Elevating Procurement’s Role

Chris MihokDirector, Yale University

Agenda

• Understand the role of Procurement today• Challenge the ‘myths’ about Procurement• Prepare the organization• Promote the organization• Deliver as promised

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Yale University Profile FY 2012*

• Undergraduate students* 5,322 • Graduate and professional students* 6,526 • International students* 2,072 • Faculty* 3,953 • Staff* 9,183 • International scholars* 2,239

Purchasing Services Organization

The Role of Procurement Today

Questions for each school to answer• Are you viewed as tactical and non valued added?• Are you responsive to customer needs?• Are you a domain expert?• Are you Innovative? Visionary? Polished? Collaborative?• Are you viewed as an internal consultant or an order taker?• Are you overburdened with requisitions and other tasks

which impact your ability to achieve higher value savings• When are you called by the department? At time of order

or during their strategy formulation

What are the ‘Myths’ about Procurement

• You don’t know anything about this product , service or commodity

• This is a very complicated or sensitive service• Procurement takes too long and can only derail the

process• This is a great deal and Procurement could not do any

better• The product is so unique you would be unable to add

value• The quote is about to expire and I will forfeit my discount

Debunk the Myths– Describe FOB and in-transit liability– Explain service level agreements to ensure availability– Have knowledge of capping the cost on consumables– Provide an acceptance process/criteria before payment– Illustrate an exit option if the product does not meet

requirements– Provide a remedy for poor performance (i.e. cash, free services

etc.)– Describe the University view to leverage other purchases– Identify a GPO where you could purchase this item for less – Offer prompt pay discount to reduce end user costs– Is the product so unique that the user underestimates its value

Prepare the Organization• Identify training opportunities for your staff (free webinars,

workshops)• Use web based services like Linked In to sign up for various supply

chain groups• Review the research in non-traditional areas-(i.e. CAPS Research,

NAEB, ISM)• Learn the language of your customers (legal-’matters’, HR ‘clients’)• Talk ‘value’ vs. lower price (risk reduction, Total Cost of

Ownership, Value Levers)• Understand the existing culture or process• Consider professional certification for the staff• Consider a ‘pilot’ program or limit the scope of the initial activity

Prepare the Organization (con’t)

• Review your spend profile and offer opportunities to reduce tactical workload through:– Increase the number of contracts available to end users– Analyze your transactions and make recommendations

to increase department buying authority based on a risk profile (80/20 rule)

– Offer fact-based suggestions to increase bidding levels, approval levels, requirements for signatures

• Evaluate GPO’s which can offer immediate value to your institution

Promote the Organization

Highlight Successes• We have streamlined the procure to pay process– Increased use of catalogs, purchasing on vendor websites,

increase electronic invoicing• We provide year over year cost savings– Offer examples of success stories with other units

• We have an ‘institutional’ view– Another department is purchasing a similar item

• We deliver value– Not always price savings but service levels, turn around time,

extended warranties etc.

Promote the Organization

Increase Your Visibility on Campus• Participate in your Sustainability Committee, Business Continuity

Team, Chair the United Way campaign• Organize the summer picnic or annual holiday party• Be a speaker at a professional society (NAEP, ISM etc)• Host a regional or local meeting of purchasing professionals at

your school– Collaborative with another school– Collaborative with a local hospital

• Sponsor a ‘vendor’ show for your faculty• Support ‘town vs. gown’ functions• Promote a small business fair for your suppliers

Deliver as Promised

How to be Successful ‘you don’t get a second chance to make a good first impression’• Identify a new commodity area with a lower risk profile

(consulting vs. benefits)• Ensure the Purchasing Lead has behind the scenes support• Consider embedding the staff member with the department,

initially• ‘Dry run’ presentations so that you are not providing ‘data’ but

actionable ‘information’• Get feedback from customer on their perceptions of the process• Listen to your customer

Summary

• Understand your role at the institution• Prepare the staff• Challenge the myths• Promote the organization• Start small but deliver large

• ‘you don’t get a second chance to make a good first impression’