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"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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