Procurement Contracts San Antonio, TX February 24, 2009 Supplier Relationship Management Product User Group Conference

Presented by: Gail Driskell Sr. Buyer, System Development City Utilities of Springfield, MO Procurement Contracts

Contents Company Overview Company Procurement Statistics Procurement Contracts – Why we use Contracts – Contract Types – Contract Releases Favorite Modifications Questions

City Utilities of Springfield, MO Municipal utility located in Springfield, MO Provide electric, water, natural gas, transportation and telecommunications services Serves 108,000 electric customers Serves 82,000 gas customers Serves 80,000 water customers 1000 Employees 2008 Operating Revenues of $393 million Service area of 320 square miles

City Utilities and PeopleSoft Financials – General Ledger – Asset Management – Project Costing – Accounts Payable Implemented version 6.0 in 1997 Upgraded to version 8.0 in 2003 Upgraded to version 8.8 in 2005 PeopleTools Version

City Utilities and PeopleSoft HRMS – Base Benefits – Human Resources – Payroll for North America – FSA Administration Implemented version 7.0 in 1998 Upgraded to version 8.0 in 2001 Updated version to 8.8 in 2008

City Utilities and PeopleSoft Supplier Relationship Management – Purchasing – eProcurement – Strategic Sourcing – eSupplier Connection – Inventory Implemented version 8.8 in 2006 PeopleTools Version

Procurement Statistics Centralized Purchasing Department – 7 Buyers – 3 Support Staff – 3 Management – 1 System Support 790 active Contracts 13,670 POs issued in 2008 – 5,970 regular POs (not contract releases) – 7,700 released POs (contract releases)

Procurement Statistics Inventory Statistics – 35,245 active Inventory Items in the Master Item Table – 15 Inventory Business Units – 6 Inventory Storerooms

Why we use Contracts... Already a part of our Business Process culture Large number of repetitive purchases for inventory items Saves time – eliminates the need to bid each time Gives our end users flexibility to order items as they need them Use contracts for inventory items, non- inventory items, services, maintenance agreements, etc.

Why we use Contracts... Fixed pricing for specified time period with options to renew Notification process to alert when nearing expiration Notification process to alert when nearing contract maximum amount

Responsibilities End user creates requisition for the goods or services they want on their contract Purchasing responsible for bidding, setting up and awarding the contract End user administers use of the contract by creating releases as needed. End user receives contract notifications for expiration and maximum amount Buyer makes any needed adjustments to contract -- price changes, renewals, maximum amount increases, etc.

Procurement Contracts PeopleSoft Delivered Contract Process Options –G–General Contract –P–Prepaid Voucher –P–Prepaid Voucher w/ Advance PO –P–Purchase Order –R–Recurring PO Voucher –R–Recurring Voucher –R–Release to Single PO only

Contract Types City Utilities’ Contract Types – Fixed Item Inventory Replenishment Releases – Open Item – Agreement ( also a Fixed Item )

Fixed Item Contracts Contract contains specified line items Contract is valid for a specified amount of time. Our pricing for the line items is fixed for the length of the contract. End user creates releases as needed No additional approval step for releases Scheduled PO Auto Sourcing process runs every 30 minutes to create the PO from staged releases POs created in approved status Scheduled PO Dispatch process runs every two hours

Inventory Item Releases Two Options to create release for inventory items – Manually by releasing directly from the Contract – Automated via Replenishment, Req Loader and PO Auto Sourcing

Automated Inventory Item Releases Replenishment is ran daily and suggests the inventory items that need to be re-ordered Inventory personnel review the replenishment and make any needed adjustments to the suggested quantities – Neat customization we recently added was the ability to add an item to the replenishment

Automated Inventory Item Releases Inventory Supervisor reviews the replenishment and approves it by running REQ Loader to create a requisition. Inventory Supervisor runs PO Auto Sourcing – inventory items that are on a contract get automatically sourced to a PO – approved status. Scheduled PO Dispatch runs and dispatches the created POs.

Custom Replenishment Report

Open Item Contracts No line items listed on contract Contract is valid for a specified amount of time Pricing for goods and services is usually contained in separate rate sheet, a % discount pricing structure, etc. End user enters a requisition describing the good/services they are releasing Price entered on requisition line becomes the PO Price for that line Requisition is linked to contract by Vendor ID, Contract ID

Open Item Contracts Remove RFQ Required Flag Requisition goes through normal workflow approval Scheduled PO Auto Sourcing process runs every 30 minutes to create the PO from staged releases POs created in approved status Scheduled PO Dispatch process runs every two hours Released amount goes against Contract Maximum Amount

No lines specified on the contract.

Enter requisition line – describing the good or service being released, quantity and price.

Go into the Line Details page.

Line Details – Enter Vendor ID, Contract ID, and remove RFQ Required flag.

Saved and submitted requisition then goes through normal requisition approval workflow process.

Agreement Contracts One or more line items on the contract Contract is valid for a specified amount of time Use for contracts that are not conducive to multiple releases – i.e. software/hardware maintenance Usually 1 LT or amount only type purchases Buyer issues one release for full contract amount The PO created from the release is used for processing one or more payments during the term of the contract Advantage is receiving the Contract Expiration notice.

Favorite Modifications CU Contract Type Do Not Release Flag Contract Thresholds – Notify Person Release Comments Release Header Defaults Releases over Contract Maximum Contract Notifications

CU Contract Type

Do Not Release Flag

Contract Thresholds

Release Comments Enter free-form text information about this release. These comments are used as release reminders and remain with the contract. They do not carry over to the PO. You can review and modify these comments on the Review Staged Releases page.

Release Comments

Release Header Defaults

Releases over Contract Max

Remember our remaining amount was $

Releases over Contract Max End User goes ahead and saves their staged release. We removed any validation against contract maximum and remaining amounts that was associated with the Save. Instead, we added some custom code in the PO Auto Sourcing process that compares the total release amount against the contract’s remaining amount.

Releases over Contract Max

that is triggered...

Releases over Contract Max

After making adjustment to the Contract Maximum Amount, the Buyer accesses the PO and unchecks the Hold Flag. PO is then eligible for PO Dispatch.

Contract Notifications

Problems we encountered... – Requestors were not good at checking their worklist – Notices did not indicate whether it was contract expiration or max amount notice. – Notices were only sent to worklist one time – Contracts were expiring before we had a chance to renew – POs would error in PO auto sourcing process due to Contract Max being exceeded. – Had to manipulate Contract Max amount and percentage for Agreement type contracts

Contract Notifications Our Solution... – Changed notices from worklist entry to an – Process still runs weekly, but if the contract still meets the criteria the following week, then another is sent -- the User quickly gets the picture to take action! – Different s are sent depending on: How close the contract is to the expiration date If the contract is nearing the maximum amount What type of contract

Contract Notifications notices – 90 Day Notification – sent to Contract Requestor – all Contract Types – 30 Day Notification – sent to Contract Requestor AND the Contract Buyer – all Contract Types – Nearing Contract Maximum Amount – sent to Contract Requestor – all Contract Types EXCEPT Agreement Contracts – Nearing Contract Expiration and Contract Maximum Amount

Contract Notifications 90 Day Notification

Contract Notifications 30 Day Notification

Contract Notifications Nearing Contract Max

Contract Notifications Nearing Expiration and Contract Max

Contract Notifications When Buyer is contacted by the Requestor to take action to renew or rebid, Buyer will... – Drop the notify days down to 1

When Buyer is contacted by the Requestor to take action to renew or rebid, Buyer will... – Drop the notify days down to 1 – Renew or Rebid the Contract – After renewing the Contract, Buyer resets the notify days back to 90 days. Contract Notifications

Summary Introduced City Utilities of Springfield, Missouri Why we use Procurement Contracts Contract Types Contract Release Process Some of our Favorite Modifications

Procurement Contracts Questions?

Contact Information Gail Driskell Sr. Buyer, System Development City Utilities of Springfield, MO