Finding Value in Procurement
By Damon Norris
Why does a school need a procurement manager or department?
This is a very popular question. A lot of schools do not see the value, or are too busy trying to run the education side of the business rather than seeing what is right before them. Procurement, also known as purchasing, is the one spot that, when running on all cylinders, can drive savings on almost every purchase large or small. Some schools have been slow to adopt this idea, but what they need to understand is that procurement is a free department!
“But how,” you may ask, when you include rent, salaries, benefits and other costs associated with employment?
If you have an effective procurement department, they should be able to support those costs with the savings they’ll find your school in other areas.
This department is responsible for the acquisition of supplies, and supports all other departments. They are authorized to issue Invitations to Bid, Requests for Proposals (RFP), Request for Quotation (RFQ) and issue contracts. Procurement will also issue purchase orders, develop terms within contracts (i.e. copiers) and go out to acquire all supplies and services that are needed by the school. In addition, they are typically charged with disposal of the surplus property and equipment, which normally happens by auction or sales of some sort.
Whether your school is small or large, procurement, if done right, will save money EVERY time.
As a small school, it is often tough to afford this position. While your office or business manager may need to assume this position, its important they are given the time needed to complete the tasks at hand. Research shows that multi-tasking really doesn’t save us money or time, and our quality suffers when we do it.
When school leaders are overwhelmed and often overworked, they do not have the time to look at contracts, pricing and complete the due diligence of making sure the school gets the best price and services for the product. Whoever you having handling purchasing, the key is to make sure they are not spread too thin. In 2015 and 2016, several schools were scammed out of funds because of fake invoices. Others were forced to pay triple or even more than the true costs of products due to bad vendor business practices.
If you are a large or multi-site school operating without a centralized procurement manager, stop and ask yourself: Why?
Basic principles of business show us if you’re not combining purchases and leveraging your size, you are wasting money. Take for example ordering a computer: if you order just one computer you will pay near retail price, but if you order 100 computers you will be able to leverage that. On average, you will save anywhere between 25 to 35 percent.
Here’s the bottom line: Your investment in the purchasing area will drive savings. And when you ensure your current manager has the time to be efficient, the investment will pay for itself.