Smeal representatives include Sue Purdum, associate teaching professor of supply chain and information systems; Brent Moritz, associate professor of supply chain management; Rashmi Sharma, clinical assistant professor and the managing director of the Laboratory for Economics Management and Auctions; Wes Bumbarger, the college’s financial officer.
“The subcommittees are filled with very talented people from across the University, all of whom come at this project with a different perspective,” Tracey said. “Many of the subcommittee members are the spenders of the money — the customers if you will — so their interest lies in being good stewards of Penn State’s money but also in making sure whatever we come up with is efficient and intuitive.
“In contrast, the Smeal subcommittee members bring their expertise in procurement systems, structures, and best practices to the table,” Tracey continued. “Our role is to make sure the customers get the efficient system they need, but we are also focused on making sure we are all good stewards of the University’s money.”
“The Smeal and non-Smeal representatives are to be commended and thanked for the considerable time they have devoted to the SPT project — time that goes far beyond the duties of their day jobs,” he added. “We would not be as far along on this journey without their valuable input and expertise.”
Duane Elmore, Penn State’s chief procurement officer and the SPT project sponsor, praised what Smeal expertise contributed to the project.
“The contributions made by this talented group of supply chain professionals from Smeal was instrumental in devising sound procurement strategies necessary for meeting the goals of the SPT project,” he said.
“Collaborating with procurement and cross-functional professionals from across the University, they brought new and creative ideas to their groups, not recognized at Penn State before, that will no doubt set the stage for successfully implementing and sustaining a more efficient, compliant and savings generating procurement operation," added Elmore.
Aspiring to a higher level of procurement
According to Tracey, organizations evolve over time when it comes to purchasing goods and services, but universities have historically lagged the private sector in this evolution. The SPT project will vault Penn State into a leadership position among its peers.
“There are multiple maturity levels with the highest being ‘strategic procurement,’ which is what Penn State is aspiring toward with this project,” he says. “On this level, organizations take a visionary look at what they buy and apply new and innovative strategies to get them the best product or service.”
It’s estimated that the SPT project will eventually save Penn State up to $45 million a year, but Tracey is quick to point out that the project isn’t simply about saving money.
“It’s also about being good stewards of our spending. Are we getting the best products and services for our money? On what and with whom do we spend our money? Can we prove we’re getting the best value for our spend? Are we being transparent? Are we protecting the University against reputation attack?” he said. “There were a lot of reasons it made sense to launch this project.”
Multiple phases for a complex project
The SPT project has methodically moved through several phases since its launch. In the initial “spend analysis” phase, Penn State had to figure out exactly where its money was going.
“Knowing we spend nearly $1 billion a year doesn’t necessarily tell us what we spend it on or with whom we spend it,” Tracey said. “There was a whole data cleansing/data analysis process we had to go through, which was a very heavy lift because it involved shifting through huge amounts of data.”
Sue Purdum is co-chair of the category management work group, along with Meg Harpster, strategic purchasing manager.
“Our work group’s task was to review huge data files of expenditures and recommend how to compartmentalize them into meaningful categories for supplier and spend management in the future,” Purdum said. “Put simply, we created a common ‘language’ for the many things the University purchases.”
Purdum’s work group alone demonstrates the depth and breadth of the SPT project. Nearly a dozen disciplines were represented in the group, including financial analysis, construction engineering, data mining/data analytics, IT hardware/software, agricultural business, project management, communications, change management, and procurement.
“The result of this phase was a complete picture of where Penn State is spending its money and in which categories,” Tracey said. “That may not sound very amazing, but it’s what carries you along the path to procurement maturity.”
Once the spend analysis phase was completed, attention turned to finding opportunities for savings or efficiency. This is called the “addressable spend,” or in a layperson’s terms, “the opportunities.”
“Where can I consolidate suppliers to get a better quality of service or price? How can I control ‘rogue spend’ [people buying things off-contract or that are not formally approved]?” Tracey said. “This is the phase when you start to come up with ways in which you’re going to manage your spending, not just once but in an ongoing way. The system you put in place at this phase needs to be customer-focused, efficient and repeatable.”
A project that involves everyone
The SPT project is now in its third year and Penn State has reached the early stages of the implementation phase. Communication in this phase is key to its success, said organizers.
“Many employees might assume the SPT project has nothing to do with them, but that would be incorrect,” Tracey said. “We’re now entering the phase where we expand beyond the work groups and start connecting with everyone across the University.”
In this phase, Penn State’s procurement experts are collaborating directly with the people who use the products and services being bought.
“Everyone has a chair they sit in, or a desk, or a computer, or supplies and equipment they use for their job,” he said. “Maybe they didn’t buy those things, but they were bought for them. Everything we buy here at Penn State impacts you in one way or another.
“Remember,” he continued, “procurement is simply a facilitator. For example, employees in the Office of Physical Plant know what they need to do their jobs and usually know where it can be acquired. The job of our procurement professionals is to make it easy for the physical plant employees to find what they need, buy what they need, and get it at the best cost.”
Tracey said he is proud of the role his colleagues have played in the SPT project.
“We have been able to share our insights and knowledge to benefit the greater University,” he said. “The vast majority of us are educators, so we’re good at translating complex topics into a collective understanding.”