CU procurement review process targets better deals, projected savings

By Marguerite Spencer

Is Cornell getting "the best bang for its buck," or could the university be saving hundreds of thousands, possibly millions, of dollars a year through better deal-making -- while enjoying equal or better quality? Last year the university said "yes" to the latter proposition and a "procurement review" initiative was launched -- an extension of Finance Workforce Planning (FWP), which led to the introduction of business service centers across the campus. The procurement review started in the last fiscal year, 2004, and $5 million in savings are anticipated.

Office of Purchasing Services Director Vince Patriarco, left, and purchasing agents Debi Benson and Glenn Morey have been instrumental in developing comprehensive preferred supplier agreements and much greater savings for the university. Joshua Adams

As with other FWP initiatives, the procurement review is chaired by Joanne DeStefano, vice president for the Division of Financial Affairs and university controller. Several Cornell faculty and staff members are involved in the review, as well as a participant from the University of Rochester. "In addition to savings through better sourcing, the review will focus on value-added procurement activities and clarify roles and accountabilities," DeStefano said.

Among the committees contributing to the review is the Strategic Sourcing Committee, led by Vince Patriarco, director of the Office of Purchasing Services. Patriarco's team is focused exclusively on taking better advantage of Cornell's buying power by gaining a better understanding of its buying practices. Armed with details of the university's purchasing behavior, the team has been approaching current suppliers with new, more comprehensive business propositions. Attracted by the prospect of special terms with Cornell, vendors are agreeing to larger discounts. Negotiations already completed are projected to yield annual savings on expenditure of more than $3 million.

In addition to savings, another advantage of the new arrangements with vendors is that, with predetermined discounts, Cornell staff will be able to avoid time-consuming competitive bidding in relation to some purchases.

Cornell's largest area of expenditure is "supplies and general expenses," amounting to over $210 million. Of this amount, more than $130 million is spent on office equipment and supplies. It is here that Purchasing has been concentrating its negotiating effort.

Among the team's major successes so far are new agreements for office supplies and copiers. Purchasing agent Glenn Morey recently announced the award of new contracts to Boise Office Solutions and Staples Business Advantage, and purchasing agent Debi Benson has concluded negotiations with a list of suppliers of copier equipment and maintenance.

Among the benefits to Cornell of the new office supplies arrangement is free one-day delivery, no minimum quantity per order of office supplies and convenient Web site listings tailored for Cornell, with the university's special built-in price. A dedicated toll-free number connects Cornell customers to sales representatives who are well-briefed on the university's special needs, as well as the university's pricing and service requirements. Benefits from the copier contracts include deeply discounted pricing on either purchased or leased equipment, in addition to lower-cost maintenance, with all supplies included. Information on new preferred supplier arrangements (PSAs) such as these is regularly updated on the Purchasing Web site: http://www.purchasing.cornell.edu/preferred.cfm.

Several groups across the campus have joined Purchasing in negotiating for new deals for other products and services such as: audio visual equipment, lab and scientific supplies and equipment, IT hardware, furniture, books and subscriptions, telecommunications services, and overnight mail service.

Project leader Patriarco summarizes his team's efforts this way: "I am happy to say that to date we have maintained our current supplier base while achieving our savings targets. In our new contracts, we have been able to lower our costs, strengthen relations with our suppliers and make it easier for the campus to do business."

Marguerite Spencer is director of university policy and division communications for the Division of Financial Affairs.