Today's Purchasing Practices

Purchasing Practices

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An online description of the Washington County Public Schools (WCPS) Purchasing Department in Hagerstown, Md., says that the organization “strives to conduct every procurement with the highest level of diligence and professionalism in an effort to serve the community and to provide the students of Washington County with the resources necessary for a solid foundation on which to learn and grow.”

That well-stated description is probably true for most K-12 purchasing departments, whether rural or urban, small or large. Here’s a look at how some districts are fulfilling their duties in a responsible manner in an age of technology and tight budgets.

PURCHASING AND TECHNOLOGY

Technology has changed how purchasing occurs, offering efficiencies in time and cost. “We were one of the early adopters of e-procurement and are probably the only local education association in Maryland using it primarily for its purchase requirements,” says Rick Gay, CPPO, purchasing manager for Baltimore County Public Schools (BCPS) in Towson, Md. “Through the last 14 years we’ve grown our platform from a small project of 2,000 line items and a handful of catalogs to more than 71,000 line items and 71 catalogs, representing 175 vendors. And we use both dynamic and hosted catalogs. Last year we did more than 20,000 orders valued at $7.7 million.” Gay is former chair of the Purchasing & Supply Management Committee for ASBO International. His district, the third largest in Maryland, educates nearly 110,000 students in 173 schools, programs and centers.

“By establishing predetermined approval paths,” Gay continues, “we’ve reduced the amount of paper coming through our office by about 78 percent, equating to a reallocation of resources of roughly $50 million through the last 14 years. What’s more, when I first got here in 2001, which was the beginning of fiscal year 2002, my office handled 32,000 hand-typed purchase orders in fiscal year 2001. This year, in fiscal year 2015, we will have hand-processed approximately 5,100 purchase orders; the bulk of the other 18,000 have been done electronically.”

“A lot of things are done electronically today that used to be done on paper,” agrees Jeff Kimball, director of Cooperative Purchasing Services for Central Susquehanna Intermediate Unit (CSIU) in Milton, Pa. “It used to be that you’d research the product, look in the catalog, write a request, get it approved and type up a purchasing order. Now, we’re using the computer more and more for purchases, such as homeowners do on Amazon.” Kimball serves as chair of the Purchasing & Supply Management Committee for ASBO International and a member of Pennsylvania ASBO Material Management Committee.

CSIU, which includes nearly 37,000 students in 17 school districts, two career and technical centers, and 69 nonpublic schools, uses an Integrated Procurement System (IPS) for ordering that is tied into an e-commerce system and business office software. According to the Internal Revenue Service, IPS is a software application whose primary purpose is to automate the acquisition process. It provides a flexible and efficient way to prepare, approve, fund and track requisitions for the delivery of goods and services. “It’s more efficient,” says Kimball. “It used to cost $150 to $200 to create a purchase order, which was inefficient, especially if we were placing a small order. For example, it may have cost $10 to $15 dollars per notebook if just a handful were needed, making for very expensive notebooks.”

Technology advances, which improve access to information, are especially helpful considering that purchasing directors are often responsible for a lot more than requisitioning and bidding, such as print managed services, disposition of assets and purchasing procurement legislation. Keeping abreast of legislation is important because it impacts how and what products are bought. “We have to keep up with things acceptlike recycled products, green products, minority business enterprise participation goals, small business enterprise purchasing goals and more that are there for a good reason but dictate that we move deliberately in making change,” says Lisa C. Freeman, CPM, supervisor of Purchasing for Washington County Public Schools (WCPS) in Hagerstown, Md. “Some of these changes impact our bottom line and how we plan procurements moving forward.” WCPS is an urban district educating more than 22,000 students in more than 42 facilities.

PURCHASING BEST PRACTICES

When it comes to best practices — procedures that are accepted as correct or effective — the experts did not point to a specific documented list. However, they willingly shared what they’ve learned and practice from their own experiences.

Collaboration: “Best practices involve a level of collaboration with all the people who have input and influence over significant purchases,” says Freeman, “because, when we publish a solicitation and make it easily accessible, the quality standards need to be very high.”

Accessibility: “I work very hard to make my records electronic and accessible to my staff as well as members outside the Purchasing Department for strengthening access to the lowest prices that we’ve historically been able to obtain,” says Freeman. “More specifically, I’m organizing, through commodity code management — identifying the items that we purchase with regularity and frequency — the specifications, solicitations, vendor registration process and ordering process to create a fully integrated, transparent and collaborative procurement program. This ensures not only getting the best price, but also assuring the taxpayers of a good value for the dollars that we’re entrusted to spend.”

ISO certification: “We’re one of maybe six or seven school districts in the country that is ISO certified,” says Gay. “With this certification, we can measure everything we do, including timing how long transactions are taking. This allows us to be more efficient. We put products on our intranet page, so our customers can order anything 24/7. They can put things in a shopping basket, it’s approved and it goes out to the vendors. We have anecdotal stories of receiving things next day, although it usually takes 24 to 72 hours to receive items.

Purchasing Cards: According to the Professional Association for the Commercial Card and Payment Industry (NAPCP) www.napcp.org, Purchasing Cards (P-Cards) allow “organizations to take advantage of the existing credit card infrastructure to make electronic payments for a variety of business expenses (e.g., goods and services). In the simplest terms, a P-Card is a charge card, similar to a consumer credit card. However, the card-using organization must pay the card issuer in full each month, at a minimum.”

Both Kimball and Gay use them. “P-Cards are issued to our customers who are responsible for making purchases. Depending on who they’re issued to, they may have certain limits, or they may have unlimited purchasing power,” explains Kimball. “You may be able to use them for travel if you’re going to conferences, or they may be restricted to use for office supplies.”

“Our online purchasing is tied to P-Cards, so vendors are paid in 48 to 72 hours,” says Gay. “That gives us a lot of leverage with vendors for deeper discounts because they know they’ll be paid in a couple of days vs. net plus 30.”

NAPCP notes that P-Cards create efficiency savings in the range of 55 percent to 80 percent of the traditional process cost and that typical savings resulting from usage are $63 per transaction. “Overall, P-Cards provide a means for streamlining the procure-to-pay process, allowing organizations to procure goods and services in a timely manner, reduce transaction costs, track expenses, take advantage of supplier discounts, reduce or redirect staff in the purchasing and/or accounts payable departments, reduce or eliminate petty cash and more,” according to the website.

Technology: “We have tried to move aggressively into a totally digital environment,” says Gay. “Richard Palmer, a professor at Southeast Missouri State University in Cape Girardeau has been studying electronic procurement in last 15 to 20 years where he’s compared a paper process to an electronic process. He’s discovered that, with electronic purchasing, you save $73 per purchase order. Last year, I did 7,900 written purchase orders. Multiply that by $73, and you quickly see the resources coming back to you. In addition, if you’re in a paper-driven process, it may take three, four or five hours per week to order supplies. With an electronic process, you can reduce that time to approximately one hour, giving the time back to a principal to take care of the business of running the school.”

Contract Purchasing: “Districts are using contract purchasing so as to not have to recreate the bid process,” says Kimball. “Using it makes for greater efficiency and the ability to get the products you need at a good price. It saves writing and issuing a bid, looking at proposals and making a selection. People used to think that contract purchasing was taking away their control. But, in fact, it may allow you to make a better acquisition than what you would get via a public bid because sometimes accepting the lowest bid results in product you didn’t want. In addition, you may later find performance issues with the contractor or a product not being properly installed.”

Ken Lackey, director of Business Services for Kettering City Schools (KCS) in Ohio, agrees with Kimball, observing that contract purchasing is ideal for convenience in that it saves the time and expense of going out to bid, and it gives the ability to buy exactly what is wanted. “However,” he adds, “I have found that these contracts are generally not the best prices we can get, to be honest.” Lackey serves as co-director of the Southwestern Ohio Educational Purchasing Cooperative, and KCS is the 32nd largest district out of 611 in the state, educating 7,620 students in 12 schools.

ADVICE FROM THE EXPERTS

When you’re moving forward with technology, efficiency and other gains to make your department more effective, bear in mind the experts’ wisdom, which they freely share with no service charges or hidden fees.

“I always advise others to look for the best way to get the product you desire at the best possible price,” says Kimball. “This may be via a local or national contract, where a larger organization has already done the bid and you’re welcome to use it. Contract purchasing is the wave of the future; it can make your life easier when making acquisitions.”

“My advice is to become professionally certified,” says Freeman. “There are essential technology skills certification offers that, without them, you will struggle in some areas. Also, most procurement activity is not new: there are lots of resources and support for new procurement officials — use them. Finally, being highly organized and surrounding yourself with a highly organized support team, is essential.”

“I advise others to not be afraid to try something new,” says Gay. “Ask yourself, ‘How I can be more efficient? How can I better utilize the resources I’m given? How can I return the resources I’m given to be used for other things?’ Our resources are finite, and the public expects us to get as much out of the resources as we can. That means getting lean, mean and technologically savvy so that the technology works for you.”

Lackey also advises to not be afraid — to change vendors, that is. “I’m working with almost none of the same vendors that I worked with 16 years ago when I came here,” he says. “There are a lot of solid vendors doing good work in providing good products and services. Evaluate all of the factors and make the best decision you can. Even if you don’t change vendors, the bid process keeps current vendors on their toes.”

RESOURCES FOR PURCHASING PROFESSIONALS

Where can a purchasing manager go for more information and/or professional development? Here are four sources.

1. Institute for Supply Management (ISM): Since 1915, this Tempe, Ariz.-based organization has been “providing industry professionals and organizations with extensive education, research, publications and highly regarded certifications,” according to its website www.instituteforsupplymanagement.org. It offers a certification program (Certified Professional in Supply Management) that is recognized in more than 30 countries.

2. NIGP: The Institute for Public Procurement: NIGP has been developing, supporting and promoting the public procurement profession since 1944, through educational and research programs, professional support and technical services, and time-saving resources. Headquartered in Herndon, Va., its website is www.nigp.org/eweb/StartPage.aspx.

3. Universal Public Procurement Certification Council (UPPCC): This independent entity based in Herndon, Va., governs and administers the Certified Public Procurement Officer (CPPO) and Certified Professional Public Buyer (CPPB) certification programs, which measure professional competence surrounding public procurement. According to NIGP, which offers certification preparation products, “… certification provides agency managers a degree of confidence in the ability and integrity of the people who have been or will be selected to do the job.” The UPPCC has certified more than 10,000 professionals around the world, according to its website: www.uppcc.org.

4. Association of School Business Officers International (ASBO): Based in Reston, Va., and founded in 1910, ASBO supports school business professionals. According to its website www.asbointl.org, it is “committed to providing programs and services that promote the highest standards of school business management, professional growth and the effective use of educational resources.” Kimball adds that ASBO has a purchasing supply management committee that puts together two or three seminars for the organization’s annual conference and hosts a listserv through which members may ask questions.

Technology, best practices, advice and resources — purchasing professionals are using everything they can to fulfill their obligations with the highest level of diligence and professionalism to serve their students and communities in a responsible manner.

This article originally appeared in the July 2015 issue of School Planning & Management.

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