The eProcurement Equation

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The eProcurement Equation

11/1/2007

By Linda L Briggs

MAKING ePROCUREMENT LOOK EASY

AS CHIEF PROCUREMENT OFFICER for the University of Pennsylvania, Ralph Maier has saved millions of dollars for the school, where he appears to steer a sophisticated eProcurement system as instinctively as the rest of us drive to work. An expert in his field, Maier was generous enough to share the following tips on what has worked so well when it comes to reining in U Penn’s $625-million yearly procurement budget.

Benchmark compulsively. "We measure everything," Maier acknowledges. "We measure throughput. We measure efficiency. We measure performance," and much more, he adds, including total cost containment, new contracts awarded each year, how much spending is done within and outside of contracts, and the effectiveness of collaborative buying. The payoff: When it’s time to point out system efficiencies, or to objectively evaluate something that doesn’t seem to be working, the proof is right there in the numbers.

Speak the language of senior management. Phrases like "optimized supply chain management" and "leveraging your spend" might thrill finance folks, but they probably aren’t part of the preferred lingo of a university president. Instead, says Maier, illustrate the benefits of the new eProcurement system with dramatic, clearly documented returnon- investment (ROI) numbers. "That’s a powerful message," he asserts.

Think like a corporation. It’s no coincidence that Maier comes from a private industry background. "Penn is roughly a $4.5 to $5 billion-a-year corporation, disguised as a research and education institution," he points out. Clearly articulating the role of the purchasing department, and the potentially tremendous ROI that comes from better spending decisions, is key, he says. Consider that the second largest portion of any university’s annual operating budget is products and services. "Purchasing has the biggest chunk of leverageable spend," Maier says. "We use that to our advantage to say, 'Purchasing is important!'"

Allowing a university to manage the marketplace in this way is a typical benefit that eProcurement systems offer, according to Anthony Rotoli, CDW-G’s higher education business development manager. He says that big savings can result when contracts are properly monitored, allowing schools to better manage vendors, and to channel users to those vendors offering the best prices. And that’s exactly the kind of strategic contract savings Smith is realizing at UM.