Streamlining District Purchasing Practices Results in Savings, Standardization

Streamlining District Purchasing Practices Results in Savings, Standardization
Posted on 01/23/2017
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The statistics are impressive: $130,000 saved in just one year through efficiencies in ordering copy paper and another $30,000 saved annually just by centralizing postage.

What may be even more remarkable is the paradigm shift that’s had to happen across Lakota’s 25 buildings to make such change possible.

Business operations team photoSince 2013, Lakota’s Business Operations team has implemented numerous changes to its purchasing procedures, all designed to reduce expenses, decrease waste, leverage the district’s size and purchasing power, and streamline processes – all part of the district’s commitment to fiscal responsibility and sustainability.

And it’s paid off, with an estimated $1.5 million in savings since 2014. “Such substantial savings have helped us maintain a balanced budget for four consecutive years,” says Lakota Treasurer Jenni Logan. “By reducing our spending to $13.7 million less than it was six years ago, we are stretching taxpayer dollars and even redirecting some of our savings to meaningful student programs and services.”

A major contributor to these savings and the long-term financial stability it supports, was the establishment of a centralized purchasing department.

“Before, each school was responsible for ordering their own supplies independently,” said Chief Operating Officer Chris Passarge. “We knew we had to find ways to be more efficient in our use of resources and, working with the Treasurer’s Department, we basically overhauled the entire purchasing structure. Before we made this a priority, the purchasing manager position didn’t even exist.”

“Fortunately for Lakota, we didn’t have to look very far to find our expert to start the program,” he stated, noting that prior to joining Lakota, Veronica Gayotin worked for Procter & Gamble for 16 years managing supply chain for some of their top customers.

“Having someone with that strong customer service background and expertise was truly an asset to establish the purchasing department,” Passarge said. Gayotin, who has been part of Lakota’s Business Operations department since 2006 supporting various aspects of the business such as construction, telecommunications and the copier fleet, was promoted to purchasing manager and began the task of identifying areas where centralized purchasing and streamlining work processes could bring reduced costs to the district.

The changes were widespread – and continue to evolve.

“We first looked at the amount of copy paper used,” Gayotin said. “There was a lot of waste, since every school ordered at various price points and stocked their own copy paper, resulting in excess inventory. The initial step of the process reduced and reallocated inventory, which saved the district $130,000 during the first year of implementation. Moving forward, to capitalize on our purchasing power, we moved to full truckload ordering, which drove down the unit price. We partnered with one of our local vendors to store and deliver full pallets to each of our buildings, resulting in a pull system, which is much more efficient. Maintaining a regular bid cycle for paper for full truckloads of paper alone has saved more than $57,000 since 2013.”

Postage machines were another area of focus. “The district was actually spending more leasing the machines than on postage,” Gayotin explained. “We’ve saved at least $30,000 annually by centralizing postage and reducing the number of postage machines district-wide.”

Based on the success of those changes, the business office kept finding ways to reduce the budget. For example, their “clean sweep” project, in which schools make their excess office supplies available to other schools, resulted in about $14,000 in savings. And another $70,000 was cut over three years by bulk ordering student planners.

“One of the aspects that has most impressed me is how Veronica has been able to leverage Lakota’s size, getting competitive pricing and rebates from our vendors,” Passarge said. “Thanks to her effort, we often arrange better agreements than we could have even through the local school consortium.”

Such savings include $410,000 over five years by all schools utilizing common copier equipment.

In conjunction with the Treasurer’s Office, Gayotin has implemented and grown a program for vendors to be paid for their goods and services through a purchasing card or P-Card. By simply changing the method of payment, the district has earned close to $70,000 in rebates over the past four years by simply paying bills with the card. “We weren’t taking full advantage of such incentives before and now we can build revenue just by paying our bills,” explained Gayotin.

Even simple changes, such as creating a shared folder accessible to all schools and establishing standard operating procedures has made a positive impact. “It keeps us all on the same page and working toward the common goal of fiscal responsibility,” noted Passarge. “We’re always looking for ways to continuously improve our processes while driving down the costs. That ongoing improvement is the focus of all we do because it prolongs our levy cycle and also allows us to do more for students.”​