Baltimore triples purchasing efficiency
The City of Baltimore completely phased out its cumbersome, paper-based purchasing system and replaced it with the web-based BuySpeed system in July 2007. Since then, the e-procurement solution has reduced pending requisitions by 50 percent and tripled the number of purchases processed per month.
Apart from construction projects, all city purchasing is now managed online – from requisitions, purchase orders and bids to vendor registrations, invoices and receipts. The system is integrated with Microsoft Dynamics, the city’s financial system, and provides a three-way match between purchase orders, receipts and invoices.
The e-procurement system is accessible via the web throughout city offices to more than 500 staff and managers in 44 departments. Vendors who want to do business with the city register in the system for free.
City staff can identify and select vendors by NIGP code and notify them electronically of bid opportunities. Since the system’s roll-out, the city’s registered vendors’ list has more than tripled, from 3,000 to 10,000, thus increasing competition for city purchases. In 2009, the system enabled approximately $230 million in purchases through 15,000 purchase orders. More than 46,000 invoices were approved for payment using automated invoice matching capabilities that year.
BuySpeed is a product of Periscope Holdings, Inc., Austin, Texas. Baltimore uses BuySpeed rebranded as CitiBuy.
With a population of approximately 636,000, Baltimore is Maryland’s largest city. The goal of the city’s Bureau of Purchasing is to provide unequaled customer service and obtain the best value in procurement and print services.
Before implementing the e-procurement system, the city relied on an antiquated, paper-based purchasing process. Each purchase went through multiple manual steps. Administrative staff within a city department typed purchase details onto a multi-part requisition form, which was either hand-carried or sent via inter-departmental mail to managers for approval and then to the city’s budget department for its OK and the encumbrance of funds. The requisition form was then mailed or hand-carried to the city’s purchasing bureau, where staff retyped the information into the bureau’s internal tracking database, which was accessible only to city buyers. Bureau staff then typed a purchase order, which was mailed to the vendor.
There was no easy way for all parties involved to check the status of a requisition or purchase order. Requisitions were aging at an unacceptable rate. Each purchase had to be approved by a buyer regardless of the amount spent or how routine the purchase, which slowed the process. With the paper-based system, the bureau also had no way to collect data needed by managers to improve employee performance or business processes.
“We needed to have instant visibility for everything in the purchasing system,” said Joe Mazza, city purchasing agent. “The buyers were basically self-reporting on their work. We had no way to verify it.”
Before e-procurement, the city also had a limited reach when advertising its bids to potential vendors. Vendors who wanted to receive city bid notices online had to pay an annual fee and register with BidNet, and they could not respond to bids online. Staff would scour a separate, city-compiled bidders’ list to select potential suppliers and mail postcards to the selected recipients. Because neither BidNet nor its in-house vendor list had NIGP codes associated with vendors, staff had to use their “best guess” in selecting which vendors to notify.
The number of requisitions processed monthly jumped from fewer than 500 before the implementation to more than 1,500. Standard and direct release purchase orders are now 50 percent of total procurements. This increases flow to strategic contracts, which reduces unit costs for items purchased and decreases processing times.
Some 96 percent of standard release requisitions are now processed in less than three days, and 98 percent of direct release requisitions are now processed in less than one day. The number of open purchases at any one time has dropped by 50 percent. Also, approximately 95 percent of open market purchases under $5,000 are now processed in less than six days, and 70 percent of open market purchases between $5,000 and under $25,000 are now processed in less than 40 days. Some 95 percent of open market purchases of $25,000 or greater (requiring formal solicitations) are now processed in less than 50 days.
Government-to-business “punch-outs” allow for quick and easy purchases; department staff can visit the Grainger Industries and Rudolph’s Office Supply web sites through BuySpeed to purchase items and automatically generate a purchase order.
The city streamlined the bid notice/response process and now posts all bid notices online through BuySpeed.
Purchasing process data is available: Standard and customized reports compile data to identify bottlenecks in the process, detail buyer productivity and reveal requisitions needing priority attention.
The new data allows the bureau to set benchmarks and establish – and stick to – service level agreements with city departments.
Providing greater budget transparency to the public, the collected data delivers detailed purchasing statistics that can be used to compare performance against expected outcomes
Vendor registration captures more details about which services and commodities vendors provide using NIGP codes. Bureau staff can easily search the vendor database to identify vendors who provide the services and products they need. Staff can easily notify vendors by e-mail or fax that a solicitation is available. (Zetafax, an online fax package, is integrated with the system.)
In 2007, BuySpeed went live with its integration with the city’s legacy mainframe financial system. In February 2009, the city migrated to the Microsoft Dynamics financial system, and Periscope implemented a new integration to Microsoft Dynamics. This implementation also included integration to an online document management system, in which vendor invoices are scanned and integrated into BuySpeed and Microsoft Dynamics. This allows accounts payable to efficiently and accurately issue payments, and vendors can track payment status through BuySpeed’s vendor portal.
Staff can ensure that items requisitioned were received and vendors were paid for the encumbered amount. Baltimore is a leader in using statistical information to measure agency performance. BuySpeed, integrated with the city’s financial system, extends the agency’s data-collecting ability.