies • Key Strategic Planning Milestones • Mission, Vision, Values, Goals and Strategies

2. Procurement Processes – DRIPPING IN RISK & OPPORTUNITY? Supply Interruption, Product or Service Failure $450m to $500m Employee or Supplier Fraud? IT – Security, Transaction Integrity, Licenses? Price or Total Life Cycle Cost? Brand/Reputation Regulatory/ Environmental Non-Compliance? Quality/ Service/ Scope Creep? Lack of Negotiation Strategy? Unwanted Auto Renewals, Non-Compliance With T’s & C’s? Wrong Sourcing & Relationship Strategy? Other Supplier Risks Financial?Dependency? Diversity? Lack of Post-Award Contract Management? Legal Risks, Insufficient Protections, Costly Disputes? Lack of Information, Reporting, Tools, Technology & Workflow Skills/Competencies, Planning &Project Management etc?

3. Procurement Strategies and Policies Procurement and Risk Management Processes Procurement Organization and People Procurement Information for Decision-Making Procurement Information Methodologies & Tools Procurement Systems and Data Procurement Process Capabilities • Current & Continuous Procurement Strategic Planning • Procurement Strategic Plan aligned with key Company Plan • Current and aligned Procurement Policies • Clear Responsibilities Defined & Segregation of Duties • Ethical Purchasing Standards • IT Plan for Process • Integrated Strategic Sourcing/Commodity Management Processes • Integrated Supplier Management Process • Integrated Risk Management Process • Integrated Contracts Management Process • Efficient, Integrated Purchasing, P-Card & AP Procedures • Supplier Stratification • Supply Risk Mgmt • Purchasing Executive • Clearly defined central and de-central roles and job descriptions • Cross Functional Category & Risk Management Teams • Buyers Trained & Certified • Trained End Users • Skills and Qualification matrices • Supportive Culture • Segregation of Duties • Integrated Procure to Pay System • Data Warehouse • CXML/EFT etc. • Electronic Supplier Catalogues • Internet-based Purchasing • Integrated P2P to ERP • internal & external for links for Supply Risk • Contract Workflow & Management System • Contract Library • Electronic Approvals • Spend Analysis Reporting • Sourcing & Supply Risk Strategy Monitors, Alerts & Reporting • Contract Mgmt & Administration Reports/Alerts • Supplier & Category Reports • Purchasing, AP, Contracting and P-Card Compliance and Reporting • Expenditure data mining and analysis • Market Analysis • Supplier Analysis • Category Analysis • Contract & Library Database Analysis • Risk Analysis and Control Tools • Supply Risk Dashboards • Expenditure Control & Contract Compliance Analysis • External Info Services There is risk to the process if infrastructure component is deficient: Reports do not provide information for effective management and control of Procurement and risks Procurement/AP Analysis methods do not adequately produce complete, relevant information Procurement Services processes not designed to achieve strategy or comply with policies Personnel are unable to perform necessary Procurement activities & processes effectively Reliable, Relevant and Timely Business Workflow and Data is not available/used for analysis, ordering and controls

4. Procurement Process Transformation 1 Scan Business Environment Complete 7 2 Evaluate, Measure, Take Corrective Action (Continuous Improvement) Set High – Level Mission , Vision & Values From Oct 2012 Complete Strategic Planning Process Finalize Vision & Mission Analyze the process – ROWS & Set Initial Goals 6 3 End Sep Complete Validate Action Plans & Goals Develop Strategic Action Plans 5 4 September End Aug Advisory Team: MMDC, Food Services, Supplier Diversity, ITaP, Athletics, Treasury, Business Management, Physical Facilities, Housing, Regional Campuses and Procurement Services Leadership

5. Procurement Process Transformation MISSION Effectively and efficiently manage procurement, accounts payables and travel services risks and opportunities in support of Purdue University’s Goals VALUES Customer Service Orientation Protective of Purdue’s Interests Collaborative, Inclusive, Responsive Proactive and Data Driven Respect For Suppliers Commitment to Diversity Commitment to Sustainability Professional Integrity, Courtesy, Fairness, Objectivity, Accountability VISION Deliver excellent service, value and expertise to our internal partners and stakeholders through a “managed process” and a high performing, innovative and diverse supply base Vision, Mission & Values Goals $28m - $32M in value improvements 3year - 2012-2015* % Spend “Managed” 33% 2012 – 85% 2015** Top 10% in Our Industry 2014/2015 “Managed” Capabilities 2014/2015 Customer Satisfaction Index TBD 2012-2015 2012-2015 Targeted Sourcing, Consolidation,& Negotiation Programs Funding Sustainable Process Capabilities Improvements Utilize Best Procurement Practices - Consistently Strategic Sourcing, Category, Supplier, Supply Risk, Project, Contracting, Supplier Diversity, Accounts Payables, Travel Management, & Purchasing Execution Professional & Dedicated, Organization & Culture Center-Led, Qualified and Professional, Customer-Focused, Cross-Functional & Collaborative, Process Ownership, Skills-Based Roles, Total Value, Risk and Control Focused Timely & Fact-Driven Decision-Making Leverage Tools and Information for Efficient Workflow & Collaboration, Accurate & Complete Analysis, Decision-Making, Measurement, Reporting & Controls Integrated Systems, Data Integrity and Completeness Passion for Excellence in Technology Adoption, Source Data Standards and Data Integrity (Category, Supplier, Market etc) for Procurement Transactions Strategies 4 * First Pass based on limited data/information detail – further opportunities to be identified as data/information improves * *Assumes Total Spend that could be influenced at $450m and current coverage at $150m ($137m confirmed to date).