Strategic Sourcing Program for Procurement Solutions

The Client

The Chicago Public School system has more than 600 elementary, middle and high schools and annually enrolls approximately 431,750 students. It employs 46,000 people, including 2600 teachers and 580 principals to see to its students needs.

The Challenge

In FY ?8, The Chicago School System spent over $401.4 million on their major product and service categories: textbooks, office supplies, printing services, food, equipment, and education programs. The scope of the purchasing organization was limited, so volume discounts and opportunities for competitive pricing negotiations were not being realized. There were no processes in place to prevent maverick buying or ensure the quality of products and services, so savings went unrealized.

BearingPoint was asked to analyze the entire purchasing function and transition it to a Strategic Sourcing Program model that would help the Chicago School System align purchasing practices with their budget. Using an initial set of commodities, we began by:

• Providing analysis of existing purchasing expenditures, policies, processes and organizational constraints
• Advising on appropriate best practices, and cost efficient and responsive purchasing strategies

The Solution

We focused on two key areas: past purchasing performance and supporting infrastructure. Working closely with the Chicago School System leadership and process owners, we gathered information, reviewed purchasing data and mapped out purchasing processes. We also developed a detailed analysis of the existing purchasing organization, human resources and IT infrastructure.

From these reviews we identified short- and long-term improvement initiatives, existing challenges and possible solutions, which included:

• Prioritizing the vendors and supplier relationships into high-value, medium-value, and low-value categories
• Evaluating opportunities for consolidating similar goods and services across the organization to leverage cost saving benefits
• Analyzing purchasing patterns of key product groups to identify volume discount and price negotiation opportunities

The Benefits

Our strategic sourcing diagnostic effort provided a comprehensive review of personnel, processes, technologies and the existing purchasing organization. Specifically, we found:

• Disproportionate amounts of time and resources were spent on low value transactions and suppliers who accounted for a small percentage of total expenditures
• Significant opportunity to consolidate vendors in four out of six product categories

As a result of BearingPoint’s efforts, The Chicago School System now has the foundation needed for implementing organization-wide purchasing improvements, including Procurement-based solutions. The strategy we developed for the client also included short- and long-term initiatives to improve internal purchasing processes, supplier/vendor selection and IT infrastructure.

The Chicago School System has realized a 35 percent savings on office supplies, office equipment and printing services for a total savings of $26 million on their annual budget. Our supplier/vendor review and analysis also helped the client meet a federally mandated goal of awarding 30 percent of their business to Chicago-based minority owned firms.