College Planning & Management

MAR 2013

College Planning & Management is the information resource for professionals serving the college and university market. Covering facilities, security, technology and business.

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SPEND AND SAVE the campuses and even within individual departments. Now we're saying, 'Let's look at this in a more disciplined and strategic manner.'" Consolidating Contracts Since 1995, the University of California system has realized savings of $335M by consolidating contracts for products and services across its 10 campuses wherever possible. Cooper, the former chief procurement officer at Stanford, was hired by the University of California in January to determine how the system can further optimize its procurement program. As the system has started to leverage its purchasing and negotiating, it has also embarked on an initiative called the P200 program, with the goal of reaching annual savings of $200M within the next five years. One initiative that will be launched as part of the program is the creation of "Centers of Excellence" at various campuses that would handle procurement for specific commodities, such as lab equipment, for the entire system. While moving to centralized purchasing, other university systems have opted to invest campuses and even departments with the authority to purchase a certain quantity of goods and services. The University of Colorado, for example, consolidated its purchasing in 1999 but continues to allow individual departments on its four campuses to spend up to $5,000 without using the central procurement office. Departments can also purchase up to $10,000 from the system's electronic catalogues, which include the University's negotiated contracts. Overall, consolidating its purchasing has allowed the University of Colorado to reduce its procurement staff from 125 to 45 and to negotiate better pricing with its contractors. "Our suppliers see us as one customer instead of four," says Sandy Hicks, assistant vice president and chief procurement officer at the University of Colorado Office of the President. "I think it just creates economies of scale, rather 44 ALL TOGETHER NOW. The University of Massachusetts is in the process of implementing an e-procurement tool to drive compliance with University contracts on its five campuses. than having to replicate everything on each campus." Supply Chain Alliance Another procurement model has been developed in The University of Texas System, which includes nine universities and six health institutions. In 2008, the public university system created a supply chain alliance, in which it instituted shared services among its campuses and began the process by negotiating contracts with suppliers of research equipment for all its health campuses. Many universities that have adopted centralized purchasing still use contracts offered by cooperative purchasing organizations because of the savings they can generate. Since then, The University of Texas System has developed system-wide contracts for its academic campuses for other products such as office supplies and computers, which has resulted in a savings of $68M. Besides attempting to guarantee a certain volume of supplies for its contractors, the system has also negotiated better pricing by narrowing the number of choices for particular products. COLLEGE PLANNING & MANAGEMENT / MARCH 2013 "In office supplies, instead of having 15 manila pads that you can buy, maybe you buy only one or two," says Scott Kelley, executive vice chancellor for business affairs at The University of Texas System. "In doing that, you become more efficient, but you have to get agreement from the campuses. Using a shared-services approach made it easier for us to get buy-in from the campuses to make those savings efficiently." E-Procurement What has allowed many universities to monitor their spending and identify potential savings is the adoption of a software system that tracks purchasing. The University of Massachusetts system, for example, is in the process of implementing SciQuest, a procurement tool that will help to drive compliance with university contracts on its five campuses. The software will establish a University of Massachusetts marketplace for all campus faculty and staff to purchase from contracted vendors. Though the software will consolidate purchase orders from the five campuses, it will not establish one procurement office for the University system. "We've come to the conclusion that this is what is best for the University at this time," says John Healey, senior director of enterprise procurement for the University of Massachusetts System Office. "There's a consensus out there that there's value in campus-level servicing. There are enough unique purchases at the campus level that the University feels it's important to provide that level of servicing." WWW.PLANNING 4EDUCATION.COM

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