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The University of Pennsylvania set out to transform its procurement operation from a largely processing function to a strategic force in the university's cost containment efforts. The results to date have been impressive: more than $89 million in documented savings and cost containment. The Penn story delivers a compelling message to any organization that still approaches supply management as an administrative task.
With a global economic crisis demonstrating the fallibility of institutions once thought immune to economic trends and media coverage detailing the impact of financial woes from Wall Street to Main Street, it's clear that today's financial storm will have lasting repercussions.
In previous economic downturns, the higher education sector emerged relatively unscathed. This time around, the economic impact is being felt from the quadrangles of the Ivy League to community colleges that are considered the bedrock of the areas they serve. Endowments are declining as costs are escalating. More than 41 states face major financial shortfalls forcing significant budget cuts for a great many institutions. With pressure to hold the line on tuition rates while at the same time maintaining or even expanding financial aid, colleges and universities are increasingly forced to look for new and innovative sources of revenue.
Challenging times for higher education, however, can also be the Golden Age of opportunity for supply management professionals. We have the ability not only to transform the role of the procurement function, but even more importantly to provide significant benefits to the institutions, faculty, staff, students, and parents we ultimately serve.
At the University of Pennsylvania, the work of the Purchasing Services Department and the resolve of our leadership to place procurement and supply management on the leading edge of Penn's cost containment efforts offer a compelling example of how procurement can impact the bottom line. In a time of much financial turmoil, such examples serve to illustrate the steps our profession can take to ensure the accessibility of higher education and maintain the quality of our research and teaching functions.
To date, Penn's transformation of its Purchasing Services Department has resulted in documented savings and cost containment of more than $89 million. This figure represents true gains, not budget cuts that impact people and academic programs or soft savings that equate more...