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TO: |
Mayor and Members of Council |
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FROM: |
Peter Loukes, Director,
Operations and Asset Management Joel Lustig, Director, Financial
and Client Services |
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PREPARED BY: |
Kevin Newson, Manager of
Purchasing |
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DATE OF MEETING: |
2004-June-28 |
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SUBJECT: |
Office Furniture Manufacturer of
Choice – Steelcase Inc. |
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RECOMMENDATION:
THAT the report entitled ‘Office Furniture Manufacturer
of Choice – Steelcase Inc.’ be received;
AND THAT Council reaffirm Steelcase Inc. as the
office furniture manufacturer of choice for systems (workstation) furniture at the
Civic Centre;
AND THAT the manufacturer of choice designation
for systems furniture be extended to all Town facilities;
AND THAT the Mayor and Clerk be authorized to
execute a 5 year Value Proposition Agreement between Steelcase Inc. and the
Town of
AND THAT, where appropriate, Steelcase Inc.
products be identified and included in the base furniture specifications for
future facility capital construction projects;
AND FURTHER THAT subsequent to the development
of the Value Proposition Agreement, staff solicit competitive bids for the supply
of Steelcase products from authorized Steelcase dealers.
PURPOSE:
The purpose of this report is to reaffirm Steelcase
Inc. as the preferred manufacturer of systems (workstation) furniture for the Civic
Centre and to extend the designation to other Town facilities. It further recommends that staff be authorized
to execute a 5 year ‘Value Proposition Agreement’ between Steelcase Inc. and
the Town of
BACKGROUND:
In 1990, Council, through a Request for
Proposal process, approved Steelcase Inc. as the product of choice to furnish
the Civic Centre (see Appendix ‘A’). Furniture
acquisitions at the Civic Centre are currently standardized utilizing the
Steelcase ‘Context’ product line. Approximately 98% of the 400 workstations in
the Civic Centre are manufactured by Steelcase representing an asset value of
approximately $2 million.
However, this approach has not been implemented
on a corporate wide basis, and past practise has been to engage multiple
furniture manufacturers / vendors to satisfy the office furniture requirements
of the Town. This report identifies, within
the current procurement model, a rationale for corporate standardization and identifies
the benefits associated with confirming Steelcase Inc. as the manufacturer of
choice. The ‘Manufacturer of Choice’
designation refers to the manufacturer of a specific good or service that will
be single sourced to gain the economies of standardization. In this case, there are two distributors of
Steelcase products (Prestige Office Interiors and Mayhew and Associates).
OPTIONS/DISCUSSION:
Although the current corporate approach offers
multiple one-time solutions that meet the needs of individual Departments, it
has proven to be less efficient and more costly. Further clarity to the overall cost of office
assets can be brought about by breaking the furniture management cost chain
into three main components:
Pre-Ownership Activities 25%:
Long term planning, annual needs assessment and
space planning, specification development, furniture evaluation and order
processing.
Product 50%:
Capital cost of product and accessories
Ownership Activities 25%:
Delivery, installation, inventory tracking,
move management, reconfiguration, warehousing, repurchase / buy back and
disposal
The areas for improvement listed below fall
outside of the 50% capital cost category and should be given greater
consideration from a total cost of ownership perspective.
All of the areas identified above can be improved
by entering into an agreement with Steelcase Inc., and through ensuring staff
adhere to internal process requirements.
Confirming Steelcase as the systems furniture product
of choice on a Town-wide basis will make a significant contribution to delivering
a procurement process that is repeatable and as efficient as possible. It will maximize
product compatibility and allow a standard set of workstations to be implemented
over time. Standardization offers savings through discounted volume pricing structures,
reduced space planning design time, efficient warehousing of components and reduced
installation and reconfiguration times.
Although pre-ownership (planning and design) and
ownership (deployment) activities are largely intangible, significant potential
for business process improvement exists. Confirming a business relationship
with a single manufacturer will enable savings to be realized, in part, through
negotiating discounts for specified products.
Staff realize that in all instances it will not be prudent to specify
and purchase Steelcase product. End use considerations will be evaluated on an
ongoing to basis to ensure that the most appropriate solution is delivered at
all times. This will include office environment solutions that cannot be found
from within the Steelcase portfolio.
FINANCIAL CONSIDERATIONS:
Over the last 14 years, Steelcase, through its
dealer, Prestige Office Interiors Ltd (POI), has supplied approximately $2
million worth of Steelcase products to the Town. Preliminary discussion with Steelcase
representatives has resulted in a Value Proposition to the Town of
Guaranteed savings, price and personnel commitments,
workplace strategy assistance and proven product support complete the Steelcase
Value Proposition. Steelcase Inc. manufactures
and markets over 540 products worldwide and offers competitively priced
products of excellent quality in virtually all office equipment categories.
BUSINESS UNITS CONSULTED AND AFFECTED:
Purchasing Department:
Purchasing By-law 143-2000 section
14 – Purchase by Negotiation includes the following:
When any of the following
conditions apply, the Treasurer or designate and the Manager of Purchasing may,
in consultation with the appropriate Director, negotiate a Contract for the
supply of goods and services which shall be submitted to the Chief
Administrative Officer for final approval:
(g) where it is in the public interest not to solicit a competitive bid.
Subject to the approval of the
recommendations contained in this report, Purchasing Department staff will lead
the negotiation process necessary to confirm the additional product discounts
offered by Steelcase Inc. Purchasing
staff will further ensure that the development of the Value Proposition
Agreement Terms and Conditions are in a form satisfactory to the Town
Solicitor. Upon conclusion of the negotiation process, a Staff Award Report
will be prepared for review by senior management with final approval by the
Chief Administrative Officer as required by Purchasing By-law 143-2000.
Subsequent to the development of
the Value Proposition Agreement, staff will solicit competitive bids for the
supply of Steelcase products from authorized Steelcase dealers.
Legal Department:
The Legal Department will review
and comment on the Terms and Conditions of the Agreement prior to the execution
of the Value Proposition Agreement.
ATTACHMENTS:
Appendix
‘A’ – May 22, 1990 Council Extract
Appendix
‘B’ – Proposed Value Proposition Agreement
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Peter Loukes, P. Eng., Director Operations
and Asset Management |
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Jim Sales, Commissioner of Community and Fire
Services |
_____________________________________ _____________________________
Joel Lustig, Director of Financial and Client Andy Taylor, Commissioner,
Services
Corporate Services
Q:\commissionshare\operationsandassetmanagement\reports\2004\assetmanagement\officefurnituremanufacturerofchoice
