Thus far in our quick look at how Chicago's public school system has turned to procurement to drive savings, we've focused our attention on some of the specific category strategies that have led to savings. This includes IT, where procurement recently helped identity (and we hope will soon implement) $11 million in fiscal year 2013 savings within the IT department. Curiously, the strategies deployed here have been as focused on change and demand management as actual sourcing. According to the CPS web page, "the department was able to generate the savings through migrating to Google Apps for Education, reducing external consulting expenditures and negotiating reduced rates with external vendors. Not only will the Google Apps for Education contract save CPS approximately $2 million in FY 13 ($6 million dollars over three years), it will greatly enhance CPS communication and e-learning tools."
We won't pass judgment on the total cost/value associated with Google Apps compared to Office (we've had negative experiences with both). Yet CPS' IT procurement strategy is a useful proxy to explore how the sourcing team is driving savings beyond just vendor negotiations and supplier management across categories and how a new approach to public sector procurement can drive better value (and outcomes) for constituents and tax payers. These strategies will be nothing new to advanced procurement organizations in the private sector. But for the public sector, they represent a real evolution of thinking. A quick list of these applied savings strategies include:
- Strategic sourcing processes (i.e., formalized 5-step, 7-step, 9-step, etc. sourcing processes)
- Price/category benchmarking (as part of a sourcing effort) and using benchmarks to drive negotiations as an outgrowth, not a starting point for price discovery
- Demand management
- Change management (e.g., printing less on paper, encouraging product substitutions, training internal customers on alternative approaches/usage)
- Demand aggregation (internal)
- Supplier development (including joint cost reduction ideas such as reducing the number of deliveries)
These strategies represent just a start in terms of the ways public sector organizations can identify and implement procurement savings. It's impressive that CPS' new head of procurement has deployed all of them in his short tenure on the job so far. Even with much proverbial low-hanging savings fruit on the vine, it still amazes me the benefit better procurement can have when brought into an organization that has been without out previously.