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Strategic Sourcing Initiative

Procurement and Supplier Diversity Services (PSDS), partnering with the Office of Organizational Excellence, embarked on a Strategic Sourcing Initiative in the fall of 2014 with the goal of supporting the UVa Cornerstone Strategic Plan's Pillar 5:

"Steward the University's resources to promote academic excellence and affordable access."

This cost saving program further supports the Cornerstone Plan through process improvement and the streamlining of procurement processes from purchase through payment. The categories of procurements included in Phase 1 are:

  • Office Supplies
  • Catering
  • Computer Peripherals
  • Inbound Freight
  • Housekeeping Supplies
  • Promotional Products
  • Office Furniture
  • Research & Development

 

Strategic Sourcing Initiative Results

Office Supplies

The annual cost savings realized through the office supply contract, awarded to The Supply Room Companies in September 2014. Cost savings primarily come from better pricing but also include early payment discounts through electronic invoicing and payment, price match guarantees, and incentives.

Inbound Freight

The projected savings on an estimated $1 million in annual expenditures on inbound freight. This contract was awarded to Vantage Point Logistics (VPL) in August 2015. Savings result in the difference between inflated shipping charges from the supplier and VPL's discounted rates.

Travel Booking

The Travel contract was awarded in April 2015 to Christopherson Business Travel (CBT). This strategic project creates a new travel office and a new expense management system. Once the entire program in implemented in the spring of 2016, savings will grow to hundreds of throusands of dollars in both cost avoidance and negotiated cost savings.

Expense Mgmt

The expense management contract was awarded to Chrome River in May 2015. The initial annual savings will be overshadowed by the cost avoided through the elimination of the current duplicative paper-driven expense reimbursement process. This program will be implemented in tandem with Travel Booking and is expected to be complete by spring 2016.

Gift Card

The gift card contract was awarded to National Gift Card in June 2015. This UVa Marketplace punchout catalog avoids cost by allowing shoppers to order gift cards in areas such as Human Subject Payments, Honoraria, and Employee Recognition from their offices rather than picking up cards at a local store. Cost savings are estimated at 1% in this low-margin business.

Catering

This contract was awarded to America To Go in August 2014 and was necessitated by the large number of local caterers in the area coupled with large spend volume in the category, which has higher rates of manual, paper invoicing and problem purchase orders. Savings are primarily in cost avoidance as the business side of catering becomes standardized and electronic, reducing the workload centrally and on departments.

Promo Products

Awarded in October 2015, the strategic source for promotional items has been in-sourced to the University Bookstore. Growth plans, performance measures, and messaging to the University community are being developed in support of this strategic partnership.

 

In addition to the cost savings generated through Strategic Sourcing, PSDS has negotiated savings for other strategic programs that support the Cornerstone Plan:

 

Mgrl Reporting
The award for the University's Business Intelligence System was made to Qlik in July 2015. Cost savings were generated through negotiation of price, additional licenses, and fixed labor rates.
Mgrl Reporting
The award for the University's Third Party Electronic Invoicing Partner was made to Transcepta in November 2015 in order to move the University's top 300 vendors (based on volume of paper invoices) to electronic invoicing. Production began in January 2016. Estimated savings are $132,000 annually based on ghost card and early payment discounts; additionally, it is estimated that this will reduce the volume of incoming paper invoices by 45,000 per year.

 

What is Strategic Sourcing?

Strategic Sourcing is an approach that consolidates and leverages the purchasing power of the university’s commonly used supplies, equipment, and services to negotiate more favorable prices and effective service. It is a continuous process of information gathering, analysis and monitoring:

  • Assess Current Spend- What is bought, where, at what price?
  • Assess Supply Market- Who offers what?
  • Total Cost Analysis- How much does it cost to provide goods/services?
  • Identify Suitable Suppliers
  • Develop Sourcing Strategy- Where to purchase, while minimizing risk and cost?
  • Negotiate with Suppliers- Products, service levels, prices, payment terms, etc.
  • Implement New Supply Structure
  • Monitor and Track Performance- Use Vendor Scorecards and Department Dashboards