Introduction to Measure – How to Measure Savings and Show Value

Why are we here?What is Measure?Why would you use it?Terms and StructureDemonstrationRegistrationMore information

Introduction

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.

• 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

What is Measure?

• Report to your manager

• Demonstrate value to elected officials

• Provide transparency to the general public

• Recognize achievement

• Identify best practice

Why would you use it?

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.

Project

Efficiency 1Discount

Efficiency 2Process

Re-engineering

Efficiency 3Added

Value

TotalEfficiencies

Reports

Charts

Graphs

Tables

Structure

Base EfficiencyIn 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 ReductionSub-type: Price Difference

Existing contract price: $100 X 300 = $30,000

New contract price $80 X 300 = $24,000

Savings: $6,000

Other EfficienciesE-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-engineeringSub-type: Electronic Tenders/Bidding

Normal Cost: $3,000E-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 ValueSub-type: Additional Items/Services

Normal Cost: $2,000Actual Cost: $0Savings: $2000

Demonstration

• 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.

Registration

www.nigp.org/measure

More InformationSet up and Training Spikes Cavell

(800) 990 0228 ext. 200

Additional Licenses: Spikes Cavell(800) 990 0228 ext. 100

Additional NIGP Agency Members NIGP Customer Care(800) 367 6447

What is a saving and is it cashable? Best practice guidance documents are being developed, however it is best to discuss these conventions within your own organization. There are a number of training and support documents available for Measure with examples.

NIGP website login issues: NIGP Customer Care(800) 367 6447