1. Strategic Sourcing Introduction
Fiscal Challenge for current year and beyond requires cost reductions
Strategic Sourcing –Sustaining New Synergies Task Force Initiative
Purdue engaged Huron Consulting Group to conduct an overall assessment of procurement to pay operations and to help Purdue develop a Strategic Sourcing Master Plan
Implemented new organizational structure

2. Strategic Sourcing Overview
Carol Conner, Business Process Manager
Denny Feldman, Manager, Strategic Sourcing

3. Strategic Sourcing What is Strategic Sourcing?
Strategic sourcing is a procurement process that continuously improves and re-evaluates the purchasing activities of an organization.

4. Strategic Sourcing Strategic Sourcing Primary Objectives
Reduce the costs of goods and services
Capture resulting savings
Create contractual alliances with suppliers to support the long-term goals of the University
Maintain and improve product quality
Improve business functions
Optimize the total purchasing process

5. Strategic Sourcing
In-Scope: Purchases that are expected to be made in competitive markets where multiple vendors are present or negotiable purchasing opportunities exist for the University. The Strategic Sourcing Master Plan identified 22 different in-scope commodities with a total annual spend of approximately $172 million in FY Out-of-Scope: Insurance and benefits, travel and employee travel expense reimbursement, sponsored research subcontracts, utilities (excluding data and voice), and construction.

6. Strategic Sourcing

7. Strategic Sourcing
Approach for prioritizing commodities or categories within a commodity

8. Strategic Sourcing Total $172M
Strategic Sourcing Master Plan
FY Commodity Savings Opportunity and Implementation Complexity
Total $172M
FY annual spend for 22 commodities

9. Strategic Sourcing Initial Quick Win Categories IT Peripherals
Removal of CDWG catalog
Goal to reduce/eliminate spending via newegg.com, amazon.com, Best Buy, etc. which represents $1.3M of $4.3M total annual spend.
Desktop/Laptop
Dell and HP agreements; leveraged entire campus
Custodial Supplies
HP Products, Kimberly Clark
Free shipping

10. Strategic Sourcing Initial Quick Win Categories (cont.)
Office Related Products
Deeper discount and broader discount base
Copiers and Printer
Analysis showed 10 different manufacturers with over 150 different models on campus
350 machines leased/rented; lease rate range 14% to 24%.
Internal loan
Right Sizing

11. Strategic Sourcing Additional Executed Categories and Annual Spend
Computer Hardware Server Maintenance – $284K
Changed vendor; leveraged entire campus
Janitorial Supplies (Trash bags) – $290K
Showcase Supplier identified in BOILERMART
Renegotiated Cannon IV agreement for ITaP and Libraries labs – $645K
Benchmark data used to renegotiate 40% savings

12. Strategic Sourcing Current Category Initiatives and Annual Spend
Computer Hardware Server (Purchase) – $4.5M
Cylinder Gasses – $374K
Audio Visual – $1.5M
Plumbing – $2M
Electrical – $1.8M
Renegotiating HP Janitorial Supplies Agreement – $640K
Scientific Supplies – $7.7M
Outside Printing Services – $2.8M
Medical Products and Services – $8.5M

13. Strategic Sourcing Seven Steps of Strategic Sourcing Analysis
Develop Commodity Team
Sourcing Strategy
Identify & Prequalify Suppliers
Supplier Selection & Contracting
Integrate Suppliers
Monitor & Follow-Up

14. Strategic Sourcing
Strategic Sourcing 2011 Operating Plan

15. Strategic Sourcing
Visit web site for commodity updates: For more information or to schedule a unit meeting contact: Denny Feldman, Manager, Strategic Sourcing Phone:

16. Strategic Sourcing Path Forward Procurement Organization
Commodity Groups
Procurement Council
Your Role