CIC Purchasing Consortium Translates Collaboration into Savings
CIC institutions established in 1998 a collaboration aimed at streamlining costs by negotiating better terms and gaining significant price advantages for its members.
In sheer dollar figures, the Purchasing Consortium is an unmitigated success. The numbers are mind-boggling – 21 contracts for over $178 million in purchases with $19.4 million saved over a seven-year period – averaging nearly 11 percent savings per contract.
Most of those savings can be found in the bulk purchase of commodities such as office supplies and laboratory equipment. Almost $2 million resulted from a deal to purchase Cisco routers, used in every campus network; the company offered the CIC a 45 percent discount.
“The bottom line is this – we are able to save more and offer more by working together,” said Teresa A. Sullivan, provost and executive vice president for academic affairs at the University of Michigan.
Today, the Purchasing Consortium’s focus has shifted towards pursuing contracts with service-oriented companies. These partnerships may not necessarily provide the eyebrow-raising cost savings found in commodities purchasing, but provide a different – but no less significant – benefit for CIC universities. Contracting with companies who are experts in specialized services reduces wear and tear on university staff, and increases productivity in a time when member institutions’ human resources are stretched to the limits.
“Time is the main driver behind these service aspects,” said Russ Snyder, CIC associate director. “The staff man-hour savings may be the big benefit there rather than physical dollar price.”
Two recent examples include:
• Customs brokerage. If a university buys a piece of equipment that’s made overseas, the item has to be walked through customs. The contractor handles every aspect of the shipment, from the necessary arrangements for customs to delivery to the institution.
• Database cleansing. Research institutions receive large amounts of funding from government sources. Those grants include stringent regulations on where and how the money may be spent. This contractor takes vendor databases and screens companies with regards to those requirements. In addition, the contractor can identify vendors that are women- and minority-owned businesses, so that universities can continue to make efforts to do business with such entities.
“We'll continue to have a large number of commodities, I don't expect to see a decrease, but we'll have an increase in the number of services,” Snyder said. “Early on the directors wanted to see some financial successes – in other words dollar savings – because of the time and effort and money that the institutions spent getting the Purchasing Consortium up and running.
“In the future we’re likely to see continued focus on saving the dollar in terms of purchase price and more attention to saving the dollar by reducing staff time. It's smaller dollars but just as important because it means that the institutions can more effectively utilize human resources.”
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