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Capitalizing on Strategic Sourcing
February 27, 2011
As part of the Innovation Task Force initiative, GW strives to recognize significant savings in how it spends on goods and services.
By Jamie L. Freedman
GW is on track to secure significant savings by spending money on goods and services in a smarter way through strategic sourcing—one of the top six innovation ideas generated in phase one of the Innovation Task Force.
An 11-member strategic sourcing committee, led by David Lawlor, senior associate vice president for finance and co-chairman of the ITF steering committee, is evaluating opportunities to maximize cost savings through sourced procurement.
Strategic sourcing can potentially save the university more than $6 million per year by funneling the vast majority of purchasing through selected best-price vendors, expanding participation in cooperatives, and encouraging the use of automated purchasing methods such as iBuy to achieve substantial savings.
“The largest ITF savings identified so far come from leveraging costs through strategic sourcing,” says Mr. Lawlor, noting that $6.3 million in savings have been identified through strategic sourcing to date.
The university’s Federal Express costs, for example, were recently reduced by 30 percent without changing business processes. “We negotiated an agreement with Federal Express to get more favorable rates through volume discounts by participating in a cooperative with the state of Utah,” he explains. “That alone will save us $150,000 per year.”
According to Mr. Lawlor, the strategic sourcing team is considering putting cost-saving agreements in place for leasing and/or buying copiers, scanners and printers university wide.
“But we’re not content to simply save money and continue conducting business in the same way,” he says. “We are eager to understand how best-in-class organizations are tackling the challenge to go paperless. We have asked the top vendors in this space to think with us about what the future holds and take this opportunity to leapfrog others from any industry. In this way we can change what it is we do and spend less in the process while providing a much stronger value proposition to our users.”
A key goal of the team is to make the GW procurement process easier, while increasing deep discounts on key commodities through the use of automated purchasing. “To that end, we will encourage the use of tools such as the iBuy portal to achieve significant savings, plus an increase in end-user satisfaction,” Mr. Lawlor says. Stakeholders across the university can search directly for various goods and services on iBuy, he explains, “confident that our procurement organization has been working in the background negotiating the best prices and service.”
The group is also working on improving the process for purchasing travel, which has been largely decentralized at GW through the years. “We’re working to put a centralized travel portal in place whereby travel contracts are negotiated in the background and users are assured of the lowest same fare pricing in travel,” Mr. Lawlor says. “We expect that to be worth $500,000 per year.”
Another chief area of focus for the strategic sourcing committee is simplifying the procurement process. “We’re very mindful that GW’s procurement organization needs to be restructured in parallel with the strategic sourcing initiative, so, led by our new director of procurement, Donna Ginter, we’re spending a great deal of time refining our metrics and infrastructure to enhance the buying experience for GW users,” Mr. Lawlor says.
He encourages stakeholders across GW to get involved in the process. “A key ingredient of our work is listening to our stakeholders and understanding from their perspective what the key opportunities and transformational changes should be,” Mr. Lawlor explains. “Strategic sourcing at its essence epitomizes the vision behind the Innovation Task Force—discovering ways in which we can enhance the operational efficiency of our day-to-day activities while enhancing the user experience for the community at large.”
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