Aggregate Purchasing The Power of Procurement

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Aggregate PurchasingThe Power of Procurement

• Doreen Murner, CEO
• National Association of Educational Buyers
• Gary Link, VP Contracts
• Educational Institutional Cooperative Service
• June 18, 2004

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NAEB

• The National Association of Educational Buyers is
  a professional association serving colleges and
  universities nationwide. Our mission is to
  facilitate the development, exchange and practice
  of effective and ethical procurement principles
  and techniques within the higher education and
  associated communities, through continuing
  education, networking, public information and
  advocacy.

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NAEB and EI

• NAEB founded in 1921
• To meet procurements professional development
  needs in higher ed
• EI founded in 1932 by NAEB members during the
  depression
• To try and figure out a better way
• Leverage the purchasing power in higher ed

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EI

• Educational Institutional Cooperative Service,
  Inc. is a not-for-profit buying cooperative which
  provides goods and services to its 1500 members
  at the best possible value. Our mission is to
  exceed member expectations by providing high
  quality, cost-effective and timely solutions
  through a diverse portfolio of competitive
  contracts and value-added services. This will be
  accomplished by members, employees, suppliers and
  business associates working together in an
  ethical, efficient, professional and respectful
  manner.

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Aggregate

• What is it?
• (adj) forming a total collected together from
  different sources and considered as a whole.
• (v) unite to come together or bring different
  things together into a total, mass or whole.

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Cooperative

• What is it?
• Business enterprise owned by and operated for the
  benefit of members who use its goods and services
• For Profit Cooperatives are Privately/Publicly
  Owned
• Not for Profit Cooperatives Owned Controlled by
  Members

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Not-For-Profit Cooperative

• How Does it Work?
• Aggregation of volume by more than one unit or
  group to achieve better pricing and
  administrative savings
• Types of Units
• Two or more individuals, departments,
  institutions, states, regions, etc.
• Local, Regional and National Cooperatives
• Ownership
• Cooperatives are owned and managed by the members
• Member Driven Cooperatives operate in many
  different environments and industries.
• Operating Expenses and Revenue Sharing

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Not-For-Profit Cooperative Industries

• Credit Unions Thrifts
• K-12
• Farms / Granges

• Health Care
• Higher Education
• Government Entities
• Private Sector

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Cooperative Products/Services

• Strategic Planning
• Collections
• Insurance
• Telecommunications
• IT Services/Products
• Capital Equipment
• Travel
• Energy/Utilities

• Finance
• MRO
• Consulting Service
• Travel
• Distribution
• Transportation
• Security
• Waste Management

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Cooperatives in Higher Ed

• Western States Contracting Alliance
• US Communities
• Texas Cooperative Purchasing Network
• Philadelphia Area Collegiate Cooperative
• Lehigh Valley Association of Independent Colleges
• Connecticut Colleges Purchasing Group
• Western collegiate Bookstore Association
• Midwest Higher Education Consortium
• Colleges of Worcester Consortium
• Massachusetts Higher Education Consortium
• Kansas City Regional Council for Higher Education

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A Few More

• The Committee in Institutional Cooperation
  Purchasing Consortium (CICPC Big 10)
• The UC System (with Cal State)
• Arizona Tri-University
• Horizon Resource Group
• Only National Cooperative Designated for Higher
  Ed
• The Educational and Institutional Cooperative
  Service

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EI Competitive Solicitation Program

• National Program
• Steering Committee
• Strategic Planning
• Recommend Products and Services
• Recommend Contract Awards
• Designed to address public university concerns
• RFP Teams
• Product/Service Expertise
• Draft Scope of Work/Service
• Participate in Evaluation Process

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Cooperative Contracting Process

• Regional Programs
• Products/Services
• Electronic Communication Equipment
• Rock Salt
• Mattresses
• Temporary Services
• Gas Cylinders
• Food Service Outsourcing
• Supplier Pool/Relationships
• Supplier Diversity
• Contracting Accomplished by
• Existing Regional Relationships
• Advisory Committee guides process

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Awarded Competitive Solicitations

• Express Package
• Routers
• Scientific Equipment
• Digital Imaging
• Centrifuges
• Multimedia
• Anti-Virus
• P-cards

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Upcoming Competitive Solicitations

• Computer Peripherals
• MRO Electrical/lamps
• Coarse Paper
• Background Investigations
• Equipment Maintenance
• Scientific Lab Furniture
• Refrigerator/Freezers

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Member Benefits

• Direct Cost Reduction
• Savings on Products Services 10-22
• Harvard University Rule of 20 (Lawrence Summers)
• Standardization of Products/Services
• Contract Administration/Management
• Spend Analysis
• Benchmarking
• Indirect Cost Reduction
• Reallocation of Internal Resources, average
  hospital saved 353,000
• Value-Added Services
• Avoid Duplication of Process
• Incentive and Rebate Programs

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Member Benefits cont

• More attention for smaller members
• Leverage in dispute resolution
• Incorporate additional services
• Pockets of expertise

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Member Purchases ComparisonJanuary 1 March 31
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Supplier Benefits

• Administrative Costs Lower
• One contract to maintain
• No duplication of solicitation process
• Cost sharing of contract marketing
• Ability to offer more competitive pricing
• Increased market share

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NAEB Cooperative Purchasing Committee

• Designed to educate members
• Assist in legislative or policy revision to
  remove obstacles

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Keys to Success

• Consolidate your spending
• Commit volume
• Honor your contracts
• Invest in the supply chain
• Support your local purchasing agent
• Identify strategic opportunities

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Keys Continued

• Use traditional and non-traditional sourcing
• Encourage professionalism
• Support should flow down
• Address legal or policy obstacles
• Communicate objectives
• Celebrate and build on success

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How to Participate

• Institutional membership in NAEB
• Find your procurement dept on campus
• Access to EI

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What We Would Like to Know

• What needs do you have that could be addressed
  cooperatively?
• What do you want?
• What can NAEB do collectively with AHECTA to make
  you successful?