Item - 2021.GL24.16

The General Government and Licensing Committee received the report (June 15, 2021) from the Chief Financial Officer and Treasurer for information.

This report is to provide an update to the General Government and Licencing Committee in the second quarter on the contract with Ernst and Young to support Phase 2 of Category Management and Strategic Sourcing as requested by City Council on December 16, 17 and 18, 2020.

Considerable progress of the program has been made since the beginning of Phase 2 in January 2021.  The City has achieved confirmed benefits of $6.36 M through the application of a strategic approach to procurement in 4 months. Currently there are seven new in-progress opportunities leading to additional expected savings of $31 M, expected to close by January 2022. Five additional opportunities, expected to lead to savings of $19.7M, are scheduled to be started shortly. In addition to the above, the Category Management and Strategic Sourcing group is working with various City divisions to validate eleven other opportunities.  

The City has instituted a category management governance model through the operationalisation of Category Management Leadership Team Meetings and the development of a performance dashboard to measure progress against City's objectives. To enable the City to get optimum value from its suppliers, the City is also developing a Supplier Relationship Management framework to standardize and upgrade its supplier and contract management practices in late Third Quarter 2021.

Overall Purchasing and Materials Management Division and the implementation of Phase 2 is currently on track for having Ernst and Young complete the contract Deliverables, to identify and start the strategic sourcing initiatives to achieve $110 million in benefits by May 2022. In addition to position Purchasing and Materials Management to be able to continue with Category Management and Strategic Sourcing without the support of Ernst and Young by the end of the contract, post May 2022.