Procurement Process Review for City of Toronto

The framework for procurement activities for the City of Toronto are determined by the Toronto Municipal Code, Chapter 195 (Purchasing By-law) and Chapter 71 (Financial Control By-law), along with various policies (such as Canadian Content, Fair Wage, Policy for the Selection and Hiring of Professional and Consulting Services, Code of Conduct for Council Members, Conflict of Interest, Lobbyist Disclosure) approved by Council, as well as administrative procedures/directives issued by the Purchasing and Materials Management Division (Purchasing Division) Current procurement process of the City of Toronto

In the City of Toronto, goods and services costing up to $7500 are purchased through each departments by issuing a Departmental Purchase Order (DPO) without going through the Purchasing Division. Departments are expected to use DPOs for one-time, for small dollar purchases up to $7,500. Repetitive purchases are to be processed by the Purchasing Division. Departmental Purchase Order limit are administered by the Purchasing Division using one of three main processes: Request for Quotations (RFQ); Request for Tenders (RFT); and Request for Proposals (RFP).

When the award of a contract is expected to be based on the lowest price meeting specifications and requirements, bids are solicited by the Purchasing Division. Public tender are issued for construction projects, and a Request for Quotations are issued for non-construction contracts. Request for Proposals are used when a contract award is not based solely on price and where there is some extent of qualitative factors in the deliverable or solution offered. Suppliers are then selected through a selection committee based on various criteria that they are assessed and analyzed on.

The procurement process generally involves: -Various departments develop the specifications of requirements for the good / services required by each department -the Purchasing Division incorporating the department’s specifications into a formal call document (Request for Quotations or Request for Tenders) or request document (Request for Proposals); -the Purchasing Division mailing the call or request documents to all suppliers on the City’s Bidders’ List that provide the particular good or service.

Requests for construction tenders are normally advertised in trade magazines and local newspapers, and are not mailed out to suppliers on the Bidders’ List; -the Purchasing Division posting the opportunity on the City’s Internet site, with instructions regarding how to obtain a copy of the call/request document and how to obtain further information with respect to the call/request; -a public opening of the responses to Request for Quotations (bids) and Request for Proposals (proposals) by the Purchasing Division and a public opening of responses to tenders (bids) by the Bid Committee; -the Purchasing Division summarizing he replies to the call/request and forwarding the bids or proposals received to the department for evaluation and recommendation on award of the contract;

Departments performing an evaluation of the bids and proposals received and submitting their award recommendation to the Purchasing Division; and -awarding of the contract based on the following limits as delegated by Council: Contract Amount Award By Up to $500,000Chief Administrative Officer/Department Head/ Director of Purchasing and Materials Management Up to $2. 5 millionBid Committee Up to $5 millionStanding Committee

Over $5 millionCouncil * in situations where the contract is awarded to the low bid meeting specifications and requirements. Delegated authority for approving consulting type commitments has a more limited level of authority for commissioners. The Purchasing Division, reporting to the Chief Financial Officer and Treasurer, is responsible for the procurement of goods and services to all City departments, as well as the Toronto Police Service, Exhibition Place and the Toronto Atmospheric Fund. The Division had a staff complement of 106. 5 positions in 2002, and a net operating budget of $5. million.

With the acquisition of 6 more companies the Intima group became Intima Global with a total of 8 factories and strategic business units across Srilanka , India & China. Each factory have their own home grown software system that facilitate the order management process. Further each company have their own database of information that is not shared across the group. Hence the group had various prices paid for the same raw material across various factories, and suppliers quoted their own prices and group agreements were not made.

When orders were placed no one shared the stock information within the factories, hence some factories ordered the same stock that the other was writing off. Decisions were not made as quickly since most information wasn’t available at most satellite units. It was obvious that the group needed a common platform to share their information. A system that can be accessed anywhere at any time. Global e Procure (GeP), is a cloud computing system that manages all portions of the strategic sourcing framework.

They linked all modules from suppliers, stocks, purchase orders, negotiations up to contracts. the proposed system facilitate to run a MRP across all factories considering the existing stock. And facilitate purchase order accordingly. The system facilitate supplier database, where supplier performance can be carried out. further the system enables to generate RFx, for all common items, where prices can be negotiated for all common items for the group. Finally the system facilitates a contract repository that can be accessed by any authorized user anywhere in the world.

Further GeP, has multiple language support system, and a 24 hour helpline, that can assist our factories and users any time of the day, GeP is willing to customize the system according to the requirement of Intima Global, hence the implementation cost and time to train is relatively much shorter to any other system due to the flexibility and ease of use. A simple cost analysis proves that the initial implementation cost of the new system can be recovered within less than a year, through the savings that we can generate within a short time.

Considering all facts, with the changes in the business, it is necessary for the company to move to an effective, flexible knowledge sharing system like GeP. Statement of Need With the merger of the 8 plants in India , China, and Srilanka Intima Global PVT limited, became Intima Global, one of the largest lingerie manufacturers in south Asia with a global presence. Intima Global inherited 8 different software systems, and 8 different corporate cultures. All 4 plants had their own home grown system for order management and supply chain.

Though the 4 plants have their own specialities, all 4 plants manufacture lingerie for the same customer base. All four plants used very similar raw materials, and same machinery. It was found that orders to factories were placed without checking the raw material stock balances, and each factory placed raw material orders as and when an order is allocated, It was found that all 4 factories purchased similar or same raw material at various prices from various suppliers. It was also found that suppliers have various prices quoted for different factories, and there are no group rates negotiated or no RFXs or quotations called.

Currently most of the details are shared on e-mail or by fax. Sometimes due to the time that each pricing investigation takes, most of the merchandisers do not cross check prices across the group, instead resort to their own price list and supplier list. Most of the sub contractor managers from the satellite plants, have to come to their respective main office to access information. It is evident that we should implement a knowledge management system that can be accessed across all factories, and all satellite plants.

Introducing a cloud based knowledge sharing e procurement system across all plants will enable merchandisers and material controllers to access the same pool of information regarding stocks and prices. Merchandisers can carry out RFx to negotiate group level prices. And also it will enable the company to manage a database of suppliers with pre negotiated prices. Further the e procure system we propose will enable us to maintain the supplier contracts in one place, to be accessed across all plants across Asia. Assumptions GeP system can bridge all home grown software systems in each factory •GeP has enough resources and can start with development and customization as soon as the contracts are signed. •No workers strikes or government restrictions during the time of implementation Project Rationale Proposed solution is the Procurement module of Global eProcure, GEP® (Global eProcure) is a procurement services firm that provides a complete solution to refine supply chain practices, and to substantially reduce costs for the enterprise.

GeP is based in Clark, New Jersey, just outside of New York City, USA, with other offices in the US, UK, Czech Republic, Brazil, China and India – supporting companies that operate, as well as source supplies, across the globe. They provide technical service in various languages which include English, French, Spanish, Mandarin, Cantonese and Hindi. Their global presence and language capabilities are a good consideration for majority of Intima Global factories and satellite units in China & India.

To achieve maximum efficiency and quality in procurement organization, it’s critical to find better ways to manage an array of diverse activities, and vast amounts of data across multiple enterprise systems – with minimum manual intervention. The solution is to automate, standardize, and integrate wherever possible Cloud-based procurement solutions With GEP (Global eProcure), we can take advantage of ready-to-use, cloud-based technology that greatly streamlines all of your source-to-pay activities, while reinforcing best practices at the same time.

GEP Suite: Integrated procurement technology. GEP’s proven procurement tools can work as stand-alone systems (GeP Spend, RFX, Contract, Supplier management and Compliance management) or as a fully integrated suite (GEP Suite 5. 0) that can share data seamlessly. Can be accessed anywhere. GEP’s tools run on a cloud infrastructure and are offered as SaaS (Software as a Service). There is no special hardware or software to buy, no infrastructure to manage, offering us huge savings in implementation and ongoing maintenance or administration. GEP handles all that. Tap into your data.

GEP’s tools work very well with an existing enterprise system, enabling smoother process integration. They can capture data streams from a variety of enterprise apps including SAP or Oracle. Further they can build a brige with almost any software system to extract information. The modules proposed and their uses e Purchase – Purchase Requisitions (PR) & Purchase orders (Pos) : The ePurchase module ensures end users to create their own requisitions through an integrated electronic database, which flows through People Manager(s) with appropriate signing authority.

Users will have access to raw material stocks, through a common MRP, that enable material exchange between plants and decreasing turn-around times The benefits to the Company include, lower transaction costs, faster ordering, greater selection of suppliers, . Also it will enable reduction of dead stock, stock holding cost and write offs and reduced maverick buying. e-Spend – Supplier Spend Database : Issuing all Purchase Orders electronically will help manage and control supplier spend across all locations locally and globally.

Merchandising will have real-time visibility to the groups buying habit, and make decisions on the total spend on various style groups across the different factories, this module will facilitate savings through strategic analysis of relationships and spend. It will also assist in rapidly analyzing, validating, cleaning, and classifying high volumes of spend data quickly and accurately. e-Contract – Contract Repository : A central contract storage module will allow Procurement to house all signed contracts in one secured place.

Legal will have access to this database and Finance/Accounting will be able to match invoices with contract terms and conditions. Procurement user access across other locations will allow creation of contracts, so as to not create contractual actions from scratch. The database will send out timely alerts when the contract is expiring or coming up for renewal, which helps better manage our supplier relationships and provides negotiation leverage. e-RFx- e-Sourcing Platform : currently we do not have many pricing negotiations done through RFXs.

Though the RFX module, we can enable negotiation for common fabrics and trims (eg. elastics, 100% cotton Single Jersey , 95% cotton, 5% Lycra Single Jersey fabrics etc). This will enable us to bid against quotes of various suppliers to get the best option. The system will allow internal stakeholders and suppliers real-time opportunity to manage queries, proposal evaluation, supplier price rankings, price negotiations, and contract awards through an automated system. An archived repository of all RFxs reduces operating costs, saves time and ensures compliance with Company policies and procedures.

The benefits to the Company are: increased worker collaboration (resulting in less resistance and more oversight), identification of ideal suppliers (through better organization and compilation of supplier data), and usage of best practices (as processes used automatically become templates utilized by users across departments). e-Supplier – Supplier Management System : Merchandising can set up any amount of supplier profiles, and the purchase orders are generated from this supplier base. This will enable us to list all our suppliers according to the raw material, the style that it has been used, the country of origin etc.

This module helps us to run supplier score cards, and performance charts to rate suppliers after every shipment if required. There is a facility to prompt supplier performance periodically, that is generated through a survey that we can send out to various departments to score, depending on the criteria for assessment such as on-time delivery, and price and vendor compliance. Also this module will facilitate us to find a brief background on the supplier, to make sure that the suppliers we are using are reliable and financially stable and have the capability to manufacture the raw materials to our expected standards.

This will enable us to select reliable suppliers. Refer Annex. 1, for the technology proposal on every module on GeP (Global e Procure). GeP and the strategic sourcing Framework. Strategic sourcing is not the purchase of materials and services on an as-needed, Instead, strategic sourcing is the opposite: A systematic process that directs purchasing and supply managers to plan, manage, and develop the supply base in line with the organization’s strategic objectives—and in a manner, that optimizes the contribution of the supply base to the organization.

GeP facilitate all components of the strategic sourcing framework. 1. 2 Strategic sourcing framework 2. 2 GeP link to strategic sourcing framework. With the effective use of all modules of GeP. Intima Global will be able to reap the full benefits of strategic sourcing that will bring financial savings to the group as a whole.