A five year transformation plan of supply chain processes...
University to most people on campus is a place to spend three to four years studying before going on to gain employment, travel or delve into further study. It is an institution to attend while working out your interests in life while meeting people from around the globe.
What is not often noted is the operation that occurs behind the scenes to provide a seamless service for these students.
At Victoria University (VU) 1,800 full time staff support its 46,000 students across Melbourne, Sydney and international colleges (mostly in Asia). VU is currently celebrating its centenary year and became a university in 1990. It boasts a curriculum that includes both higher education and vocational options.
Director of Procurement and Business Operations Juliana Tiong stresses that “Victoria University is a fantastic place to work. People are very friendly; if you can explain the logic behind a change, they will come on board,” she follows.
Since joining VU, Tiong has worked on a five-year transformation of Procurement throughout the university. Procurement comprised siloed purchasing activities across the functions of the University. “I was brought in to transform that and centralise it over two phases,” she notes.
The first phase involved forming a strategic procurement team to create and implement category strategies for the short, medium and long-terms. This included consolidating purchasing volume, data mining, tendering and negotiations. “This is the strategy part of procurement,” Tiong states. “It had been done in a silo manner by each individual department. This could be an individual faculty or college. They would call a supplier and the product would be delivered.” Some of these ad-hoc purchases resulted in incorrect products, unmet expectations and cost creep.
Procurement in VU worked in this way for many years and it was not sustainable. “We could not leverage the suppliers and therefore could not leverage enough savings. We could not manage the supplier performance appropriately because it had been done in such an ad-hoc manner,” Tiong explains.
The first phase brought standardization of tendering processes, redefined policies, procedures, governance and framework, and facilitated clear understanding of spend by category. This resulted in large savings within the first 18 months.
The second phase was to centralise, streamline and introduce end to end procurement, with the establishment of the Procurement Centre of Excellence (CoE). eProcurement tools and systems were introduced as enablers of efficiency and reporting accuracy. This brought about streamlined processes, efficiencies, reduced paperwork and improved approval times.
This is not the first time Juliana Tiong has embarked upon a transformation of procurement. Previously, when working for defence company Thales, in the Air System Division, she worked on similar transformation. She centralised Procurement ensuring ad-hoc ways of purchasing were eliminated by close collaboration with stakeholders, demand planning/forecasting for greater leverage, and contract negotiation.
However, she says: “Coming to Victoria University, the transformation was multiple in size and complexity compared to Thales.”
Tiong applied Procurement methodologies such as identification of the “low hanging fruit”, supply and demand strategies and volume aggregation to improve leverage and market interest and leverage.
Prior to the transformation, for the same product, the same supplier could be charging a different department within the university a range of prices. The product would be delivered to the same location. Tiong identified such areas of lower complexity, describing them as low hanging fruit.
“There were about 30 categories in this area and we started looking at them within six months of the establishment of the strategy procurement team. We started delivering savings immediately through that part of the process,” she says. Following activities for the low hanging fruits, the team targeted the medium and high complexity categories.
During the second phase of transformation, Tiong searched for people to actively contribute to this process and be part of the Procurement Hub team. The establishment of the procurement hub led to the creation of a Procurement Centre of Excellence for the whole university. Those who previously worked in procurement for departments brought their expertise to the hub.
“We have created a shared services function in Procurement for the whole University to use. The Procurement Specialists in the Centre of Excellence will support every need of the University,” notes Tiong. The University has been advancing its technology so students have the best access to education, but also for use behind the scenes by staff members.
VU is working on a cloud-based solution with IT for ERP systems. “Cloud is not new anymore. Everybody is migrating to cloud. We have been looking at how to make the system more efficient and that is by moving to the cloud,” Tiong comments.
Full migration has not happened due to the data security risk. The Procurement, Finance and IT departments have been working closely together to ensure the transition is smooth.
The Procurement Hub launched an e-catalogue as part of streamlining the process. The e-catalogue captures negotiated pricing and approved suppliers. The success of e-catalogue was achieved through collaboration between Procurement, Finance systems and IT. Groundwork included tenders, negotiations, category classification, coding and reporting standardization. The e-catalogues has “made it easier having all relevant information captured within the ERP system,” notes Tiong.
The Centre of Excellence also drove efficiency in the Procure-to-Pay (P2P) process, with invoices streamlined by using consolidated invoices instead of one invoice per delivery. “We now have one invoice a month for multiple deliveries.
The right system has to be put in place” states Tiong. Strong partnerships with key suppliers including CISCO and Optus ensure VU has relevant advancements in technologies when available. This is important to the head of procurement.
“We are partnering with these suppliers because we want to be active in bringing in new technologies. I would say bring in a new era to Victoria University” Tiong says. These technologies include bringing educational services to students digitally, which involves improving the online portals and streaming lectures and seminars online.
While VU is advancing with technology, it has not neglected sustainability. Between 2006 and 2010, the university decreased its water usage by 75,000 kilolitres in partnership with City West Water thanks to initiatives spanning harvesting rainwater in pools, single flush toilets and installation of water meters.
Energy efficient solutions have been implemented; solar panels have been erected on site. A new lighting system works through sensors. All of this leads to the undeniable conclusion that procurement takes sustainability seriously. “When we look at our tender documents and requirements we must think, how sustainable is this?” comments Tiong.
The proactivity shown towards sustainability and the transformation of Procurement in Victoria University cements its place as a pioneer for higher education in Australia and further afield, continuing to provide the movers and shakers for the country’s future.