Procurement Services
SupplyChain 500 Addresses Funding
There are great efficiencies and cost savings in streamlining, consolidating and integrating and that’s the strategy of SupplyChain 500. It pledges to drive $500 million in annual benefit by continuing to improve the UC Procurement model and extending it across the UC supply chain.
A supply chain includes a wide range of interrelated functions and activities. Integrating functions like planning, sourcing, delivery/logistics, and payables helps UC maximize the power of the entire value chain to free up resources and deliver benefits back to the UC mission of teaching, research and public service.
While we have moved this initiative forward by first focusing on projects that can be advanced within current budgets, one of the biggest challenges is finding the funding needed to implement larger and longer-term changes. With this in mind, the SC500 Advisory Group identified two major priorities: revenue generation (systemwide, multi-campus and campus-specific) and program funding. Two corresponding sub-committees were established to investigate and recommend action in these areas. Each sub-committee met multiple times over the spring/summer to gather information, consider options and make recommendations back to the Advisory Group.
Based on strategies and approaches used by UCB, UCD, UCSD and other campuses, the Revenue Generation sub-committee recommended establishing a two-year pilot of a systemwide revenue generation team to engage all campuses and, collectively, grow future revenue commitments. The proposed effort would involve the systemwide team facilitating a community of practice with representation from each campus to support, cultivate and drive revenue generation opportunities. The details of the proposal are being finalized and the final proposal will return to the full SC500 Advisory Group for their endorsement.
The Program Funding sub-committee recommended leveraging revenue from UC’s role as the “lead agency” in a Group Purchasing Organization (GPO) to fund the remainder of Phase 1 and future SC500 activities. As the “lead agency” UC receives revenue (fees and incentives) when other public agencies/educational organizations leverage UC’s competitively bid contracts. UC has proven the concept by piloting this type of arrangement with a maintenance supply contract and is now moving to expand to other sourcing categories/contracts. To bridge the gap until UC realizes sufficient revenue from these GPO contracts, the Funding sub-committee recommended seeking a bridge loan for short-term funding. In their meeting on September 20, the Advisory Group endorsed the Funding committee’s recommendation.
The next steps are to pursue bridge funding and, if approved, work with the PLC on prioritizing the Phase 1 implementation plans.