As part of the budgetary reductions and administrative streamlining that the UI has undertaken in recent years, procurement has been identified as an area for the university to save money.
A study by the consulting firm Accenture in February 2004 indicated that the university could save 5 to 15 percent on the $198 million it spends annually on purchases of commodities by re-engineering its procurement activities, including the use of a systemwide purchasing application that simplifies buying, encourages units to buy from contracted vendors and facilitates data analysis to better manage spending.
This fall, the university is going to start using an electronic procurement system, which Illinois is calling iBuy. The system will be hosted by SciQuest HigherMarkets, a supply-chain software maker, and its product partner SCT, maker of the Banner software suite that Illinois uses for financial and business processes. Indiana University, the University of Chicago, the University of Michigan and Yale University already use the e-procurement system.
According to Philip Abruzzi, university chief procurement officer, “The introduction of iBuy is the first step in making it easier for departments to get the goods and services they need to support their operations. Future areas of focus will enable the Purchasing Department to work more collaboratively with the campuses in leveraging our resources by streamlining our processes and implementing the right supportive technology.”
The iBuy system will be tested by the entire Springfield campus and by selected units at the Urbana and Chicago campuses beginning in October. During the next several months, the application will be phased in at Urbana and Chicago, with it being available to everyone who wants to use it by July 1, 2007.
“We’re not mandating the use of iBuy,” said Brad Sheriff, administrative director of university procurement in the Office of Business and Financial Services. “People are still welcome to create requisitions in Banner and use their P-cards for purchases, but we’re hoping that iBuy will become their tool of choice when they want to make a purchase,”
iBuy offers a shopping experience similar to Amazon.com, where buyers select products and load them into a virtual shopping cart using their computer mouse. When iBuy goes live in October, OBFS expects to have about a dozen vendor catalogs who offer discount pricing, and expects to have up to 100 catalogs by the time the system is fully operational. Although OBFS is negotiating with vendors, iBuy will contain the catalogs of external vendors such as Fisher Scientific, OfficeMax and Zones Inc. and CDW-G, as well as internal vendors such as Campus Stores and the Printing Department when it goes live, Sheriff said.
In addition to purchasing core products at substantial discounts from catalog vendors, shoppers will be able to requisition other items from the vendors’ Web sites – at the university’s discount prices – as well as from non-catalog vendors, all through iBuy.
Buyers will have the option of charging purchases to a university account (the seven-segment accounting code called a C-FOAPAL in Banner) or to a P-card, and will be able to customize iBuy by storing frequently used account codes, then selecting them from drop-down menus when making purchases. If departmental approval or special approval from oversight units such as the Division of Environmental Health and Safety or the Grants and Contracts Office is not required, iBuy will automatically generate electronic purchase orders and send them to the vendors. Requisitions involving non-catalog vendors will be sent to Purchasing for review before purchase orders are generated.
The iBuy system is one portion of a broader, strategic approach that the university is taking toward re-engineering its procurement processes.
The iBuy-Banner interface will improve reporting and data analysis that will allow units to manage their spending, and the university to leverage that spending, by developing better contracts and negotiating discounts with frequently used, non-catalog vendors; by renegotiating pricing for high-volume items, and identifying and addressing customer-service issues related to the procurement process or particular vendors.
Advisory committees members from all three campuses have offered input in developing, evaluating and testing the iBuy application. Advisory committees composed of key stakeholders also will assist Purchasing in seeking out other savings opportunities relative to the goods and services purchased by the campuses. A team is reviewing spending related to maintenance, repair and operations, and plans to request proposals for pricing on air filters and safety supplies soon, Abruzzi said.
OBFS also plans to request proposals for automated tools that will streamline the accounts payable process, which also could be advantageous to the UI in vendor negotiations.
Additionally, the procurement re-engineering initiative is expected to reap substantial savings in terms of employee productivity – for example, by reducing data entry and the number of requisitions requiring Purchasing Department approval.
“Right now, buyers are so time-constrained by having to work within SCT Banner that they don’t have the time necessary to devote to these strategic issues,” Abruzzi said.
Training is an important component of the overall re-engineering strategy, and OBFS will offer training on iBuy as it is implemented in addition to ongoing training on other procurement initiatives, policies and procedures. Karen Deering, a training and communication coordinator with OBFS, will be dedicated full time to training.