In the Loop on Strategic Sourcing and Parking
With this email, I want to inaugurate a series of messages that will keep you up to date on progress in meeting our goals for reducing expenses and increasing revenues so that we can reduce the annual rate of tuition, room and board cost increases to approximately the rate of inflation while providing annual employee compensation pools above the rate of inflation. We will call this series of messages “In the Loop.” You should expect to receive these updates once or twice per month.
As you know, the initiatives I announced at the August All College Meeting are vital to keeping Ithaca College affordable while at the same time making sure we remain an employer whose salaries, benefits and miscellaneous perks are enviable when compared to the wider market.
One of the most promising cost saving initiatives identified as part of this process is creation of a “strategic sourcing” program. This involves establishing a centrally coordinated approach to purchasing goods and services so as to take advantage of volume discounts through contracts with preferred providers. Last week we hosted a consultant team who specializes in creating strategic sourcing capability on college campuses. The consultants informed us that, compared to our current purchasing practices, an effective strategic sourcing program would save at least $3 million per year and potentially more than double that amount. That sounds like a lot of money (and it is!), but experts tell us it is highly achievable in the context of the approximately $64 million that IC spends every year on non-construction procurement.
The strategic sourcing program will achieve the projected level of savings only to the extent all of us participate in making it work. This will require that we adjust our behavior with respect to making IC purchases, and it may mean some inconvenience particularly in the beginning as the strategic purchasing program is being put in place.
Given the magnitude of those savings, which significantly outstrip the savings described in the Huron consultant report of one year ago (a report based on a more cursory overview of our existing purchasing), I have concluded that it is appropriate for us to suspend the parking fee implementation plan in order to focus on the goal of achieving the potential savings from strategic sourcing.
Implementation of an employee parking fee is suspended for the next 25 months, to January 2015. If the strategic sourcing plan reaches its goal of saving $3 million per year within the next two years – a goal that consultants tell us is conservative – then the parking fee will be suspended indefinitely.
I plan to work vigorously with those in charge of our strategic sourcing initiative to make sure we reach our cost savings goal. As we put the IC strategic sourcing team in place, I hope you will join me in carefully following our purchasing guidelines and working actively to identify goods and services on which we should seek volume discounts. We will issue periodic reports to the campus on our progress in achieving the goal of $3 million in savings. I look forward to your full collaboration in achieving our objective!
Originally published in Intercom: In the Loop on Strategic Sourcing and Parking.