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Solving Procurement Challenges
Procurement department professionals are responsible for sourcing everything from pencils and projectors to food service and flooring. In today’s atmosphere of tight budgets and competitive vendors, how are these experts solving their toughest challenges? Here’s how.
1. CHALLENGE: The Procurement Department Is Perceived as an Obstacle
“I think a lot of procurement departments are still perceived as obstacles rather than as service providers,” says Barry Swanson, associate vice provost of Campus Operations and chief procurement officer for Lawrence-based University of Kansas. “The truth is that we’re here to help our customers get the goods and services they need in a timely manner at the best cost/terms/supply chain logistics we can negotiate.”
Swanson indicates that his department has overcome this misperception: “We’ve got a really good model,” he explains. “We spend a lot of time with Systems, and build transparency and buy-in with the university’s different departments and deans. We don’t make decisions in isolation and enforce them upon our customers. For example, we have committees for selecting computer hardware and software.”
Missty C. Kennedy, assistant director of Procurement Services for Alabama-based Auburn University, agrees with Swanson’s observation. “Our biggest challenge is changing people’s perception of procurement as gatekeepers — the no-you-can’t-dothat people. We’re changing that misperception to the truth: We’re your partner. For example, if a department knows it is receiving a grant, we encourage them to come to us early to help determine what they need to procure. This is as opposed to their coming to us when they need something and discovering the item exceeds our bid threshold, so we have to bid it, which affects their timeline.”
Kennedy notes that she employs several strategies for changing others’ perception of procurement services. “We do campus outreach through listening tours to our departments,” she indicates. “Once a quarter, our strategic sourcing analysts meet with department leaders and financial managers to ask what we are and aren’t doing right. Also, once a quarter our entire department meets with our financial liaisons. We review new contracts and policy changes, and we allow them to provide feedback as to how we’re doing. Finally, we do an annual survey that is sent to all of our stakeholders.”
2. CHALLENGE: Getting the Desired Products and Services
Ah, yes, getting the products and services customers want is an age-old problem. “Science and medical labs, as well as music, technology and other departments, need and want exactly what they need and want,” says Duff Erholtz, who handles membership relations and communications for Staples, MN-based National Joint Powers Alliance (NJPA). “They are very brand specific. This is a real life issue.”
“If purchasing professionals are restricted to doing their own bid,” says Jeffrey Kimball, cooperative purchasing services director for Milton, PA-based Keystone Purchasing Network (KPN), “they have to take the lowest bid, and that may not get them the specific products their customers want.
“If, however, purchasing professionals are not restricted in their bidding,” he continues, “they are able to solve the challenge of getting the precise products and services their customers want by using cooperative purchasing contracts.”
Erholtz agrees, noting that, by using cooperative purchasing contracts, purchasing professionals can use the time previously spent on the bidding process to find cooperative vehicles for the exact products desired, often with time left over to devote to collecting spend data.
3. CHALLENGE: Information and Analytics
“One of the biggest challenges procurement professionals are facing is cost reduction,” says Gary Link, C.P.M., senior vice president of Consulting & Contracts for Jericho, NY-based E&I Cooperative Services. Why is that so important? For the public institutions, there is less and less state funding, while the cost of operating an institution continues to rise. For the private institutions, this requires them to significantly increase endowments and reduce expenses to support these increased costs.
“Cost reduction really starts with data, and collecting spend data,” Link continues. “First, does the procurement operation have the information and spend data to evaluate and negotiate contracts that will add value and reduce costs to the institution? Second, do they have the required skillset? The movement in managing information and collecting spend data to ultimately reduce costs takes a different skillset and requires change and/or retraining staff. Third, does the institutional leadership support the transformation process required to be successful?”
To assist campus leadership, E&I offers the ability to normalize data through a spend analytics relationship with Rosslyn Analytics. “It’s very, very important for purchasing professionals to understand we are not a transactional environment anymore,” says Link, “and that the future is supply chain management and strategic sourcing, with information, data and analytics.”
4. CHALLENGE: Limited Resources
“I work for a large, complex research institution,” indicates Lisa Deal, purchasing director for Gainesville-based University of Florida, and president of Columbia, MDbased National Association of Educational Procurement (NAEP). “One of the biggest challenges we face is hiring staff who can support the needs of a complex institution and who can create excellent relationships to teach people how we can be of great customer service. With limited resources to pay people well, we have to find other ways to recruit and reward staff who are excited and engaged by what we do. The resource challenge is ever present.”
5. CHALLENGE: Anticipating Needs
Another challenge that Deal strives to overcome is staying ahead of the curve. “Because we’re so large, the procurement department can’t always be ahead of the needs of a cutting-edge institution,” she explains. “We’re not always as nimble as we wish we were for emerging technology. My crystal ball doesn’t allow me to anticipate a need and get a contract for an item before my customers ask for it: ‘I need a drone, and I need it now.’” She and her team do their best to know what’s on the market and from where it can be sourced, counting on strong relationships with vendors for assistance.
6. CHALLENGE: Revenue Generation
Revenue generation through campus sponsorship offers colleges and universities significant financial opportunities, however traditionalists argue that campuses may become too commercialized. “The way we look at it, and the way campus administrators should look at it, is: What is the value in the institution’s name, and how can we increase revenue on campus?” says Link. “Two early leaders in campus sponsorship opportunities are the University of Kentucky and Arizona State University. University of Kentucky revenues have increased significantly with their new JMI Sports relationship for campus sponsorship. E&I and JMI (in cooperation and collaboration with the University of Kentucky) recently signed a Master Agreement available to all higher education institutions.
“Many large institution athletic departments have chief revenue officers, and as campus sponsorships increase, institutions are considering this an important function as well,” Link sums.
How exhausting is it for purchasing professionals to keep pushing against these challenges? Maybe not as exhausting as you initially think. “One of the things to keep in mind is why procurement professionals do what we do,” says Deal. “Our mission is about research, teaching and service, and that’s not about gross profit margin. So, when we negotiate with a supplier, we’re negotiating to make the world a better place. It’s easier to do what we do when we do it for that reason.”
This article originally appeared in the March 2016 issue of College Planning & Management.