October 1, 2017 In Procurement
Six Best Practices for Charter School Procurement
If procurement is part of your job description, then you know just how high the stakes are with the purchasing decisions you make on behalf of your school or school network, and just how important due diligence is in the procurement process.
Part of that due diligence should include identifying best procurement practices — not only from within the education sector but also from other industries — then, if applicable, adapting and using them to benefit your own organization. We scoured the wide world of procurement to identify a handful of purchasing best practices for school decision-makers to consider adopting themselves. There are others, of course, but these six represent a good starting point:
- Standardize to as few vendors as possible. Juggling multiple vendors can unnecessarily complicate your procurement efforts, making them more time-consuming to manage and more difficult to track, especially if you’re spreading purchases within a single category across multiple vendors. It also can limit access to volume discounts and hamper efforts to build strong supplier relationships. Working with fewer vendors, on the other hand, creates opportunities for volume discounts in specific categories, while also simplifying supplier relationship management (SRM) and all the responsibilities associated with bids, RFPs and the like.
- Look beyond initial purchase cost, to total cost of ownership (TCO), in making procurement decisions. As cost-sensitive as most charter schools are, perhaps the most effective way to decrease overall costs without sacrificing quality is to build TCO into your school’s procurement decision-making process. TCO emphasizes the overall value of goods and services, taking into account all the direct and indirect lifecycle costs associated with a product or service, including shipping and delivery costs, service, maintenance and disposal costs, obsolescence, and other hidden costs that can turn what seemed like a good deal into an expensive problem later. The Council of Supply Chain Management Professionals estimates that acquisition cost accounts for just 25 to 40 percent of the total cost for most products and services.
- Take advantage of today’s technology. The efficiency gains provided by software-based “procure-to-pay” tools like bidding software, electronic contract management and SRM systems make them a worthwhile investment. These days, software tools such as Coupa, Procurify and SpendBridge are popular in the charter school procurement world.
- Cultivate and maintain positive relationships with vendors/suppliers. This one is vital enough that there’s even an acronym for it: SRM, short for supplier relationship management. The goal is to create win-win associations with suppliers that lead to improved value and communication, reduced waste, and improved innovation. That means treating suppliers as partners, not adversaries to nickel and dime on price. To solidify relationships with key suppliers:
- Get them excited about your school’s mission. Invite them for a tour or your school and introduce them to staff and students.
- Work with them to develop channels for transparent processes and communications.
- Share organizational and procurement department goals with them.
- Jointly develop objectives and metrics/scorecards to measure performance on both sides.
- Align with a group purchasing organization (GPO) to leverage its buying power and relieve your in-house administrative staff of some of the burden associated with managing RFPs, bids, etc. Schools can save as much as 85% off retail prices by purchasing through a GPO and free up time to focus on more strategic, high-value activities. Working with a GPO whose vendor contracts are awarded through an open, fair and competitive RFP process means compliance shouldn’t be an issue.
- Plan in advance. The best-performing procurement teams develop — and strictly follow — an annual procurement plan. It’s extra time well-spent. Consider developing the plan in conjunction with the annual budget process to ensure procurement has a seat at the table for discussions of upcoming capital projects and other potential purchases. To support the plan and ensure adherence to it, be sure reporting processes are in place to monitor progress toward fulfilling various aspects of the plan.