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Introduction to Measure – How to Measure Savings and Show Value

Introduction to Measure – How to Measure Savings and Show Value. Introduction. Why are we here? What is Measure? Why would you use it? Terms and Structure Demonstration Registration More information. Why are we here?. Procurement teams make a significant contribution

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Introduction to Measure – How to Measure Savings and Show Value

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  1. Introduction to Measure – How to Measure Savings and Show Value

  2. Introduction Why are we here? What is Measure? Why would you use it? Terms and Structure Demonstration Registration More information

  3. Why are we here? • Procurement teams make a significant contribution • Often receive inadequate recognition • Procurement is more than overhead On behalf of its members, the NIGP Board of Directors has negotiated to provide its National Agency Members with a tool to enable agencies to record and report the value that procurement professionals bring to their agencies every day. The tool is called Measure.

  4. What is Measure? • Web based (SAAS) • Easy to use and scalable • Standardized data input • Records savings and efficiencies • Produces reports, charts, graphs and tables • Enables you to clearly communicate the value your procurement team brings to your agency. • Free to National Agency Members

  5. Why would you use it? • Report to your manager • Demonstrate value to elected officials • Provide transparency to the general public • Recognize achievement • Identify best practice

  6. Terms • Savings: Any type of savings made, whether it translates directly into cash or not. • Cashable Savings: Real Money - Sub-group of savings where the value of the savings resulted in a hard cash returned to the organization. There is no universally accepted definition of what precisely constitutes a “cash”, “cash releasing” or “cashable” saving. NIGP is currently researching best practice in this area. • Project: The overall description of a procurement savings or revenue initiative which may have multiple types of efficiencies achieved. • Efficiencies: The record and value of what was actually done to achieve a savings.

  7. Structure Efficiency 1 Discount Reports Charts Graphs Tables Total Efficiencies Project Efficiency 2 Process Re-engineering Efficiency 3 Added Value

  8. Base Efficiency In January of 2010, the agency acquires a new building to use as a staff training and meeting facility. The fit out of the new facility requires 300 conference room style chairs. The price for a conference room chair is $100 per chair were they to buy from their existing supplier on the existing contract. In February, the purchasing team gets involved and puts out an IFB/RFP to supply 300 conference room chairs for the new facility. The RFP ends and a supplier is chosen in March 2010. The agency’s existing supplier wins the contract with a bid price of $80 per chair. How Achieved: Price Reduction Sub-type: Price Difference Existing contract price: $100 X 300 = $30,000 New contract price $80 X 300 = $24,000 Savings: $6,000

  9. Other Efficiencies E-Bid for Data Projectors Reduced cost to administer the process through use of electronic tools for submission and evaluation of bid responses. How Achieved: Process Re-engineering Sub-type: Electronic Tenders/Bidding Normal Cost: $3,000 E-Bid Cost: $1,000 Savings: $2,000 Extended Warranty Period – Projector Bulbs Result of e-bid process was an increase to 5 year parts and labor warranty for the price of 3. How Achieved: Added Value Sub-type: Additional Items/Services Normal Cost: $2,000 Actual Cost: $0 Savings: $2000

  10. Demonstration

  11. Registration www.nigp.org/measure • Electronic registration behind NIGP member wall • 1 Full license per agency (Data Input and Reporting) • Up to 9 Data Input licenses per agency (dependent on Agency Category) • Additional licenses are available.

  12. More Information

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