WHY HAVE A SUPPLIER CONSOLIDATION REENGINEERING TEAM?
Reduce the cost of acquiring commodity goods & services
Consolidate the number of suppliers with whom MIT does business by establishing partnerships with distributors who have relationships with thousands of suppliers (only the largest can afford to compete in today's marketplace)
Immediately remove the margins that internal MIT suppliers charge departments, labs, and centers
Measure partner performance and consumer buying patterns to continually reduce pricing
Improve the quality of service to the MIT community
Create change through incentives and not mandates
Change the process not the ability to purchase any brand
Maintain or improve current service levels (e.g. delivery time, customer support)
Make it easier to order goods & services (e.g. less paperwork, electronic commerce)
HOW DOES SUPPLIER CONSOLIDATION DO ITS WORK?
Ongoing, planned communications is a critical success factor.
The preliminary work was to examine all MIT purchases and develop an analysis framework based on the complexity of redesigning how MIT acquires specific commodities.
We target a specific purchasing area for redesign and create a high-level redesign. Some of the key tools include studying existing initiatives, a current process analysis, focus groups and interviews, industry research and best practices, discussions with suppliers, and advice from external consultants.
A cross-functional implementation team then creates a detailed plan for rolling out the new design, which includes the formal selection of the partner(s).
Our Sponsor and the Program Manager help us shepherd our work to acceptance throughout the MIT Community.
Weekly meetings with Human Resources staff help us plan for the new way that people will do their work.
Thoughtful and early selection of the implementation team captain and members help make the hand-off to them much smoother.
Clear communications of the plan and timeline to the organizations affected by our work, particularly their executives, can help ease the transition.
Our Sponsor works with us to identify key groups, such as Deans, Department Heads, Directors, and Department Managers, and support staff, and helps us bring our message to them.
We take advantage of community-wide mediums, such as Tech Talk and the World Wide Web, to help us inform as broadly as possible.
WHAT ARE THE ROUND 1 SUPPLIER CONSOLIDATION INITIATIVES?
Clerical Temporary Help
We consolidated from 25+ suppliers to one partnership with Sterling Olsten, who have subcontracted with Skill Bureau, Office Specialists, and Adia Personnel Agency.
We now have a vendor, located in Kendall Square, who can deliver the right person from a pool of qualified and trained MIT knowledgeable workers, within a very short period of time.
This initiative will save MIT $250K annually.
Scientific & Office Supplies
The redesign calls for outsourcing this work to three partners--Office Supplies, Scientific Suppliers, and Gas Cylinders. We plan to continue our current furniture sourcing arrangement and arrange for an outside assembly firm.
We are currently analyzing Request for Solutions for potential partners, and then will develop detailed implementation plans and negotiate contracts.
All indications are that this initiative should save MIT approximately $2.5M annually.
Desktop Devices Pilot
We are testing three hypotheses between now and October, 1995.
1. Can we channel buying behavior into peak sales periods ("end of fiscal year", "back to school")?
2. Can we consolidate buying options to nine platforms (Macintosh, Intel, and UNIX by low-end, high-end, and laptop)?
3. Can we use a cross-functional selection process to choose the platforms?
This initiative has the potential to save MIT $800K annually.
SUPPLIER CONSOLIDATION IS IMPLEMENTING ENABLING TECHNOLOGIES TO IMPROVE THE MIT QUALITY OF LIFE
Purchasing Card Program
We are developing an implementation plan to begin using the American Express Corporate Purchasing Card as a supplier consolidation tool. This program will make it simpler to buy goods and services from only our preferred partners, will lower Institute processing costs, and will provide key information and control on what is being purchased.
We are developing an implementation plan to create an MIT Electronic Catalog, using World Wide Web and Internet Electronic Commerce technology. The catalog will allow authorized purchasers to order directly from our preferred partners, using the Purchasing Card as the payment vehicle.
Pilots and roll-out are planned to coincide with SAP to minimize confusion and maximize training.
WHAT ARE ROUND 2 SUPPLIER CONSOLIDATION INITIATIVES?
We have began two new initiatives, Travel and Printing & Publishing, and are working on the analysis work necessary to formulate redesigns.
WHO IS SUPPLIER CONSOLIDATION? HOW TO CONTACT SUPPLIER CONSOLIDATION?
Diane Devlin (captain), MIT Purchasing & Stores
Peter Roden, MIT Information Systems
Kurt Sollod, CSC Index
Bill Dickson, (sponsor) Senior Vice-President
25+ others on Implementation teams
electronic mail: firstname.lastname@example.org
World Wide Web: http://web.mit.edu/supcon/www/
A version of this article appeared in MIT Tech Talk on May 1, 1995.