University procurement services recognized for cost reduction, new technology

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The University of California’s procurement office, which reduced costs by $132 million in the previous fiscal year, is being recognized for its innovative introduction of emerging technology.

The university’s Procurement Services — which negotiates contracts and sourcing for goods and services ranging from laboratory equipment to produce for dining halls — delivered about 30 percent greater savings last year than the previous fiscal year. The office is more than halfway to the university’s goal of recapturing $200 million per year lost from suboptimal practices and contracts by 2017.

New procurement software has been implemented systemwide, enabling the office to better report spending and track savings opportunities across campuses. Introducing common software across campuses with different financial systems was “extremely challenging,” according to Bill Cooper, associate vice president and chief procurement officer for the university.

The technology has allowed the office to better identify the overlaps in goods and services that campuses were acquiring individually and leverage the university’s total resources in order to negotiate more favorable contracts.

“If you’re bringing a $100 million potential contract, you’re going to get a heck of a lot better discount than if you’re bringing $10 million,” Cooper said.

The new sourcing tools speed up the procurement process in ways to which large businesses are accustomed; what previously might have taken six or seven months now takes a few weeks, he said.

In addition, the procurement office has established teams for particular categories of goods and services that pool the resources and knowledge of experts across campuses to create a specific procurement strategy for that category.

The savings are part of the P200 Strategic Procurement program, established in 2012 as part of the university’s Working Smarter Initiative, which aims to redirect $500 million in administrative costs to the academic and research roles of the UC system over five years.

Cooper’s office is a finalist for the SuperNova award, given annually by a business research and consulting firm for “disrupting” traditional business practices through new technology. Seven awards are given each year, and the 37 other finalists include Delta Airlines and Dell.

“The most important thing for me is recognizing that this is not something higher-ed related — this is across industries,” Cooper said.

The award winners will be determined by judges and a public vote and will be announced at an Oct. 29 conference.

“We’re starting to get recognition across the country — I get calls every week from (universities such as) SUNY and the University of Pittsburgh,” Cooper said. “Larger university systems are watching what we’re doing, and it’s their intention … to replicate our model.”

Sahil Chinoy covers higher education. Contact him at [email protected] and follow him on Twitter @sahilchinoy_dc.