Executive Summary

The Procurement Service is an attached agency of the Department of Budget and Management
mandated to be the central procuring arm of the government. It is created on October 18, 1978 by
virtue of Letter of Instructions (LOI) No. 755 as an integrated procurement system establishment for the
nationwide government agencies. The agency implemented its first e-tool on 2002 using only an
inventory management system (eIMS). Due to the continuous advancement in technology, it evolved
from a mere eIMS to Enterprise Resource Planning (ERP) software which enabled PS to automate most
of its processes. The ERP was last configured in 2013 and was anchored with the business processes of
Procurement Service at that time.

Because of the changing challenges the Procurement Service has met in fulfilling its mandate, the
organizational processes and organizational design continuously changed. Reorganization,
rationalization and organizational reengineering have been implemented. With these changes, the ERP
is no longer aligned with the current organizational structure or PS-DBM. Furthermore, problems such as
insufficient number of licenses against the number of users, no clear functional users (actors) for some
processes, increasing human errors, redundant processes and lack of clearly defined business benefits
begin to arise; a clear manifestation of misalignment. Thus, the objective of this study is to develop a
system process improvement plan which can lead to the streamlining of Procurement Services business
processes and the realignment of the ERP process flow to the current organizational design. In order for
PS-DBM to fully utilize the system, it has to be realigned with the current organizational structure and
Business processes. To do so, business process review is necessary.

Some of the benefits the Procurement Service can gain through focused group discussion are to
streamline business processes, map the existing business processes under the new organizational design
and to analyze the existing business processes under the new organizational design. In order to do so,
focused group discussion, key informant interview, requirement mapping and review of existing
processes are the ideal methodology that can be used.

For the results and discussion, the researchers were able to pinpoint some key issues which are causing
misalignment, bottle necks and problems for both business process and the system. For the ordering
process alone, these issues arise: Agency Procurement Request (APRs) can only be closed upon the
availability of the item or upon refund by the client agency, bottle neck in the issuance of Certificate of
Cash Availability (CCA), Sales Division manually maintain and monitor outstanding APR's and an average
of 3,000 open APRs per year for Common Supply and Equipment (CSE) alone. These issues indicate that
Procurement Service most often cannot provide 100% of the Agency Procurement Request due to out of
stocks. This leads to the ballooned unutilized deposits of the client agencies. To add up, because of
keeping APRs, PS is committing stock to the clients instead of cash.

Other issues encountered such as some processes are done manually which are needed to be
automated and requires module in the system, number of system users increased and the licenses are
no longer sufficient, the system set-up and masterfile are not updated and no longer fit the current
organizational structure and the system capability is not fully utilized by the organization. Process such
as Fixed Asset, Demand Planning, Cost Centers and Budgeting can be automated by the system but not
being utilized by PS.

For the Recommendations, Single Fund Concept can address the issues and problems in the ordering
process. Because common supplies and equipment falls under the budget category of MOOE, and Non
Common Supplies and Equipment falls under Capital Outlay, maintaining open APRs is not necessary.
Instead, cash balance should be maintained and can be converted into a new APR provided that they fall
under the same category. This will streamline the ordering process and PS is no longer required to
commit stocks but cash instead.

The Procurement Service should fully utilize the unused modules of the system. This will help automate
existing manual processes and helps PS to capitalize on information technology. Automation provides
centralized data gathering which can be later easily pilled for faster report generation, analysis and
decision making. Furthermore, it high time for the Procurement Service to update and reorganized its
Masterfiles and Set-ups to suit the current organizational structure.