Georgia Consolidates Procurement

State plans to provide a more competitive environment for suppliers to vie for state contracts and a preferential position on its e-procurement network.

by / August 19, 2008

The State of Georgia's Department of Administrative Services is engaged in a multi-million dollar investment in new procurement technologies and processes that will unite statewide entities into one comprehensive buying consortium.

The state's decision represents a new approach to purchasing within the public sector. The vision for such a transformative overhaul is to aggregate spending across statewide entities -- such as agencies, universities, municipalities and hospitals -- that typically operate independently, but whose untapped power as a single buying consortium has the potential to drive dramatic cost savings and process efficiencies.

"It is well known that the consolidation of buying power often represents the single greatest opportunity to contain costs," said Brad Douglas, commissioner for the Department of Administrative Services for the state of Georgia. "Our decision to take a new approach while using proven systems and technologies will enable the state to accomplish more with its revenue and free employees from time-consuming administrative work."

SciQuest's eprocurement solutions will provide the state with supplier enablement capabilities and an intuitive online shopping environment that will be integrated with PeopleSoft's eprocurement system. The resulting solution will empower the state to drive spending to pre-negotiated contracts, gain insight into how state money is being spent and eliminate paper-driven administrative practices so staff can spend more time on initiatives that deliver greater savings and higher value services.

Most state entities run their operations independently, with disparate enterprise resource planning (ERP) systems, different purchasing practices and very distinct needs (i.e., the purchasing needs of a hospital differ from those of a police department). Without a core eprocurement technology capable of integrating these systems and practices, broad user adoption is limited.

It also has been a practice among state governments to populate their procurement systems with tens of thousands of suppliers to facilitate unlimited choice. The challenge with this approach is that users are often overwhelmed by the sheer volume of options and the complexity of the systems used, which makes it difficult to find the best contract supplier for the given need. It has also become impossible to incent suppliers to discount their prices in an environment where the opportunity to gain significant market share is slim.

The state of Georgia has decided to take a new approach in two key ways:

  • Instead of recruiting thousands of suppliers to join its procurement network in equal fashion regardless of their contract status or level, the state plans to provide a more competitive environment for suppliers to vie for state contracts and a preferential position on its eprocurement network. In this way, the state can negotiate more favorable contracts and provide employees across its agencies with better-priced goods and services, without compromising on choice, thus providing suppliers the opportunity to grow their transaction volume across the state.
  • The state will also take advantage of SciQuest's open and modular architecture that easily integrates with various ERP systems. This approach has enabled SciQuest's customers to bring disparate groups into one seamless procurement supply chain. And because SciQuest doesn't charge suppliers to participate in its network -- a key component of its online shopping platform and unique among vendor offerings -- suppliers have further incentive to provide the best terms possible.

This new approach will help remove the barriers to adoption that have plagued state procurement initiatives and provide all participants -- the state, the users and suppliers alike -- with real-time access to the information they need to make better, more strategic decisions.

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