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Question: When is a preferred supplier list not a preferred supplier list?

Jun 15, 2011

Answer: When your staff choose to ignore it and do their own thing!

Interesting article in Supply Management magazine today around this subject which is something schools are notoriously bad for despite the best efforts of the bursars.

The alarming statistic from this research is that 60% of employees don’t shop around for the best deal when spending company money as opposed to their own personal money.

Many bursars I speak with hold their head in their hands when it comes to trying to keep control on various members of staff ordering goods and services on their credit cards from non-preferred suppliers and then expecting reimbursement from the school.

‘Free’ gifts and resources or long-standing personal relationships, whilst appealing to the academic staff, are unlikely to be appealing to the bursar who discovers that the core supplies ordered have been done so at a premium price.

As well as not necessarily getting the best value for money on an individual item you also miss out on the opportunity to negotiate bulk buyer discounts when putting all of your category spend with one supplier.

It’s also more difficult dealing with staff with an academic mindset who tends to think along the lines that ‘we’re an educational establishment not a business’ whereas, in fact, a school is both.

So what’s the solution?  Well, you’ve probably got a couple of options open to you depending on how brave you feel.

Firstly, you could have a ‘three strikes and you’re out (not reimbursed)’ policy.  Identify the serial offenders and if they continue to order outside of preferred supplier arrangements advise that they will not be reimbursed.  I doubt it will take long for that message to get around.

Secondly, and slightly less draconian, is to start to centralise your spend.  The schools I work with which have a single point of contact for purchasing in certain spend categories get it right more often than not.  It doesn’t have to land at the feet of one individual, the task can be shared by several personnel, but by having one individual monitoring stationery, another to book coach journeys and so on your gain much greater control and insight into the spend in that category.

So why not book a review with Minerva today?  We can start to assess individual categories, negotiate deals with suppliers on your behalf, help implement new supplier arrangements and train staff in the new regime.  As we’re independent we can review the entire market place.  Not only will you most likely make immediate cost savings but, by putting in place more efficient procurement practices, these savings will continue well into the future.

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