Strategic

Procurement

FY09 Summary

Prepared by Frank Corris

FY 08 Objectives

• Obtain granular visibility into University spend

• Review and select a common eProcurement

system across HighEd in Ohio

• Reorganized the department

• Derive logical category management plans

• Build go-forward strategies for each category

and with collaboration with internal departments

• Complete financial analysis of FY 08

spend:

•Pcard & PO spend combined

•Analyzed at the line item level

•Each line item to be commodity

tagged

Methodology

Analysis

• Key Categories defined:

– Maintenance Repair & Operations (Facilities Support)

– Food

– Technology (Includes IT, A/V and Telephony)

– Business Services

– Science / Medical

– Travel and Pcard

– Construction

MRO Category

Breakdown

Commodity Name FY Spend Notes

Auto Parts $264,519

Sourcing event needed, three vendors account for 27% of spend

one vendor over bid limit

Batteries $12,658Catalogs could cover most of this commodity

Carpenter Shop $196,544

Electrical Supplies $106,923Catalogs could cover most of this commodity

HVAC Parts $55,623

Hardware Supplies $106,923Catalogs could cover most of this commodity

Light Bulbs $70,652Catalogs could cover most of this commodity

Misc Food Supplies $56,869

Misc Supplies $1,521,892Needs additional Research

Misc Maintenance $79,852

Mower Parts $50,871

Painting Supplies $59,000

Plumbing Supplies $118,097Catalogs could cover most of this commodity

Spec. Gases $95,207Sourcing event possibility

Water Treatment $120,116Sourcing event possibility

Coal and 3rd Party Gas $3,599,387

MRO Category

Graphic

MRO Top Supplier

Breakdown

Vendor Name FY 08 Spend FY 09 Spend

Number of

Transactions

FY08

Avg $ Per

Transaction FY

08

Accessed

by:

Catalog

Item Notes

Payment

Method

Sherwin Williams $71,000 $36,080 1254 $57sts ? STS 778635A PO/PC

Airgas Mid American $86,000 $136,517 1134 $76 ? Contract needed PO/PC

Kroger $20,000 $94,110 450 $44 PO/PC

J A Sexauer $27,673 $35,104 300 $92sts x

Moving Purchases to Direct Resources

(Minority) PO/PC

State Electric $206,000 $98,543 1218 $169

Term

Contract x

Term Contract that expires June 30, 2010.

Will be meeting with Facilities for future

needs. PO/PC

Economy Supply $20,331 $25,000 420 $48 PO/PC

Crescent Sprague $221,645 $319,070 4727 $47

Term

Contract x

June 30, 2010, also will be meeting about

this one. PO/PC

Classic Solutions $677,614 $835,900 6842 $99

Term

contract x

Contract expires June 30 2010. Meeting

now about rebidding PO/PC

Lowes $166,828 $167,000 4583 $36 PO/PC

McMaster Carr $39,500 $107,500 1128 $35 x

Needs addressed both in terms of contract

and catalog PO/PC

C & E Hardware $25,000 $28,697 1131 $22 PO/PC

NAPA $15,669 $18,538 400 $39 ? RFP/ Catalog possibilities PO/PC

Murray's Auto Parts $8,400 $7,138 300 $28 ? RFP/ Catalog possibilities PO/PC

Aqua Science $120,116 $120,116 12 $10,010Term Contract The Contract expires June 30, 2015 PO/PC

W W Grainger $481,697 $321,171 910 $529sts x STS 774511A / E&I CNR0115 PO/PC

Architectural Interior

Prod $88,031 $29,000 164 $537 PO/PC

Professional Auto Parts $47,225 $29,973 788 $60 ? RFP/ Catalog possibilities PO/PC

Electric Motor Service $31,187 $22,857 41 $761 PO/PC

Kone Elevator $412,053 $439,081 12 $34,338Term Contract Contract expires June 30, 2012 PO

Pioneer Coal & Gas $3,599,387 $4,099,364 12 $299,949Term Contract

This contract will run through June 30 2010.

We will need to rebid at that time. PO

Top Supplier

Graphic

Sherwin Williams, $71,000

Airgas Mid American, $86,000

Kroger, $20,000

J A Sexauer, $27,673

State Electric, $206,000

Economy Supply, $20,331

Crescent Sprague, $221,645

Classic Solutions, $677,614

Lowes, $166,828

McMaster Carr, $39,500

C & E Hardware, $25,000

NAPA, $15,669

Murray's Auto Parts,

$8,400

Aqua Science, $120,116

W W Grainger, $481,697

Architectural Interior Prod, $88,031

Professional Auto Parts, $47,225

Electric Motor Service, $31,187

Kone Elevator, $412,053

Top Supplier Breakdown Excluding Coal

MRO Top Supplier FY

08-09 Comparison

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000

$900,000

FY 08 / 09 Comparison

FY 08 FY 09

Significant changes in spend were not the result of a procurement strategy.

FY 08 Projects

Travel and Expense Project

• Total revenue increased by 140%

• Total expenses decreased by 19%

• Net improvement over FY08 57%

• Net loss of $41,943 for FY09

Coal

• Purchase coal futures at 25% under market price

• Cost avoidance of $750,00 over two years

• A $2.5M annual set-aside for a Minority Business Enterprise (MBE)

FY 08 Projects

Technology

• Reduced the cost of the Juniper equipment for NextGen by $130,000 per year over ten years for a $1.3M savings

• Savings from reverse auctions of over $200K

• Ciber Consulting Services savings of $480,000

• Savings from converting to OSU Standard configurations of $144,000

Purchasing Card Services• Inter University Council (IUC-PG) cooperative bid was

lead by Ohio University• Over $225M in collective annual spend• $34M/year is Ohio University spend• Collective rebates will increase by >$1M/year and

$130,000/year at Ohio University respectively

FY 08 Projects

Convenience Store Retail Operations• Inter University Council (IUC-PG) cooperative bid was

lead by Ohio University• Miami and Akron Universities were collaborators on

this project• $2.0M/year is Ohio University spend• Saving of 4.5% or $90,000/year

Milk and Dairy Products• $106,000/year is Ohio University spend• Saving of 20% or $21,000/year

Fresh Bread Products• $350,000/year is Ohio University spend• Saving of 4.5% or $56,000/year

FY 08 Projects

Office Supplies

• Inter University Council (IUC-PG) cooperative bid was lead by

Ohio University

• Over $10M in collective annual spend

• $1.3M/year is Ohio University spend

• Saving of 12% or $156,000/year for Ohio University starting FY09

• Looking to take a bold step toward a single IUC-PG award to a

state certified MBE and with the collaboration of every state

funded college and university in Ohio

FY 08 Projects

Laundry Upgrade• Replace all equipment with new high efficiency

equipment

• Saved 4M gallons of water/year and reduced waste water effluents by 4M gallons/year for savings of $50,000/year

• Increased revenue the Housing by >$20,000/year

• New property improvements totalled >$200,000 which included new paint, flooring and furniture

Pharmacy Benefits with RxOC• Joint collaborative with OPERS, STRS, SERS, and

OSU

• Over $1B in collective annual spend

• Saving of 8% or $600,000/year for Ohio University starting FY09

FY 08 Projects

Total New Savings for FY09

for

Ohio University

$2,653,531

FY 10 and Beyond…

• SciQuest Implementation

• Department Reorganization

• Move to Strategic Sourcing Model

– Potential Projects

• Auto Parts

• Promotional Items

• Outsourced Print (may include a bilateral

agreement with Ohio State University)

• MRO Supplies

The End