Last week, the Chicago Tribune published an insightful piece of reporting highlighting how Chicago Public Schools (CPS) have identified almost $50 million in savings from procurement and total cost management strategies led by a new CPO with a private sector background. It's a great success story because hard dollar savings can go back into the CPS budget to improve educational programming -- or to reduce the growing overall funding deficit each year.
According to the story, "A day before the expected release of a budget that must address a gaping deficit, Chicago Public Schools said it has found ways to save nearly $144 million, a third of that through a more aggressive purchasing strategy and technology upgrades ... The district said a procurement officer who started in March and came from the private sector led efforts to renegotiate contracts and work with other city agencies to secure lower prices. Also instituted were cost-cutting practices like having milk delivered every other day, instead of daily, and having schools cleaned at night rather than during the day."
What stands out to us from reading this statement is when the new CPO started -- in March. Taking us from March through early July is roughly 3-4 months (if you count an initial few weeks to ramp up and conduct a quick-hit incomplete spend analysis). In other word, the new CPO and his team are:
- At the very early stage of an initial phase roll-out of a sourcing that will continue to deliver additional savings in this phase and future sourcing efforts;
- Unearthing some horrendously dirty laundry from the past purchasing groups based on the speed with which savings was identified;
- Receptive to the overtures of suppliers who proactively agreed to reducing costs based on an initial discussion or two before any formal sourcing process; or...
- Good. Just very good.
I suspect it's likely a combination of these factors. Most important, and we write this as Chicago citizens, we should be thankful to this new team and leadership, as unearthing roughly $50 million in savings in a matter of months in a state/city public sector environment is almost unheard of (especially where the process to run sourcing events can take forever based on stakeholder and supplier pushback and circumvention).