Supply Management Services

The Office for Supply Management Services (SMS) is responsible for developing strategic sourcing initiatives to leverage the university’s buying power and cost containment opportunities, without imposing restrictions on manufacturers or products required by faculty and staff.

1. Create purchasing profiles and prioritize
   The strategic sourcing team gathers as much information as possible from the campus community about what, when, and how the institution should purchase the desired products or services. This involves internal interviews, in-house surveys, and marketplace surveys to ensure that SMS understands the business unit’s needs and requirements, and current supplier capabilities.
   
   
2. Identify strategic sourcing products
   This step involves developing the specifications for the products to be purchased, and identifies exactly how a product is used and which features are most and least important to the business units.
   
   
3. Solicit bids and negotiate with suppliers
   Once the sourcing team understands the users’ needs, it identifies the potential suppliers. A detailed Request for Proposal (RFP) is usually issued, detailing exactly what information is needed from potential bidders, including incumbent suppliers.

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Formal university-wide contracts are awarded to suppliers that can satisfy the university’s business requirements while providing value, service, and support to university faculty and staff.

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1. Support and customer service
   This incorporates the quality of the products and service, performance, responsiveness, timely delivery, customer service, training, support, and the product exchange and return policy.
   
   
2. Strategic alliances
   Small and diversity-owned businesses can effectively compete against larger, national competitors by forming alliances with similar innovative businesses in order to meet the service, technology, and financial requirements of the university.
   
   
3. Investment in technology
   Businesses can reduce supply-chain costs with electronic commerce and better use of technology (e-SHOP).
   
   
4. Price
   Competitive pricing is a factor in bid evaluations.
   
   
5. Innovation
   Is the supplier able to become a strategic partner for the university? How quickly can the supplier adapt to changing customer requirements? Does the supplier pass along the benefits of cost-reduction initiatives to its customers? Does the supplier use current technology? Can the supplier effectively participate in e-SHOP?
   

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• Microsoft Server Agreement
  Glenn Morey, manager of Strategic Sourcing, worked with CIT to respond to an offer from Microsoft within 30 days. The offer allowed Cornell to purchase unlimited licenses for $215,000 per year, resulting in a savings of $185,000 for the university. Additionally, the team from Cornell was able to negotiate a 90-day return/full-refund policy for licenses purchased through other merchants.
  

• Strategic Preferred Supplier Agreement
  The creation of this supplier category begins a new direction for Cornell’s supplier relationships by recognizing companies that are able to go beyond the standard preferred supplier designation by partnering with Cornell to provide significant, multiyear savings; support supply base consolidation efforts; and meet annual customer satisfaction improvement goals. Cornell's first strategic preferred supplier agreement has been awarded to VWR International (VWR) for the company’s ability to provide significant discounts to the university on more than 5,400 products. VWR has been a preferred supplier since 1992, providing chemicals, laboratory supplies, and equipment to numerous units across campus. Read more
  

• Negotiated discounts
  

• Reverse auction for electrical supplies
  This first reverse auction using the Procurex bidding tool was completed in October 2010 with an average savings of 20%. Read more
  
  
• Compostables bid for Campus Life and The Statler Hotel
  SMS recently completed two university-wide contracts with a new supplier, Hill & Markes, that are expected to save the university over $240,000. Read more

View a complete list of contracts awarded through the Procurement Initiative.

= Can be accessed by Cornell staff members only.

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Goal

Achieve $7.5 - $10 million in savings

Accomplishment

Achieved $8.4 million in savings by June 30, 2012

Objectives

• Renegotiate existing contracts
• Target $50 million in non-contracted supplier spend
• Engage in collaborative buying

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Goal

Achieve $22.5 - $29.3 million in savings by June 30, 2015

Objectives

• Develop customer focus groups for specific commodities
• Identify needs for changes in buying patterns
• Conduct sourcing projects with campus teams

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Strategies

Facilitate contracting strategies to achieve the desired results.

• Engage customers on commodity requirements and bidders list
• Competitively bid and negotiated contracts
• Leverage manufacturer spend for Cornell-specific discounts
• Leverage strategic supplier relationships to achieve additional savings
• Investigate utilization of cutting edge tools, such as reverse auctions

Savings Estimate Methodology

The procurement savings are based on the improvement of our cost position for goods and services relative to the base year of fiscal year 2009. Spend is forecasted by applying a forecast factor and Consumer Price Index to the base year spend. As actual spend data becomes available for a specific month, that month’s forecast is replaced with actual data.

The savings forecast is based on assumptions for each contract. Factors in the savings estimate include improved contract pricing, discounts, and directing spend from one vendor to a lower cost competitor, etc. The anticipated savings may be represented as a percentage of spend or as a fixed dollar amount (there are approximately 50% of each type). Each contract has a unique set of assumptions, which is tracked through the Spend Viz tool’s Run Rate Report.

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