Increasing procurement efficiency through optimal e-commerce enablement scheduling
| Pages | 90-107 |
| DOI | https://doi.org/10.1108/JOPP-06-2019-027 |
| Published date | 03 June 2019 |
| Date | 03 June 2019 |
| Author | Susan Cholette,Andrew G. Clark,Özgür Özlük |
| Subject Matter | Public policy & environmental management,Politics,Public adminstration & management,Government,Economics,Public finance/economics,Taxation/public revenue |
Increasing procurement efficiency
through optimal e-commerce
enablement scheduling
Susan Cholette
Department of Decision Sciences, San Francisco State University, San Francisco,
California, USA
Andrew G. Clark
Strategic Sourcing Unit, University of California San Francisco,
San Francisco, California, USA, and
Özgür Özlük
Department of Industrial Engineering, MEF University, _
Istanbul, Turkey
Abstract
Purpose –This study aims to show how cost savings can be achieved through optimizing the scheduling of
e-commerce enablements. The University of California is one of the largest, most prestigious public education and
research systems in the world, yet diminished state support is driving the search for system-wide cost savings.
Design/methodology/approach –This study documents the preparation for and rollout of an
e-procurement system across a subsetof campuses. A math programing tool was developed for prioritizing
the gradualrollout to generate the greatest expected savings subject to resource constraints.
Findings –The authors conclude by summarizingthe results of the rollout, discussing lessons learned and
their benefitto decision-makers at other public institutions.
Originality/value –The pilot program comprising three campuseshas been predicted to yield $1.2m in
savings over a one-year period; additionalsensitivity analysis with respect to savings, project timelines and
other rolloutdecisions illustrate the robustness of thesefindings.
Keywords Procurement, e-Commerce, Enablements, Scheduling, Binary programming
Paper type Research paper
1. Introduction
The University of California (UC) is a world-class education and research institution
comprised of ten campuses, five medicalcenters and three national labs. With over 200,000
academic and staff positions, the UC is California’s third largest employer (UC, 2016).
Although salaries dominate annual expenditures, 18 per cent of the $28.5bn annual
operating budget is allocated for equipment and other related expenditures (UC, 2016).
While UC remains public, the past decade has witnessed significant reduction in state and
federal funding, resulting in unprecedented budget shortfalls, increased tuition, staff
furloughs, layoffsand proposals to cut programs.
UC’s response to such cuts includes developing scalable programs for promoting
efficiency, leveraging resources and saving money. One such program is adopting
e-procurement (electronic procurement) systems to streamline procurement and business
operations. Angeles and Nath (2007) report the procurement of maintenance, repair, and
operations goods not directly involved in the production process such as office supplies,
personal computers,nonmanufacturing items, etc. can constitute between 30 and 60 per cent
JOPP
19,2
90
Journalof Public Procurement
Vol.19 No. 2, 2019
pp. 90-107
© Emerald Publishing Limited
1535-0118
DOI 10.1108/JOPP-06-2019-027
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1535-0118.htm
of a firm’s total expenditures. Croom (2005) notes that although companies rarely see
procurement as a strategic function, they expect significant benefits such as decreased
processing costs, better pricing and improved information flow. Thus, adopting an
e-procurementsystem seems a savvy response to reduced government funding.
We first consider the organization’s underlying procurement process. Given that UCSF
alone has 20,000 faculty and staff members, 4000 requisitioners, and more than 400
contracted suppliers, the complexities are byzantine. The legacy of decentralized
procurement processes includes a myriad of systems, staff, budgets, pricing, and supplier
relationships. A few departments even pre-processed invoices prior to sending them to
central Accounts Payable, a duplicative effort that added no value. The legacy of shadow
systems still plagues UCSFand Berkeley in 2017 as both campuses seek greater automation
of rote procurement activities. Sometimes these systems are simple databases that may be
easily transitioned. Oftenthey are third-party inventory systems that play a significantrole
in campus operations and wouldrequire integration into any e-procurement system.
Though a few exotic transaction types complicate the system, the predominant
transaction consists of the one-time procurement of a discrete consumable product such as
office or lab supplies. As shown in Figure 1, the procurement process begins when a
shopper, either a faculty or staff member, identifies the need to purchase a product. The
shopper then finds the UC contracted supplier for the desired product and next submits a
request to the department’s designated requisitioner. The requisitioner then provides
relevant financial data to ensure the procurement is properly accounted for and accurately
assigned to the correct grant, fund or department account. Following a series of checksand
reviews, many of which are automated, the requisition is turned into a purchase order (PO)
which is then dispatched to the supplier. The supplier fills the order and arranges for
delivery accompanied by an invoice for payment. Finally, the invoice is entered into the
BearBuy system, checked against the PO and if all checks are passed then scheduled for
payment.
We next visit the institution’s history with e-procurement. UC first began dabbling with
internet purchasing over fifteen years ago (KPMG, 2001).By 2013, all 10 UC campuses had
implemented at least a first generation e-commerce system, and a few had upgraded to
systems with enhanced functionality.Seven of the ten UC campuses had standardized on a
Figure 1.
UC procurement
process illustrated
E-commerce
enablement
scheduling
91
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