Procurement transformation project moving ahead with implementation
UNIVERSITY PARK, Pa. - The Strategic Procurement Transformation (SPT) project is proceeding with its next phase, focusing on implementing recommendations from the project’s working groups.
The goal of the project is to streamline and modernize Penn State’s procurement activities and create approximately $45 million in cost-savings annually.
After an extensive period of analysis and documentation, the project will implement key procurement changes that include policy updates and revisions, reorganization of the Central Procurement office to align with a category management approach, and the improved incorporation of technology in the procurement process.
“We are proud of the working groups accomplishments and thank them for their dedication to the project,” said Senior Vice President of Finance and Business/Treasurer Sara Thorndike. “We are excited to start realizing many of the recommendations of their work, which will create the foundation for implementing strategic procurement practices that will benefit the University and its stakeholders for many years to come.”
The cross-functional working groups, composed of Smeal College of Business faculty, financial administrators, area subject matter experts and University procurement representatives, worked alongside consulting agency AArete to develop a robust strategic procurement strategy that better leverages the University’s buying power, contracts, and position in the marketplace.
After finishing its charge last year, the Organizational Alignment working group recommended a new organizational structure with well-trained category management teams and supporting staff focused on analytics and compliance. To help implement these changes, procurement staff will be leveraging industry-leading training through Smeal Executive Programs. The creation of several new positions, including the chief procurement officer, and the re-alignment of Central Procurement under Finance and Business have already been implemented.
The working group also recommended a Strategic Procurement Leadership Council (SPLC), a cross functional group that will strengthen collaboration across the University in procurement which recently kicked-off its activities.
The Policy and Guidelines working group recommended new procedures and policies that focus on streamlining procurement activities and driving compliance with procurement regulations. New policies around diversity, equity, and inclusion, as well as sustainable purchasing, highlight some of the recommendations currently in review for implementation.
The Category Management working group has nearly completed its recommendations for an approach that will position Penn State procurement operations to be innovative and efficient and generate cost savings. After analyzing $400 million in transactional spend, the group developed seven focused categories and category playbooks that will guide the new organization through the effective procurement of the goods and services the University requires.
The Compliance and Business Intelligence/Analysis working group is well on its way towards the development of dashboards, reports and other analytics tools that will track savings goals, inform strategic procurement decisions and drive compliance in procurement activities both internally and with Penn State suppliers. The group will engage with the recently formed Technology Insertion working group, charged with evaluating technology tools, and determine how to leverage these tools to be more efficient and drive cost-savings.
“The working groups have done a tremendous job navigating the complexities of university procurement,” said Duane Elmore, chief procurement officer and project sponsor. “We are incredibly grateful to have the participation of individuals from across the University, and to have the expertise of the Smeal College of Business on board to guide us through best practices.”
Critical changes in the University’s procurement space will be implemented throughout the coming months, creating opportunities for growth. The project will continue to use University resources to address challenges and update stakeholders on changes surrounding policies, procedures and point of contacts.
"We will need everyone across the University, regardless of their role, to be engaged in this transformation,” said Elmore. “Penn State’s success in generating the efficiencies and identified cost-savings depends on the support of our critical users and their ability to navigate and enhance the changes.”
Visit the SPT project website for more information on the project’s implementation status.