Strategic Sourcing

Overview of Strategic Sourcing

Strategic Sourcing is an approach PSDS uses to consolidate and leverage the purchasing power of the university’s commonly used supplies, equipment, and services to negotiate more favorable prices, process efficiencies, and better service. It is a continuous process of information gathering, analysis and monitoring:

  • Assess Current Spend- What is bought, where, at what price?
  • Assess Supply Market- Who offers what?
  • Total Cost Analysis- How much does it cost to provide goods/services?
  • Identify Suitable Suppliers
  • Develop Sourcing Strategy- Where to purchase, while minimizing risk and cost?
  • Negotiate with Suppliers- Products, service levels, prices, payment terms, etc.
  • Implement New Supply Structure
  • Monitor and Track Performance- Use Vendor Scorecards and Department Dashboards

 

Goal

Our approach to Strategic Sourcing seeks to better balance the University’s requirements for flexibility and savings by focusing on a small number of contracts that best meet the University’s needs as a whole. We use Strategic Sourcing best practices to better leverage the University’s purchasing power. We then work to develop better supplier relationships in order to ensure that the University receives the highest level of service and innovation from its strategic vendors.

 

Why Use Strategic Contracts?

PSDS uses historical purchasing data to negotiate the best pricing on the items the University purchases most often. Our ability to leverage our purchasing volume increases as the usage of our strategic contracts increases, creating the opportunity to:

  • negotiate further discounts
  • enhance levels of customer service provided to University customers, and
  • demonstrate to competitors the value of the contracts for the next cycle of strategic sourcing

 

Strategic Sourcing Projects

Office Supplies: Established 2014, Average Annual Savings: $1.4M. Using historical data analysis and forecasting techniques PSDS negotiated a contract that featured aggressive discounts on the products and categories most often purchased at UVA.     This contract also incentivizes cooperative contracting, and features a customer service-driven supplier scorecard. Catering: Established 2014. Average Annual Savings $59.5k. This contract focuses on streamlining a very distributed, inefficient purchasing and payment process for not only departmental purchasers, but also for PSDS and local catering vendors.     The contract also requires proper management of food safety certificates and encourages the vendor to certify its caterers as SWaM.

Inbound freight established 2015 average annual savings $70k. As a tailored freight management solution, this contract provides the University with a significant reduction of inbound shipping costs.     Instead of vendors charging their own shipping rates, vendors use the University's existing, more favorable express mailing contracted rate for shipments. R&D products established 2016 average annual savings $240k. An innovative "open enrollment" contract vehicle helped University research departments procure unique, complex equipment and supplies faster, while also securing additional savings for departments.    The current R&D contract features over one hundred and fifty vendors.