Elevating Procurement’s Role Chris Mihok Director, Yale University

Agenda Understand the role of Procurement today Challenge the ‘myths’ about Procurement Prepare the organization Promote the organization Deliver as promised

Yale University Profile FY 2012* Undergraduate students* 5,322 Graduate and professional students* 6,526 International students* 2,072 Faculty* 3,953 Staff* 9,183 International scholars* 2,239 3

Purchasing Services Organization

The Role of Procurement Today Questions for each school to answer Are you viewed as tactical and non valued added? Are you responsive to customer needs? Are you a domain expert? Are you Innovative? Visionary? Polished? Collaborative? Are you viewed as an internal consultant or an order taker? Are you overburdened with requisitions and other tasks which impact your ability to achieve higher value savings When are you called by the department? At time of order or during their strategy formulation

What are the ‘Myths’ about Procurement You don’t know anything about this product, service or commodity This is a very complicated or sensitive service Procurement takes too long and can only derail the process This is a great deal and Procurement could not do any better The product is so unique you would be unable to add value The quote is about to expire and I will forfeit my discount

Debunk the Myths – Describe FOB and in-transit liability – Explain service level agreements to ensure availability – Have knowledge of capping the cost on consumables – Provide an acceptance process/criteria before payment – Illustrate an exit option if the product does not meet requirements – Provide a remedy for poor performance (i.e. cash, free services etc.) – Describe the University view to leverage other purchases – Identify a GPO where you could purchase this item for less – Offer prompt pay discount to reduce end user costs – Is the product so unique that the user underestimates its value

Prepare the Organization Identify training opportunities for your staff (free webinars, workshops) Use web based services like Linked In to sign up for various supply chain groups Review the research in non-traditional areas-(i.e. CAPS Research, NAEB, ISM) Learn the language of your customers (legal-’matters’, HR ‘clients’) Talk ‘value’ vs. lower price (risk reduction, Total Cost of Ownership, Value Levers) Understand the existing culture or process Consider professional certification for the staff Consider a ‘pilot’ program or limit the scope of the initial activity

Prepare the Organization (con’t) Review your spend profile and offer opportunities to reduce tactical workload through: – Increase the number of contracts available to end users – Analyze your transactions and make recommendations to increase department buying authority based on a risk profile (80/20 rule) – Offer fact-based suggestions to increase bidding levels, approval levels, requirements for signatures Evaluate GPO’s which can offer immediate value to your institution

Promote the Organization Highlight Successes We have streamlined the procure to pay process – Increased use of catalogs, purchasing on vendor websites, increase electronic invoicing We provide year over year cost savings – Offer examples of success stories with other units We have an ‘institutional’ view – Another department is purchasing a similar item We deliver value – Not always price savings but service levels, turn around time, extended warranties etc.

Promote the Organization Increase Your Visibility on Campus Participate in your Sustainability Committee, Business Continuity Team, Chair the United Way campaign Organize the summer picnic or annual holiday party Be a speaker at a professional society (NAEP, ISM etc) Host a regional or local meeting of purchasing professionals at your school – Collaborative with another school – Collaborative with a local hospital Sponsor a ‘vendor’ show for your faculty Support ‘town vs. gown’ functions Promote a small business fair for your suppliers

Deliver as Promised How to be Successful ‘you don’t get a second chance to make a good first impression’ Identify a new commodity area with a lower risk profile (consulting vs. benefits) Ensure the Purchasing Lead has behind the scenes support Consider embedding the staff member with the department, initially ‘Dry run’ presentations so that you are not providing ‘data’ but actionable ‘information’ Get feedback from customer on their perceptions of the process Listen to your customer

Summary Understand your role at the institution Prepare the staff Challenge the myths Promote the organization Start small but deliver large ‘you don’t get a second chance to make a good first impression’