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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, andstreamlined electronic approval routing paths.

EMPOWER Kentucky – EMPOWER Kentucky is a statewide initiative to change the way the Commonwealth does business in order to save costs, increase revenues and improve service to its citizens.  Changes to existing processes were developed by cross-Cabinet groups of over 250 state employees and approved by a redesign committee consisting of senior leaders in the Executive and Legislative Branches of state government.

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.

Financial Management – The Administrative Services Project redesigns were developed by employees from a variety of agencies who served on either the Administrative Services Financial Management or Material Management Teams.  The Financial Management Team concentrated on benefits and investment opportunities to 1) make the budget and planning process easier, 2) make it easier to get money in the bank, 3) improve the way we pay bills and 4) provide better information to help agencies manage.  Material Management is also defined below.

Infrastructure – "Infrastructure" refers to an organization’s basic operating structure including formal policies, procedures, organizational units and geographic locations as well as less formalized organizational components that may also affect day-to-day operations.

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.  MARS supports both the state’s financial and materials management processes and replaces a number of legacy systems including STARS and KAPS.

MARS is based on packaged software from American Management Systems, Inc. and brings the benefits of new client/server and relational database technology to the Commonwealth.  when fully implemented the benefits will include: an automated budget preparation process; automated workflow; automated match and payables processing; web based purchase requisitions; and significantly improved data access and reporting capabilities.

Material Management – The Administrative Services Project redesigns were developed by employees from a variety of agencies who served on either the Administrative Services Financial Management or Material Management Teams.  Financial Management was defined above.  The Material Management Team concentrated on benefits related to 1) statewide procurement card rollout, 2) increased delegations of small purchase authority, 3) reduced dependency on costly warehousing, 3) statewide access to the KAPS purchase order and receiving module prior to MARS, 4) development of a Best Value approach to procurement of goods and services, 5) initiation of a comprehensive Statewide Purchasing Agreement program, 6) formalization of a vendor relations program.  The Material Management Team was restructured in Fall 1997 as the current Business Improvement Team.

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:

· Restructuring of an agency’s administrative units at the cabinet, department, division, and branch level
· Assessing the cost and benefits of restructuring
· Assessing fiscal impact across these units to reflect changes in FTEs and other resource requirements
· Changing reporting relationships
· Integration and communication with the overall Commonwealth Administrative Services Infrastructure

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

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 "Best Value" 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:
 

• Redeployment of state employees whose positions are affected as a  result of the EMPOWER redesigns
• Reclassification of jobs due to significant changes in employee’s roles and responsibilities
• Creation of new job descriptions to support new activities as a result of MARS or Business Improvement Projects (BIPS)
• Scheduling and planning the transition from the old to the new job duties
• Communication, counseling, and other support activities for the above, which includes communication to those who are and are not affected by the transition.