BuyHub e-Procurement Speeds up Bid Process in Napa

"This experience has paved the way for more progressive thinking at the City of Napa, and has delivered on the promise of e-Procurement" - Wes Wheeler

Background
The City of Napa, incorporated in 1872, is located at the base of the world-famous Napa Valley wine-producing region, approximately 50 miles northeast of San Francisco. It has a land area of 18 square miles and a population of 70,000. 

With an operating budget of nearly $33 million, the City employs approximately 400 full-time and 50 part-time staff. The City of Napa government provides a broad range of services to its citizens through the City's 12 departments, including the following: Finance, Fire, Police, Public Works, Planning, Housing, Community Resources and Economic Development.

The Problem
Because of the broad range of services provided by the City, the Central Stores warehouse is required to maintain a large vendor base and inventory to cover normal and emergency needs. While most purchasing is done to replenish inventory, the City has chosen to rebid these items rather than negotiate long-term contracts because of the price volatility of these items. The City has a database of suppliers that it does business with, and is careful to maintain at least three sources of supply for most of its purchased commodities. The bidding process was particularly cumbersome because it required preparing bid documents, sending or faxing these documents to the appropriate suppliers, and then awaiting their responses before making an award by manually collecting faxes, tabulating the bid results and going through the paper based approval. This process typically consumed 3 to 4 weeks for the average bid from the time that a requisition was created to an award being made. Because of the length and paper-intensive nature of this process, some departments would devise workarounds to speed up, although circumventing, the bid process. Typically workarounds would be "one quote only" PO's and would be listed as "sole source" or "only known vendor" when that wasn't the case but the frustration with the time frame for the paper method left this as a poor alternative.

The Solution
The City's Central Stores Manager, Wes Wheeler, knew of eHub Software and its local government BuyHub e-procurement solution, and presented his management the benefits of reduced turnaround time and lower costs. The BuyHub solution was installed quickly, since it is an ASP delivered software and required no involvement by the City's IT organization for implementation. Over 4,000 Central Stores inventory SKU's were loaded onto the BuyHub system. Next, an outreach effort to existing City of Napa suppliers was initiated in order for the suppliers to complete their vendor registration records on the BuyHub system. This supplier self-registration allowed better information to be included on each supplier using NIGP commodity code classification. Now the system was configured for electronic buyer/supplier communications, and a paperless process. Results exceeded expectations in areas of cycle time, inventory and 

price reduction. Personnel productivity was greatly enhanced because of the ease of creating RFQ's and issuing awards. Some of the quantifiable results are shown in the table below:

Performance Area Before BuyHub e-Procurement After BuyHub e-Procurement
Cycle Time: Elapsed Time 
from Requisition to Award
21-30 days 2-3 days

In addition to cutting the cycle time by 90%, more items are going out to bid, even items that are truly sole vendor. The psychology that drives this is that the vendors don't realize that they're the only one on the RFQ and bid as if they were competing with other vendors. This greater competition on all bids allows the City to take advantage of commodity price changes and higher competition among suppliers. 

The operation of the system is simple. The online database makes creating RFQ's quick and painless. Any approvals relating to releasing RFQ's or awarding PO's are handled electronically with the built-in BuyHub workflow automatically routing through the proper approval authorities. 

For rarely purchased items, the BuyHub matching algorithms and extended supplier base, which is comprised of suppliers of eHub's other local government clients, facilitate finding appropriate suppliers. Audit trail for the entire purchase process is available online anytime. 

Suppliers have not only accepted the system as the way to do business with the City of Napa but have given it high praise. The short cycle time benefits everyone in the process. Suppliers have access to electronic records of their previous bid responses and bid recap published at the system, and can fine-tune their bids based on previous results. Simpler processes are followed, and top management of the supplier companies are much more involved in the bid process.












 
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