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Mark Land
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Last modified: Thursday, February 14, 2013

IU reaps significant savings from strategic approaches to purchasing goods and services

Feb. 14, 2013

INDIANAPOLIS -- Indiana University saw annual savings of nearly $100 million as a result of streamlined purchasing processes and other measures put into place in recent years. During a report Thursday morning, trustees heard recommendations expected to result in even more efficiencies.

MaryFrances McCourt

MaryFrances McCourt

Print-Quality Photo

"The Purchasing Department continues to achieve significant savings by leveraging volume purchasing, reducing non-contract spending and streamlining processes," said MaryFrances McCourt, interim vice president and chief financial officer. "Future strategies that address the use of technology and improved communication with our campus clients could make purchasing operations even more efficient."

Steps taken so far saved the university $96 million, or 17.6 percent, during the 2012 fiscal year when the procurement office spent $450 million. During the 2011 fiscal year, when $435 million was spent, the university realized $83 million in savings, or 16.2 percent.

The Office of Procurement Services oversees the purchase of goods and services needed for the day-to-day operations of IU campuses, including lab equipment, furniture and food for residence halls. It does not include costs such as construction, library acquisitions or health care benefits.

McCourt said the consolidation of campus purchasing offices over the past two years, as part of benchmarking efforts to improve how IU conducts business, provided substantial opportunities for savings.

When the function was consolidated, staff purchasing responsibilities were realigned, rather than physically moving personnel, allowing the university to leverage expertise -- and purchasing volume. For example, instead of the purchasing office for one campus buying scientific equipment for its campus alone, personnel from that campus now purchase it for seven campuses.

McCourt said the key to the savings has been the ability to increase the number of negotiated contracts, realizing additional discounts in numerous commodity areas. Today, 94 percent of university purchases are managed by the Office of Procurement Services using an expansive portfolio of institutional contracts and other competitive methods. The purchasing department has seen a decrease in non-contract spending, which includes the use of procurement cards.

Investing in technology, such as contract, vendor and document management systems, will enable purchasing staff to gain more efficiencies. McCourt also said an effort will be made to improve communication with the campus community through increased training and outreach sessions for faculty and staff on individual campuses. The more the purchasing department knows about ongoing purchasing needs, the more opportunities there will be for savings through inclusion in larger contracts.