Procurement Initiative looks to trim $18M a year
When more than 100 faculty and staff members looked closely at what the university buys, from where and for how much, they found something pretty impressive: the opportunity to save $9 million.
Those volunteers served on committees for the JHU Procurement Initiative, which began in September 2013. In the initiative's first year, the university established new contracts, discount programs, and vendor choices for areas including office supplies, temporary staffing, computer software, lab equipment and supplies, janitorial supplies, and HVAC and elevator maintenance.
As 2015 begins, the initiative is targeting a total estimated savings of $18 million per year out of nearly $650 million in total spending that can potentially be affected through procurement efforts. Its leaders are also working to secure more responsive and streamlined service in the spending areas where it is making changes.
The next significant step toward those goals is the implementation of a new travel management program aimed at enhancing customer service, traveler safety, and cost savings. A phased rollout of the program begins in January.
The initiative was launched by Senior Vice President for Finance and Administration Daniel Ennis and Provost Robert Lieberman and led by an advisory committee co-chaired by Dan Cronin, senior associate dean for finance and administration in the Krieger School of Arts and Sciences, and Jerry Hart, a professor and chair of the Department of Biological Chemistry in the School of Medicine. A consulting firm helped the committee evaluate procurement processes and identify opportunities for improvement.
"The goal of this initiative has always been to help principal investigators make the most of their grant funding and enable offices and departments to get better service while they stretch their budgets," Ennis says. "We are working to ensure that the university community will be able to focus more resources on mission-critical teaching and research efforts."
As Brian Smith, the university's new chief procurement officer, explains, Johns Hopkins purchases a lot of supplies and services, and should have the leverage to get good prices and great service.
The logistics, however, can be fairly complicated with so many diverse schools, departments, and programs. "We are a large organization," Smith says, "and our best results are achieved when we come together and go to the market as one large organization, not as many small organizations."
Smith, who joined Johns Hopkins in October, plans to continue the momentum of the Procurement Initiative and to provide leadership for a long-term strategy. He previously served as vice president for procurement at Education Management Corp., where he consolidated purchasing across 110 campuses. He has worked as a procurement consultant to multinational companies and previously centralized $4 billion in global sourcing as general manager for global procurement for H.J. Heinz Co.
Smith says an effective procurement department needs to really seek to understand the diverse requirements of its internal customers and then provide solutions that balance savings, service, speed, and risk. He says that the first step in getting employees to be satisfied with the procurement experience is to invite them to participate.
"We want to hear what their needs are," he says.
Feedback will be an important part of addressing the next procurement focus area: approximately $90 million in annual spending on travel for the university, including the Applied Physics Laboratory, and the Johns Hopkins Health System.
A committee of faculty and staff who arrange significant amounts of travel was asked to conduct a search for one or more travel companies that could serve the entire Johns Hopkins community. The group recommended World Travel Inc., which is new to Johns Hopkins but has experience with other large and complicated educational institutions.
During the first months of 2015, the travel team will roll out the new agency through a phased implementation. Users will have a new online booking tool, access to live agents for complicated itineraries, streamlined billing, and easy access to existing rewards programs. The Procurement Office plans to hire a dedicated travel manager at the beginning of the year who will work with World Travel Inc. to incorporate suggestions and address concerns from Johns Hopkins users.
Booking through WTI will be focused initially on travel supported by institutional funds, but Smith says he would like faculty and staff to fully engage the service and help make it great with their ideas. "All things point toward this being a successful partnership," he says, "but great partnerships always require some investment of effort to make them great."
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