C A S E S T U D Y:

SUPPLY CHAIN

MANAGEMENT

THE NEXT FRONTIER

IN SAVINGS

Barry Swanson

• Chief Procurement Officer

• University of Kentucky

• E&I Liaison to NAEP Board of Directors

BIOGRAPHY

What Does Success Look Like?

Answer: The right things, in the right quantity, in the right place, at the right time,

handled as few times as possible using the least amount of space and fewest people

possible.

P O T E N T I AL U S H I G H E R E D U C AT I O N B U D G E T C U T S P E N D I N G

• Looming budget cuts, averaging $9 billion below 2008 levels

• Do more with less mandate (or less with less in some cases)

• Multiple supply chain management processes to work through

• Expensive, inefficient processes and fragmented supply base across facilities

FACILITIES SUPPLY CHAIN

I work now with the University of Kentucky, beginning the

process of implementing a new supply chain management

strategy. I recently was involved with a similar effort at the

University of Kansas, and will profile that process today.

Do you have an existing eProcurement and

or CMMS solution in place?

Does it have mobile capabilities?

POLL #1

Changing for Excellence

Merger of Facilities Operations, Department of

Student Housing Operations, and maintenance

team to form a new unit: Facilities Services

UNIVERSITY OF KANSAS CONTEXT

I M PAC T S

• Procurement and Strategic Sourcing

• Purchasing and Payables Merged

• Enhanced Staffing

• Full-Suite SciQuest

ORGANIZATION STRUCTURE

Central store and supply chain report to Procurement Services.

The new Facilities Services team has 5 zones and…

U N I V E R S I T Y O F K AN S A S S I T U AT I O N

Several Central Shops

• Special services

• Instrumentation (fire alarms, etc.)

• Landscaping

Do you utilize zones to separate and

maintain your facilities?

POLL #2

• Facilities merger took place on July 1, 2012

• Procurement and strategic sourcing fully implemented by July 1, 2013

• First generation strategic sourcing activities completed

• Staff and services for both units now stable and high performing

CHANGING FOR EXCELLENCE COMPLETE

NOW WHAT?

1. Personnel and

related expenses

2. Facilities • Construction

• Operation and maintenance

• Lifecycle renewal

• Utilities

3. Information

technology, scientific

equipment and

supplies

5. Budget dust and

rounding errors

4. Professional Services

UNIVERSITY

BUDGET

CONSISTS OF:

1

2

3 4

5

The cost of inventory goes beyond products. Delays, multiple handoffs, and low productivity

result in an inefficient process.

PROCESS PAIN POINTS

$124 90 5 40% to process

a PO minutes to

replenish

an item

steps to

purchase

an item

people involved

in the process

of time spent

“Shopping”

30 Leads to

complexity,

low

productivity,

and low

compliance

Source: https://www.grainger.com/content/kc-epro-article-why-shifting-to-eprocurement-makes-sense

• Fewer people and less storage space used provides the same or better cost savings

• Controlled supply chains result in far more savings than can be achieved on commodity or service pricing alone

• After first generation, strategic sourcing complete

• Estimated that zones spend 20 hours per week going to central store or local suppliers

• At 30 minutes (conservative) per trip the total lost productivity totals $234,000

LARGEST SAVINGS OPPORTUNITY?

Do you partner with vendors to establish

and maintain your procurement process?

POLL #3

The cost of inventory goes beyond products. Delays, multiple handoffs, and low productivity

result in an inefficient process.

COMPONENTS OF FACILIT IES SUPPLY CHAIN

Governance Supplier

Partners

Technology Stores Operations Metrics

FACILIT IES SUPPLY CHAIN - GOVERNANCE

Governance

• Executive leadership

• Core team

• Project team

• Facilities advisory group

• Quarterly supplier reviews

FACIL IT IES SUPPLY CHAIN - SUPPL IER PARTNER(S)

Supplier Partners

• Grainger

• KeepStock® program

• Rapid delivery from Grainger distribution

• On-Site staff

• Deliveries

FACILIT IES SUPPLY CHAIN - TECHNOLOGY

Technology

• Maximo

• SciQuest/PeopleSoft

• Moving to Oracle financials and business

intelligence/metrics in the clouds

• Facilities personnel issued iPads and iPhones

• Bar code scanners

FACIL IT IES SUPPLY CHAIN - MANAGED INVENTORIES

Managed Inventories

Locations

• Central store

• Zone headquarters

• Custodial closets

• Zone maintenance vehicles

• Central district 3rd party operations and maintenance

FACIL IT IES SUPPLY CHAIN - OPERATIONS/PROCESSES

Operations/Processes

• Receipt/delivery to all managed inventory locations

• Delivery to planned project sites

• Pre-planned preventative maintenance (kits)

• All items bar coded

• Obsolete and surplus items identified and disposed

• Delivery of emergency and unplanned needs

• Who performs the above tasks?

GOVERNANCE - PROGRESS TO DATE

Executive Leadership

• Associate Vice Provost RMS/CPO

• Associate Vice Provost Campus Operations

Core Team

• Procurement leadership

• Campus operations finance and work management

• Director, Facilities Services

• Project team

• Core team with zone managers and administrative staff

Governance

TECHNOLOGY - PROGRESS TO DATE

• iPads/iPhones issued to team

• Zone managers, supervisors, and maintenance teams in place

• Maximo fully operational

• Preventative maintenance schedules loaded

• Move to Oracle completed in December 2017

• Integrations with Maximo and business intelligence to follow Technology

CUSTODIAL CLOSETS - PROGRESS TO DATE

• Items and quantity for each closet identified

• Grainger direct delivery to each closet

• Processes in place for management and upkeep

CENTRAL STORES - PROGRESS TO DATE

• Staffing

• Facilities Commodity Specialist, Manager

• Full Time Warehouse Supervisor

• Storekeepers

• Students

• Grainger staff on-site

• KeepStock® Inventory Management solutions in place

• Preventative maintenance kits in pilot stage

Stores

O P E R AT I O N S / P R O C E S S E S / L O G I S T I C S - P R O G R E S S T O D AT E

• Delivery

• Planned

• Facilities services special services process

• Emergency and Unplanned

• NAPA model

• Grainger

• Discussions underway

Operations/

Processes/

Logistics

UNIVERSITY OF KANSAS PROGRESS TO DATE

• Project start date: September 2014

• Grainger staff hours per week: 44

• Locations served by Grainger: 100

• Central store plus 99 custodial dens

• KeepStock spend last 12 months: $555,567

• 832 items stocked across 27 categories

UNIVERSITY OF KANSAS SAVINGS TO DATE (CONT)

• Custodial den deliver savings: $162,000

• Recovery from inactive inventory returns: $15,000

• Value of Grainger staff to KeepStock® site: $72,800 (loaded wage of $35/hour)

• Process improvement savings: $52,880

• Build shopping cart, bar code, put away

• Reduced inventory on hand and stock-outs: $30,000 (Est)

• Total: $332,680 (Est)

PROGRESS TO DATE SUMMARY (CONT)

• ePro Non-Stock costs: $40.90 per transaction

• ePro KeepStock® order: $11.84 per transaction

• KeepStock® orders (last 12 months): 5970 transactions

• Transaction savings: $173,492

• Logistics/process/inventory savings: $332,680 (estimate)

• Transaction processing: $173,492

• Total: $506,172 (estimate)

Is the ROI or KPI’s on your procurement

process measured?

POLL #4

DIVERSITY IN PROCUREMENT

Our next webinar in the series, “The Evolution of Diversity in Procurement,” will explore the

changing demographics and economic landscape are increasingly positioning

disadvantage business enterprises (DBEs) as important contributors to the economic

growth and productivity of the United States. These businesses are creating jobs and

supporting the economic development of their respective communities, while promoting

the placement of their goods and services in both domestic and global markets.

• How can Grainger procurement solutions help

in a new procurement process? An existing

one?

• What kind of savings can universities of

different sizes expect?

• What are some best practices for procurement

in education?

Q&A

Want to stay ahead of the curve on more topics like

this? Visit grainger.com/content/knowledge-center.

Upcoming NAEP Webinars

Check them out at www.naepnet.org/page/Webinars

Trends in Procurement Webinar Series Sponsored by Grainger

01/30 The Evolution of Diversity in Procurement

2pm ET Presented by: Julie Holmes, Sr. Channel Business Manager, Grainger

Responsible and Sustainable Sourcing Webinar Series Sponsored by ConnXus

01/18 Best Practices regarding Responsible and Sustainable Sourcing

2pm ET Presented by: Daryl B. Hammett & Carrie Hawkins

CO-Owner & COO and Sales Executive

01/25 Disrupting the Sourcing Process, from the Small Business’s Perspective

2pm ET Presented by: Daryl B. Hammett & Carrie Hawkins

CO-Owner & COO and Sales Executive

To view and register for NAEP Webinars log into our website at www.naepnet.org and check out our events

calendar. Access it directly here: http://www.naepnet.org/events/event_list.asp