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EMPOWER KENTUCKY
Simplified
Administrative Services Project
Administrative Services
– Administrative services are those activities that support financial
and material management functions for state government. Those
functions include:
Procurement Planning Budgeting
Vendor Management Intra-governmental Transactions
Ordering Accounts Payable/Disbursements
Bidding General Accounting
Receiving Cash Receipts/Cash Flow
Inventory Management Accounts Receivables
Disposal Management Reporting and Decision
Post-Audit Support
A central theme of the Administrative
Services Project process redesigns involves a shift in accountabilities
and responsibilities between the Finance and Administration Cabinet
and the other state government program Cabinets and Agencies.
The basic nature of the shift is a transfer of accountability and authority
for process execution and control to those program Cabinets and Agencies.
Over time, the Finance and Administration Cabinet will transform its
role to one which focuses on maintaining an effective and efficient
process infrastructure (policies and systems) and providing value-added
services (advice, expertise) to managers and employees throughout the
Commonwealth. Accordingly, program Cabinets and Agencies will
need to establish the capabilities to accept both the responsibility
for control and execution of transactions as well as the accountability
for related decisions.
Business Improvement Projects
(BIPs) – The Business Improvement Project (BIP) addresses a wide
range of centralized and agency material management practices.
The BIP team is made up of members from a variety of agencies in state
government. Several team members were charter members of the original
Material Management Team who created the “brown paper maps” of the
“as is” world as a visual tool for determining the need for change.
The Business Improvement Project focuses on 1) procurement planning to leverage the state’s purchasing power 2) alternatives to the state’s costly warehouse infrastructure 3) Procurement Card 4) MARS preparatory activity through encouragement of Treasury mailed checks, streamlined electronic approval routing paths, and KAPs rollout.
EMPOWER Kentucky Business
Case – The Business Case started as a tool the Executive Leadership
of the Commonwealth used in order to prioritize EMPOWER Kentucky funding
requests. Proposed project costs and benefits (both tangible and
intangible) were compared in a standard approach. The results
were then ranked and presented to the EMPOWER Kentucky Redesign Steering
Committee for concurrence. Subsequently, the business cases are
being used as a management tool for EMPOWER leadership and process owners.
Achieving the business case, particularly as it relates to financial
impact is key to the success of EMPOWER. Benefits generated from
EMPOWER projects are being used by the Governor to fund strategic initiatives.
The business case has been
disaggregated to the Cabinet budget level. Each Cabinet is responsible
for achieving the cost reductions, revenue enhancements or service improvements
identified. The cost savings from the Administrative Services
initiatives for this biennium have been extracted from each Cabinet’s
budget. The Business Improvement Team is working with Cabinet
staff to achieve these savings as well as monitoring performance through
the Agency Scorecard. We expect a similar model to occur with
MARS.
Management Administrative
and Reporting System (MARS) – The Management Administrative and
Reporting System is an enterprise-wide system that will support state
government’s administrative processes. When implemented in July
of 1999, MARS will support both the state’s financial and materials
management processes and replace a number of legacy systems including
STARS and KAPS.
MARS will be based on packaged
software from American Management Systems, Inc. and will bring the benefits
of new client/server and relational database technology to the Commonwealth.
Among the benefits will be: an automated budget preparation process;
automated workflow; automated match and payables processing; web based
travel vouchers and purchase requisitions; and significantly improved
data access and reporting capabilities.
Organizational Design
– Organizational design activities support agency implementation of
Administrative Services redesigns and assist agencies as they meet provisions
set forth in the EMPOWER Kentucky business case. Organizational
design is defined as:
Statewide Purchasing Contract
Agreements – These contracts are being developed to respond to
multi-agency purchasing needs. Several commodities are frequently
and routinely purchased which are best suited for a statewide contract
approach. In some cases, these large scope contracts can be awarded
by region to best structure a vendor delivery network for our agencies.
In each case, a cross-cabinet purchasing team is assembled to ensure
the contract bid is responsive to each agency’s needs. This
team researches the commodities and services, vendor capability, proposed
usage, delivery, product quality, safety issues, develops the evaluation
criteria and evaluates the vendor bids and many other areas for consideration.
Several commodities are a best
fit for delivery through this type of contract arrangement:
Office Supplies
Medical Supplies
Building Materials & Supplies
Janitorial Supplies
Uniforms
These contracts are designed
to reduce administrative burden, assist with locating a “best value”
source, offer faster delivery for core items, provide brand selection,
and facilitate use of the state procurement card – in addition to
other purchasing enhancements.
Warehouse Optimization
– The Warehouse Optimization effort resulted from problems with our
existing warehouse infrastructure. Dependence on warehousing has
made it easy for us to neglect a strong procurement planning approach
for too long. Large stockpiles in warehouses often represent a
cash investment that is no longer necessary to meet agencies’ business
needs. For some time now, vendors have been providing just-in-time
delivery and prompt payment discounts to private sector businesses,
in the process avoiding costly investments in warehousing. The
state’s practice of stockpile purchasing was our best indicator that
our procurement process was broken.
To date, the Business Improvement
Project Team has identified 106 facilities used by our agencies for
redistribution centers, forms distributions, storage of surplus equipment
and in some cases junk. We justified spending funds on these facilities
because we couldn’t get what we needed when we needed it and because,
at first glance, volume discounts appeared to be a good purchasing decision.
While bulk buying may secure some immediate volume discounts, the state
also has a large investment in the storage and redistribution of this
inventory/stock, which in some cases, will not cost more to ship to
the appropriate location.
State employees addressed the
situation by proposing a common sense business strategy -- apply the
same purchasing practices we use at home to a state agency’s business
needs. Each day we all make decisions about what we will buy for
home, when best to make those purchases, quantities to purchase, considering
seasonal, budgetary, and any other factors that must be weighed.
The warehouse optimization analysis prepares us for making those same
decisions to meet an agency’s purchasing needs. This analysis
provides a review of all processes, from beginning to end, to determine
how to improve customer services. Agency warehouse and procurement
staff gather the data necessary to support the analysis. Recommendations
are then developed for the improvement of the day-to-day activities
using procurement planning, just-in-time delivery, procurement card,
and inventory on hand for spend down.
Workforce Transition
– The EMPOWER Kentucky project is committed to supporting a smooth
transition for all employees whose jobs are impacted by the process
redesigns. To that end, the Personnel Cabinet, agency personnel
administrators and EMPOWER teams have developed a strong organization
for assistance with workforce transition issues. Workforce Transition
is defined as:
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