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NIGP Consulting Guides Raleigh-Durham Airport Authority Toward Centralized Procurement
Struggling to maintain a decentralized procurement system, the Raleigh-Durham (N.C.) Airport Authority (RDU) began to experience delays and inadequacies in its processes and to discover gaps in spend, resulting from disorganization and insufficient communication. With purchasing functions disbursed along multiple routes across multiple departments, RDU suffered a range of issues, such as an overall sluggish procurement cycle, an overwhelming number of assigned approvers and purchase order requestors, and a misunderstanding of approval paths by employees. The authority also had an excessive number of suppliers with similar needs to be met, a staggering amount of small-dollar purchases, and overlooked automatic contract renewal terms. Other problems included a lack of standardized RFP and contract templates and no centralized repository to house solicitations and contracts.
In 2012, the Airport Authority took action, developed a vision, and compiled a set of objectives to lead to a complete procurement transformation. “Our mission was to create a robust procurement department as the primary provider of procurement services to enhance transparency and increase efficiency of our processes, all while maintaining a strong customer focus,” said Joe Styres, Deputy Director of Finance, Business and Administration at Raleigh-Durham Airport Authority. RDU sought direction and support from the public procurement professionals of the NIGP Consulting Program to jumpstart their strategy to standardize, to the extent feasible, the acquisition of all non-construction products and services by means of streamlining the procurement contracting process.
RDU engaged the services and expertise of a team of three veteran NIGP consultants and involved approximately 50 personnel to provide abundant feedback via individual interviews, small focus groups, and data to review, in order to narrow the scope of the Authority’s needs and maximize the effectiveness of the project. Key areas included in the breadth of the project were: business process; organizational structure and staffing; policies, procedures, and practices; source documents; and staff development.
Upon conducting an analysis of the data gathered from interaction with personnel, the NIGP Consulting team was able to determine several fundamental pain points on which to focus and tailor their solutions. The consultants found that the departments of Requesting and Purchasing were drowning in high-volume, low-transaction-value activities, and that the procurement function was deeply fragmented. Further, the contract administrators in need of products and services did not fully comprehend the procurement process and essentially had too much responsibility over it compared to those organizations following best practices.
Styres added, “The NIGP Consulting team helped us analyze the volume of work we were doing and the level of effort we were spending. It was a classic case of two different ‘ends of the pool.’” On the high-volume end of the procurement spectrum, there was an unnecessary portion of staff involved, lack of delegation of authority for purchase approvals, and no substantial tools to support procurement activity. For the low-volume, high-complexity procurement items, they identified insufficient staffing and lack of the proper training and credentials needed by procurement and contract administration personnel to effectively manage such relatively high-dollar, high-risk acquisitions. NIGP Consulting also pinpointed that the organization fell short in spend analysis reporting capabilities and both knowledge and usage of cooperative and blanket purchasing agreements, which led to lost opportunities for supplier consolidation and savings on operating costs. And finally, 80 percent of all transactions totaled less than $1,000 each, indicating the need for a purchasing card (p-card) program in place at RDU.
The consultants laid out a roadmap of recommendations unique to RDU’s circumstances for the Authority leadership to implement. This included changes, like integrating its purchasing functions into a single, concise Procurement Department; organizational restructuring to manage procurement, which entailed hiring a Procurement Department Manager, assigning a Purchasing Officer for the “volume” business, a Contracting Officer for the “complex” business, and a Procurement Associate for support and management of the P-card program; redesigning of the competitive procurement processes based on contract value; increasing purchase approval levels across all organizational levels; drafting updated policies and procedures manuals; and, providing in-depth training for new and existing Procurement and Contract Administration personnel and vendors on the new policies and procedures, tools, and capabilities.
Taking these essential steps toward complete procurement revitalization has since produced significant benefits for the Raleigh-Durham Airport Authority. Styres is pleased with how the project has driven his team’s productivity and cost savings. “The NIGP consultants did an excellent job of analyzing our particular situation and making clear, actionable recommendations for change,” he said. “NIGP provided a ‘desired state’ blueprint of the future in the areas of organization/staffing, training, process, policy and procedural change that we are executing on and continue to implement successfully.”