Implementing i Procurement: More Than Meets the “ i ”

1. Implementing iProcurement:More Than Meets the “i” OAUG – FALL 2002 San Diego, California Vira Homick Stuart Benoff

2. Presentation Agenda • Background • About Penn • Purchasing Overview • Business Objectives for iProcurement • Process improvements • Enhance the effectiveness of the purchasing organization

3. Presentation Agenda (continued) • Implementing iProcurement • The Penn Marketplace • Strategic Sourcing • Catalog Content Management • Product Demonstration • Future Directions/Conclusions • Questions?

4. About Penn • Nation’s first University founded in 1740 by Benjamin Franklin • 24,500 employees and 22,300 students • Major research institution • Annual operating budget of approximately $3.2 Billion • Pursuit of administrative excellence is administration’s top business objective

5. Purchasing Overview • Oracle Financials (Purchasing, Payables & GL) implemented in July 1996 • Upgraded to Release 11i in January 2002 • Introduced the Penn Marketplace, Penn’s private online exchange in January 2002 • First higher education institution to implement Oracle’s iProcurement application

6. Purchasing Overview - continued • Decentralized purchasing environment with final purchase approval <$5,000 delegated to the point-of-demand • 1600 end users across 12 schools and 20 business units • 150,000 annual PO transactions representing $525M in purchasing dollars

7. Business Objectives for iProcurement • Process improvement resulting from customer feedback • Reduce time and effort related to order creation • Provide easy access to supplier content for most commonly ordered items • Enhance the effectiveness of the purchasing organization • Focus on shifting purchasing volume to “preferred contract suppliers” • Consolidate supplier database • Reduce maverick buying • Identify new cost savings opportunities

8. Implementing iProcurement • Introduced to the campus community as part of the Upgrade to Oracle Financials Release 11i • Delegates the item shopping and requisition creation to the point-of-demand • Enables multi-supplier ordering in a single shopping session • Oracle workflow used for requisition routing and purchase order approval • Provides access to the Penn Marketplace

9. The Penn Marketplace • The Penn Marketplace • Private online exchange for most commonly ordered products and services • Contains over 500,000 products from 28 suppliers representing 2700 manufacturers and distributors with Penn specific contract pricing • Catalog content hosting and management services provided by Global Exchange Services (GXS) • Robust search tools with results displayed in a consistent format • Facilitates a seamless purchase-to-pay environment

10. The Penn Marketplace - continued • Supports strategic purchasing initiatives • Provide easy access to commonly ordered items • Provides enhanced purchasing data to support future contract negotiations • Focuses purchasing attention on strategic “preferred contract suppliers” • Finding the right item quickly and easily reduces maverick buying

11. Strategic Sourcing • Supplier recruitment • Three tiered approach for Marketplace suppliers • High volume transaction suppliers • School and Center specific suppliers • Targeted community/minority suppliers

12. Strategic Sourcing - continued • Contract negotiations • All participating suppliers had new or newly renegotiated pricing agreements • Supplier recruitment and contract negotiations resulted in approximately $4.2M in new product and service cost savings (as of 10/1/02) • Reduce maverick buying by channeling users to Penn Marketplace suppliers

13. Strategic Sourcing - continued • Supplier marketing opportunities • iProcurement provides direct access to faculty and staff via messages on thehomepage • Web hosting of electronic promotions provided by Penn Purchasing Services • Participation in Penn sponsored supplier trade shows

14. Strategic Sourcing - continued • Use of EDI to transmit purchase orders to Penn Marketplace suppliers and receive their invoices • Reduces process cycle time • Administrative cost savings for both supplier and Penn • Enhances matching of invoices to PO’s • Enables negotiations for prompt pay discounts

15. Catalog Content Management • Partnered with Global Exchange Services • Provides catalog management and hosting services • Transforms and standardizes supplier content • Provides supplier ramping services • Facilitates training of supplier representatives and purchasing staff • Provides online tools for managing catalog content

16. Catalog Content Management-cont’d • Approach to supplier content development • Based on Penn’s past purchase history • Based on other higher education and research institution’s purchase history • Optionally, load full supplier catalog • Regularly scheduled updates to maintain catalog “freshness” and accuracy • Verification of content • UNSPSC, hazardous material, and pricing

17. Demonstration

18. Demonstration

19. Demonstration

20. Demonstration

21. Demonstration

22. Demonstration

23. Demonstration

24. Demonstration

25. Demonstration

26. Demonstration

27. Demonstration

28. Demonstration

29. Demonstration

30. Demonstration

31. Demonstration

32. Future Directions • Global Exchange Services • Favorites List • Quick Order Capability for marketplace items • Oracle • Process improvement for products and services not in the marketplace • Oracle Exchange • Oracle’s Purchasing Intelligence

33. Conclusion • Current Status of the Penn Marketplace • As of October 1, 2002, 51% of all POs were created from the 28 marketplace suppliers • All participating suppliers have realized significant growth in business • iProcurement and Penn Marketplace addressed the major concerns • Enabled creation of a requisition at the point of demand • Enhanced our ability to manage our key suppliers and their catalog content • Streamlined the PO creation process

34. Thank You! Questions Vira Homick : homickv@pobox.upenn.edu Stuart Benoff: benoff@isc.upenn.edu