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Streamlining in procurement racks up to $9M in savings

The university is on track to save $30 million to $40 million by June 2014 by changing the way it buys everything from key chains to copiers, according to managers of a procurement initiative.

Since 2009, the initiative has saved $9 million, $8.4 million in fiscal year 2011, said Thomas Romantic, senior director of supply channel management and business services, at a Sept. 12 brown-bag lunch. It was the first of seven informal gatherings hosted by the Administrative Streamlining Program (ASP) on the status of several cost-cutting initiatives.

But, Romantic said, there's more work to do. "This is not a sprint. This is more of a marathon," he said.

Savings are coming from three areas: e-business, partnerships with suppliers, and new tools and software, Romantic said. The initiative will help prevent layoffs, he noted.

First, Cornell continues to buy more of its goods and services with e-SHOP, an online shopping tool that more than 2,000 staff and faculty use regularly. In fiscal 2011, more than 100,000 transactions and $40 million in purchases went through e-SHOP. Additional training sessions aimed at helping staff transition to the Kuali Financial System will begin this week, and staff also can get help online and by phone, said Mike Winters, procurement manager in the Office for Supply Management Services.

Second, procurement staff members have asked key suppliers how the university can work with them more efficiently, said Cindy Jefferson, director of strategic sourcing in the Office for Supply Management Services. For example, about half the colleges that have university cell phones now pool their minutes similar to a "family plan," resulting in lower rates and fewer bills that can be processed faster than separate bills, she said. And the university has reduced the number of suppliers of such promotional items as clothing and key chains and has standardized the quality of the materials, yielding lower prices and saving $125,000, Jefferson said.

Third, the university is using new tools such as Spend Viz, software that aggregates and analyzes purchasing data. That analysis gives procurement staff a better sense of when and how the university spends money -- and the ability to narrow down the number of suppliers and negotiate lower prices. Another promising tool is the reverse auction, in which suppliers compete online to win Cornell's business. So far nine auctions have saved $373,000, Jefferson said.

The procurement team aims to save $4.5 million to $5.3 million in fiscal year 2012. Meeting that goal and later savings targets through 2014 is likely to require more help from the campus community, Jefferson said. "Please be ambassadors for us. We need help. We can't do this by ourselves," she said. She asked the audience to participate in focus groups and share their creative ideas.

Audience members asked several technical questions about procurement procedures and software. The questions ranged from the types of suppliers listed in e-SHOP to Cornell's policies on the use of personal cell phones for work and how e-SHOP calculates discounts.

Several participants said that e-SHOP is hard to use and doesn't necessarily result in lower prices when not buying in bulk. "It's hard for smaller units to see this as savings," one said. Jefferson asked her to contact the office if that problem resurfaces. "We'll find that better price," Jefferson said.

While the procurement initiative has resulted in smaller budgets for some colleges, it has also produced an enormous benefit for the entire university community, Jefferson said: "Every dollar we save saves somebody's job."

Upcoming sessions this semester

The Administrative Streamlining Program is hosting the following brown-bag lunch sessions this semester, with updates on its initiatives. Information:

· Facilities: Sept. 28, noon-1 p.m., Friends Hall, Hall of Fame Room.

· Information technology: Oct. 6, noon-1 p.m., 401 Physical Sciences Building.

· Human resources and spans and layers: Oct. 14, noon-1 p.m., Physical Sciences Building, Baker Portico.

· University communications: Oct. 26, noon-1 p.m., Mann Library, conference room 102.

· Finance: Nov. 4, noon-1 p.m., Physical Sciences Building, Baker Portico.

· Student and Academic Services: Nov. 16, noon-1 p.m., Willard Straight Hall, Memorial Room.

Media Contact

Claudia Wheatley