Pumping up procurement: online procurement systems can simplify ordering, reduce paperwork and save time and money. But choosing the right solution for your school involves more than a point and click

Matrix: The Magazine for Leaders in Education, Nov-Dec, 2001 by Nicole Rivard

Ray Moran is a happy these days. The University of Nevada Reno's director of purchasing is ha the early phases of using the school's new electronic purchasing marketplace. He expects to achieve savings of 15 percent to 20 percent by completing at least half of UNR's purchasing transactions under $2,000 online. Since those transactions amount to about $13 million annually, that's a potential savings of more than $2 million a year. No wonder he's smiling.

"It's estimated that rogue purchasing--buying from non-contracted vendors--costs an institution approximately 15 to 20 percent extra," Moran says. "Giving endusers a simple, foolproof way to use the contracted sources should all but fill that loophole. With the information that an e-purchasing system can provide--about commodities purchased, from whom, and at what price--a purchasing department can go out and find better pricing and terms to the tune of at least 10 to 20 percent."

Colleges and universities tend to fall into two camps when it comes to e-procurement. There are schools such as UNR and Arizona State University that are on the "bleeding edge" and have already made a commitment to using a third-party vendor.

In September, ASU began rolling out Buysense, an online procurement system that made 11 strategic vendor catalogs offering more than 600 items available to faculty and administrators with the point and click of a mouse.

Then there are those schools who are playing it safe, watching the others and waiting for the bugs to be worked out of the system.

Most campuses fall into the latter category. While 60 percent of senior college officers rate harnessing the power of e-business as a top priority, only 2 percent of university procurement transactions actually take place electronically, according to Highermarkets, a provider of e-commerce solutions for higher education.

Given the potential time and cost-saving benefits of e-procurement, why would anyone continue to buy items the old-fashioned way? Why continue filling out forms, rushing them to the purchasing department for authorization, and manually entering the data into the university's information system when the process can be automated?

"I think many people are intimidated by it," says Paul Martin, director of procurement and financial services at Rensselaer Polytechnic institute. The school turned to e-procurement in January to reduce the overall cost of purchasing so administrators could grow research dollars.

"People can get caught up by the fancy software and the buzzword `e-commerce,'" he says. "But they have to understand what their needs are and make sure the solution they develop--whether it's in-house, an ASP or some type of a licensed program--is something that is being driven to meet their needs, not just something to have."

The Road Less Traveled

The University of Delaware is one school that doesn't exactly fit into either camp. But it serves as a good role model for administrators who may be intimidated by e-procurement. UD decided to test the online purchasing waters by developing a solution in-house.

"It's not a complete solution but it's meant to bridge the gap while we look at what we will do about full-blown ecommerce," says Tory Windley, director of purchasing.

Implemented in 1999, UD Mart offers employees online shopping for pre-approved items for their departments up to $5,000. Using a university-issued procurement bank credit card, buyers browse through online catalogs for items such as office supplies or equipment and laboratory items.

They also may use a personal shopper for items that are frequently ordered. Orders go directly to external and internal vendors. When an order is submitted, the employee receives an order confirmation number via e-mail. Integration with the school's financial system is achieved through the procurement card.

The school earned a Management Achievement award from NACUBO this summer for the UD Mart purchasing program. "As it turns out we have more benefits than we had anticipated," says Windley.

All 3,000 items on UD Mart are contracted. "'In the past buyers might not have gone to a contract vendor, and even if they did, they might not get contract pricing," Windley says. "We are ensuring contract pricing."

She says people will buy where you tell them to if you have a compelling best case scenario, but it's hard to communicate sometimes.

"If you change a contract supplier there is a lag where people stay with the old contract," sine says. "Here, that doesn't happen."

When purchasing toner cartridges, for example, Windley says people usually ordered from the vendor that had the office supplier contract.. But after a year, the purchasing department replaced that vendor with three other contracted suppliers that sold toner cartridges at a significantly lower cost.

"We don't have documented dollars but certainly by driving transactions to contract we are saving dollars," she says. "On average, we're saving 20 percent more on cartridges than we were before."

Row It Works