Bill Cooper of Stanford University and Jack D. Zencheck of Yeshiva University (N.Y.), who serve on E&I Cooperative Purchasing's strategic sourcing committee, offer these examples of how their more strategic ideas and actions are paying off for their institutions:
- Changes to a challenging department. Certain campus departments, such as athletics and facilities are used to operating very independently and have a significant amount of spend, says Cooper. "They have a tendency to form allegiances with local purveyors, folks they feel comfortable with. That's OK as long as you are refreshing that contract." With renovation projects, Stanford's facilities leaders preferred familiar contractors, as they know the campus and can act quickly on projects. Cooper introduced job order contracting (JOC) and demonstrated how using the methodology, which is designed to allow for quick mobilization, can save big money. His team cost out projects via JOC that had been completed in a traditional mode to reflect the savings that could have been realized, and "they were just astounded," he shares. Cooper has been meeting with each school's facilities team and selling them on the merits of JOC, and the three largest facilities operations on campus will be conducting JOC pilots.
Approaching an independent department requires putting on kid gloves, he says. "You have to be careful that you're not making an indictment of the way they're doing it. … I find it's always important to start with the leadership of the department, so they understand fully the value of the proposition and maybe get some champions within," he says. "That's the way you get around the reticence of departments."
- Budget meeting participation. Yeshiva, which Zencheck points out got hit by both the economy and Bernie Madoff, has benefited from his strategy of being a part of the budget process. "It used to be that people would establish their [department] budget, then go back and buy something off budget; my people would get them a good deal, they'd get it cheaper, and then they'd spend the savings on something else," he says. "I started working with the CFO, attending budget meetings." Now, instead of a department budgeting $10,000 for computers, which Zencheck's team gets them for $8,000, and then spending $2,000 on office supplies because the money is there, he can sit in on the meetings and make sure only $8,000 is budgeted in the first place. "So there's a real savings on the budget, not perceived savings," he explains.
When the campus went through zero-based budgeting, departments had to find a way to spend only 85 percent of what they once did. They reviewed every contract the institution had and told vendors they would be getting 15 percent less. "In some cases, they could do it through clever things like consolidation and negotiating things like surcharges," he shares. It's all about "taking advantage of a good disaster," he jokes, adding that "everyone is struggling for money. They 'get it.' "