Item - 2016.GM16.5
Tracking Status
- This item was considered by Government Management Committee on November 14, 2016 and was adopted without amendment.
GM16.5 - Purchasing and Materials Management Review: Strategy for Category Management and Strategic Sourcing
- Decision Type:
- ACTION
- Status:
- Adopted
- Wards:
- All
Committee Decision
The Government Management Committee received the report (October 27, 2016) from the Treasurer for information.
Origin
Summary
This report outlines work undertaken in Purchasing and Materials Management Division (PMMD) to investigate category management and strategic sourcing. Introducing category management would change the City's current, primarily transactional approach to procurement, to an approach that adds a strategic element. The Treasurer is including implementation of category management and strategic sourcing as part of the 2017 budget process for consideration, while keeping in mind Council's direction to City divisions to achieve a 2.6 percent reduction to the net 2016 operating budget.
This report also outlines the work being done to improve PMMD's existing processes through the implementation of the Council approved Supply Chain Management Transformation (SCMT) I&T project. SCMT will modernize the procurement process by leveraging SAP Ariba, a cloud based solution to automate various manual processes, improving many metrics, including the cycle time of procurement calls. The successful implementation of category management and the ability to drive the benefits from category management is dependent upon the successful implementation of SCMT.
The Treasurer and the Director, Purchasing and Materials Management (the Chief Purchasing Official) believe it is essential for PMMD to transform its business practices to play a more strategic role in the procurement of goods and services. Implementing category management and strategic sourcing has the potential to generate significant annual recurring savings, estimated to be approximately $30 million by 2021.
Background Information
https://www.toronto.ca/legdocs/mmis/2016/gm/bgrd/backgroundfile-97882.pdf
Attachment 1 - Ernst & Young's City of Toronto Purchasing and Materials Management Program Review Final Report - Volume A - Executive Summary (August 10, 2016)
https://www.toronto.ca/legdocs/mmis/2016/gm/bgrd/backgroundfile-97883.pdf