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Mississippi State UniversityObservatory Case Study: Mississippi State University

Mississippi State University used our services to deliver improved spend and contract visibility, find savings, standardize the Procurement process and manage maverick spend. We talked to Don Buffum, Director of Procurement & Contracts and Taylor Adams, Procurement Manager about their experience to date.

"I don't mind telling you we didn't come into this blind. We looked at the rest of the marketplace before deciding to go with the Spikes Cavell Observatory, and we've looked at it again since. I don't believe there is a better option out there available, particularly when you look at the cost versus the value. So I'm delighted and looking forward to the Observatory helping us deliver real savings for the University and contributing to us being able to think and act more strategically."

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Tell me a little bit about your agency?

Don: The university has a little over 20,000 students now and around 4500 -5000 employees. We're a very research intensive University so we're buying a lot of different things for a lot of different departments. We spend around $112m on goods and services each year.

Can you describe your procurement function and where and how it fits into the organization?

Don: We have myself and two purchasing managers. We've broken up the university's spend by department and allocated a number to Taylor and the remainder to Jennifer. There are a further two people in purchase order processing, as well as a bid specialist and a person who oversees state contracts. When I arrived four years ago the University was processing around 18,000 purchase orders a year, now we're down to 7,000 as we've moved a lot of purchases to procurement card.

Taylor: Four years ago we were very much a paper production shop, and our office has been in a transition in an effort to become more strategic –the reduction of purchase order volumes is allowing that to become a reality.

Would you describe the procurement function's role as mainly tactical or mainly strategic?

Don: Right now about 50/50 but we're moving in the right direction.

What do you see as the top three challenges for procurement at Mississippi State University over the next 12 months?

Don: The top area of focus for the coming year or two is to continue to drive out savings by implementing an eProcurement system alongside the Spikes Cavell Observatory in order to help us better manage maverick spend.

We'll also be looking at standardization in some areas. We might not be mandating that they use "Product X", but coming up with 5 alternatives and saying, "Use one of these." We can at least control some spend a little bit better that way.

Using the Observatory, we'll have information at our fingertips that will help us educate our customers on where the spend is going – this will help significantly in changing buyer behavior. We've already used the Observatory to establish that we spent over $600,000 last year at a local retail store. And you know every single one of those purchases was probably at list price as most retail outlets are not giving us a discount. So with the detail on hand from the Observatory, I'm looking at this and many other examples to contact some of the departments and say, "You spent X dollars at this store last year.  Let's look at better ways to spend the University's money."

You've been working with Spikes Cavell to deliver improved spend visibility. What were you hoping to achieve when you undertook the data transformation and spend analysis project?

Don: I wanted to have the ammunition that would help me get better control over the University's spend and in particular identify maverick spend. When I looked at the Observatory, it was clear that it was a very cost effective way to help me do that and a lot more besides. We buy a lot of different goods and services at the university and without the Observatory, it's very difficult to get a firm handle on how much we're spending by category and with whom.

The Observatory also gives us the information we need to identify where we were buying from the same vendor all over the campus but didn't know it. None of our 200 departments is going to look at their own spend and say, "Oh that's something we spend a lot of money with, we need to compete that". So that's 200 different "business managers" that only see what they spend. So we can use the Observatory to go to the department heads and say, "Okay guys, you don't spend a lot in the category, but the university as a whole does. Why don't we compete this and come up with a contract that you can all utilize?"

Taylor: A good example of that is gases. The University buys a lot of gases, for example Oxygen and Acetylene, as well as specialty research gases. We had a vendor contact us to discuss a pricing proposal and initially we thought this was going to be a relativity minor line item. Well we drilled into the information in the Observatory and within a matter of minutes we'd established that across the University, we were spending the better part of a million dollars a year across three vendors, in gases. To get to that would have taken a lot of effort as our systems just aren't set up to make that analysis as easy as it should be.  

What has better spend visibility enabled you to achieve to date?

Don: The Observatory has already been invaluable in giving us way better visibility over our spend than we've ever been able to achieve with our existing systems. For example we've been able to show where we're using multiple vendors in the same category where different departments have been using these different vendors. It has enabled us to ask the question of department heads and it has already resulted in us identifying priority categories to focus on.

Another simple example of how the Observatory has helped was when we were able to determin exactly how much was spent on food last year.  Using the Observatory, we were able to show where it was spent was spent - which vendors, which departments and how much with each - and be confident that we were looking at all of our spend on food. With the Observatory we were able to do it quickly, with little effort on my part, and there are many similar examples. That alone will save us a huge amount of time and effort across the year.

Taylor: I think it's fair to add that it seems like every time we use the Observatory, we end up with a new strategic initiative that has the potential to save us time, money and effort!  We were recently having a dialog with a number of the University's IT vendors, most of whom were resellers. After a quick analysis using the Observatory, we realized that the value of our spend was substantial enough across the relevant categories that we don't necessarily need to deal with resellers. We may be better off dealing with some of the manufacturers directly and getting better prices as a result.

What are you anticipating better spend visibility will help you achieve in the future?

Taylor: I think there are a number of things we could do. We've started to identify the low hanging fruit and now we're getting into the more complex analysis – uploading our contacts and identifying where maverick spend appears to be occurring by category for example.

Don: We think that there's a major opportunity to use the Observatory to identify opportunities to cooperate with other universities and colleges in the state. To do that though we need to have the other universities using the Observatory. One of the things I am planning to do is meet with the other universities, show them what we've already done and show them what we might be able to do together.

Taylor: Don and I have talked about this a lot, and more effective cooperation with other universities and colleges is what is potentially most exciting about the Observatory. If we can get the others on-board, we'll be able to quickly identify common vendors, no matter what they're called in the financial system, and establish which categories make the most sense for cooperative contracting efforts. There's no way we'd be able to do that without the Observatory.

Do you think you could have undertaken the data transformation and spend analysis project without external help?

Don: No, absolutely not.

How did you find working with Spikes Cavell?

Don: Excellent. There's never been a time when I've contacted your people and not got a quick response and proper response. The training has been good. If there's something I'm looking for or trying to figure out how to do it, I contact our account manager, they give me the answer back. Recently I had a kind of a unique request, I don't remember what it was, but I couldn't figure out how to pull it all together. Based on my account manager's response it was very complex, but rather just telling me how to do it, he told me how to do it and also ran the report for me, so it's just fantastic.

You have one word to describe Spikes Cavell to a colleague or peer. What would that one word be?

Don: Beneficial. Great product, great service at a very reasonable price. And I think your pricing model is huge – most finance people are not going to come out and admit that their finance package doesn't give them the information procurement need. So me being able to go in there and tell them, "Look, we can get this cleaned up, the spend properly categorized and a set of easy to use online tools to manipulate it, and it's only going to cost a modest number of dollars each year." They're happy and willing to listen and support it.

Taylor: I don't mind telling you we didn't come into this blind. We looked at the rest of the marketplace before deciding to go with the Spikes Cavell Observatory and we've looked at it again since. I don't believe there is a better option out there available, particularly when you look at the cost versus the value. So I'm delighted and looking forward to the Observatory helping us deliver real savings for the University and contributing to us being able to think and act more strategically.

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About Mississippi State University

Mississippi State University is a land-grant university located in Oktibbeha County, Mississippi, United States. It is classified as a 'comprehensive doctoral research university with very high research activity' by the Carnegie Foundation. MSU currently has an enrollment of over 20,000.

www.msstate.edu

Published: 9/29/2011

TAGS: msu, spend visibility, observatory, mississippi state university, procurement

"So far we estimate that we’ve delivered around $120,000 and, with the initiatives that the Observatory has helped us to identify, our forecast is that we’ll multiply our initial savings by a factor of four by year end."

Mike Bevis, City of Naperville